Let’s talk money
There is a lot of myths about how things work in Lebanon versus how they should.
Most of it, are intentional schemes of smokes and mirrors..
Here is your MOB Money Guide 101 in Lebanon.
In Layman’s terms, a simple money order whether through a bank or an exchanger is a 3-way transaction.
Your side of the transaction, where you deal is the paying bank. The records are usually kept between those mentioned parties.
What does the central bank do here? Basically nothing.
The central bank’s job can more be described
Eight major functions of the central bank in an economy are as follows: (1) Bank of Issue, (2) Banker, Agent and Advisor to Government, (3) Custodian of Cash Reserves, (4) Custodian of Foreign Balances, (5) Lender of Last Resort, (6) Clearing House, (7) Controller of Credit and (8) Protection of Depositor’s Interest
Let me simplify again, if a central bank already monitoring every transaction why do you have to sign to your bank a declaration of a deposit or wire above 10k to justify it for the central bank, when asked. The key here is when asked, or when in fact audited which is as mentioned one of the main duties.
How would this work if as we know, the accused, accuser, judge, and executioner are all in bed together?
The simple answer, it does work well for them, as YOU the citizen, the victim or the third party in this equation are the source of their profit.
Lebanon has created a false image of economic legitimacy and stability to global markets, particularly as related to its sovereign bonds and related securities including the credit default swaps that ‘insure’ those bonds. In fact, the real picture of Lebanon and its sovereign-backed securities reveals a fraud and market manipulation that is used by Hizballah, Lebanon’s central bank Banque du Liban (BDL), and the Lebanese banking system to continue money laundering on a massive scale
As it is no secret for the people, nor the government and definitely no secret for all foreign governments, banking systems and foreign intelligence agencies, that the whole system is corrupt.
It is beyond my understanding which stance everyone is, as it seems the entities (international specifically) that are fighting money laundry and terrorism,are also benefiting somehow from being silent.
Few cases across the last 20 years, and only the ones I recall whereas am very sure you can dig up dozens more
Lebanese Canadian Bank paid over $100 million, or £76 million, in 2011 to settle claims brought by US authorities that it was involved in laundering drug money and funneling funds to Hezbollah and other militant organizations.
FBME Bank issue in Cyprus, as the bank was fighting its battle with FinCEN, the Cyprus Central Bank ordered the FBME to compensate its depositors with up to 100,000 euro. A Cyprus court prevented the Central Bank’s attempt to liquidate FBME in 2017.
Riad Salameh, Governor of the Banque Centrale du Liban (BDL), has affirmed that a civil lawsuit by approximately 1,200 plaintiffs has been brought against 11 Lebanese banks for assisting Hezbollah. The plaintiffs, all US citizens, have filed the lawsuit in court in New York. The defendants in the lawsuit include the following banks: 1. Bank Audi 2. Bank of Beirut 3. Bank of Beirut And The Arab Countries (BBAC) 4. Banque Libano-Française (BLF) 5. BLOM Bank 6. Byblos Bank 7. Fransabank 8. Jammal Trust Bank 9. Lebanon And Gulf Bank (LGB) 10. Middle East Africa Bank (MEAB) 11. SGBL The civil action was brought on January 1 2019, under the Anti Terrorism Act
March 2016 KSA starts blocking wires to Lebanon then again in 2021 ( last quarter ) with issues related to drug smuggling and anti-KSA statements, started a new round of distancing, and thus depriving Lebanon of literally milking KSA.
Commonly 15 major banks are in circulation in Lebanon, which most people know and deal with.
Commercially, google for example will tell you there are 65 banks in Lebanon as of public records.
Since the real number can not be hidden but not necessarily advertised… wait for it … it’s 142
Why are there so many, that is due to two reasons
1: Owning a bank actually became a prestigious thing for capitalists and wealthy portion of Lebanese, and that was their way to compare dick sizes right after comparing cars, houses or businesses was not enough anymore.
2: Why bribe other bank chiefs and shareholders to launder your money when you can afford to have it all in-house, from running the business to legalizing the cash it brings.
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Facts can be so misleading where rumors true or false are often revealing
Here are some picks of true or false stories
In the chaotic days after the fall of Saddam Hussein, nearly US$ 20 billion was sent from the US to Iraq, to be used to help reconstruct the war-torn country. Some of it went missing. When a US official who monitored the funds located more than a billion dollars of it secreted in Lebanon, his office was shut down before any of the money could be recovered.
At the time, the Airline Bsat EL Rii7 ( Magic Carpet Airlines) yes, a truly existent airline back then owned by the Bsat family (thus the pun), who also own chains of Pharmacies and are nephews of Fouad Sanyoura xPM who is also rumored to help hide 11bln USD from the ministry of finance balance sheets,, that airline was rumored to only transport Iraqi cash.
Similarly, right after the 2006 Israel-Lebanon war triggered by Hezbollah and later on rumored to have smuggled 10bln+ in cash from Iran just to buy people’s loyalty by paying for damages back then, which did not end well as inflation led to 400% price jump in real estate prices.
Not long after, the Syrian war led all capitalists, both with or against syrian regime to flee with their money and hide it in Lebanon, in business, or in Banks.
Another rumor related to Saudi monies, laundered by Aby Ayash, an infamous business man 20 years ago then where his associates became larger than life as well with bank Al Madina back then ran by Taha Koleilat and his sister Rana whom later became the scapegoat for all of this.
Your get out of jail card works every time!
Lebanon has a history of rewarding corrupt, or according to their description defamation or allegedly corrupt, and since they clear their name everytime the only corruption left is the citizens defamation which they actually ironically get charged for !
On top of the list are Riad Salameh, the CDL governer and the one that holds the highest duty in protecting the public funds and banks investments, but that also goes to many ministers and parliament members like Gebran Bassil, Yusuf Fenianous, Ghazi Zaiter, Ali Hassan Khalil, and their infamous contractors.
More blew in the Panama papers and Pandora Leaks … which seriously did not make a dent in their reputation or position or not even asked for questioning or been brought a charge a single time !
Not only that, but Lebanon has become the refugee’s shelter .. with a hint of spice.
Let’s explain the difference
Lebanon has been blowing up actual refugee numbers like Palestinians to 700k (Actual < 270k)
And was done the same for Syrian refugees claiming over 2 Million refugees which in my personal suspicion would not exceed 0.5m
All of this sheltering is paid for .. but not as the real sheltering of infamous businessmen.
Riad Salameh again is one example of an internationally accused person, Carlos Ghosn xCEO of Nissan with an Interpol warrant has been held quite a reception from the president and media and even liked for running a public office !!!!! That’s the kind of refugees Lebanon likes, Citizens with green.
So how did all this happen … the funny answer is: Steadily!
As many of the money laundry operations are by default relative to militias and the shiniest example is Hezbollah here is how this affected real trade and then government and banking alike .. and definitely the people.
For a while, you could buy a new iPhone or Samsung release cheaper than its price in the US, How?
Corporations like Star Telecom (later sanctioned and popped under other names), would buy in wholesale from the US, and not necessarily under its own name, any other affiliates especially people and individuals who want to smuggle their money and avoid taxes and transfer them to Lebanon.
Such people are more than happy to get off with 0 commission ( that is 30% tax evasion) and get their money paid back to Lebanon
The buyer (ex: Star at the time) despite their own wealth they now got extra contributions, on the Lebanese side and since they control air and sea ports and customs personnel, with short bribes the merchandise is all set “tax-free and customs-free into Lebanon”
So now we got two beneficiaries
The merchant and the tax evader, followed right on by the average person who just found he can buy an imported new item such as a phone less than its origin!
You would think this will make people ask questions, but that is exactly how you build a corrupt system, you let the individuals become your army of corrupted participants by licking the lollipop.
Another popular example for smuggling money was buying cars in cash, giving it to a conspiring exporter and sell it back in Lebanon, which again a nation of people who brag about know it all, did not question why US cars are popular in Lebanon and not the EU ones.
( ex: A Mercedes manufactured in EU is way better for MENA region than a US one because it follows the standards of the nature, roads, heat and other factors those big companies consider when manufacturing in different continents)
So cars, phones, apparel, electronics, clothing outlets and so many other industries are brought to Lebanon sponsored by tax evaded monies… and none the wise.
What do legit merchants do in such a case? The same way I discovered this myself when I made my first electronics importing business study, I found out the cost at arrival in wholesale is higher than the retail price in Beirut, which led me to ask those questions and know how things work.
Then you are presented with two choices, walk away from this industry or buy from the very smugglers destroying the competition and sponsoring everything wrong that people pretend to fight.
We established that commerce is just another money laundry operation, where do banks come in this?
Banks, as mentioned with so much more banks available to serve versus the international average per 100,000 people, pretend to have big KYC and compliance departments that do flood themselves with cases and cases to give the illusion of complying with FACTA and others while in fact just overloading their staff enough to miss, on purpose the very few names they need to miss.
142 banks owned by hundreds of shareholders and their associates are ones you will find yourself in bed with when doing business one way or another.
And the bank accounts opened via one of those connections come with personal banking and way less paperwork, whilst you have to sign everything in person normally those accounts (sponsored) come with wide privileges.
Next to banks are the biggest and most important part of the equation, the exchangers and exchange offices.
Why would those be bigger and more important? Because even banks sometimes work through them, as well as politicians and popular merchants.
Banks will pass on the clean-looking transactions, after all they do want some shiny transactions on their books, and at the same time banks offer you secrecy and legal ways to avoid audits.
Tax audit agencies require you to disclose your business transactions sheet, whereas banks offer you a local LBP currency account and as many foreign currency sub accounts (that you do not need to disclose out) as well as sub-accounts in both LBP and USD that are never disclosed to audit authorities and all of this come under privileged bank account opening and then they will advise you briefly how to pay salaries also from such accounts, then evading both tax and social security audits.
Banks are thus your cleanest dirtiest accountant that your money can buy.
What about exchangers I keep circling around, also sometimes introduced by your bankers or other businesses before you are the wire transfers made by exchangers and money transfer offices.
Top elitist wire transfers up to 2018 were also western union offices (franchises owned by OMT and Bank of Beirut respectively) and both are owned by politicians and their associates, and am not talking about cash to cash transfers.
Uncommon to individuals, both had what is called a Business Bank Transfer, where you the merchant could transfer from your local account in your bank (usually the not audited or disclosed one) to the western union franchise designated account, or even better they would accept cash up to 100,000 easily per any given day.
The WU franchise is hereby required to KYC and approves or disapprove the transaction, which again since this is only offered to privileged merchants they will be approved unless you knew about the service, signed up, and will be treated harshly and audited up to your …
The final step, WU having accounts worldwide, will move partial funds equal to your requested wire from its local account to yours in the destination country.
Basically, the same thing banks do and charge you for, WU does since they own accounts all over the world, and charge you fewer fees>
The very same method used by WU Business transfers is used by exchangers but on a trust basis (of course, exchangers put a lot upfront between each other and their connections abroad to supply funds and create a parallel banking system without the paperwork or traces)
To wire via exchangers, you bring them the cash (never asked about the source), and your designated destination worldwide, with an average fee of 5/1000 this is done.
The exchangers depending on the destination contact their local associate and order them to put some money in that account local-local transaction, and if needed cash to cash it also happens just like a WU/Moneygram transaction, again with no recorded audits or paper trails.
With such operations active since as far as I remember, laundering money was never an issue but rather a brand for Lebanon. So why would the very same politicians and merchants who use such operations crack down on it? When they even smuggle and move their own money through it.
One might ask, or request as innocent citizens of Lebanon ask, why not go for international audit, banking audit, and most importantly the infamous BDL audit (Bank of Lebanon) audit propaganda.
Here are a few reasons why, NOT
1: Most individual and business transactions are not passed nor audited by central banks anywhere, the central bank is required to audit when it matches the national security interest, and when it comes to governmental funds, and since they are all in bed together and politicians and approved governmental funds are also a pre-setup operation, no one will claim. And for individual banking transactions, they do not necessarily exist as bank operators also help their elite clientele use their private systems or sister-ly operatives with exchanges.
2: Huge portions of smuggled money did not go through exchangers with no paper trail.
3: Many still own and reserve cash, which is king still anywhere, and the ability to move it is also feasible, unlike movie-like theatrics.
4: FInding the smuggled money will require an international audit, which should be requested by the very government that needs to have itself audited and populate their names under PEP and disclose their family’s PEP lists as well. ( yeah that is going to happen)
The investigations and articles regarding Hezbollah and money laundry and financial terrorism are in hundreds over the internet and very insightful but it is rare to find the little things or the details of how operations go and how do win-win situations arise.
Let’s recap some of the win-win situations and inside business trading.
My first WTF moment was literally right after the 2006 war, up til that day and before we really got more data and confessions from the mastermind Nasrallah about the mistake going into war (which was just said to calm things down) where in reality I did believe it was a really calculated move.
As many Lebanese and Arabs know, it was soon after named “The Holy Victory”, and that is something really worth stopping at, again financially is all that matters.
Briefly, during the 2006 war casualties were really unfortunately just collateral damages from both sides, where Israel was trying to destroy the infrastructure (later on this become a huge win in reality to Hezbollah), and technically a win for Israel as they now have the country in the backward shift gear.
Additionally, right after the war, as rumored over 10 BLN $USD were smuggled in cash and laundered in Lebanon, including payoffs to those whose houses were damaged and everyone recalls their people got the most shares of that, and their payoffs were larger, and that allowed them to also spread across and buy more properties and real estate across Lebanon during the reconstruction phase.
During the reconstruction, many would testify “proudly” how they are also building their underground infrastructure back then while rebuilding the houses and buildings complexes.
Jumping forward, with the unannounced truce and moving the war to a social media war only, both parties expanded their reach, and specifically, Hezbollah with all the other financial operations talked about along with driving the actual governmental institutions underground.
Worth mentioning here a sideline story on the financial war between Hezbollah and Israel (Not really)
Although both Forex and Online Gambling are supposedly banned in Lebanon, and since everything illegal is actually protected by the militias (again with Hezbollah as the top protector), gambling and forex websites and platforms are spread heavily especially in the south, and operators are untouchable.
How does this relate to Israel? Here is the funny kick .. all websites and software platforms used in Lebanon are developed by Israeli companies and usually contracts to go on revenue share models.
So victims, or players who lose money are eventually paying off the operator, the agent (reseller) and the software operator, and that is my friends is another silly win-win.
Can we compare terrorism and corruption?
The creme de la creme of the financial corruption is cracking down on any individual buying a crypto wallet for fun, whilst a militia like Hezbollah on the other hand
- Involved in money laundry operations and tax evasion in dozen countries
- Drug operations and blood monies from Africa, Southern America and EU
- Controlling ports of entry and customs operators and evading tax locally
- Destroying the governmental income funds from any legit import operation
- Making a legal competition impossible versus the actual fees involved
- Calling out politicians on media and the central bank governor while voting for their stay in the cabinet
- Protecting gambling and forex operators and their operations
- Recruiting people with the very same money they indirectly robbed
- Purchasing real estate and businesses they drove down the bankruptcy lane
The only missing piece was then to create their own banking system, which they did, one of the evilest schemes ever existed was to convince people that it was a Good Loan institution (Al Kard Al Hassan) and while they were driving the economy down and lending people money and knew where everything was heading
They only lend money to people who had gold as collateral whereas it is estimated now in billions of gold coverage and more stable than traditional banks which already collapsed as known.
Was this all? Absolutely Not! …
