BEIRUT // Investors in the Gulf may have lost hundreds of millions of dollars after the bankruptcy and arrest of a Lebanese businessman who was prominent in that country's Shia community. Salah Ezzedine, who ran a publishing house in Beirut's southern Shia suburb and also owned a travel agency for pilgrims to Mecca, is alleged to have run a Bernard Madoff-style Ponzi scheme, according to an official at Lebanon's central bank.
The official estimated the total amount of money lost in the scheme at about US$400 million (Dh1.47 billion), with half of that coming from investors in the Gulf, including Qatar and Kuwait, and the rest from investors in Lebanon. Mr Ezzedine remains in custody and has yet to be charged. The Lebanese judiciary has said that it was impossible yet to give an accurate estimate of the amount of money involved, or of the number of people that had been affected. Some Lebanese newspapers gave figures as high as $2bn. A group of Qatari investors was said to have put up more than $100m.
The judiciary has not yet determined whether the money was lost because of intentional fraud or bad business decisions. But inquiries among people who have been affected reveal promises of improbably large returns of more than 30 per cent annually, and an opaque accounting system. Complicating matters in the Lebanese context is the fact that Mr Ezzedine was seen as being very close to the powerful Shia Hizbollah movement. Several senior Hizbollah people are said to have invested with Mr Ezzedine.
According to media reports and one Shia activist in Beirut who has extensive contacts in the area, Mr Ezzedine was first held by Hizbollah for several days before being handed over to the Lebanese authorities. The movement has not commented on any of the reports. But a source close to Hizbollah called the case a "catastrophe for the people". The movement is monitoring the situation closely. Many of the investors are reported to have come from the country's Shia community, particularly in the south. Mr Ezzedine is from the village of Maaroub, near the southern port of Tyre, and many people in the vicinity said they had invested with him.
Mr Ezzedine ran the Dar al Hadi publishing house and also owned a children's television station called Al Hadi. The companies are said to be named after Hadi Nasrallah, the son of the Hizbollah leader Hassan Nasrallah, who died fighting the Israelis in southern Lebanon in 1997. Apart from the many books on religion and Iranian Shia thought that it printed, Dar al Hadi was the publisher of choice for Hizbollah's second in command, Sheikh Naim Qassem.
Another of Mr Ezzedine's ventures was a travel agency for pilgrims to Mecca and Medina. He had a reputation for being a very religious person and for contributing to charities, another reason why so many people seem to have trusted him with their money. One Shia political analyst who was familiar with Mr Ezzedine and had met him on several occasions said that everybody was surprised by the case. "He was very well respected. He had a solid reputation."
The analyst said that he did not think that Mr Ezzedine was closer to Hizbollah than many other people in the Shia community. "Ninety-Five per cent of the Shia support Hizbollah," he said. There has been no suggestion that Mr Ezzedine was a member of the movement or was involved in any other way in its political or military operations. business@thenational.ae