German probe into Riad Salameh names son and nephew as 'money-laundering accomplices'

The Salameh Papers: Full coverage here German judicial documents obtained by The National shed light on the involvement of new people in the acquisition of multimillion-dollar real estate owned by Lebanon's central bank governor Riad Salameh in Germany, which is currently under investigation by European authorities. They also reveal direct transactions from Forry Associates Ltd to fund these properties. Forry, the governor's brother's company, is suspected of being at the centre of an alleged embezzlement scheme set up by the governor at the Banque du Liban. At least six investigations have been opened in Europe where the governor and his family own a multimillion euro real estate empire, which European judiciaries suspect was acquired with misappropriated funds. The German investigation into the once-praised central bank governor started after Lebanon's top prosecutor requested in May 2021 an inquiry into the assets held in Germany by Riad Salameh, his brother, and his former assistant, Marianne Hoayek, to freeze these assets as a precautionary measure. The probe was entrusted to the head of the Munich I public prosecutor's office, Hans Kornprobst. Ms Hoayek was placed under formal investigation in Paris in June for criminal conspiracy as part of the ongoing French investigation. In 2022, Germany joined forces with France and Luxembourg as part of an international investigative team, to enhance information sharing. The German investigation took a significant turn in May with the issuing of an arrest warrant and an Interpol notice. The judicial documents provide an exclusive insight into the German component of the embezzlement scandal – of which little was known until now. The new names are Nady Salameh, the governor's son, Marwan Issa El Khoury, his nephew, and Gabriel Jean, a Belgian citizen. The three are alleged to have “invested funds from Lebanon’s central bank” in real estate and in share acquisition “while concealing the origin of the incriminated funds within the legal economic circuit in Germany”, wrote a judge at the Munich Court in a March 2022 seizure order. They are identified in the probe as among the directors of Luxembourg-based entities used by Riad Salameh to purchase high-end properties in Hamburg, Dusseldorf and Munich. These purchases were made with alleged misappropriated funds from the Lebanese central bank, according to the German documents. It is the first time that the roles of these three individuals and their liability as directors of the companies have been explicitly stated. Mr Jean was director of Stockwell Investissement SA, while Nady Salameh and Mr Khoury were directors of BR 209 Invest SA during the period under investigation. Both companies are based in Luxembourg and are owned by Riad Salameh . The three people “stated that they had given their consent to the defendant Riad Salameh to allocate the incriminated funds to the legal economic circuit in Germany”, the judge added in the document. These suspicions led the Luxembourg police to conduct large-scale raids on three Luxembourg-based companies suspected of hosting a minimum of $100 million of misappropriated funds linked to property investments by the Salameh family, including in Germany. They found no obvious sign of Stockwell and BR 209's operational endeavours. “Entities that lack genuine operational activity often raise suspicions as potential facades for money laundering, serving as additional layers to obscure the origin of funds,” a lawyer specialising in combating money laundering told The National . “While it may not always be the case, this situation can be a red flag.” The offices of Stockwell Investissement were found to be completely unoccupied when raided by the police, while BR 209 has been subleasing offices since 2021 from another company that seems unaware of its tenant's activities. This subletting arrangement was facilitated by the Luxembourg bank BLG BNP Paribas, which has a business relationship with Riad Salameh. Amid mounting legal pressure, Mr Jean left the management of Stockwell in 2021. He was replaced by three employees from Lebanese bank Al Mawarid. Mr Jean was also the director of another company, BET SA, related to real-estate purchases in France for Riad Salameh's romantic partner, Anna Kosakova, and their daughter. Ms Kosakova, who is also under formal investigation by the French judiciary for organised money laundering , and her daughter also hold the bare ownership of Stockwell. Riad Salameh , his brother Raja did not response to our request for comments. The National approached his son, Nady, to answer a number of questions concerning the investigation. However, he did not provide a reply to these questions. The National could not reach Mr Jean for comment. The Salameh brothers have previously denied any wrongdoing, stating that no public funds were ever transferred to their private accounts. The governor previously denounced what he described as an attempt to scapegoat him for Lebanon's financial meltdown. Mr Issa Khoury told the National in a letter that he has not "been approached in any manner whatsoever by the German judiciary". He added that as a lawyer "it is not unusual (...) to be requested to sit on a board of directors, especially when this is consistent with his background". His full response is here. European investigators suspect that the funds in question were initially embezzled in Lebanon through Forry, suspected to be a shell company that served as a laundering vehicle to siphon off more than $330 million of public money. It was done through a 0.38 per cent commission taken by the company from commercial banks on the sale of financial instruments such as Eurobonds, Lebanese Treasury bills and certificates of deposit from the central bank, without actually providing any services in return. The commissions were then transferred to Europe, where Riad Salameh and his relatives bought extensive properties. The money went through “successive stacking operations”, involving various people and countries, carried out to “obscure the origin of the funds” – characterising a “laundering process”, a French attachment order obtained by The National said. Most of the commissions – more than $220 million – were transferred from Forry to Salameh's Swiss account before being routed to his accounts in Lebanon. Once in Lebanon, the funds became hard to track, as European investigators faced obstacles in gaining access to data due to Lebanese banking secrecy laws. But this did not prevent them from piecing it together. They noticed that while Raja Salameh was transferring Forry's commissions from Switzerland to his Lebanese accounts, the governor was simultaneously transferring money from his Lebanese accounts to personal and corporate accounts in Luxembourg. Based on a financial analysis, the German judiciary found out that the majority of the funds used to finance the German acquisitions by Stockwell and BR 209 came from Riad Salameh's account at the central bank, either directly or indirectly through his personal and corporate accounts in Luxembourg. But in contrast to the typically layered money flows uncovered in other European countries, the German documents show surprisingly straightforward operations by Forry for the acquisition of luxury properties in Germany. In 2012, BR Invest 209 received a direct transfer to its BGL BNP Paris account of €2.8 million from Forry's HSBC account in Switzerland, which was used to buy the high-end building in Dusseldorf. “This transaction raises a lot of questions”, the Luxembourg watchdog wrote in a report seen by The National to the judiciary as it was investigating the money flows related to the Salameh clan. “It looks like a mistake”, a lawyer specialising in combating money laundering confirmed to The National . This transfer could have been a giveaway for the judiciary, he added. “It was likely driven by an urgent need for money to cover the asset payment. This may have triggered alarms on the German side. While transferring funds from Mr Salameh's personal account maintained appearances, the origin of the funds becomes obvious in this case”, he said. German investigators suspect that the Forry commissions were used to partially buy four properties for more than €18 million between 2012 and 2017 through BR 209 and Stockwell. In Munich, Stockwell bought high-end commercial properties and four parking spaces in central Munich in 2015 for €6.4 million, while also securing a property for €3.4 million in the posh area of Gartnerplatz in 2017. BR 209 provided financing for the acquisition of a 94 per cent stake in 2016 in the German company WBH 51 GmbH, valued at €3.9 million, which owned an office building in Hamburg. BR 209 also obtained 94 per cent of shares in Dock 13-Villa GmbH, a German company that owns a high-end property in the Docks district of Dusserdorf, for €4.6 million in 2012. The remaining shares of the two German companies were acquired either by Mr El Khoury himself or were split between him and Nady Salameh, the seizure order claims. Riad Salameh's real estate in Germany had already been mostly mapped by a 2020 investigation from media outlets Daraj and OCCRP. However, the source of the funding and its legitimacy were not disclosed at that time. Two years later, suspicions were enough for the German judge to issue an order to freeze these assets and stakes, categorising the alleged misconduct as “joint money laundering in four instances”.

German probe into Riad Salameh names son and nephew as 'money-laundering accomplices'

Revealed: Lebanon central bank governor suspected of embezzling $330m acquired high-end properties in Munich, Dusseldorf and Hamburg