“Lebanon’s Madoff” in the media



 
After Lebanese Shiite financier and businessman Salah Ezzedine declared bankruptcy in late August, hundreds of small investors from Lebanon’s Shia population lost their life savings. 
 
Ezzedine-Madoff.jpg
Salah Ezzedine. R.R.

The disgraced businessman, previously known as a religious and charitable man, has been dubbed “the Lebanese Madoff” and “Beirut’s Bernie” by the media, after US fraudster Bernie Madoff.

His connections to Hezbollah, say commentators, have dealt a severe blow to the political party’s image of integrity and incorruptibility. The legal enquiry into the case continues.

“Everyone trusted Salah Ezzedine,” wrote The Independent’s Robert Fisk. Ezzedine organised pilgrimages to Mecca and Medina. He owned a publishing house and a children’s television station. He even built a mosque in his home town of Mahroub in south Lebanon.

“We’re not talking here about anybody on quite the scale of Madoff, but we’re certainly talking about something that has seriously damaged the reputation of Hezbollah,” Fisk told France24 in September.

Many of those who invested with Ezzedine were from Lebanon’s large Shia population, and included some senior Hizbollah political figures, according to the newspapers.

Lured by the promise of projects in gold, steel, iron and titanium, many smaller investors sold their land and mortgaged their homes to invest with a man who, said Robert F. Worth in the New York Times, “offered 40 and 50 percent profits but never showed any paperwork.”

Middlemen who collected money from their neighbours to invest with Ezzedine - exchanging bags of cash for cheques, wrote Worth - are now selling their property and belongings to start paying back the smaller creditors.

Ezzedine's financial collapse reportedly became inevitable after he wrote a USD 200,000 cheque to Hizbollah member of parliament Hussein Haj Hassan and it bounced.

Having lost massive profits in the oil business, say economists in Beirut, Ezzedine sought to cover his losses by bringing in more investors, who he appears to have rewarded with the money of yet newer investors attracted to his scheme.

As Fisk wrote, “Whether Salah Ezzedine did this with the calculation of a Bernard Madoff or with a charitable desire to spread his own wealth among the largest single community in Lebanon, we do not know.”

Whatever his intentions, the spotlight has been on Hizbollah, a movement described by Ferry Bierderman in the Financial Times as “feared and hated by large swathes of the population as the vanguard of Iranian-style militancy and fundamentalism, revered by others as defender of the country against Israel and in general against western and Gulf Arab influence.”

“The embarrassment of Hezbollah at the derivation, character and scope of the Ezzedine scheme has caused considerable joy among the anti-Hezbollah political circles in Lebanon,” noted George H. Wittman in The American Spectator.

Both Ezzedine’s publishing house and children’s television channel were named after the son of Secretary General of Hizbollah Hassan Nasrallah who died in a suicidal attack against Israel, according to Fisk. And his publishing house is said to have handled the books of Hizbollah’s second-in-command, Naim Qassem.

But Hezbollah has denied any connection to the scam: "Neither Hezbollah, nor its leadership, nor its members have any link to this matter," Nasrallah said to the media, according to the BBC.

Estimates as to the total amount of money invested with Ezzedine range from USD 400 million to more than USD 1 billion, according to the Financial Times. Half of this is said to have originated in Lebanon and the rest in the Gulf countries.

There have been calls for Hizbollah to compensate the investors, but so far the movement has not said anything to that effect.

“It is easy to see why,” wrote Worth. “The losses among southern Shiites alone run into the hundreds of millions, and Hezbollah is still struggling to rebuild the houses destroyed during its devastating month long war with Israel in 2006.”

Moreover, many small investors do not seem to hold the movement responsible: “While many confirmed the sense of a close tie between Ezzedine and Hizbollah had led them to trust him, they held back from blaming the movement,” wrote Biedermann.

“Their residual distrust of mainstream Lebanese institutions, which helped fuel Hezbollah’s rise as a virtual state within a state, also appears to have made them vulnerable to Mr. Ezzedine’s schemes,” Worth pointed out.
 


Questioning continues


On December 8, Ezzedine admitted in court to having signed dud cheques for a number of those who invested cash in his projects and private companies, according to As-Safir newspaper.

The enquiry has however now been stalled, wrote As-Safir reporter Fatin Qabisi on December 18, as the accused is saying he cannot remember what happened to the money he acquired from investors.

A committee of expert accountants has been appointed to review his accounts and do the inventory of his properties and funds.

Kamal Haidar, one of the prosecution lawyers in the case, told As-Safir that he did not think that the committee’s task would be completed quickly. It would require close attention to detail, statements from the accused, and possible travel abroad.

It has been suggested that Ezzedine’s financial assets be auctioned off to start paying back his investors.