The Mysterious Billionaire who “Saved” Lebanon’s BankMed with an Audi Bank Loan

Hala Nasreddine
Lebanese Journalist
Published on 15.05.2023
Reading time: 11 minutes

This investigative report, the second in the Daraj series Shadow Figures, profiles the Jordanian billionaire Ala al-Khawaja, who has become a major investor in Lebanon and the region. The report delves into his business interests, his political relations and suspicions of corruption

Ala al-Khawaja, or Abu Omar, is a wealthy businessman with a combined Palestinian, Jordanian and Lebanese nationality, who has been described as “the mysterious billionaire,” “the guardian of Hariri’s property,” and “the Godfather of settlements.” 

A confidant of Lebanon’s former Prime Minister Saad Hariri, he has skilfully managed to navigate the pitfalls and complexities of Lebanese politics, while concluding major business deals. Remarkably, he has managed to maintain a low profile by avoiding the media limelight and steering clear of any direct involvement in Lebanese politics.

So, who is Ala al-Khawaja, who brought together the realms of business, art and politics, creating links between Lebanon, Jordan, Egypt and the rest of the Arab region? Are there any indications he has political ambitions within the Lebanese arena?

This investigative report, the second in the Daraj series Shadow Figures, offers a profile of Ala al-Khawaja, outlining his main investments and business interests in Lebanon and elsewhere. The report also delves into suspicions of corruption and his associations with key figures across the Arab region. 

Khawaja and Hariri 

In 2017, Ayman Hariri, the second-youngest son of the late Lebanese business tycoon and politician Rafic Hariri sold his 42.24% stake in GroupMed Holding for US$ 535 million to OLT Holding, which is owned by Ala Al Khawaja.  

GroupMed is a Lebanese holding company with investments in banking, insurance, real estate, industry and services. It is the sole shareholder of BankMed, one of Lebanon’s leading banks with a network of 67 branches across the country.  

“The investment by OLT Holding s.a.l. is regarded not only as an unwavering display of confidence in the privately-owned Bankmed s.a.l. but also as faith in the Lebanese banking sector, economy and permanent stability,” Khawaja said in a press release at the time. “The acquisition will pave the way for increasing and diversifying the ownership structure of GroupMed Holding s.a.l which could result in an Initial Public Offering in the near future.”

Several legal and banking sources, however, told Daraj that Khawaja acquired shares in BankMed with the help of an Audi Bank loan. The same sources even claimed the purchase potentially breached Lebanon’s Code of Money and Credit.

According to documents reviewed by Daraj, the Lebanese Central Bank (BDL) at the same time “happened” to grant Audi Bank a loan of approximately the same value (some US$ 550 million) without collateral. 

It seems very well possible that Audi Bank borrowed money from the BDL and then lent it to Khawaja. Yet, the latter did not repay this loan and thus directly contributed to the Lebanese banking crisis. More about this in a later stage. 

Egyptian Art and Cinema 

Khawaja is a known figure in the world of art and culture, especially in Egypt, as he is married to actress Sherihan with whom he has two daughters, while he used to be married to actress and TV host Esaad Younes. 

In addition, he owns over 124 movie theaters across Egypt through his company Al Arabia Cinema Production. He allegedly purchased a large portion of the Egyptian cinema and TV archives, which he later sold to Saudi Prince Al-Waleed bin Talal, owner of Rotana. 

Khawaja made a fortune by investing in the Egyptian privatization programs between 1996 and 2003 and used to own a significant stake in the telecom giant Orascom. He still owns several hotels in Hurghada. 

Through his business activities Khawaja is reportedly closely linked to the sons of former Egyptian President Hosni Mubarak, Gamal, and Alaa, as well as Ahmed, son of the late Mohamed Hassanein Heikal. 

Forbes Arabia recently ranked Khawaja among Jordan’s fifty wealthiest families and reported that he has two private jets which he uses to supervise his business interests in Jordan, Kuwait, Egypt, and Tunisia. One of them is reportedly Rafik Hariri’s former private jet.

In France, Khawaja bought Hariri’s former flagship Oger International through AMK Capital Investment. According to a press release, the company aimed to regain its “leading position” in the world of construction. Khawaja participated in the restructuring of the company’s debts and acquired all its shares.

A Friend of Lebanon?

“Alaa Khawaja is an investor and a friend of mine,” former Prime Minister Saad Hariri told Lebanese broadcaster MTV in October 2018. “He invested over 700 million dollars in Lebanon and some may criticize him and try to blackmail him, however, Alaa will not give in to their attempts.”

The Lebanese commercial register shows that Khawaja’s business dealings in Lebanon are just as significant as his investments in Egypt. Also, he is not only closely connected to the Hariri family but also to the MP and Free Patriotic Movement leader Gebran Bassil.

Some of the companies in which Khawaja has a stake are:

OLT Holding SALGroupMed SAL HoldingInternational Developments Holding SALOak Hills Estates SALUniversal Properties Holding SAL
Akoya Holding SALRenewable Energy SAL HoldingSea Front Diamond SALDreamtech Invest Holding SALOne Park Avenue

Among Khawaja’s partners in these companies are:

Saad El-Din Al-Hariri

Hussam El-Din Saad El-Din Al-Hariri

Tariq Ahmed Doughan

Ayman Rafik Hariri

Walid Mohieddine Sabaa Eyn (former chief financial officer of Prime Minister Hariri and brother-in-law of former Beirut mayor Bilal Hamad).

Regarding the Seaside Development Company (SDC), Khawaja is a majority shareholder partnering with former Hariri advisor and chief of staff Nader Hariri and Patchi founding father and former Telecom Minister Mohamed Choucair, who both own some 10% of the company.

According to the Lebanese monthly Le Commerce Du Levant, SDC leased the land that was previously home to the BIEL Center in downtown Beirut, bought the existing structures, and renamed it “Seaside Arena.” 

Suspicions of Corruption

There are several suspicions regarding Khawaja’s activities in Lebanon, especially regarding the following endeavours 

1- BankMed

As a trusted ally of the Hariri family, Khawaja bought Ayman Harii’s share in GroupMed, the parent company of Bankmed. Holding, yet he lacked the necessary liquidity to complete the transaction, which amounted to some $535 million. 

According to Daraj’s sources, the Hariris contacted Riad Salameh, the governor of the Lebanese Central Bank, to find a solution. Salameh subsequently reached out to Audi Bank Chairman and CEO Samir Hanna. Together they arranged to provide Khawaja with a loan of about the same amount, which would be reimbursed with interest, although some of sources cited a slightly higher sum of US$ 650 million.

Following Khawaja’s purchase of Ayman Hariri’s shares in March 2017, the Rahme brothers, Raymond and Teddy, carried out a capital increase in the bank and secured a stake of some 10%. 

BankMed’s ownership became as follows: 

Saad Hariri, about 38%

Ala al-Khawaja, about 38%

Nazek Hariri, 14%

Teddy and Raymond Rahme, about 10%.

Interestingly, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) on April 3, 2023, imposed sanctions on the Rahme brothers “who used their wealth, power, and influence to engage in corrupt practices that contribute to the breakdown of the rule of law in Lebanon, thereby undermining Lebanon’s democratic processes to the detriment of the Lebanese people.”

Khawaja reportedly shielded former prime minister Saad Hariri from several lawsuits and numerous other problems related to his dire economic situation, not in the least due to the collapse of Saudi Oger.

In return, he put pressure on Hariri to pay off his loan to Audi Bank. According to the website, Khawaja threatened to either acquire more BankMed shares or have the bank seize properties owned by Saad Hariri, including [the family palace] Beit al-Wasat. 

According to a March 2019 article by Al-Akhbar financial journalist Mohammed Wahba, the amount of non-performing loans at BankMed totalled US$ 461.5 million by the end of 2017, of which $134.4 million to subcontractors connected to Saudi Oger, the construction company that went bankrupt in July 2017. 

The problem is that Khawaja did not repay Audi Bank as agreed. The bank pressured him to return the funds, which forced Khawaja to leave the country, according to Daraj’s sources. 

They also claimed Saad Hariri tried to sell some of his shares to Jordanian national Yoesef Khalaf, who on April 19, 2023, was stopped at the Beirut International Airport with US$ 3.5 million in his suitcase.

As previously mentioned, the loan in question may have been acquired with help from the Lebanese Central Bank. Documents seen by Daraj unveil that Audi Bank obtained a loan from the Lebanese Central Bank for roughly the same amount. Daraj asked Audi Bank for clarification, yet  did not receive a response

2- The Deir Ammar 2 power plant

The first tender regarding the construction of the Deir Ammar 2 power plant was issued in 2013. It was won by the Greek company JP Avax at a value of some $500 million. However, it was later cancelled due to political bickering. 

The Free Patriotic Movement (FPM) wanted the project to be funded by the treasury. Yet, their rivals, especially Amal and the Future Movement, wanted it to be financed by Arab funds, which often demand the authority to supervise the projects. This would prevent the FPM’s Gebran Bassil from having any influence over the electricity projects. 

According to an investigation by The Legal Agenda the dispute was resolved by passing Law No. 181 which allocated funds for the construction of power plants. A second tender was issued and this time JP Avax won with a bid of US$ 360 million. 

However, the tender process had failed to include the value-added tax (VAT), which caused a serious dispute.

VAT had not been brought up at the time, then Minister of Energy Cesar Abi Khalil (FPM) told The Legal Agenda. He also said that from the start there was a hidden agenda trying to block the deal. 

As a result, the project was abandoned and the Greek company sued the Lebanese state in an international arbitration case. In 2018, Lebanon’s Council of Ministers agreed that Abi Khalil and then Minister of Finance Ali Hassan Khalil would negotiate with JP Avax in an attempt to come to a solution.  

In the end, it was agreed to offer a Build Operate and Transfer (BOT) contract to a newly formed Lebanese company, partly owned by JP Avax, which would abandon the arbitration case. The contract envisions building a 540 MW power plant in Deir Ammar and operating it for 20 years. 

“The settlement had been agreed upon before the file was presented to the Council of Ministers,” according to The Legal Agenda. “It led to the establishment of a new company owned by the Greek firm, which owns 20% of the shares and will receive $50 million from the new shareholders, Lebanese businessman Raymond Rahme, who acquired 29% and Jordanian-Lebanese businessman Ala al-Khawaja, who bought a 51% stake.”

3- The Hawa Akkar Wind Farm

Khawaja furthermore holds a majority stake in a wind farm in Akkar, a project that has been stalled due to funding issues. 

The European Investment Bank and the US Overseas Private Investment Corporation (OPIC) agreed to finance the project, yet in light of the Lebanese economic crisis nothing has happened to this day. Daraj’s sources indicated that Khawaja is trying to sell the project, but so far has only been able to sell a handful of shares.  

Khawaja Offshore

Khawaja owns a network of offshore companies. It should be noted that it is not illegal to own offshore companies, yet it raises suspicions of money laundering and/or tax evasion. Khawaja’s offshore companies include:

DAPII, registered in London in 2018.

According to the Panama Papers Khawaja owns GALAXTRON HOLDINGS INC in the British Virgin Islands (BVI), which was established with the aid of the notorious Mossack Fonseca law firm in 1998.

RENILDA INVESTMENT S.A.,registered in Panama in 1982.

A.N.D.RESEARCH AND DEVELOPMENTS S.A., founded in Panama in 1988.

EASTERN ALLIANCE COMPANY LTD. INC was registered in Panama in 1988. Among Khawaj’s co-owners are  Jordanian businessman Muhannad Khalifa, who owns the Arabia Trading and Consulting company, in partnership with Zaid Jumaa, ex-husband of the king’s sister Aisha Bint Al-Hussein.

Zaid Jumaa and Muhannad Khalifa can be considered “the second largest media owner in Jordan after the government,” as they own Al-Faridah Publications which publishes 10 monthly and 6 weekly magazines, in addition to a news website and 4 radio stations, according to Jordanian website 7iber.

Omar al-Khawaja, the eldest son of Ala al-Khawaja, also owns several offshore companies, including Vanilo Limited and OK ICE CREAM LIMITED. Omar also owns AMK Investment Company that, according to its website, aims to manage and diversify the Khawaja family investments. 

Daraj sent several inquiries to Khawaja through his son Omar, but did not receive a response.

Media Shy 

Despite his many business endeavours, Khawaja does not like to appear in the media. According to some of his acquaintances, he prefers to control things from behind the scenes. “He pays the media not to polish his image, but rather to hide it,” one person said.

This explains the near total absence of photos and videos. There are only a few pictures of him to be found on the Internet. However, due to his excessive activity in Lebanon, his profile has been discussed by a number of politicians.  

“Hariri is a salaried employee of Khawaja,” said former minister Wiam Wahhab.

“Ala al-Khawaja’s hand reappears again,” former MP Ziad Assouad tweeted in December 2022. “This means the return of the most unexpected financial settlements (…). A partnership that began secretly from Kfarfalous to Bisri, to include gas, oil, reservoirs, stocks, banks and diesel fuel.”

Sawt Beirut International (SBI), a website owned by Bahaa Hariri described Khawaja as a “ghost” who controls his younger brother Saad through partnerships in a number of projects and companies.

Several media reports indicate that Khawaja played a prominent role in forming Saad’s most recent government, mediating between Hariri and Gebran Bassil in Paris thanks in no small part to Khawaja’s extensive regional network. 

Over the years, Khawaja has managed to build strong ties throughout the Arab region and even in Europe. He enjoys a close friendship with King Abdullah II of Jordan, as well as the Saudi royal court and the Emirates. Some people believe the Saudis assigned him to manage Hariri’s fallen empire, following the bankruptcy of Saudi Oger.

Hala Nasreddine
Lebanese Journalist
Published on 15.05.2023
Reading time: 11 minutes

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