This article was updated on March 8, 2024, to include the response from Salim Sfeir’s lawyer.
Contributors: The Organized Crime and Corruption Reporting Project (OCCRP) in the framework of Cyprus Confidential, a project by the International Consortium of Investigative Journalists (ICIJ).
Sfeir sought the European island to establish a company owning shares in the Bank of Beirut, possibly with the aim of safeguarding and accumulating his wealth while the country, its banking sector, and depositors sank into a financial crisis. In the meantime, his bank refused to return deposits to depositors in Lebanon.
The documents reveal an increase in Salim Sfeir’s assets in the Cypriot company he owns, which in turn owns shares in the Bank of Beirut. The increase began in 2016 but heightened significantly by the end of both 2019 and 2020 following the Lebanese economic crisis: His assets jumped from $37.2 million to $45.5 million in 2019 in one year, only to reach over $55 million by the end of 2020. The documents also indicate that in April 2019, Salim Sfeir, on behalf of the Bank of Beirut, sold 500,000 shares to Salim Sfeir in his capacity as the director of the Cypriot company Sfeir Bancorp Limited, with his signature appearing for both parties.
He refused to answer any of our questions.
Sfeir and the Bank of Beirut have long operated in the gray zone and have so far succeeded in staying away from the spotlight, like other banks including Al-Mawarid Bank, Bank Audi and SGBL. These names have been associated with the Central Bank Governor Riad Salameh who is currently being investigated in six European countries for aggravated money laundering and who has two arrest warrants out on him in France and Germany and a Red Notice by the Interpol.
Salim Sfeir’s name is closely associated with the Association of Banks and its role in obstructing Lebanon’s financial recovery plan, favoring commercial banks over depositors. His name also emerged during the Lebanese uprising when protestors stormed the banks, demanding the retrieval of their looted deposits.
This investigation, part of the Cyprus Confidential project led by the International Consortium of Investigative Journalists (ICIJ), involving over 250 journalists from 69 media outlets in 55 countries, including Daraj, reveals how Cyprus, an EU member, has served as a haven for questionable global businessmen and politicians, including the Lebanese-Swiss banker Salim Sfeir.
| Who is Salim Sfeir? Salim Sfeir is a Lebanese-Swiss banker, Chairman of the Board and CEO of Bank of Beirut, and the President of the Association of Banks in Lebanon since June 29, 2019. He started his banking career in 1971 with Nova Scotia Bank in Beirut and was the Deputy General Manager of Mediterranean Bank from 1980 to 1983. In 1983, he founded Sfeir Bank and Wedge (M.E.) LLC in Beirut, serving as CEO and board member until 1989. In 1987, he was appointed General Manager and CEO of Wedge Bank (Switzerland) and remained in that position until 1991. He was then appointed Deputy Chairman in January 1992. In mid-2019, then-Foreign Minister Gebran Bassil awarded Sfeir with the National Merit Award. He is also known to have close ties with Patriarch Mar Bechara Boutros al-Rahi. Despite being described as a “conservative banker” who has always acted prudently, Sami Halabi, Co-Founder and Director of Policy at Triangle, told Daraj that in March 2022, Judge Ghada Aoun, the Attorney General in Mount Lebanon, issued travel bans against five Lebanese bank heads, including Salim Sfeir. “As the President of the Association of Banks in Lebanon, Sfeir plays a significant role in the Lebanese political scene, representing the interests of the banking lobby. He regularly meets with politicians and the Governor of the Central Bank of Lebanon, Riad Salameh. Sfeir is also known for his political alliances, particularly with the Free Patriotic Movement,” according to Badil, an initiative working on restoring the media’s function to uphold political accountability. The Association of Banks was founded in 1959 and aims to strengthen collaboration among member banks by developing a common vision for the benefit of the sector. Its objectives include representing the profession, the collective defense of banking sector interests, and highlighting the central role of banks in supporting the national economy. |
“Banking Beyond Borders”
“‘Banking Beyond Borders’ is our slogan… it has pushed us beyond many limits; it has made us go farther and further. With this in mind Bank of Beirut has penetrated 4 continents,” says the first statement in Bank of Beirut’s introduction.
In the list of shareholders on their website, one can find the following:
| Shareholder | Percentage % |
| International Century Corporation SA. S.P.F | 23.18% |
| Millet & Millet Inc | 8.26% |
| Nar Aram Khatchadourian | 7.54% |
| International Century Corporation Lebanon S.A.L – Holding | 5.35% |
| HPG Urban Developments PTY LTD | 5.00% |
| Sfeir Bancorp Limited | 4.68% |
| FSHN Limited | 4.65% |
| Solpro S.A.L. Holding | 4.51% |
| Merit S.A.L Holding | 4.38% |
| Rashid Bin Saad Bin Abdul Rahman Al Rashid | 4.10% |
A quick and general overview of the companies listed in the table suggests that the stocks are distributed in a “healthy” manner. However, a more in-depth investigation reveals that a significant number of these companies’ shares trace back to Salim Sfeir himself. These companies include Sfeir Bancorp Limited, International Century Corporation (ICC) SA, Lebanon, and HPG Urban Developments PTY LTD. It is essential to emphasize that this is legal, but it requires a deeper understanding of the role of Cypriot companies.
According to Badil, Merit Holding purchased 4.38% of Bank of Beirut’s shares in 2018. This investment company was owned by the Lebanese-French businessman Jacques Saade, who passed away in the same year. Following his death, his share was evenly distributed among his three children. CMA CGM, the third-largest shipping company globally, owns 99.9% of Merit Holding’s shares. Additionally, Merit Corporation Limited, owned by the Saade family, holds 60.69% of CMA CGM shares, now managed by Jacques Saade’s son, Rodolphe Saade, who serves as the company’s director and CEO. Rodolphe Saade’s growing role in Lebanese politics, particularly his proximity to French President Emmanuel Macron, has been highlighted by Sami Halabi.
What Does Cyprus Confidential Reveal?
Within the context of the Cyprus Confidential project, the documents point to a key company owned by Sfeir, Sfeir Bancorp Limited, established in September 2011.
The documents reveal that:
– Salim Sfeir is the CEO of Sfeir Bancorp Limited since September 19, 2011, and the sole shareholder.
– The investments of Sfeir Bancorp Limited in Bank of Beirut and ICC amount to approximately $50.5 million, representing over 90% of the company’s total assets until December 31, 2019.
– According to the data, Sfeir Bancorp Limited agreed to pay $4.7 million to Bank of Beirut in an attempt to increase its capital.
It is worth noting that Lebanon has been facing a severe economic crisis since October 2019, with banks illegally preventing individuals from withdrawing and transferring their funds in US dollars. Consequently, many depositors lost the savings they had in Lebanese banks. During the Lebanese uprising, protesters stormed the Association of Banks, considering it the main entity protecting commercial banks that “gambled” with deposits and lost them in what some experts described as a “Ponzi scheme.”
Further investigation into the financial reports in Cyprus Confidential reveals that the company began its operations in 2011 but was barely functioning until 2016. The financial audit report for the end of 2016 shows “financial assets available for sale” amounting to over $38.5 million. This includes investments of around $37.2 million in the Bank of Beirut, and around $1.4 million in International Century Corporation Lebanon, a subsidiary of the International Century Corporation Luxembourg. Both companies collectively own shares in Bank of Beirut, amounting to 28.52%, according to the bank’s website.
Since 2016, Salim Sfeir has been the sole owner of Sfeir Bancorp Limited with an account of around $37.2 million, which happens to be the loan he provided to the company.
It is worth noting that 2016 was the year Riad Salameh, the former governor of the Central Bank of Lebanon, approved the financial engineering plan that benefited private banks. It became clear four years later that this was a major cause of the economic collapse in Lebanon.
Until the end of 2019, the company received dividends amounting to $1,789,000, but it did not receive any dividends in 2020. The documents also reveal that on April 3, 2019, Salim Sfeir, on behalf of the Bank of Beirut, sold 500,000 shares for a price of $16 per share, with a total value of $8 million, to Salim Sfeir in his capacity as the director of Sfeir Bancorp Limited. Sfeir signed on behalf of both parties. By December 31, 2020, Sfeir Bancorp Limited owed Salim Sfeir an amount exceeding $55 million, according to documents, which is an increase compared to all previous years:
– 2016: $37,213,560
– 2017: $38,027,752
– 2018: $37,277,798
– 2019: $45.5 million
– 2020: more than $55 million
The increase in money owed in 2019 represents a surprising leap compared to previous years, especially considering that it was the year when the financial crisis in Lebanon began. Until the end of 2017, the interest rate was 3.75%, but it increased to 4.5% annually afterward.
As for the end of 2020, the documents show that the company became indebted to Sfeir for more than $55 million.
The documents do not reveal whether this money was transferred in cash to Cyprus or if it was in paper records. If it was transferred, it would mean that Sfeir used this method to move dollars abroad at a time when his bank refused to give people their deposits, which would violate the illegal capital controls imposed by banks on their clients’ deposits. If it remains on paper, it is possible that Sfeir found a way or financially engineered his way to ensure the existence of $55 million in his account on paper. As a shareholder and Chairman of the Board of Directors at the Bank of Beirut, he could secure this amount from the bank if the bank were to declare bankruptcy, for example, as Sfeir Bancorp is also a shareholder of the bank. Perhaps Sfeir did this in anticipation of a financial crisis in Lebanon and/or to ensure the presence of funds outside Lebanon in case of deteriorating conditions.
“The motive behind such a step may be tax evasion or asset protection,” a financial banking expert who preferred to remain anonymous said. However, if these actions were taken preemptively to protect his funds before the crisis erupted, it is necessary to refer to the Lebanese Anti-Money Laundering Law No. 44 issued in 2015, which states in Article 1 paragraph 7 that funds are considered illegitimate if “privileged information is exploited, secrets are disclosed, and freedom of sale is hindered by bidding and unauthorized speculations.” Sfeir did not respond to our questions.
Page 141 of the 2018 annual report, the latest report published by the bank on its website shows that the bank granted loans and secured and unsecured advances to shareholders, directors, and other key management personnel, as well as close family members and their related companies:
| Loans and Advances (in billion Lebanese pounds) | 2018 | 2017 |
| Secured | 85,649,848 | 89,609,711 |
| Unsecured | 42,361,767 | 38,425,890 |
In 2018, there was an increase in the value of unsecured loans compared to 2017 and a decrease in the value of secured loans. The total value of loans and advances amounted to around 128 billion Lebanese pounds in 2018. The same report indicates that “executive management salaries of the bank amounted to 1.39 billion Lebanese pounds in 2018 (compared to 1.39 billion Lebanese pounds in 2017), in addition to performance-related incentives representing 6% of pre-tax profits.”
Some experts speculate that Sfeir may have borrowed from the Bank of Beirut and then indebted his company, Sfeir Bancorp, which in turn bought shares in the Bank of Beirut. However, in the absence of conclusive documents and evidence, we cannot confirm this hypothesis.
The bank has not published annual reports for the years 2019 through 2023, contrary to the listing requirements of the Beirut Stock Exchange. The investigation team attempted to contact the Beirut Stock Exchange to inquire about the absence of annual reports on the bank’s website and information on the exchange’s website, but did not receive any response at the time of publication.
In 2018, Sfeir Bancorp Limited changed the status of its financial assets from “available for sale” to “fair value through other comprehensive income” (FVOCI) and had an approximate value of $42 million.
The reason for this step may be the fluctuation in the value of those investments. If their value decreases, it may affect the reported profits of the company. By reclassifying to “fair value through other comprehensive income,” the company can record the changes without impacting the reported profits and present a more stable financial picture.
It should be noted that Sfeir Bancorp’s auditors announced that they do not bear responsibility for the annual report. The financial audit report for the year 2020 stated the following:
“In our opinion… the accompanying financial statements do not give a true and fair view of the financial position of the Company as at 31 December 2020, and of its financial performance and its cash flows for the year…”
Basis for Adverse Opinion
Sfeir Bancorp – also referenced as the Company– ‘s investments in Bank of Beirut S.A.L. and International Century Corporation S.A.L. are carried at US$60,020,097 on the Company’s statement of financial position, which represents over 90% of the Company’s total assets as of December 31, 2020. We did not find the fair value of these investments classified at fair value through other comprehensive income, due to the economic reality and the market conditions existed at the reporting date.
In the Company’s statement of financial position on December 31, 2020, deposits with a total amount of US$689,744 are included. The Company has not recognized an appropriate level of expected credit losses. As such, we were unable to quantify the effect of the departure from the accounting standard.”
Offshore Companies Owned by Sfeir
In addition to Sfeir Bancorp Limited, Sfeir owns shares in several other companies.
The ownership of shares in International Century Corporation SA is shared among several shareholders as follows:
– Yousef Abdel-Messih: 106 shares
– Antoine Abdel-Messih: 482 shares
– Joseph Ghra: 66 shares
– Nar Khatchadourian: 482 shares
– Fawaz Nabulsi: 482 shares
– Salim Sfeir: 482 shares
– Total number of shares: 2100
It’s worth noting that Antoine Abdel-Messih has been a non-executive board member of the bank since 1993, and Fawaz Nabulsi serves as the CEO and Deputy CEO of Bank of Beirut.
As for the two companies associated with ICC SA:
1. ICC Holdings Lebanon, with shares distributed as follows:
– ICC CENTURY MANAGEMENT SERVICES LIMITED, owned by Sfeir, Fawaz Nabulsi, and Henry Tabet (formerly), all of whom work at Bank of Beirut.
– FSHN Limited, a company owned by Fawaz Nabulsi in partnership with Sfeir.
Transfers Abroad
Beyond the scope of the Cyprus Confidential documents, Daraj reviewed two documents regarding the loans obtained by commercial banks and the transfers they made abroad.
The first document reveals that the Bank of Beirut obtained a loan from the Central Bank of Lebanon amounting to $428 million on January 25, 2020, only four months after the financial crisis had begun unfolding in October 2019.
The second document shows that the Bank of Beirut obtained a total of $620 million in loans after the crisis and transferred $466 million abroad. It is important to note that the available documents do not specify the destination nor address of the transferred funds.
These documented transfers occurred at a time when depositors were illegally prevented from accessing their savings. According to the Bank of Beirut’s website, “Shareholders’ Fulfillment: Unceasingly endeavoring to provide our shareholders with a respectable return on their investments while minimizing risks.
Customer Satisfaction: Continuously striving to anticipate and satisfy our customers’ needs and to develop long-lasting relationships with them.”
Sfeir did not respond to any of Daraj’s questions.
BoB Finance
While the International Monetary Fund was negotiating with the government and depositors were demanding their rights and deposits, cash transfer operations were at their peak. There were a few companies providing these services, requiring a license from the Central Bank of Lebanon. Among these companies are OMT and BoB Finance, managing Western Union transfer points. BoB Finance currently manages over 700 transfer points in Lebanon.
In this context, Zeina Wakim, a Swiss lawyer and one of the founders of Accountability Now, tells Daraj:”The World Bank has repeatedly confirmed that the contraction in Lebanon is ‘deliberate’ and serves the larger goal of consolidating the interests of the political economy. The head of the association of banks is an example of how the political elite profits from the crisis,” explaining why the Association of Banks was not interested in finding a solution to the crisis.
On the other hand, at the end of 2022, economic journalist Mounir Younes tweeted that BoB Finance “is set to achieve profits of $20 million in 2022, the basis for these profits is collecting dollars from the market for the benefit of Riad [Salameh] and a 3% commission. Some have profited from prosperity, and he profits from the collapse.”
Meanwhile, in October 2022, MP Bilal Abdullah asked: “Why is our transfer bill the highest in the world?” demanding to know “the amount of profits earned by ‘OMT’ and ‘BoB Finance’ during the banks’ crisis and their monopoly on transfers and their control over facilities and commissions from the Central Bank of Lebanon with additional fees on the Lebanese people.”
Association of Banks: The Fiercest Opponent of the Recovery Plan
The Association of Banks made headlines when it rejected the recovery plan proposed by the Lebanese government to address the financial crisis and restore depositors’ funds. The Association insisted on placing the responsibility on the Lebanese state, protecting the banks, and even went as far as advocating for the sale of state assets.
In this context, Henri Chaoul, a former advisor to the Minister of Finance and a former member of the government team negotiating with the International Monetary Fund, tweeted: “A source in a ‘group of experts and economic consultants’ asks where the accountability and trial of the Association of Banks stands for conspiring with the former governor of the Central Bank and a team of deputies to thwart the financial recovery plan in 2020, obstructing all negotiations with the IMF to defend their personal interests at the expense of the people, depositors, and the country’s recovery and growth.”
The Association of Banks insisted on attributing the collapse to the government and the Central Bank, overseeing years of excessive spending and extravagance. The Association overlooked the fact that private banks had benefited for many years from injecting liquidity from public funds into their accounts, amounting to hundreds of billions of dollars.
In this context, Zeina Wakim told Daraj that “despite the fact that the international community and the IMF validated on several occasions the FRP and the figures it mentioned, ABL staged up its resistance against this plan and announced in a statement on its website that it can, in no way, endorse the recovery plan as it has not been consulted. The reality is that ABL opposed the FRP because it precluded the use of public money to cover the losses incurred by the banks. ABL decided to establish a shadow plan in its favor which shifts the system’s vast losses away from banks’ balance sheets, onto small and medium sized depositors, and the wider population in general.”
Wakim added: “Although the association of banks of Lebanon is legally organized as a private association, it carries the voice and the interests of the political elite. The 18 largest banks in Lebanon are indeed controlled by the political elite as per the findings of the UN Special Rapporteur on extreme poverty and human rights.”
Therefore, the Association of Banks requested the intervention of the parliamentary Finance and Budget Committee to establish an investigation committee to obstruct the recovery plan. In this regard, Chaoul told Daraj that when his team presented the recovery plan, “ [the committee] objected to it and took the battle to parliament through the investigative committee, considering that the problem is with the state and has nothing to do with them.”
Will Sfeir Be Listed on the Sanctions List?
After the inclusion of the former governor of the Central Bank of Lebanon, Riad Salameh, on the sanctions list in several countries, including the United States, Canada, and the United Kingdom in August 2023, and after the investigation of the former minister and Al Mawarid Chairman of the Board Marwan Kheireddine in France, could Salim Sfeir be the next name among them, given his role and position as the head of the Association of Banks?
Chaoul believes that it is impossible to avoid real accountability and an agreement on a single narrative to determine responsibilities in the crisis. History must be written correctly, he mentioned.
“There are several ways to target corruption by Lebanese politicians and their enablers. The preferred avenue is through legal proceedings initiated outside of Lebanon to freeze ill-gotten assets and have them restored to the Lebanese people. This being said, this is a long and costly route for civil society since it requires tracking dirty money first, building a bulletproof legal case, filing and then ensuring a thorough follow-up of the proceedings which can last several years,” says Wakim, who sees sanctions as a good alternative. “Sanctions can be a good state measure which is extremely effective and sends an immediate message to both the perpetrator and the supporting network. They can range from travel bans, to the freezing and confiscation of assets. Although they had been historically seen as a punitive measure, most governments now tend to use them to incentivize behavioral change. In the case of the sanctions issued by the Treasury against Riad Salameh, the mother of this child, his assistant, his brother, and his son, [ the Office of Foreign Assets Control] clearly mentions that the power and integrity of its sanctions derive not only from its ability to designate targeted individuals but also from its willingness to remove them from the list of sanctions when consistent with the law.”
Although Sfeir’s name is likely to be included on the sanctions list, Sami Halabi believes that foreign countries tend to avoid listing individuals in their positions on the sanctions list, as happened with Riad Salameh.
There remain many questions about the financial maneuvers carried out by Salim Sfeir, the head of the Association of Banks in Lebanon. However, it is likely that, like his banking peers, he managed to preserve his wealth, perhaps even accumulating it in Cyprus, despite the economic crisis that has ravaged all sectors of the country. Therefore, we place these documents and conclusions in the hands of the Lebanese judiciary, as it is necessary to hold accountable those who were able to safeguard their wealth at the expense of the savings of small and medium depositors.
A timeline of Sfeir Bancorp’s role in the Bank of Beirut:
| 2011 | Sfeir founded Sfeir Bancorp in Cyprus. |
| 2016 | Sfeir extended a loan of $37.2 million to Sfeir Bancorp. Most of these funds were used by the company to invest in financial assets “available for sale.” |
| 2017 | Sfeir Bancorp received profits of approximately $1.5 million. It paid interest amounting to $1.3 million and owes Sfeir about $38 million. |
| 2018 | Sfeir Bancorp received profits of approximately $1.7 million. It paid interest of around $1.5 million. Financial data for Sfeir Bancorp for 2018 shows that the company owes Sfeir about $37.2 million. |
| 2018 | The company transferred its financial assets available for sale, amounting to $41.8 million, to financial assets at fair value through other comprehensive income, increasing the balance to $42.4 million. |
| April 2019 | Sfeir sold 500,000 shares of Bank of Beirut to Sfeir Bancorp. |
| October 2019 – March 2020 | The Bank of Beirut borrowed $620 million from the central bank and transferred $466 million abroad, according to a document seen by “Daraj.” |
| November 2019 | The central bank issued a decision that Lebanese banks must increase their capital by 20% from shareholders, to be done in US dollars. |
| December 31, 2019 | The balance in Sfeir Bancorp’s account with the Bank of Beirut reached about $53.6 million, up from $44.2 million the previous year. The value of Sfeir’s debt in Sfeir Bancorp increased from about $37.2 million to about $45.5 million. |
| March 2020 | A financial transfer of about $4.7 million was made to Sfeir Bancorp’s account at the Bank of Beirut. |
| September 2020 | A financial transfer of about $4.7 million was made to Sfeir Bancorp’s account at the Bank of Beirut. |
| Until the end of December 2020 | Sfeir Bancorp did not receive any profits from the Bank of Beirut. |
| June 2021 | Sfeir commits to maintaining his debit balance in Bancorp Sfeir and covering any obligations to it for 2019. |
| March 31, 2021 | The value of Bank of Beirut shares owned by Sfeir Bancorp is estimated at about $53.6 million. |
Two weeks after publishing the investigation, we received the following response from Salim Sfeir’s lawyer on the questions we had sent on November 14, 2023, and thereafter on February 13, 2024. Here is the response as received:
“We are pleased to provide Daraj with written answers as per your request, and we kindly ask you to publish our response on your website alongside the articles titled:
• “Cyprus Confidential”: A Safe Haven for Salim Sfeir, the Head of the Association of Lebanese Banks and the Obstructionist of Lebanon’s Recovery Plan
• أسربرص: الملاذ الآمن للمصرفي سليم صفير، “معرقل” خطة التعافي اللبنانية
This is to remove any damage caused by the content of the article to the Sfeir Bancorp’s reputation.
Firstly: The information and inquiries about legitimate companies and legal transactions that harm the reputation of Sfeir Bancorp in Lebanon and Cyprus.
These questions were accompanied by a series of articles published to undermine the professionalism of Dr. Salim Sfeir and Bank of Beirut through the use of the following technique:
1- The articles published were part of a media and judicial campaign against the Association of Banks after the State Council’s decision on February 6, 2024, which invalidated the third decision taken by the Council of Ministers on May 20, 2022, exempting the Lebanese Central Bank entirely or partially from its legal and constitutional obligations to return the deposits of Lebanese banks, thereby exempting the Lebanese state from its legal obligation stipulated in Article 113 of the Monetary and Credit Law, which requires it to bear any losses appearing in the Lebanese Central Bank’s budget. The State Council also affirmed that the ownership of depositors’ deposits is guaranteed by the Lebanese Constitution and the international treaties to which Lebanon has acceded, preventing the Lebanese state from directly or indirectly confiscating depositors’ deposits.
2- The title of the articles:
• “Cyprus Confidential”: A Safe Haven for Salim Sfeir, the Head of the Association of Lebanese Banks and the Obstructionist of Lebanon’s Recovery Plan
• أسرار قبرص: الملاذ الآمن للمصرفي سليم صفير، “معرقل” خطة التعافي اللبنانية
suggests to the reader, before reading the content, that Dr. Sfeir resorts to questionable means to place his money in Cyprus, which is contrary to the truth. Sfeir Bancorp’s Cypriot activity is limited to owning shares in Bank of Beirut, as we will explain when answering the questions. Although the information you refer to in the articles is true, public, and published, as we will explain in the following paragraph, its formulation is twisted and not objective. You claim that it was discovered by specialized investigators to imply that Sfeir Bancorp is hiding something suspicious.
3- You attribute to the Association of Banks and Dr. Sfeir a position opposing any plan proposed by the government to address the crisis resulting from the misuse of power contrary to the law, the depositors’ money, which constitutes private ownership protected by the constitution. While the Association of Banks supports every plan proposed by the authorities to address the crisis it caused, it does so on the condition of protecting people’s deposits and the state’s commitment to refund them when its capabilities allow.
4- Publishing publicly available information and portraying it contrary to reality as if it were secret and discovered by investigators is intended to imply to the reader that this correct information, consistent with the law, hides something suspicious.
5- The aim of the approach you follow is an attempt to influence the position of the Association of Banks, which defends the ownership of depositors’ deposits and the Lebanese economic system based on protecting private property and the freedom to transfer funds to and from Lebanon.
6- Publishing accurate information about legal transactions and publicly available information and portraying it contrary to reality as if it were about suspicious or secret operations discovered by investigators is aimed at pressuring the Association of Banks in Lebanon to stop the judicial party’s behavior opposing any plan by the authorities aimed at exempting itself from returning the deposits to the depositors.
Secondly: Answers to specific questions about public and legal operations
Question 1: Bank of Beirut’s Budgets
The budgets of Bank of Beirut and reports of individual and consolidated auditors are sent based on regulations to banking authorities (Banque du Liban and Banking Control Commission) and to the Beirut Stock Exchange and shareholders in the general assemblies, in addition to the publication of consolidated and audited financial statements in the Office Gazette, and in two newspapers and two magazines to inform the public.
Question 2: Sfeir Bancorp
Sfeir Bancorp does not benefit from any loan from Bank of Beirut.
Question 3: Bank of Beirut’s Profits
Bank of Beirut has not distributed any profits to shareholders starting from the fiscal year 2019 until the present date due to the absence of distributable profits from the fiscal year 2019 until the year 2023.
Question 4: Purchase of Dollars for the Benefit of Banque du Liban
Banque du Liban has instructed multiple companies at specific times, including BOB Finance, to exclusively purchase dollars from the Lebanese market, paying for them in Lebanese pounds in exchange for limited commissions. It should be noted that this arrangement is no longer valid for BOB Finance.
All operations are legal and registered with Banque du Liban, and BOB Finance’s accounting includes the payment of due taxes to the Ministry of Finance.
Questions 5 and 9: Government Financial Recovery Plan
The Association of Banks supports any plan approved by the political authority to address the systemic crisis in the Lebanese banking and monetary system and has even encouraged the authority to adopt such a plan since 2020. Any plan to address the crisis must be based on respecting the Lebanese state’s private property obligations, a principle enshrined in the Lebanese constitution and forming the cornerstone of the Lebanese constitutional and legal system. The Lebanese authority, which borrowed amounts defined by Alvarez & Marsal’s report from Banque du Liban, cannot directly or indirectly exempt itself from repaying what it borrowed from Banque du Liban, which practically constitutes the deposits of depositors in Lebanese banks. The Association of Banks stands with the Lebanese state in any plan it adopts on the condition that the Lebanese state recognizes its obligations to repay what it borrowed from the people’s deposits when its resources allow for it. The Lebanese state, which caused the current crisis, and violated the law by borrowing people’s deposits from Banque du Liban, cannot address its mistake with another violation of the Lebanese system, which is the forced nationalization of banks and deposits. Violating this Lebanese constitutional principle means that no investor, Lebanese or foreign, will trust the Lebanese banking sector in the future, and no depositor will trust any Lebanese bank with their money for fear of direct or indirect nationalization by the authority.
Questions 6 and 7: Investigating Judge Ghada Aoun Case No. 705/2022
The subject of these questions is under investigation by the Mount Lebanon Prosecutor, Judge Ghada Aoun, in Case No. 705/2022 dated February 22, 2022, and the bank has provided all the information requested by the judiciary. Therefore, in compliance with the confidentiality of the investigation imposed by law, Bank of Beirut cannot provide you with the answers it provided to the judiciary. It should also be noted that in the matter of financial engineering profits, the Association of Banks of Lebanon clarified the issue of financial engineering in a statement issued by the Secretary-General of the Association of Banks, Dr. Fadi Khalaf, entitled “Banks’ Revenues from Financial Engineering: A Ledger in Lebanese Pound,” which is highlighted in attachment 1.
Question 8: Sfeir Bancorp Limited
This Cypriot company, subject to Cypriot law, was founded by Dr. Salim Sfeir in 2011 and has a single activity, which is owning shares in Bank of Beirut belonging to Dr. Salim Sfeir, and has no commercial activity. This ownership was approved by the Central Council of Banque du Liban in accordance with the law and Banque du Liban’s circulars. In 2019, Sfeir Bancorp acquired additional shares in Bank of Beirut. In 2020, Bank of Beirut increased its capital in accordance with Banque du Liban Circular No. 154/2020, and Sfeir Bancorp paid its share of this increase. This explains the increase in Sfeir Bancorp’s investments in 2019 and 2020, as mentioned in the published and public reports of the auditors, specifically on page 22 thereof. It should be noted that the company’s investments remain Lebanese because they are in shares of Bank of Beirut, a Lebanese company.”
