In April 2019, just a few months before Lebanon’s financial collapse in October of the same year, Bank Audi distributed more than $260 million to its shareholders, including Najib Mikati, Riad Salameh, and other stakeholders. Bank Audi had directly benefited from financial engineering schemes and facilities from the Central Bank of Lebanon (Banque du Liban), including a loan exceeding $2 billion, while Lebanese depositors were receiving mere scraps of their frozen funds held in Lebanese banks.
Former Central Bank Governor Riad Salameh, who is currently in prison, held shares in Bank Audi through an offshore company — in clear violation of Lebanon’s Code of Money and Credit, specifically Article 20, which prohibits the Central Bank governor from owning shares in any private bank due to the obvious conflict of interest it represents.
Although no dividends were distributed after 2019, following Central Bank Circular No. 567, more than $260 million in retained earnings from 2018 were paid out based on a decision from the general shareholders’ meeting held on April 12, 2019, just months before the financial crisis hit in October. Between 2012 and 2019, more than $1.5 billion in profits were distributed to shareholders, over $1.1 billion of which occurred between 2015 and 2019, during the period of financial engineering orchestrated by the Central Bank.
A review of Bank Audi’s annual and financial reports reveals that, as of the end of 2020, the amount owed by Bank Audi to the Central Bank exceeded $2.27 billion USD (or 3,405,622 million Lebanese lira), based on the official exchange rate at the time, which stood at around 1,500 LBP to the dollar.
The Amounts Owed by Bank Audi to the Central Bank of Lebanon
| Amount Owed by Bank Audi to the Central Bank of Lebanon in US Dollars | Amount Owed by Bank Audi to the Central Bank of Lebanon in Lebanese Lira | Year |
| 2,270,414,666.67 | 3,405,622,000,000 | 2020 |
| 3,737,654,000 | 5,606,481,000,000 | 2019 |
| 7,814,134,000 | 11,721,201,000,000 | 2018 |
| 2,647,665,333.33 | 3,971,498,000,000 | 2017 |
| 1,272,697,333.33 | 1,909,046,000,000 | 2016 |
| 379,904,000 | 569,856,000,000 | 2015 |
| Distribution Year | Share Profits in Lebanese Lira | Share Profits in US Dollars |
| 2020 | – | – |
| 2019 | 394,192,000,000 | 262,794,666.67 |
| 2018 | 395,322,000,000 | 263,548,000.00 |
| 2017 | 347,101,000,000 | 231,400,666.67 |
| 2016 | 275,533,000,000 | 183,688,666.67 |
| 2015 | 286,556,000,000 | 191,037,333.33 |
| 2014 | 249,906,000,000 | 166,604,000.00 |
| 2013 | 245,131,000,000 | 163,420,666.67 |
| 2012 | 236,622,000,000 | 157,748,000.00 |
How Much Did Bank Audi Benefit from Financial Engineering?
Bank Audi was the biggest beneficiary of the liquidity injections carried out by the Central Bank of Lebanon under the leadership of Riad Salameh between 2015 and 2019. In 2016 alone, the bank recorded profits of $1.6 billion, according to a previous investigation by Daraj and the Organized Crime and Corruption Reporting Project (OCCRP). This profit surge was linked to the overlapping interests of Riad Salameh and the Mikati family to the bank’s capital, and Samir Hanna, the bank’s Chairman and CEO.
Furthermore, the financial audit report conducted by Alvarez & Marsal on the Central Bank’s accounts, dated August 7, 2023, revealed an additional $1.5 billion in profits for Bank Audi through what are known as “leverage arrangements.”
Through these arrangements, Bank Audi borrowed approximately $6.3 billion in Lebanese lira from the Central Bank in 2018 (around 9.3 trillion LBP at the time), at a low interest rate of just 2 percent. The bank then used the borrowed funds to purchase roughly $6.3 billion worth of Lebanese treasury bonds, certificates of deposit, and term deposits at the Central Bank — with significantly higher annual interest rates, ranging from 6.5 percent (for instruments in foreign currencies) to 10.5 percent (for those in local currency).
Profits Earned by Bank Audi from Loans Through Leverage Arrangements
| Year | Treasury Bond Profits (LBP) | Term Deposits (LBP) | Credit Deposit Profits (LBP) |
| 2017 | 338,056,875,000 | – | – |
| 2018 | 271,587,043,000 | 181,467,222,000 | 102,888,000,000 |
| 2019 | 271,587,291,000 | 354,846,167,000 | 102,888,000,000 |
| 2020 | 273,121,421,000 | 253,012,101,000 | 102,888,000,000 |
| Total (LBP) | 1,154,352,630,000 | 789,325,490,000 | 308,664,000,000 |
| Total ( USD) | 769,568,420 | 526,216,993.33 | 205,776,000 |
Afterward, the bank either deposited U.S. dollars or Lebanese lira at the Central Bank of Lebanon, or purchased Lebanese government Eurobonds from the Central Bank, with matching maturities and interest rates to the original instruments. The gap between the low borrowing cost (2 percent) and the high returns (up to 10.5 percent) allowed Bank Audi to generate significant profits — estimated at around $1.5 billion — without exposing itself to major risk, as most of the transactions were backed by instruments from the Central Bank.
Notably, Bank Audi was the only bank that received loans against credit deposits (in Lebanese lira) as part of the leverage arrangements.
Zena Wakim, a lawyer for Accountability Now — which previously filed complaints against Bank Audi – Switzerland and HSBC with the Swiss Federal Prosecutor and the Swiss Financial Market Supervisory Authority (FINMA) — told Daraj in an interview: “Our investigations revealed that Bank Audi was used as one of the channels for laundering money on behalf of Lebanese politicians. We succeeded in filing a formal complaint with the Swiss regulatory authorities. In addition, it has now become clear that hundreds of millions of dollars were pumped into the bank by the Central Bank of Lebanon during Riad Salameh’s tenure, resulting in extraordinary profits for Bank Audi. But instead of safeguarding against risk and protecting depositors, those funds were distributed to the bank’s shareholders. This is precisely why lifting banking secrecy for only ten years is not enough, a full investigation into these crimes is essential.”
In March 2024, FINMA issued a ruling to confiscate approximately €4 million in profits from Bank Audi (Switzerland) and imposed an additional capital fine of 19 million Swiss francs, citing “serious violations” of anti-money laundering regulations. In June 2024, FINMA also announced that HSBC Private Bank in Switzerland had “failed to meet its due diligence obligations” regarding two politically exposed persons (PEPs) and ordered the bank to halt all new business relationships with politically connected individuals until a full review of existing accounts is completed.
In this context, lawyer Karim Daher explained to Daraj:
“We need to distinguish between two things:
The bank as a joint-stock company: It’s important to separate between profit and loss accounts, the balance sheet, outstanding loans, shareholder capital, and provisioning. We also need to distinguish between what is known as cash flow and the company’s actual financial results.
Profits: According to commercial law, a bank cannot distribute profits without the approval of the General Assembly, and even then, it must comply with all financial standards and legal obligations. This includes ensuring profits are not fictitious or based on unaudited accounts not approved by certified auditors. This raises questions about the impact of profit distribution on liquidity, solvency, and urgent liabilities — and whether the bank remains capable of meeting its obligations to creditors and depositors, especially in the current crisis, where many depositors are unable to access their savings.”
According to Daher: “The situation must be closely examined from an accounting standpoint, especially with regard to external audits. If the auditor detects financial risks, they are required to declare that no real profits exist — particularly when there are substantial outstanding obligations to the Central Bank of Lebanon.”
Three Key Laws
Clarifying the responsibilities of banks is essential in the ongoing debate around the three core laws tied to Lebanon’s financial crisis:
The banking secrecy law, which was passed in Parliament with a retroactive effect of 10 years — going back to 2015. This was considered a win for depositors, as it allows authorized entities, including the Central Bank, to lift banking secrecy.
The bank restructuring law, which outlines how Lebanese banks may be restructured, including the potential merger of certain banks.
The law on defining the financial gap and allocating responsibilities, which addresses the fate of frozen deposits in Lebanese banks since October 2019.
Lawyer Karim Daher described the bank restructuring law in an interview with Daraj as a kind of “elimination round,” where weaker banks are liquidated first, while stronger ones advance to the next stage. However, he stressed the need to link the restructuring law with the law defining the financial gap (also referred to as the financial regularization law), in order to account for which banks had benefited from the Central Bank’s financial engineering schemes, and which had not, as the latter may now be less capable of meeting Central Bank requirements.
All of this, Daher noted, is contingent on the outcome of ongoing negotiations between the Lebanese delegation and the International Monetary Fund (IMF) in Washington.
Daher explained: “This is where the role of oversight bodies becomes crucial: ensuring that these operations were carried out under clear, sound standards, and not through manipulative financial engineering supported by unjustified or preferential treatment from the Central Bank, such as the loans received by some banks.”
Financial audit reports for Bank Audi show that its auditors — Ernst & Young and BDO Semaan Gholam & Co. (the same firms that audited the Central Bank under Riad Salameh’s tenure) — issued an adverse opinion in the bank’s audited 2019 report, following the outbreak of Lebanon’s financial crisis. The report noted: “Events and conditions exist that raise substantial doubt about the group’s ability to continue as a going concern. We were unable to obtain sufficient appropriate audit evidence regarding the group’s ability to continue operating.”
Daraj sent a series of questions to both auditing firms but did not receive a response by the time of publication.
Who Are the Main Beneficiaries?
According to Bank Audi’s website, 21.55 percent of the bank’s shares fall under the category of global depository receipts (GDRs). These GDRs represent common shares held by Bank of New York Mellon in its capacity as the registered owner of these shares, serving as the depository for the bank’s GDR program.
In addition to the direct ownership of common shares outlined in the table below, 8.35 percent of the bank’s common shares are also held via GDRs by a number of disclosed shareholders.
However, Bank Audi’s website adds that ownership details related to the remaining GDRs are unknown to the bank, meaning that approximately 13.20% of the shares remain anonymous.
A leaked document, a request issued by the regional court of the Principality of Liechtenstein to the Lebanese judiciary in late June 2022, referenced the GDR account in connection with investigations into Riad Salameh, accused of embezzling up to $400 million.
The request is linked to two local companies in the principality, Salamandur and Crossland, both limited liability companies based in Liechtenstein. Previous investigations by Daraj and the OCCRP had revealed that Riad Salameh owns both. The request refers to a contract dated January 26, 2016, between the Swiss company SI 2 SA, owned by Riad Salameh, and the M1 Group, affiliated with Taha Mikati, brother of Najib Mikati. Based on that contract, on August 15, 2016, a total of $14 million was transferred by Taha Mikati to Crossland, into an account held at Bank Audi Suisse. The request also noted the transfer of ownership of 4 million shares in Banque Audi SAL Spons-GDR-Repr, valued at $25.82 million, to Crossland.
Regarding the Liechtenstein court request, an investigation by Intelligence Online revealed that Crossland “owns 4 million bearer shares (untraceable shares) of Bank Audi — in the form of Global Depository Receipts (GDRs) — worth $25.28 million. However, according to the 2014 shareholder registry, MAL Investments One Holding, a company affiliated with the Mikati family, had historically owned GDRs and sold its stake for an equivalent amount.”
This indicates that both Salameh and Mikati were shareholders in Bank Audi through GDRs.
In this context, Mikati’s office confirmed in an email to Daraj that in June 2023, the Mikati family received an official letter from the Liechtenstein Princely Court stating that “there are no pending investigations against them. This categorically denies any allegations of wrongdoing.”
The office further stated that “there are no contractual agreements between the M1 Group and SI2SA Geneva, and that M1 has not been contacted by any official or regulatory body in Liechtenstein, or any other jurisdiction, regarding the alleged investigations or any other inquiry.”
The Intelligence Online investigation also revealed that Bank Audi, one of Lebanon’s largest banks, played a central role in these financial operations. In 2010, Riad Salameh intervened to prevent hostile shareholders from entering the bank, after Egyptian firm EFG Hermes decided to sell its stake, which amounts to 29 percent of the bank. Since Lebanese law prohibits the Central Bank Governor from owning shares in private companies, Salameh discreetly used $154 million — representing 4.94 percent of Bank Audi’s capital — from a private account under his control to purchase shares via Middle East Opportunities For Structured Finance Ltd, a company registered in the Cayman Islands.
These shares were later transferred to other offshore companies such as Levant Finance and Levant Finance 2, with ongoing ambiguity surrounding the true beneficiaries of these transactions.
Swiss investigators reportedly traced transfers from an HSBC account in Geneva belonging to Raja Salameh, Riad Salameh’s brother, to a Dubai-based company of the same name: Levant Capital — which, according to French investigators, is a company over which Raja Salameh holds banking power of attorney.
The names Middle East Opportunities for Structured Finance, M1 Capital, and Mikati Holding were also listed as attendees in the minutes of an extraordinary general assembly of Bank Audi – Audi Group – Saradar, held in April 2012.
Based on the above, Riad Salameh owns approximately 5 percent of Bank Audi’s shares, while Najib Mikati owns about 10 percent, according to a statement previously made by Judge Ghada Aoun and reported by L’Orient-Le Jour. Mikati’s stake, she said, was acquired through a loan from the bank itself.
Bank Audi and Mikati Respond
Bank Audi responded to Daraj’s questions with the following statement: “The claims, suggestions, and allegations you refer to are baseless. The article you cite from Intelligence Online unfortunately lacks a balanced or objective assessment of the facts.
We have never supported or knowingly participated in any fraudulent activities or legal violations, nor have we facilitated any misuse of public funds.
Our shareholder structure is transparent and has always been disclosed honestly and regularly through publicly available statements.
When assessing the volume of our dealings with the Central Bank relative to the sector as a whole, they are fully in line with those of other banks.
Whenever we identify that our banking services may have been used by clients to facilitate unlawful financial activity, we promptly notify the relevant authorities.”
Prime Minister Najib Mikati’s office also responded to Daraj’s questions, stating:
“The implication that companies affiliated with our group benefited from more than $154 million in public Central Bank funds to purchase Bank Audi shares is entirely unfounded, misleading, and lacks any credibility. We categorically reject these allegations. To clarify the facts and correct the record regarding the Bank Audi S.A.L. transaction, please note the following:
The transaction occurred in January 2010 — nearly 15 years ago.
It was a fully legal, transparent, and publicly known deal, executed in accordance with Lebanese banking laws and regulations.
All necessary approvals were obtained, including from the Central Bank of Lebanon. No violations occurred at any stage of the transaction.
Bank Audi’s decision to facilitate the transfer of ownership from an Egyptian investment fund to Lebanese investors was entirely legitimate and based on sound commercial reasoning.
The transaction was private in nature, involved no public funds, and was carried out under standard commercial terms within regulatory and legal frameworks.
In 2010, entities affiliated with our group invested in financial instruments tied to Bank Audi’s capital. These instruments were marketed on an equal-opportunity basis and were available to a wide range of market investors. Several investors participated under the same terms and conditions.
Any claims of preferential treatment, misuse of public funds, or any violation are entirely baseless and categorically denied.”
Mikati’s office confirmed:
“No court — in Lebanon or abroad — has issued any ruling against former Prime Minister Najib Mikati, his family members, or any affiliated companies related to abuse of power, illicit enrichment, money laundering, or mismanagement of public funds. Our group operates under the highest standards of governance and transparency, maintaining a clear and principled separation between public service and private business.”
In conclusion, lawyer Karim Daher warned of the risk that proposed “solutions” may end up being temporary settlements or delays, rather than steps toward genuine reform. Without reform, he argued, accountability is impossible — and without accountability, the financial system’s foundations will collapse. Sacrificing accountability to jump-start the economy would effectively excuse those responsible for wrongdoing, further violate the rights of depositors, and erode credit trust. Instead, he called for a balanced approach to saving the banking sector, one that restructures banks and enables them to resume operations under strict oversight.
This must include the allocation of losses based on global “waterfall” standards, holding those responsible for financial misconduct accountable, recovering stolen or illicitly obtained funds, and repatriating funds that were smuggled abroad after October 17, 2019 — in line with the constitutional principles of justice and equality. It also requires tax system reform, including broadening the tax base, curbing smuggling and evasion, and collecting taxes on extraordinary profits made by individuals during the collapse of the Lebanese lira. Additionally, any unjustified gains from early crisis-era subsidy schemes must be reclaimed.
