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Lebanese Nationalization Decree: Sanction Evasion & Shady Business?

A nationalization decree was issued by the Lebanese President General Michel Aoun and signed by the Prime Minister Saad El Hariri and the Interior minister Nouhad El Machnouk last month, but the document was only made public few weeks later, due to pressure from the media and some political parties. The presidential decree grants Lebanese citizenship to 407 foreigners from different countries. Three major political factions, namely the Lebanese Forces Party (LFP), Progressive Socialist Party (PSP), and the Kataeb Party denounced the decree and submitted an appeal to the State Council. The repercussions of the nationalization decree issued by President Aoun, have raised political and media controversy in Lebanon. Among the names of those would be granted citizenship there are several Syrian businessmen close to the Syrian President Bachar El Assad, in addition to a number of foreign businessmen and politicians with a track record of scandals and corruption.

Bachar El Assad’s Business Elite

Many of the nationalized individuals are politically and financially linked to the Syrian regime and subject to permanent monitoring and sanctions by the EU and USA.

Abdul Qader Sabra, granted Lebanese citizenship, is a member of “Sham Holding” board that is subjected to US[1] and EU[2] sanctions. Furthermore, Sabra has contributed to the establishment of a company in Lebanon (Yass Marine Group) whose name was associated with the food security scandal in Syria.[3]

Khaldoon al-Zu’bi, “Aman Holding” Vice President, Syrian businessman and a major shareholder of 90% of “Fly Aman”, is under international supervision for his suspected connection to the Syrian regime and  his close ties to Samer Foz, a confidant for the Syrian President Bashar al-Assad.[4]

On the other hand, Syrian opposition sources pointed out that Mazen Murtada is a key player in the financial relationship between Assad regime and Iran.[5]

What also raises concerns about the intentions of some nationalized persons and their goals, is a statement issued by the Syrian businessman Farouk Joud. In the statement, Joud highlighted the importance of his children’s acquisition of the Lebanese nationality so as to facilitate their travel to and from Syria in order to run their industrial businesses, due to the unjust sanctions imposed on the Syrian people.[6] It is well known that those subject to international sanctions against Syria are mainly members and companies  close to the Syrian regime. Joud’s Company (Joud Trading), was sanctioned by France[7] for its involvement in the chemical attacks on the eastern region of Ghouta.[8]

Another name of interest is Fadi al-Dabbai and his brother-in law Bassam Ashqar. Dabbai and Ashqar are both partners in several businesses with Farouk Joud and Bachar El Assad’s cousin Rami Makhlouf.[9] In addition to that, Fadi al-Dabbai’s name was also revealed in the Panama papers scandal regarding tax evasion and fictitious companies.[10] Image: Faddi Al-Dabbai businesses in Syria, Lebanon, and by offshore companies.   

Image: Faddi Al-Dabbai businesses in Syria, Lebanon, and by offshore companies

The intentions of the relevant political actors in Lebanon became clearer after checking the activities of some nationalized individuals in facilitating their evasion from international treasury monitoring and sanctions. Granting nationality for these individuals will help their businesses activities on the Lebanese territories. It would be certainly easier for them to open new bank accounts if they hold the Lebanese citizenship and enjoy the banking secrecy regulations.  Moreover, international actors’ are monitoring financial activities in Syria. Usage of the US dollar is currently not allowed on the Syrian territory, and the only way to complete a transaction in USD is to obtain an OFAC license from the US Treasury Department, which requires adherence specific and strict conditions. Although the Lebanese banking system is also monitored by the US, it is easier for these corrupt businessmen and Bachar El Assad’s inner circle to evade international sanctions by creating front companies in partnership with Lebanese businessmen. 

Another potential motivation behind the nationalization decree is that some Lebanese politicians and businessmen intend to collaborate with their Syrian counterparts in the reconstruction Post-War Syria.

Sources claim that a company affiliated with the Lebanese Foreign Minister and President of the Free Patriotic Movement, Gebran Bassil, is seeking to establish a platform for a number of international businessmen, and to hold meetings about the reconstruction of Syria.[11] This platform will be created in Lebanon by inviting a number of financiers, businessmen, engineering companies and others interested in the reconstruction plans. This alludes to the interest of Lebanese officials’ interest in restoring the relations with the Syrian regime and their enthusiasm for the return of the Syrian refugees to their disregard for UN conditions.[12] Furthermore, the plans for Syria’s reconstruction by companies close the Bachar El Assad’s business elite is evident especially after the passing of Decree 66 in 2012, in addition to decrees and laws related to reconstruction initiatives. Decree number 66 allowed for the establishment of two “organizational zones” in Damascus. Sham Holding Company was thus established to manage state property in the two organizational areas, as well as to impose and collect taxes and fees. The company is composed of members of the Damascus Governorate Council. It has several contracts with Syrian companies and investors to develop parts of the city of Marotta and set up residential towers and commercial outlets. In August 2017, Aman Holding Group, owned by prominent businessman Samer Foz and his deputy Khaldoun al-Zu’bi, announced its contribution to the reconstruction of the Al-Razi orchards in the Mezzeh area of ​​Damascus in partnership with Damascus Governorate, Damascus Rural and a joint stock company.[13] 

Names associated with Tax Evasion, Corruption and oil Companies’ Scandals

A detailed background check would offer some answers regarding the corrupted nationalized individuals who are linked to the oil sector. Some reports indicated that Farid Noureddine Bedjaoui was associated with Sonatrach’s dealings, as an intermediary for contracts with the company. It is alleged that Badjawi received bribes in the form of commissions for an amount of $ 1 billion from a Canadian company and the Italian oil company Saipem.[14] On the other hand, the Iranian businessman Sirus Ahssani, part of the UnaOil scandal in Iraq, was charged by several courts for corruption, and forging oil contracts.[15]

According to media reports, other naturalized individuals were also associated with financial scandals and corruption deals in different countries such as Issam and Davinci Hourani, Fakhri Karim, Nozad Daoud, and Fatah Al Jaf. Furthermore, some of the nationalized individuals were included in the Panama Paper scandals for tax evasion. For example, Former Iraqi Prime Minister Iyad Allawi[16], Sirus Ahssani[17], and Sami Sidawi[18] names were all listed in these papers. 

The Lebanese law sets criteria for granting Lebanese citizenship. Therefore, it is surprising to grant the Lebanese citizenship to individuals without specific standards and criteria. For example, citizenship was granted to the so-called “Star Sky Light” with only mentioning the native country of this “entity” which is USA. It is surprising to find such names in a decree. Moreover, granting citizenship to several individuals associated with oil sector scandals in addition to individuals who have applied for citizenship using foreign passports[19] (mainly UK and France), despite having Arab passports, raises doubts about their underlying intentions for acquiring Lebanese citizenship. It is widely known that Lebanon is preparing to enter the oil production market in the near future, which raises further concerns about the intentions of these nationalized individuals. To ensure more transparency, the Lebanese citizens have the right to know on what bases were these individuals granted the Lebanese citizenship. The right of access to information should be a tool to promote transparency in the nationalization decree as well as in other governmental decisions. The nationalization decree, which included a number of suspicious individuals, will certainly affect the international community positive perception of the Lebanese banking sector and raise doubts about the government’s aim to combat corruption. It is a very dangerous step by the Lebanese state to grant citizenship for controversial individuals who hold positions that can be abused for the purposes of laundering illicit funds or other predicate offenses such as corruption and bribery. Many of the nationalized individuals have a history of corruption and bribery. In addition, the attempt of some political figures in the Lebanese government to normalize the relations with the Syrian regime is likely to damage Lebanon’s reputation. Lebanon should stand by its international obligations and to respect the international standards and laws without allowing its territories and institutions to be a used for any suspicious action.

Although the General Security chief Maj. Gen. Abbas Ibrahim indicated that the vetting of the individuals named on the nationalization decree was nearly complete[20], the question remains about the reasons that prevented the detection of these names before the decree .The General Security may, if politically allowed, put on hold the files of those who have some legal records or suspicions, but even if they have no legal records and if they are simply business investors, the political question remains “does Lebanon want to be associated to such individuals who have close ties to the Syrian Regime and how did such a decree get the approval of both Presidents?

[1] US Department of Treasury, https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20110518.aspx

[2] Reuters Staff. (2011). Reuters, retrieved from : https://uk.reuters.com/article/uk-eu-syria-sanctions/eu-adds-commercial-bank-of-syria-to-sanctions-list-idUKTRE79C2PG20111013

[3] Saul, J. (2013). EXCLUSIVE – Assad allies profit from Syria’s lucrative food trade, Reuters, retrieved from: https://www.reuters.com/article/syria-food/exclusive-assad-allies-profit-from-syrias-lucrative-food-trade-idINDEE9AE06T20131115

[4] https://aliqtisadi.com/شخصيات/خلدون-الزعبي/

[5] اسكندر خشاشو (2018). النهار،  الوزير السوري السابق هاني مرتضى لـ”النهار”: لم أطلب الجنسية اللبنانية ولا أعلم إن حصل أبنائي عليها https://www.annahar.com/article/813454 -الوزير-السوري-السابق-هاني-مرتضى-لالنهار-ار-لم-أطلب-الجنسية-اللبنانية-ولا-أعلم-إن

 [6] ماذا وراء تجنيس هذه العائلة السوريّة؟ (2018)، موقع ال MTV https://www.mtv.com.lb/News/مــحــلــيــات/820068/ماذا_وراء_تجنيس_هذه_العائلة_السوريّة؟

[7] Tresor, Diection Generale. (2018). https://www.tresor.economie.gouv.fr/Ressources/3733_syrie

[8] L’Orient Le Jour. (2018). Armes chimiques en Syrie : 25 entités et responsables d’entreprises (dont des Libanais) sanctionnés par Paris, retrieved from : https://www.lorientlejour.com/article/1095800/armes-chimiques-en-syrie-25-entites-et-responsables-dentreprises-dont-des-libanais-sanctionnes-par-paris.html

[9]  الشرق الأوسط (2006)، تأسيس شركة تأمين لبنانية ـ سورية في دمشق، http://archive.aawsat.com/details.asp?section=6&article=386018&issueno=10174#.WyE85n3pfIV

Dabbai is one of Rami Makhlouf’s partners in Byblos Bank of Syria

[10] https://offshoreleaks.icij.org/nodes/12140785

[11] منير الربيع (2018). لهذه الأسباب يسعى باسيل لعودة اللاجئين ويواجه المفوضية، المدن، https://www.almodon.com/politics/2018/6/9/لهذه-الأسباب-يسعى-باسيل-لعودة-اللاجئين-ويواجه-المفوضية

[12]  Ibid 14

[13] Daher, J. (2018). Decree 66 and the Impact of its National Expansion, The Atlantic, retrieved from: http://www.syria-report.com

Daher, J. (2017) Militias and Crony Capitalism to Hamper Syria Reconstruction. Syria Untold. Retrieved from:  http://syriauntold.com/2017/09/militias-and-crony-capitalism-to-hamper-syria-reconstruction/

[14] La véritable histoire de Farid Bedjaoui, ce fils gâté de la nomenklatura algérienne qui ramenait des milliards de dollars de contrats à des multinationales en Algérie. (2017). ALGERIE PART, retrieved from : https://algeriepart.com/2017/12/29/veritable-histoire-de-farid_bedjaoui-fils-gate-de-nomenklatura-algerienne-ramenait-milliards-de-dollars-de-contrats-a-multinationales-algerie/

[15] World’s Biggest Bribe Scandal, UNAOIL: THE AHSANIS – MONACO BRIBE MASTERS. The Age, retrieved from: https://www.theage.com.au/interactive/2016/the-bribe-factory/day-1/who-are-the-ahsanis.html

Segal, D. (2017). Deals in Code, Arrests in Raids: The Risky Stakes of Oil Middlemen, The New York Times, retrieved from : https://www.nytimes.com/2017/09/23/business/ahsani-middlemen-oil-unaoil.html

[16] https://offshoreleaks.icij.org/stories/ayad-allawi

[17] https://offshoreleaks.icij.org/nodes/13009251

[18] https://offshoreleaks.icij.org/nodes/12194683

[19] Example : Issam and Davinci Hourani, Faddi Al-Dabbai,  Sami and Samer Sidawi, Farid Noureddine Bedjaoui…

[20] The Daily Star. (2018). Naturalization vetting to finish next week: Ibrahim http://www.dailystar.com.lb/News/Lebanon-News/2018/Jun-17/453434-naturalization-decree-vetting-to-finish-next-week-ibrahim.ashx