Salah Izzedine’s Bankruptcy
Special Report/Compiled by the Lebanese Canadian Coordinating Council (LCCC) web site
As From September 04/09- This Report will be updated on daily basis
Ezzeddine fingerprints on Lebanon Central Bank’s clearance
Date: October 6th, 2009/Future News
Clearance room of Lebanon Central Bank showed that the bouncing checks during the first 9 months of year 2009 till September are increasing in both number and value. The bounced checks of businessman Salah Ezzeddine clearly showed during September, which is the month when bounced checks drawn by Ezzeddine began to show. The value of bounced checks during September reached 120 million dollars and the highest value of bounced checks in one month year 2009 till August did not exceed 81 million dollars, and in August Ezzeddine ceased payments before he was received by the public prosecutor from Hizbullah. From January 2009 until July of the same year, the bounced checks reached a minimum value of 52 million dollars (February) and a maximum rate of 78 million dollars (July). The reason behind the bounced checks is not necessary because of is not necessarily due to the insolvency of the drawer, even in cases of non-availability of money. Sometimes, banks deal with this kind of checks depending on the solvency of the client and his duty credit and financial relations, but this was not provided to Ezzeddine.
Hizbollah embroiled in Ponzi scheme
Lebanon's militant Islamic group Hizbollah has had its reputation for ideological purity tarnished by a growing scandal involving an alleged Bernie Madoff-style Ponzi scheme.
By Abigail Fielding-Smith in Beirut
Published: 6:00AM BST 06 Oct 2009
A Lebanese businessman with close links to the party has been arrested on suspicion of defrauding investors of up to £500 million.
A Hizbollah MP is among those who have lost money, and victims are thought to include a number of other senior officials, ordinary members and supporters.
The scandal has forced Hizbollah on to the defensive, with its secretary general, Hassan Nasrallah, having to deny involvement.
The scandal has been particularly damaging because financial speculation and the accumulation of personal wealth appears to directly contradict the party's religious ideology.
"Its public image has been tainted," said Amal Saad Ghorayeb, a Hizbollah expert. "Wealth taints you if you are a Khomeinist ideological party."
Some investors now say they expect the party to compensate them, claiming they were encouraged to invest with the businessman, Salah Ezzedine, because of his closeness to Hizbollah officials.
"Hizbollah must do something," said one investor, 33, who asked to be called Ali. "Ezzedine was close to them, they should be responsible about this."
Mr Ezzedine, a Shia known for his piety who also ran a number of legitimate businesses, was charged with embezzlement after his scheme collapsed.
Hizbollah's Shia heartland in South Lebanon has been hit hard with one resident estimating that at least 70 people in the towns of Toura, Shour, and Maaroub had bought in. Some of them are thought to have been investing on behalf of several other people.
"They are blaming me for the loss of their money," Ali said. He said he sold family land and gathered money from his mother, sister and two friends to invest £200,000.
Mr Ezzedine's middle men allegedly told clients they were investing in commodities such as gold and iron, and promised profits of up to 40 per cent.
But the scheme – believed to be like a Ponzi, in which one investor's money would be used to pay another – collapsed as losses spiralled out of control.
Investors say they had doubts about the improbably high returns and the lack of paperwork but they were mollified by the strength of Mr Ezzedine's Hizbollah connections.
"We heard people close to Hizbollah were doing business with him, and the party said that he was a trustworthy person," Ali said. "I thought, what the hell, everyone's making money, I should as well." Although the group has its own private army, it is also a political party with a crucial role in current negotiations to form the next Lebanese cabinet.
The party is not itself accused of wrongdoing, and is said to have helped in Mr Ezzedine's arrest. But its implicit endorsement of Mr Ezzedine has put it in a difficult position, and it has been forced to deny that it is considering some kind of compensation scheme. The pro-Hizbollah newspaper Al Akhbar also ran a critical editorial, saying that the apparent willingness of so many party members and associates to invest in the scheme should sound an "alarm bell". The organisation, famous for its probity and discipline, could be permanently damaged, it said.
"People are kind of shocked now," said one resident of a South Lebanon village. "They are not mad at Hizbollah, they can never be, they worship the party. "But they started saying it looks like the poor will stay poor, fight and die poor, and the rich become richer."
Terrorism: Hizballah's Brand is
By Jonathan Spyer*
September 27, 2009
A famous Hizbullah marching song, "Hizbullah ya ayuni" (Hizbullah - my eyes), contains the following verse: "And today through the blood of the brave, the merciful creator has given us victory, and the whole world and all people have begun to speak of our glory." Unfortunately for the Lebanese Shi'ite Islamist movement, the main world news story in which it currently features concerns matters of a distinctly inglorious type, with which it would undoubtedly prefer not to be associated.
The revelations concerning the activities of the so-called Lebanese Bernie Madoff - Salah Ezz el-Din of the south Lebanese village of Ma'aroub - are serving to tarnish the image of selflessness and idealism in which Hizbullah likes to present itself. The movement has long sought to differentiate itself from the notoriously corrupt, distinctly nonidealistic political and financial practices with which Lebanon is often associated. Ezz el-Din's activities suggest that on close observation, Hizbullah may be less different from its surroundings than its admirers (especially in the west) like to think.
Ezz el-Din, a Lebanese Shi'ite in his 50s, is accused of embezzlement and defrauding investors of hundreds of millions of dollars. The means by which he chose to part his victims from their money are familiar. He promised quick returns on investments in what he claimed were construction, oil and gas projects outside of Lebanon. He is reported to have guaranteed investors 20 percent-25% profits within 100 days on certain investments.
It now appears that Ezz el-Din was running a Ponzi scheme - paying clients with funds gleaned from newer investors. The sums involved are large - though nowhere near Madoff-like proportions. He is believed to have defrauded investors of around $500 million.
But Ezz el-Din was no ordinary financier. Rather, he enjoyed close links to Hizbullah. He ran a variety of enterprises associated with the group - most importantly the Dar al-Hadi Publishing House - named after Hadi Nasrallah. Hadi Nasrallah was the son of Hizbullah leader Hassan Nasrallah who was killed fighting the IDF in southern Lebanon, and is somewhere near the top of the movement's pantheon of "martyrs." The publishing house which bore his name was responsible for the publication of a number of books by senior Hizbullah officials.
THE PERCEPTION of Hizbullah patronage was a major factor in encouraging investors to place their trust in Ezz el-Din. As one disappointed client put it, "people put money with him because he was wearing the Hizbullah cloak." The presence of people like him does not fit with the puritanical image of Hizbullah. But it is not especially out of place with the broader pattern of the movement's activities.
As a major Lebanese political force, Hizbullah offers patronage to powerful families and individuals from the Lebanese Shi'ite community. The organization effectively operates a state within a state. Its areas are off limits to the army and police. This is particularly useful for individuals close to the movement engaged in criminal activities.
The lucrative hashish trade in the movement's heartland in the Bekaa Valley in eastern Lebanon offers an example of this patronage. Families engaged in this trade receive the protection of Hizbullah, ensuring that neither the authorities nor their rivals interfere with their activities. In return, Hizbullah takes a generous helping of the considerable profits.
The movement controls 13,000 acres in the Bekaa, which produce at least 300 tons of hashish annually. Hizbullah is reckoned to rake in profits of $180 million annually from this trade.
Most of the hashish is exported to Europe. Not all, though. The problem of drug abuse among residents in the Hizbullah-controlled Dahiyeh area of south Beirut is well known in Lebanon. Not all residents of the Dahiyeh are Shi'ite puritans.
Hizbullah is not reinventing the wheel. Rather, it is behaving in the manner of other Lebanese political forces. These activities are not particularly demonic - though the less powerful members of the various Lebanese communities are most likely to be hurt by them. But they serve to indicate the extent to which Hizbullah's pose of purity and incorruptibility and standing above the base practices of its rivals is largely a product of good public relations, rather than any observable reality.
The gradual tarnishing of the Hizbullah brand is, of course, good news for Israel. With past enemies - Arab nationalist regimes, the Yasser Arafat-led PLO - it was in the end the unbridgeable gap between proclamations and reality which served to initiate their slow decay and decline more than any single military defeat.
In this regard, another explanation for the Ezz al-Din affair is predictably doing the rounds in southern Lebanon. Haj Kamal Shour, who lost $1.03 million investing with the financier told reporters that he was sure that the "Israeli Mossad and Zionist lobby" were in some unaccountable way behind it all.
The reliable Zionist foe is enlisted to explain away failures and corruption scandals. But wasn't that exactly the political style that Hizbullah, with its selfless martyrs and its blood-curdling marching songs, was supposed to be doing away with? As Lebanon's former colonial governors might have put it - the more things change, the more they stay the same.
*Jonathan Spyer is a senior research fellow at the Global Research in International Affairs (GLORIA) Center, Herzliya, Israel
Report: Ezzedine handed over to military intelligence
Daily Star staff/Tuesday, September 29, 2009
BEIRUT: Businessman Salah Ezzedine was reportedly transferred from Roumieh prison to the headquarters of the Lebanese military intelligence after initial investigation showed that the financial losses from his investments were less than the amount of cash given to the financier. Pan-Arab daily Al-Hayat on Monday quoted judicial and security sources as saying the Lebanese Armed Forces (LAF) intelligence will now investigate the fate of the unaccounted-for money, as well as money transfers and investments in several countries, including Algeria, China, Brazil and Morocco.
Ezzedine is now making puzzling confessions about the amount of savings given to him by people, including citizens of Qatar, Kuwait and Iraq, the report said.
The financier made limited financial transactions via two Lebanese banks, and the amount does not make up two percent of the savings entrusted with him, the report added.
The sources said military intelligence will investigate whether there was embezzlement or Ezzedine had huge financial losses as a result of bad investments in oil, gas and iron.
A third possibility, said the sources, is a security and financial “ambush” by foreign parties, a clear reference to Israel.
Ezzedine has been charged with fraud and is being called the “Lebanese Bernie Madoff” in local newspapers.
Bankers say it is the biggest fraud of its kind this country has ever seen, and media coverage has fed on Ezzedine’s links with Hizbullah.
Hundreds of Lebanese sold land or drained their retirement savings and handed over hundreds of millions of dollars to Ezzedine, whose investment company promised as much as 40 percent in annual returns.
Ezzedine and his partner, Youssef Faour, have been arrested on suspicion of cheating investors out of hundreds of millions of dollars – perhaps up to $1 billion, prosecutors say.
Earlier this month, they were charged with fraudulent embezzlement, a crime punishable by 15 years in prison. Alleged victims included well-off Shiites but also smaller investors who sold land or pulled out savings to bundle the cash and give it to Ezzedine.
The Ezzedine, 47, was well-known for his religious works and charity in the southern port city of Tyre and surrounding Shiite villages. He owns the Dar Al-Hadi Publishing House.
Among his charitable works was largely financing a giant mosque in the center of his hometown of Maaroub. – The Daily Star
New Opinion: Ezzedine shows Hezbollah’s moral bankruptcy
September 25, 2009
Lebanese financier Salah Ezzedine, who is close to Hezbollah and accused of fraud and embezzlement, posing with family members. (AFP/HO)
Hassan Nasrallah says Hezbollah will compensate those who lost money when Salah Ezzedine went bankrupt. Many Lebanese Shia, according to news reports, trusted Ezzedine – and gave him their savings or money earned from land they sold – because of his proximity to the party. Yet even as Hezbollah continues to deny any ties to the financer, who is accused of fraudulent embezzlement, it apparently feels responsible enough to clean up his mess. While Hezbollah’s paying Ezzedine’s victims now is more nakedly political, it is quite similar to how the party reacted to the 2006 July War. Then, as hundreds of homes lay in ruins immediately after the war, Hezbollah started doling out large cash payments in US currency to residents in South Lebanon and Dahiyeh – what it called “clean money” – to rebuild. The speed with which the dollars began flying was clearly aimed as much at blunting ill will toward the party because unleashed such a destructive onslaught as it was at helping people. Ezzedine’s victims, according to Al-Hayat, were mostly Hezbollah members as opposed to the silent majority of Shia who live in the party’s areas of control and “support” it because there’s no other option. Hezbollah knows it needs to pay these people or risk losing its more ardent followers. Once again, the party will throw money at the problem it is responsible for creating. The Ezzedine case, of course, is different than the July War, but both highlight the problems Lebanon – and the Shia community in particular – face having Hezbollah exist as essentially a “state within a state.” The party runs a parallel institution for everything the state has – schools, hospitals, a telephone network and security forces, to name a few. In July 2006 Hezbollah, acting completely on its own with no apparent regard for the consequences of its actions, brought hell to a lot of innocent people living in the South and Dahiyeh.
On the other hand, Ezzedine stands as more of a symbol of the party and the disaster that frequently results from its “state within a state.” He is a wealthy man who lured scores of unassuming people into investing with him. He promised abnormally high returns and apparently either sent investors bad checks or sent them nothing, leaving them to discover their savings were gone only when he turned himself in to authorities after going bankrupt.Like Hezbollah, Ezzedine obviously operated with no transparency or oversight. The details of his fraud are not clear yet, but were he operating a legitimate investment company subject to rules and regulations, he would have been far less likely to lose it all seemingly overnight. As an individual acting on his own outside the law, he was free to wheel and deal as he saw fit, and the results were catastrophic for many. Similarly, Hezbollah’s existence and operation outside of official state institutions means it alone makes decisions without input from or consideration of others. Now as Hezbollah reaches into its coffers to purchase support and pay off Ezzedine’s victims, it may be able to soften the blow of his financial bankruptcy, but all the money in the world cannot save the party from its moral bankruptcy.
Fraudster Ezzedine hid investments from banking system
Compiled By Daily Star Staff
BEIRUT: Arrested businessman Salah Ezzedine admitted during questioning on Thursday that he had hidden large investments from the Lebanese banking system, judicial sources told The Daily Star. Ezzedine’s bankruptcy and arrest on suspicion of fraud have transfixed Lebanon, largely because of Ezzedine’s connections to members of Hizbullah. Ezzedine was questioned for five and a half hours by Mount Lebanon Investigating Magistrate Jean Farnini.
Ezzedine during the interrogation described details of his financial situation and of his recent bankruptcy. He also admitted to having invested large amounts of money, estimated at hundreds of millions of dollars, without going through the Lebanese banking system, the source said. The businessman then gave further details about his ambiguous transfer of money from and to Lebanon, the source added.
The investigating magistrate also questioned on Thursday Ezzedine’s partner Youssef Faour, after having issued arrest warrants against the two suspects last week.
Three other suspects who were not arrested were also called to the magistrate’s office. However, the three opted to wait for legal representation and their questioning was hence delayed, the source said.
Ezzedine is a wealthy businessman from the south and a prominent financier, particularly among Shiite circles in Lebanon. He is the owner of Dar Al-Hadi Publishing House, which has published religious Shiite books, including books by Hizbullah officials. He was officially charged with fraudulent embezzlement, a crime punishable by up to 15 years in prison, on September 15.
Ezzedine had major business interests, particularly in oil and iron industries, in Eastern Europe and suffered substantial losses when oil prices dropped starting in mid-2008.
It was believed that he tried to make up for his losses by taking money from investors, promising them up to 40 percent interest on their deposits – a return he could not repay.
Having declared bankruptcy two months ago, Ezzedine faced several charges and according to well-informed sources a new lawsuit has been filed against him and other suspects.
Also present at the questioning on Thursday was a large number of people who invested with Ezzedine along with numerous attorneys.
Ezzedine has been sued by Hizbullah MP Hussein Hajj Hassan, among others, for the loss of hundreds of thousands of dollars, but the group has maintained that Ezzedine was not a member, nor had any official connection to the party.
Hizbullah’s unsullied reputation when it comes to corruption has long-rested on the myriad social-welfare projects the group sponsors for its mostly Shiite constituents. – The Daily Star
financier investments embarrasses Hezbollah
By BASSEM MROUE (AP)
TOURA, Lebanon — A Mideast version of the Bernie Madoff scandal is threatening to tarnish Hezbollah's reputation in Lebanon for being incorruptible, and the powerful Shiite militant movement faces calls to bail out small investors to keep its position from being undercut. Hundreds of Lebanese sold land or drained their retirement savings and handed over hundreds of millions of dollars to Salah Ezzedine, a Shiite businessman with connections to Hezbollah. The anti-Israeli Hezbollah is on a U.S. list of terrorist organizations and maintains the strongest military force in Lebanon. For its Shiite followers, however, it is seen as a trusted quasi-government that provides social services and aid. The group gets substantial funding from Iran and paid out millions to rebuild the Shiite heartland in south Lebanon after a devastating 2006 war with Israel. Hezbollah has said it had nothing to do with the alleged swindle and has so far resisted pressure to rescue the investors.
Nevertheless, many investors put their trust in Ezzedine, principally because of the financier's connections to Hezbollah and because of his reputation as a pious, respectable Shiite. Ezzedine's investment company promised as much as 40 percent in annual returns, according to residents of this southern Lebanese village. Ezzedine and his partner, Youssef Faour, have been arrested on suspicion of cheating investors out of perhaps up to $1 billion, prosecutors say. Earlier this month, they were charged with fraudulent embezzlement, a crime punishable by 15 years in prison. Alleged victims included well-off Shiites but also smaller investors who sold land or pulled out savings to bundle the cash and give it to Ezzedine. Lebanese are comparing to the swindle by Madoff, now serving a 150-year prison sentence for masterminding a multibillion-dollar scheme that burned thousands of investors.
Hezbollah leader Sheik Hassan Nasrallah earlier this month denied the group had any connection with the financier. A parliament member from Hezbollah reportedly lost money with Ezzedine and is suing him — a sign, the group's supporters say, that it, too, was victimized.
Still, Hezbollah is trying to ward off any blow to its status among loyalists. Nasrallah spoke recently by video link to a group of investors in the south to hear their complaints and reassure them, although he made no promises of compensation, according to an investor who lost money, speaking on condition of anonymity because of the sensitivity of the meeting. The losses among people of all economic levels have stunned Shiites, who hold an abiding faith in Hezbollah's integrity and incorruptibility. While many still vow loyalty to the movement, they feel it should support its followers and pay compensation.
"That is what we hope," Wajih Shour, an investor from Toura, told The Associated Press. He said he paid several installments — including one of $150,000 — into the scheme. He refused to say the total amount he invested with Ezzedine but showed two checks worth hundreds of thousands of dollars that were given to him by one of Ezzedine's companies as a guarantee on his investment. The checks bounced because there was no money in the accounts, he said.
The 47-year-old Ezzedine was well-known for his religious works and charity in the southern port city of Tyre and surrounding Shiite villages. He had personal connections with Hezbollah figures — as any major businessman in the south would. He owns the Dar Al-Hadi Publishing House, one of Lebanon's most prominent producers of Shiite religious books that also prints books written by Hezbollah officials, and the children's TV channel Al-Hadi.
Among his charitable works was largely financing a giant mosque in the center of his hometown of Maaroub. A sign at its entrance says it was inaugurated in 2005 under the auspices of Nasrallah. A nearby municipal stadium was also financed by Ezzedine and was named "Stadium of the Resistance and Liberation Martyrs." Judicial officials said Ezzedine had major business interests, particularly in oil and iron industries, in Eastern Europe and suffered substantial losses when oil prices fell last year. They added that Ezzedine tried to make up for his losses by taking money from Lebanese investors. They have not detailed what Ezzedine did with the money or where the funds are now.
In Maaroub, a town of about 4,500 people, no one was home at the financier's large villa surrounded by a garden. Residents refused to say anything bad about Ezzedine, insisting he is a decent man. Rida Dbouki, 75, has known Ezzedine since he was a little boy and describes him as a "man who did all the good for this village." Asked about the losses, the grocer said, "We don't know how all this happened."
Another Maaroub resident, Hussein Khalil Khamis, 78, recounted how Ezzedine paid for his wife's diabetes and high blood pressure medications that he could not afford — amounting to $200 a month. Only one man in Maaroub, who identified himself only as Abu Ali because of the sensitivity of discussing the scheme in Ezzedine's hometown, acknowledged he invested a small amount of money, was promised 40 percent in annual return and never got it back. He would not say how much he invested. He said dozens of residents sold plots of land or took their retirement funds and invested them. Investors in Maaroub and the nearby town of Toura told the AP that those who wanted to invest $100,000 and above could go directly to Ezzedine's office in nearby Tyre. Those who had amounts less than that gathered their money and gave them to a person they trusted to invest it for them.
Fadi Ajami, owner of a hardware shop in Toura, said he and a friend each invested around $500,000, plus another $3 million bundled from dozens of his neighbors. Now he's trying to pay them back from his own funds, returning $390,000 so far after selling property and using his savings.
Ajami proudly proclaims himself a Hezbollah supporter — his office is decorated with pictures of its leaders, including Nasrallah and its military commander, Imad Mughniyeh, who was killed by a car bomb in Syria last year. "What really hurts is that those people (Ezzedine and Faour) used their connections with Hezbollah as a cover to gain people's trust. Hezbollah had nothing to do with them," Ajami said.
Copyright © 2009 The Associated Press. All rights reserved.
Lebanon's Madoff" embarrasses Hezbollah
Tue Sep 22, 2009
By Yara Bayoumy
Tire, Lebanon (Reuters) - Those who know wealthy Lebanese Shi'ite financier Salah Ezz el-Din say he is a deeply pious, humble man whose close links to Hezbollah made his credentials impeccable as he allegedly embezzled their savings.
Many Shi'ite Lebanese investors find it hard to believe the philanthropist could have defrauded them to the tune of at least $500 million -- small change compared with the $65 billion in the U.S. fraudster Bernard Madoff's Ponzi scheme, but made more painful by the connection with Hezbollah, which its followers regard as incorruptible.
"Whoever says he's a thief, that is an incorrect assessment," said Fouad Ajami, a 36-year-old steel factory owner from the southern Lebanese village of Toura of the embezzlement charges made earlier this month against Ezz el-Din, who is now in Roumieh prison and due for more questioning on September 24.
The charges include issuing cheques without sufficient funds.
"He was a do-gooder, he may have been subjected to a financial setback," said Ajami. "And because he didn't want to show that, maybe he created ghost investments to cover his losses."
Some Hezbollah officials have also lost money with the financier, from whom Ajami said he had at first received returns of 30 percent annually.
Among what meager paperwork the factory owner has retained are two cheques worth a combined $675,500 that bounced, with "Canceled" stamped in red.
He says he personally lost more than $500,000 to Ezz el-Din, whose holdings included a tour company that arranged for pilgrims to go on the annual haj pilgrimage to Mecca.
The financier lived in the village of Ma'aroub in southern Lebanon, the political and guerrilla group's bastion, which benefited from his goodwill with the construction of Shi'ite mosques and a football ground.
Ezz el-Din was also said to pay for fellow villagers' medical bills, compounding the Hezbollah connection for many people. Hezbollah also provides a network of social welfare services from education grants to subsidized medical treatment.
"To tell you the truth, people put their money with him because he was wearing the Hezbollah cloak," Ajami said.
Iranian-backed Hezbollah has a reputation for squeaky-clean honesty among its followers and famously compensated Shi'ite residents in southern Lebanon with $100-bill stuffed suitcases after the 2006 Israel-Hezbollah war.
That connection has been a political embarrassment, forcing Hezbollah leader Sayyed Hassan Nasrallah to address the issue. He denied any official connection to the financier but promised to set up a crisis center to assess the needs of those affected.
"Hezbollah is one of those affected by the crisis, but it won't leave the people to their destinies. Actually, it creates an environment that will protect them security-wise, politically ... and even economically," Nasrallah was quoted by local media as saying.
This may be a reason why for now at least, many duped investors have refrained from filing lawsuits against Ezz el-Din and his partner Yousef Fa'our.
Political sources say Ezz el-Din's cover was blown after a Qatari investor who wanted $9 million suspected him of stalling. Hezbollah officials privately say they suspect him of fraud.
Part of Ezz el-Din's appeal was that he promised large returns on investments which he said were from oil and gas, iron and steel projects outside Lebanon.
And flush with cash in the post-war reconstruction boom, many investors found the get-rich-quick scheme attractive.
Ajami said he first invested $90,000 after the 2006 Hezbollah-Israel war.
"Every two months, I received a check worth $4,950," he said. "Then his agent told us about investing in an Iranian gold mine which would guarantee profits of 20-25 percent within 100 days. On August 22, I gave him $50,000 and my friend gave him $200,000." Shortly after, Ezz el-Din was arrested.
"I was in shock. I spent the first 24 hours laughing uncontrollably," Ajami said.
Ajami is reluctant to call Ezz el-Din a fraud, but says his own reputation has suffered since fellow villagers, who were often poorer, entrusted him to invest their money.
"We were considered respectable people," Ajami said. "Now an onion-seller thinks we're stupid. We are bankrupt. I have had to mortgage some of my property to pay people back."
Ezz el-Din's hilltop mansion, lined with trees and bougainvilleas, overlooks the lush green fields of Ma'aroub. A spiral, paved driveway leads to a huge villa that is now empty save for Mostapha, the caretaker, who tends to the menagerie of chickens, pigeons, birds, horses and a flamingo.
Mostapha says the mansion's internal doors are all sealed with red wax.
The village, like many in the south, is virtually empty, save for multi-million dollar villas whose occupants generally live abroad and only visit Lebanon in the summer.
It is widely said that the majority of Ezz el-Din's early investors were Lebanese emigrants who were not in the country often to study closely their investments.
Hussein Fneish, the head of Ma'aroub's municipality, also attested to Ezz el-Din's reputation, but said Ma'aroub was severely affected by the crisis, losing $5 million: "It will take two years until the village is back to normal."
Political sources say the Lebanese central bank warned some investors a few months ago about Ezz el-Din. But it seems many refused to heed its warning.
Haj Kamal Shour, who with his three sons lost $1.03 million, said he never thought about investigating the investments, some of which they were led to believe were in Africa or Brazil, because of Ezz el-Din's "honesty and integrity."
He believes a bigger conspiracy is behind Ezz el-Din's demise: the "Israeli Mossad and Zionist Lobby."
"They look at where a Shi'ite is working, and try to destroy him. I don't discount this possibility," Shour told Reuters.
"We are in a difficult financial environment. The last thing we expected was that he would go bankrupt. But everyone trusts Salah Ezz el-Din. He is an excellent, honest, good human being."
(Editing by Sara Ledwith)
Loyalty to Hizbullah prevents Ezzedine victims from
Date: September 18th, 2009/Future News
Lebanese judiciary charged Entrepreneur Salah Ezzedine of fraudulent bankruptcy for attempting to pull a $1 billion ponzi scheme. The New York Times published a press analysis on the southern town of Toura, discussing the repercussions of the cause which rendered many Lebanese victims. The enormous amount of money stolen did not raise much interest as Ezzedine’s ties to Hezbullah have. Many investors, mostly Shiites, living in Beirut and southern villages said that their loyalty to Hizbullah drove them to gamble their savings with a man who paid up to 50% profit but never presented written documents. The scandal mortified the party that took pride primarily with altruism and honesty. It also revealed how Shiites in Lebanon still differ from the country’s other constituents, despite their ascent from poverty aging back to the feudalism age. It seems that their lack of confidence in Lebanese institutions contributing to Hizbullah’s establishment as a mini-state, exposed them to Ezzedine’s plots. “We were given guarantees better than those they give in banks,” pointed one investor speaking on condition of anonymity. That investor, for example, fears revengeful acts. Asked whether those “acts” are inflicted by Hizbullah, the investor refused to answer.
Last week, Hizbullah Secretary General, Hassan Nasrallah denied in last week’s speech the presence of ties linking the party to Ezzedine. A few days later, during an Iftar banquet for Hizbullah supporters, Sayyed Nasrallah admitted that it is practically the party’s responsibility and that he will be forming a crisis cell to assess investors’ losses. Several Hizbullah officials lost significant amounts of money and at least one pressed charges against Ezzedine. Hizbullah was even asked to compensate financial losses. Till not, the party said that it will not, for easily-reckoned reasons. Southern Shiites alone lost hundreds of millions of dollars and Hizbullah still hasn’t fulfilled its promises to rebuild houses destroyed by its vicious war against Israel in July 2006. Salah Ezzedine remains a mysterious character. He was known for owning Dar al-Hadi publishing house, specialized in selling religious books. Dar al-Hadi is situated at the middle of Beirut’s southern suburb. Ezzedine was known as philanthropic, religious and talented in easily winning the friendship of others. It is not clear what happened to the money, according to an informed judicial source, speaking on condition of anonymity. Though it is unlikely that the Ezzedine scandal would affect Lebanese economy in general, it could cause a genuine problem for Shiites, especially business men and real-estate owners. There is no specific number on the total amount of financial losses yet; however, the judicial official assured that the “ponzied” funds mount up to more than $700 million and might actually reach $1 billion.
Ezeedine’s scandal: a growing snowball
Date: September 17th, 2009
If it wasn’t a catastrophe, Hezbollah’s General Secretary Sayyed Hassan Nasrallah wouldn’t have repeatedly talked about Salah Ezzeddine’s scandal.
Despite all Hezbollah’s party upbeat talks and promises that they would not leave the victims alone to face their fate, Shiite sources, close to Ezzedine’s case confirmed that Nasrallah’s words didn’t alleviate Ezzedine’s victims revulsion. On the contrary, his clarifications have increased their fears and concerns. To deny or prove the organizational relationship of the latter with Hezbollah doesn’t meet the requirements in this regard.
These sources added that the victims have waited for a solution or reassuring that the harvest they have worked hard to collect will not go in vain, and of course, Hezbollah’s denial of any remote or relative relationship with Ezzedine wasn’t a big deal for them.
Nevertheless, Sayyed Hasan Nasrallah’s words showed his overwhelming concern whether Ezzedine held an organizational card from Hezbollah or not. Citizens however, don’t classify people over their organizational card, the relationship between Ezzedine and Hezbollah’s leadership and prominent figures is very well known and enough to presume any judgment. This relationship was what emphasized the victims to deposit their funds with Ezzedine, and without this crucial element, he wouldn’t have been able to reap the large amounts, estimated between $400 million and 2 billiard dollars.
According to these sources, the chats which take place in the narrow circles of Hezbollah’s party confirm that Ezzedine was one of the few people who could arrange a meeting with Nsarallah within a few minutes. This relationship between Hezbollah and Ezzedine was what motivated people to entrust him to their money, thus these quarters consider that it is Hezbollah’s responsibility to solve the problems of thousands of depositors, and disclose the mystery of Ezzedine’s case, although it is within the hands of the Lebanese judiciary.
The quarters added that a moral responsibility falls over Hezbollah’s shoulders; especially that the majority of the victims were of Hezbollah’s well-known activists. Ezzedine’s close relationship to the party gave his work some kind of credibility; this is why the investors no longer verified his financial situation.
Gossips on a larger scale claim that a large fraction of the funds deposited with Ezzedine, are the reparations circulated by Hezbollah and some Arab countries after July 2006 war to thousands of families in southern Lebanon and southern Beirut.
Furthermore, it was pointed out that there still is a very controversial issue within Hezbollah that wasn’t brought to public until now because it holds great risks over the party and impacts its unity. The issue is about the legitimate religious rationale adopted by the party investors to Ezzedine whereas there is a clear legal law prohibiting usury to both the lending and the lender.
This matter created a debate about Hezbollah and questioned its credibility, the thing which may affect the party’s future contact with large segments of the Shiites.
How was “The Pacific Emperor” exposed? Was his work initially a cover to his intentions of fraudulent or did he loose in his business between Lebanon and abroad?
Hezbollah is convinced that Ezzedine is a hustler, and that he was able through his religious "commitment" to deceive the leadership cadre, including Sayyed Hasan Nasrallah who was very surprised and stated during his meeting with party cadres about this case, that a person’s credibility can’t be measured through his fasting, or prayer or release of beard, other standards should be taken into consideration and other criteria must be followed. Perhaps this explains why MP Husseien Hajj Hasan carried a law suit over Ezzedine and accused him of giving him an unbalanced “Check”.
But why did Hezbollah hand out Ezzedine to justice after keeping him for three days?
It is reported that a Qatari businessman married to a Lebanese woman from Nabatiyeh deposited a sum of more than one hundred million dollars with Ezzedine, and then tried to contact him many times without getting any answer.
When this businessman came to the country, he repeatedly tried to contact Ezzedine, but the latter did not respond. The man therefore contacted a person related to Ezzedine and asked him if he was outside the country. The latter replied that he had seen him about one hour ago and he came into contact with Ezzedine telling him that this man wants to meet him, Ezzedine answered, "Tell him I am out of the country”. The interlocutor went and told the party about it.
According to the information, Ezzedine tried to pretend he was out of Lebanon, and he stamped his passport and hided in Saadiyat village after he has given up his old phone numbers and replaced them with new ones. However, the party and the Ministry of Communications managed through a security operation to arrest and investigate him. Ezzedine confessed he was broke and had no money with him. It should be noted here that Ezzedine’s phone track was directly ordered by the Minister of Telecommunications Gebran Bassil, without going through the legal procedures and passing the demand to the prosecution.
Three days after his arrest at the party, his case began to interact with the victims who protested against him in front of Hezbollah’s Center, which pressured the party hand Ezzedine to the judiciary, along with his conviction that he was responsible of a major fraud operation that damaged the lives of people who belonged to the party.
Shiite sources stress that the issue goes far beyond the judiciary, given that its interactions occupied the villages of the south and the Bekaa and the southern suburbs and neighborhoods. Many of the questions are getting reproduced within all the elucidations issued here or there in an attempt to avoid responsibilities.
The talks among the affected people indicate that Ezzedine’s case may turn into an on-growing snowball in the upcoming days, especially that it is not the first incident of its kind, there is also the issue of “Khalil Hassoun, AL-Jawad Foundation," which dozens of families are still suffering from its repercussions, in addition to the Moussaoui case. Many other similar cases differentiate in numbers and small details but resemble highly in the way Hezbollah deals with it. The party’s concern is obviously to get back its money before handing the criminal to justice, without taking into consideration the rights of thousands of families.
Bernie Madoff: A Scandal Taints Hizballah
By Andrew Lee Butters / Beirut
Wednesday, Sep. 16, 2009
Business magnate Salah Ezzedine was known as a pious, generous man. Hailing from a small Shi'ite Muslim town in southern Lebanon, he was a success story among country's poorest, historically marginalized religious sect. With his reputation for generosity (he built a stadium and a mosque for his hometown of Maaroub, sponsored pilgrimages to Mecca, and published children's books), few were suspicious when Ezzeddine promised investors a share of his business with the lure of outstanding rewards — from 20% to 40% returns — and few details of how the scheme worked or guarantees or paperwork. Still, what he seemed to have — the implicit backing of Hizballah, the popular anti-Israeli militant group and political party — was as good as gold to its many loyal followers among the Shi'ites of Lebanon.
But now Ezzeddine's schemes — supposedly investments in oil, publishing, metals and television spread out from the Gulf to Africa — are unraveling on a spectacular scale — and it is casting Hizballah in an unflattering light. The house of cards began falling earlier this month, when his businesses went bankrupt, ostensibly from the effects of the global financial crisis. But rumors swirled in the press of a pyramid scheme of more than a billion dollars, and the local media dubbed him the Lebanese Bernie Madoff. Last weekend the Lebanese government charged him with fraud. All across the Shi'ite-populated regions of Lebanon, thousands of small investors — many of whom bundled small sums of money with their neighbors to give to Ezzeddine — feel betrayed by both the man and the organization. "I inherited $100,000 from my father to continue my studies, I invested them with Ezzeddine and now all my dreams are destroyed," says Mohammad, a 25-year old student from Maaroub. "I don't know what I was thinking when I invested with him. We thought he was Hizballah's financier."
(See pictures from inside Hizballah.)
Ezzeddine's exact connection to Hizballah is unclear. The organization denied having an official relationship with him, but Hizballah leader Hassan Nasrallah has acknowledged that the group was being tainted by association, saying he would mount an investigation to account for investor losses. But many investors have said that Hizballah officials not only encouraged them to put their money and trust in Ezzeddine, but also that his investments were halal, meaning acceptable according to Muslim laws which forbid profiting from interest (which they equate with usury).
(See pictures of Hizballah's youth movement: the Mahdi Scouts.)
"He was able to gain people's confidence easily due to his connections with Hizballah," says Mohammad Duhaini the mayor of Toura, another town in southern Lebanon, where he says at least 250 people had invested with Ezzeddine. Says Duhaini, "Most of those who dealt with him were supporters of Hizballah [and] many people were encouraged to do business with Ezzeddine due to Hizballah's propaganda for him." Indeed, one Hizballah source told TIME that some top leaders did business with Ezzeddine. The Lebanese press has published unsubstantiated reports that his enterprise collapsed when a check he wrote to a senior Hizballah official bounced, and that, as a result, the financier went into hiding until Hizballah security forces found him and turned him over to the government.
It seems surprising that the leaders of an institution as sophisticated as Hizballah would fall for a simple Ponzi scheme. But the organization does rely on a network of businessmen and fundraisers such as Ezzeddine, not just in southern Lebanon but also in West Africa, South America and wherever expatriate Lebanese do business. Hizballah has been trying to become financially independent from its main patron, Iran (which has its own financial problems) and earlier this year, a Hizballah official told TIME that the organization is close to becoming completely self-sustaining. What effect the Ezzeddine scandal has on those plans remains to be seen.
The worst part of the scandal for Hizballah might not come in dollars and cents but in damage to its reputation for honesty, competence and integrity which, after its status as the world's most formidable organization of guerrilla fighters, is what makes the Shi'ite political party popular not just in Lebanon but in the wider Arab world. Those traits were on display when Hizballah engineers and social service workers fanned out immediately in the aftermath of the war with Israel in 2006 to assess damage and offer assistance to its supporters who had lost their homes and business. Months later, Nasrallah launched a reconstruction program called Waad, or "promise", to rebuild every destroyed home by the beginning of 2010.
But since then, the organization has struggled under the burden of the massive development project. It scrapped ambitious plans to redesign the cramped urban environment of Beirut's southern suburbs, where Hizballah support is strongest and which Israel bombed most heavily. Yet, Waad is still well behind schedule to meet the 2010 deadline.
For the loyal rank-and-file, the scandal may not tarnish their faith in Hizballah. After all, it was Hizballah, not the Lebanese government, that freed southern Lebanon from Israeli occupation in 2000, and it was Hizballah that turned back the Israeli tanks in 2006. But on the back of several recent setbacks — the assassination of its operations chief last year, the electoral loss at the polls in June this year, the discovery this spring that an Israeli spy ring in Lebanon had bugged Hizbalalh's vehicles — Hizballah has lost some of its aura of invincibility, and its supporters no longer seem so ready to hit the frontlines and the barricades. With reporting by Rami Aysha/Beirut
Billion-Dollar Pyramid Scheme Rivets Lebanon
New York Times
September 16, 2009
The investor, a heavyset man in a gray polo shirt, sat back in a plastic chair in his hardware store and sighed, unable to explain how his life savings had vanished so quickly into thin air, The “It’s a disaster, a tsunami,” he said. “Some farmers mortgaged their fields and brought in cash. Others sold land they had inherited from their parents. Teachers gave up all their savings. Old people lost everything they had.”The money disappeared, judicial authorities say, in a billion-dollar pyramid scheme that has riveted Lebanon, The New York Times’s Robert F. Worth writes from Tura. Its mastermind, a businessman named Salah Ezzedine, was charged with fraud on Saturday and is being called the “Lebanese Bernie Madoff” in local newspapers. Bankers say it is the biggest fraud of its kind this country has ever seen.
But the dollar figures have drawn less attention here than Mr. Ezzedine’s close links with Hezbollah, the militant Shiite movement. Many of the investors — mostly Shiites living in Beirut and southern villages like this one — say those party links were the reason they chose to risk their hard-earned savings with a man who offered 40 and 50 percent profits but never showed any paperwork. The scandal has embarrassed the party, which prides itself on a reputation for honesty and selfless piety. It has also illustrated the way many of Lebanon’s Shiites, despite their ascent from near feudal poverty just a few decades ago, remain in some ways a nation apart. 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.
“We got guarantees that were stronger than any bank,” said the investor here, who like others associated with Mr. Ezzedine, spoke only on condition of anonymity for fear of reprisals. Asked whether he meant Hezbollah, he declined to answer, The Times said.
Hezbollah’s general secretary, Hassan Nasrallah, denied in a speech last week that the party had any official connection with Mr. Ezzedine. But a few days later, during a Ramadan dinner with Hezbollah supporters where he appeared by video link, Mr. Nasrallah conceded that the party would in practice be held responsible, and said it was setting up a “crisis network” to assess each investor’s losses. Several Hezbollah officials lost money, and at least one has filed suit against Mr. Ezzedine.
There have even been calls for Hezbollah to compensate the investors. So far, the party has said it will not do so, and it is easy to see why. 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 monthlong war with Israel in 2006.
Mr. Ezzedine, 49, remains a mysterious figure. He was best known as the owner of Dar el-Hadi, a publishing house that specialized in religious titles and is based in the heart of Dahieh, Beirut’s Shiite southern suburb. More recently, in 2007, he founded Al Mustathmir, a financial institution based in Beirut that focused on money management. He was known as a deeply religious and charitable man, with a gift for winning people’s friendship.
It is still not clear what happened to the money, according to a judicial official with knowledge of the case who spoke on condition of anonymity, telling The Times that he was not authorized to comment publicly. Mr. Ezzedine, who is now in jail awaiting trial, invested in metals, oil and other commodities in Africa and the Middle East, The Times said, citing several people who knew him.
“Gold, steel, iron,” said the investor, who regularly bundled smaller contributions from dozens or even hundreds of villagers and then presented packages — anywhere from $100,000 to $500,000 — as a single investment to Mr. Ezzedine’s assistants. “Every time, I’d give them the money in a bag, and they’d give me a check for the same amount.”
He leaned forward and showed his cellphone, with a photograph on the screen of rows and rows of stacked $100 bills.
As he reeled off the project titles — zircon, titanium, African oil — the investor began to shake with melancholy laughter. Two friends sitting across from him in his threadbare store — who also lost money with Mr. Ezzedine — laughed with him. The laughs grew louder and louder, and soon all three men were collapsing into wild, helpless bouts of hilarity, tears forming in the corners of their eyes.
“On the day we first heard, we met in the mosque, and we were laughing hysterically for 24 hours,” the investor told The Times.
He soon grew sober again.
“I’m telling you this like it’s just a story,” he said. “But for us, it’s really hard. We are expecting family problems, social problems. Brothers who borrowed money from in-laws and lost it. I have a building I mortgaged.”
Although the scandal is not likely to affect Lebanon’s broader economy, it could create real problems in the Shiite community, where some major real estate owners and businessmen went into debt to finance their investments. The full extent of the alleged swindle remains unclear, but the judicial official said the amount lost appeared to be at least $700 million, and possibly more than $1 billion.
Curiously, some of the investors still defend Mr. Ezzedine. The deep loyalty to Hezbollah that may have helped cause the disaster apparently also prevents many victims from complaining.
In Mahroub, the village a few miles from Tura where Mr. Ezzedine grew up, many local people know him as the pious, likable man who used his money to build a beautiful new mosque a few years ago. And in some cases the financial naïveté that Mr. Ezzedine played on may even help obscure any crimes. Mustafa Fneish, a wizened 54-year-old taxi driver in Mahroub, said he invested $10,000 with Mr. Ezzedine and had received an 80 percent profit on his investment, or $8,000. When asked whether he had received the principal back, he looked confused, and said no. “All this happened because of the United States and Israel,” Mr. Fneish added, echoing a refrain that springs easily to people’s minds here. “When they discovered that Ezzedine was close to Hezbollah, they ruined him.”
'Madoff' Ezzedine goes from fame to infamy
Nasrallah sets up crisis unit to help those who fell victim to fraud
By Agence France Presse (AFP)
Wednesday, September 16, 2009
Rita Daou /MAAROUB: From wealthy Lebanese expatriates to local villagers to top Hizbullah officials: financier Salah Ezzedine spared no one as he allegedly concocted a Ponzi scheme that saw more than a billion dollars go up in smoke. Dubbed “Lebanon’s Bernard Madoff” by the local and international press, Ezzedine made headlines earlier this month after he filed for bankruptcy and was placed under arrest. Madoff, the disgraced Wall Street financier, is serving a 150-year sentence for fraud.
Lebanese authorities at the weekend charged the 47-year-old mogul and his business partner, Yussef Faour, with fraud, embezzlement, distributing bounced cheques and violating Lebanese fiscal law. Faour, who has also been arrested, is the deputy mayor of the southern Lebanese village of Maaroub, Ezzedine’s hometown, and – according to some local residents – a member of the Hizbullah party. Reports say Ezzedine, who also has ties to Hizbullah, squandered more than $1 billion of his clients’ money, mainly Shiites from southern Lebanon. Ezzedine gained fame among Lebanon’s sizeable Shiite community in the early 1990s, when he began organizing pilgrimages to Mecca.
He then began to dabble in oil and diamond trade, but kept most of his financial business outside of Lebanon, mainly Iran, Algeria and China, residents of Maaroub told AFP.
Ezzedine’s publishing house, located in the southern suburbs of Beirut, was named after Hizbullah leader Sayyed Hassan Nasrallah’s late son Hadi and was shut down by state officials after his arrest. His victims say his entrepreneurial skills and reputation as a “good man” led many to look to him as their financial shepherd.
Jamil Fneish, a Lebanese living in Canada, told AFP that he and his six sons lost more than $1 million they had entrusted to Ezzedine.
Fneish, like many in Maaroub, says he is still stunned by the revelations concerning the local ‘golden boy’ who built the town hall, sports stadium and two mosques.
“He was a good man who was very generous with the poor,” said Ali, a local shopkeeper. “He would cover tuition fees, hospital bills and medicine costs for those in need.”
Even when Ezzedine struck an unlucky deal in aluminium trade, he still let his clients pay only “five percent interest instead of the usual 20 to 25 percent or more,” said Fneish, who travelled to Lebanon this summer and returned to Canada on Monday to rejoin his 11 children and 25 grandchildren.
Another Maaroub resident, Ali Fneish, said many in Lebanon’s Shiite community have borne the brunt of his financial foils.
“I hold Hizbullah and the Lebanese state responsible,” the 67-year-old said. “Are they not responsible for their people? And where were they when their people were investing their money illegally?” Mohammad al-Duheini, mayor of the southern village of Toura, said that around 250 local residents had placed their money with Ezzedine who would give them interest rates that topped 25 percent. “He managed to win the trust of the Shiites of south Lebanon and handled a lot of their money,” he told AFP.
Hizbullah leader Nasrallah insists that Ezzedine is not linked to the party but acknowledges that some party officials had invested money with him.
Among them is Hizbullah MP Hussein Hajj Hassan who has filed a complaint over a bounced cheque signed by Ezzedine.
Nasrallah at the weekend said that he had set up a crisis unit to help those who fell victim to the alleged fraud.
A banking official in southern Lebanon, who requested his name not be revealed, said he expected the number of lawsuits against Ezzedine to rise sharply.
“Our clients have deposited around 20 bounced cheques coming from one of Ezzedine’s companies, called ‘Through the Gulf for Trade and Industry,’” he said on condition of anonymity. The cheques were written for a minimum of $200,000 each, he added.
Under Lebanon’s banking secrecy law, banks cannot reveal their clients’ names, assets or holdings except in cases of bankruptcy or if granted written authorization by the client.
Lebanon's Own 'Madoff'
Naharnet/From wealthy Lebanese expatriates to local villagers to top Hizbullah officials: financier Salah Ezzedine spared no one as he allegedly concocted a Ponzi scheme that saw more than a billion dollars go up in smoke. Dubbed "Lebanon's Bernard Madoff" by the local and international press, Ezzedine made headlines earlier this month after he filed for bankruptcy and was placed under arrest. Madoff, the disgraced Wall Street financier, is serving a 150-year sentence for fraud.
Lebanese authorities at the weekend charged the 47-year-old mogul and his business partner, Youssef Faour, with fraud, embezzlement, distributing bounced cheques and violating Lebanese fiscal law. Faour, who has also been arrested, is the deputy mayor of the southern Lebanese village of Maaroub, Ezzedine's hometown, and -- according to some local residents -- a Hizbullah member. Reports say Ezzedine, who also has ties to Hizbullah, squandered more than one billion dollars (688 million euros) of his clients' money, mainly Shiites from southern Lebanon. Ezzedine gained fame among Lebanon's sizeable Shiite community in the early 1990s, when he began organizing pilgrimages to Mecca.
He then began to dabble in oil and diamond trade, but kept most of his financial business outside of Lebanon, mainly Iran, Algeria and China, residents of Maaroub told AFP.
Ezzedine's publishing house, located in the southern suburbs of Beirut, was named after Hizbullah leader Sayyed Hassan Nasrallah's late son Hadi and was shut down by state officials after his arrest.
His victims say his entrepreneurial skills and reputation as a "good man" led many to look to him as their financial shepherd. Jamil Fneish, a Lebanese living in Canada, told AFP that he and his six sons lost more than one million dollars they had entrusted to Ezzedine. Fneish, like many in Maaroub, says he is still stunned by the revelations concerning the local 'golden boy' who built the town hall, sports stadium and two mosques. "He was a good man who was very generous with the poor," said Ali, a local shopkeeper. "He would cover tuition fees, hospital bills and medicine costs for those in need." Even when Ezzedine struck an unlucky deal in aluminum trade, he still let his clients pay only "five percent interest instead of the usual 20 to 25 percent or more," said Fneish, who traveled to Lebanon this summer and returned to Canada on Monday to rejoin his 11 children and 25 grandchildren. Another Maaroub resident, Ali Fneish, said many in Lebanon's Shiite community have borne the brunt of his financial foils.
"I hold Hizbullah and the Lebanese state responsible," the 67-year-old said. "Are they not responsible for their people? And where were they when their people were investing their money illegally?" Mohammed al-Duheini, mayor of the southern village of Toura, said that around 250 local residents had placed their money with Ezzedine who would give them interest rates that topped 25 percent. "He managed to win the trust of the Shiites of south Lebanon and handled a lot of their money," he told AFP.
Hizbullah leader Nasrallah insists that Ezzedine is not linked to the militant party but acknowledges that some party officials had invested money with him.
Among them is Hizbullah MP Hussein Hajj Hassan who has filed a complaint over a bounced cheque signed by Ezzedine. Nasrallah at the weekend said that he had set up a crisis unit to help those who fell victim to the alleged fraud. A banking official in southern Lebanon, who requested his name not be revealed, said he expected the number of lawsuits against Ezzedine to rise sharply. "Our clients have deposited around 20 bounced cheques coming from one of Ezzedine's companies, called 'Through the Gulf for Trade and Industry'," he told AFP on condition of anonymity. The cheques were written for a minimum of 200,000 dollars (137,000 euros) each, he added. Under Lebanon's banking secrecy law, banks cannot reveal their clients' names, assets or holdings except in cases of bankruptcy or if granted written authorization by the client.(AFP)
Beirut, 15 Sep 09, 10:54
Ezzedine charged with embezzlement
Monday, September 14, 2009
BEIRUT : A Lebanese prosecutor on Saturday formally charged a prominent Shiite businessman with alleged links to Hizbullah with fraudulent embezzlement, a crime punishable by up to 15 years in prison, a court official said. The businessman, Salah Ezzedine, is suspected of depriving investors of hundreds of millions of dollars. He turned himself in to authorities last month after declaring bankruptcy and has since been held in custody.
Ezzedine is suspected of creating a Ponzi scheme that promised investors returns of up to 40 percent a year. The case has drawn comparisons in Lebanon with that of Bernard Madoff. punishable with prison terms of three to 15 years, the court official said.
Five others have also been charged with involvement in the case, but are on the run, the official said. He spoke on condition of anonymity because he was not authorized to address the media.
Ezzedine and Faour have been referred to an investigating magistrate for further investigation before a date is set for their trial.
Ezzedine, a wealthy businessman from the town of Maaroub near the southern port city of Tyre, is a prominent financier, particularly among Shiite circles in Lebanon. He is the owner of Dar Al-Hadi Publishing House, which has published religious Shiite books, including books by Hizbullah officials. The allegations have tarnished a reputation Ezzedine had as a pious man involved in charity work. He headed an institution that organized pilgrimage trips to Muslims holy cities of Mecca and Medina in Saudi Arabia. Recent media reports in Lebanon have alleged that Hizbullah has had business dealings with the businessman, shaking the militant Shiite group’s image as an austere resistance movement. Hizbullah, however, has denied any involvement in Ezzedine‘s business dealings. Many Muslims consider interest paid by banks as un-Islamic and therefore prefer to invest their money in businesses such as the ones run by Ezzeddine. – AP
On Saturday, acting financial prosecutor Fawzi Adham charged Ezzedine and a partner, Youssef Faour, with fraudulent embezzlement, issuing bad checks and violating the Lebanese monetary and loan laws. The crimes are
Izzedine’s bankruptcy: CIA drowned him to strike Hizbullah
Date: September 4th, 2009/Source: Future News
Bankrupt businessman Salah Izzedine apparently had financial links with Hizbullah, as a report said that Izzedine, born in Maaroub village of Tyr district, was one of the Shiite party’s investors in many countries. According to the report, the US intelligence services, and within its bid to dry up the financers of terrorism across the world, deliberately drowned Izeddine in the dilemma of the stock market and was able to cause him a 300 million dollar loss. The CIA then seized the rest of his money when he tried to retrieve the fortune he had lost earlier and lost the transactions. The report estimated the funds Izzedine had lost anywhere between 1.2 and two billion dollars, adding that half of the funds belong to Hizbullah and the Iranian Revolutionary Guards, which had invested the funds abroad. After Izzedine lost the funds, Hizbullah captured him and kept him in custody for 10 days before handing him ‘empty-handed’ to the Lebanese judiciary after it transferred what was left of his wealth to the party as a compensation for its loss.
According to the report, this transaction has made it impossible to return some of the funds to the affected impoverished Shiites, who had given their lifesavings to Izzedine including the compensations they were given after the July war of 2006, which Izzedine used to rebuild his affected real-estates. Information estimated the losses of the Southern village of Yaroun, from 110 to 130 million dollars, while the village of Jwayya was mostly affected by the bankruptcy as most of its people are expatriates and are well heeled.
Hizbullah’s MP Hussein Hajj Hassan was also among the victims of Izzedine as he lost millions of dollars which he had taken from the people of the Bekaa village of Shmistar and its surrounding, and according to the report Hajj Hassan claimed an amount of 200 million dollars through the lawsuit he filed against Izzedine through his agent attorney Ashraf Mussawi accusing of fraud and giving a check without credit. Not to mention the massive losses that affected Fneich family and other families of the MPS of Amal movement and Hizbullah.
Sources told almustaqbal.org that the judicial investigations about the Izzedine case is ongoing covertly, given the political sensitivity of the case, and awaiting the clarification of the nature of the procedures he was conducting and the amount of funds he had obtained. The sources say that investigations are trying to find out if the detained man had concealed accounts or if he had other identities outside Lebanon. Banking sources note that if investigations proved that Izzedine did not have any debit accounts in Lebanon, as sources in the Central Bank of Lebanon told almustaqbal.org, then a large part of his business would be relying on cash transactions for reasons imposed by his financial association with Hizbullah and in order not to fall for international measures that prohibit working with the party. According to the sources the international Committee for Fighting Money Laundry and the embassies in Lebanon have been following up on the case. The sources say the case will not come to an end as any other case, given its multi-national complexions.
3 Hezbollah leaders lose big to 'Lebanese Madoff'
Wafik Safa, who refused to reveal status of Regev and Goldwasser, is one of biggest losers in scheme
Roee Nahmias Published: 09.04.09, 17:39 / Israel News
Three senior Hezbollah operatives are among those who invested and lost funds with Lebanese businessman Salah Ezzadine, who has been nicknamed the 'Lebanese Madoff' after being accused of losing over a billion dollars of his clients' money.
'Lebanese Madoff' detained / Associated Press
Famous Shiite financier suspected of executing Ponzi scheme in which main loser was Hezbollah
One of the three is Wafik Safa, the first to disclose during Israel's prisoner swap with Hezbollah in 2008 that IDF reservists Ehud Goldwasser and Eldad Regev, kidnapped by the organization two years earlier, were dead During the prisoner swap Wafik Safa became known in Israel for refusing to reveal the status of the two captured soldiers until the very last minute, just before their bodies were brought out in coffins. Al-Arabiya reported that the other two men were the leader of Hezbollah's parliament bloc, Mohammad Raad, and a member of the bloc, Amin Sherri. The report did not say whether they had lost their own private funds or those of the organization. Sources affiliated with Hezbollah have estimated Ezzadine's losses at around a billion dollars, and a Kuwaiti daily reported Thursday that the organization had lost around $683 million.
Hezbollah, said to be still recovering from the 2006 Second Lebanon War with Israel, is now considered to be in financial dire straits.
Earlier this week the Lebanese a-Safir reported that Ezzadine, a prominent Lebanese businessman, is accused of leading a giant Ponzi scheme and that he was arrested by Hezbollah in Beirut while attempting to flee the country.
Lebanon: Financier Is Detained
Published: September 4, 2009
A prominent Lebanese businessman with ties to Hezbollah has declared bankruptcy and been detained after it appeared that he lost several hundred million dollars' worth of investors' money, Lebanese officials said. The businessman, Salah Ezzedine, the owner of a religious publishing house who also traded oil and owned factories in Eastern Europe, surrendered to Lebanese authorities last week, according to a judiciary official . Lebanese newspapers have begun referring to the case as a Lebanese equivalent of the Bernard L. Madoff scandal. Mr. Ezzedine was born in the Shiite heartland of South Lebanon, and his reputation for piety and good relations with Hezbollah, the Shiite militant movement, helped lure many of the group's supporters to invest with him. He promised investors a return of 30 to 40 percent, the judiciary official said. Some of his clients, who include investors from Qatar and other Persian Gulf countries, have said they plan to sue him.
locate bankrupt businessman
Daily Star staff/Saturday, September 05, 2009
BEIRUT: Hizbullah in association with the Telecommunications Ministry helped locate bankrupt businessman Salah Ezzedine in his hideout in the Beirut southern suburbs, well-informed judicial sources told The Central News Agency (CNA) on Friday. According to the judicial sources quoted by the CNA, Hizbullah carried out “a quick raid” of his hideout, “questioned him and later handed him to judicial authorities. Earlier reports had mentioned that Ezzedine gave himself up to authorities. The sources added that one of Ezzedine’s associates, a businessman only identified as “Youssef F” had been recently arrested by the judiciary. Ezzedine, a wealthy businessman from the town of Maaroub near the southern port city of Tyre, is a prominent financier particularly among Shiite circles in Lebanon. He is the owner of Dar Al-Hadi Publishing House – one of Lebanon’s most prominent publishers of religious Shiite books that also prints books written by Hizbullah officials – and Al-Hadi TV for children.
As-Safir newspaper reported on that Ezzedine’s publishing house Dar al-Hadi was shut down on Thursday based on a court order to close down some of Ezzedine’s enterprises. More than 250 employees lost their jobs overnight as a result of the court’s decision. The judicial officials said Ezzedine had major business interests, particularly in oil and iron industries, in Eastern Europe and suffered substantial losses when oil prices dropped starting mid last year. He tried to make up for his losses by taking money from Lebanese investors, promising up to 40 percent interest which he could not repay, the officials said on condition of anonymity. Many Muslims consider interest paid by banks as un-Islamic and therefore prefer to invest their money in businesses such as the ones run by Ezzeddine. Media reports said that those who invested with Ezzedine included high-ranking members of Hizbullah, as well as Shiite investors from south Lebanon and the Hizbullah stronghold south of Beirut.
Former Hizbullah MP Amin Sherry denied any links to Ezzedine in a statement released on Friday. Earlier Friday, Saudi-owned Al-Arabiya news channel had reported that Sherry, along with the head of Hizbullah’s parliamentary bloc MP Mohammad Raad and the party’s politburo member Wafiq Safa, were among those who invested their money with Ezzedine.
As-Safir newspaper also interviewed a relative of Ezzedine who inistsed that his kin was not the only person implicated in the bankruptcy case. “He is one of five associates,” he said, adding that one of them had fled the country. Judicial sources told the CNA that one of Ezzedine’s relatives “stands behind or knows the true reasons behind the bankruptcy.”
The bankruptcy case made headlines earlier this week as Ezzedine gave himself up to authorities after declaring himself bankrupt. The officials said he was then taken into custody and was investigated for possible crimes including “the fraud of large amounts of money.” – The Daily Star
Mystery surrounds Lebanon's 'Bernard Madoff'
Sep 05, 2009/AFP
A shroud of mystery surrounding the bankruptcy of a top Lebanese financier was growing on Friday as his list of alleged victims, mainly Muslim Shi'ites, also does.
Salah Ezzedine, a Shi'ite from southern Lebanon in his 50s who has been dubbed the "Bernard Madoff" of his country, was arrested earlier this week when he filed for bankruptcy.
Reports surfaced that he had squandered more than $1.5 billion of his clients' money. Mohammed al-Duheini, mayor of the southern town of Toura, said on Friday that "around 250 residents from my town placed their money in the hands of Salah Ezzedine, and he would give them interest rates that topped 25 percent". "He managed to win the trust of the Shi'ites of south Lebanon and handled a lot of their money," he told news agency AFP. Local papers have reported that Ezzedine offered interest rates as high as 60 percent and that part of his clientele was from the oil-rich Gulf. But prosecutor Said Mirza said there were no official figures as yet on Ezzedine's finances, and that the bankruptcy claim had yet to be verified.
"We are still gathering information," he told AFP. While Ezzedine's own political beliefs are unclear, most of his clients were supporters of militant group Hezbollah, Duheini says.
Hezbollah MP Hussein Hajj Hassan was among the first to file a complaint against Ezzedine over a bounced cheque, according to the local media.
"What people heard about him was that he is protected by Hezbollah and is an honest man who runs charities," Duheini said. "They looked to him as the saviour of the south and its people, as the protector of the Shi'ites' finances."Under Lebanon's banking secrecy law, banks cannot reveal their clients' names, assets or holdings except in cases of bankruptcy or if granted written authorisation by the client. To keep updated with the very latest news sign up to the Maktoob Business newsletter now.
Mystery Shrouds Ezzedine's Bankruptcy Case
Naharnet/A shroud of mystery surrounding the bankruptcy of a top Lebanese financier was growing as his list of alleged victims, mainly Muslim Shiites, also does. Salah Ezzedine, a Shiite from southern Lebanon in his 50s who has been dubbed the "Bernard Madoff" of his country, was arrested earlier this week when he filed for bankruptcy. Reports surfaced that he had squandered more than 1.5 billion dollars (1.05 billion euros) of his clients' money. Mohammed al-Duheini, mayor of the southern town of Toura, said that "around 250 residents from my town placed their money in the hands of Salah Ezzedine, and he would give them interest rates that topped 25 percent. "He managed to win the trust of the Shiites of south Lebanon and handled a lot of their money," he told AFP. Local papers have reported that Ezzedine offered interest rates as high as 60 percent and that part of his clientele was from the oil-rich Gulf. But prosecutor Saeed Mirza said there were no official figures as yet on Ezzedine's finances, and that the bankruptcy claim had yet to be verified. "We are still gathering information," he told AFP. While Ezzedine's own political beliefs are unclear, most of his clients were supporters of Hizbullah, Duheini says. Hizbullah MP Hussein Hajj Hassan was among the first to file a complaint against Ezzedine over a bounced check, according to the local media. "What people heard about him was that he is protected by Hizbullah and is an honest man who runs charities," Duheini said. "They looked to him as the savior of the south and its people, as the protector of the Shiites' finances." Under Lebanon's banking secrecy law, banks cannot reveal their clients' names, assets or holdings except in cases of bankruptcy or if granted written authorization by the client. Lebanese authorities have closed down Dar al-Hadi Publishing House which was owned by Ezzedine. Dar al-Hadi was one of Lebanon's prominent publishing houses of religious Shiite books in Beirut's southern suburbs.(AFP-Naharnet)(AP photo shows a man checking books at Dar Al-Hadi.) Beirut, 06 Sep 09, 09:56
Lebanon's banks not exposed to Ponzi scheme: Central Bank
Bloomberg /Published: September 06, 2009, 11:29
Beirut: Lebanon's banks have no exposure to a Bernard Madoff-style Ponzi scheme run by a Lebanese businessman accused of defrauding investors, Lebanon's Central Bank governor said. "There is no exposure by the banks to it," Riad Salameh said. "The investigation is ongoing. It has nothing to do with the finance or banking industry. He had his own investors, and it's a private matter that's outside of the banking industry." Salah Ezzedine is under investigation after turning himself in to authorities last week, said Major General Ashraf Reefi, head of Lebanon's internal security forces. The As-Safir newspaper, citing unidentified judicial officials, reported last week the losses do not exceed $500 million and that $180 million of that amount belongs to an unidentified Qatari investor. "He was using people's money with the promise of high and unrealistic returns," Reefi said in a September 3 interview with Bloomberg News. "The investigation is ongoing and any number that is suggested at the moment is presumptuous and not accurate." Some members of the Shiite Hezbollah movement may have invested with Ezzedine, who is not part of the group, Lebanese media, including the Daily Star reported. As-Safir reported that Hezbollah lawmaker Hussain Hajj Hassan was one of the first people to file a lawsuit against Ezzedine. Phone calls by Bloomberg News to Hajj Hassan on Sunday were unanswered. Ezzedine, a Shiite businessman who owns Dar Al Hadi Publishing House, invested hundreds of millions of dollars prior to declaring bankruptcy and giving himself up to authorities, As-Safir said. State Prosecutor Saeed Mirza told As-Safir that a number of lawsuits have been filed against Ezzedine, who if found guilty, could be imprisoned for as long seven years. Madoff was sentenced in June to 150 years in US federal prison for a $65 billion Ponzi scheme.
Lebanon's own 'Madoff' ponzi scheme unravels
Source: BI-ME and agencies ,
Author: BI-ME staff
Posted: Sun September 6, 2009
LEBANON. Salah Ezzedine, a businessman from southern Lebanon in his 50s who has been dubbed the "Bernard Madoff" of his country, was arrested earlier this week when he filed for bankruptcy. Reports surfaced that he had squandered his clients' money. Ezzedine is under investigation after turning himself in to authorities last week, Major General Ashraf Reefi, head of Lebanon’s internal security forces, said. The As-Safir newspaper, citing unidentified judicial officials, reported last week the losses do not exceed US$500 million and that US$180 million of that amount belongs to an unidentified Qatari investor. “He was using people’s money with the promise of high and unrealistic returns,” Reefi said in a 3 September interview with Bloomberg News. “The investigation is ongoing and any number that is suggested at the moment is presumptuous and not accurate.
Mohammed al-Duheini, mayor of the southern town of Toura, said on Friday that "around 250 residents from my town placed their money in the hands of Salah Ezzedine, and he would give them interest rates that topped 25%. "He managed to win the trust of the Shiites of south Lebanon and handled a lot of their money," he told AFP.
Local papers have reported that Ezzedine offered interest rates as high as 40% and that part of his clientele was from the oil-rich Gulf. While Ezzedine's own political beliefs are unclear, most of his clients were supporters of militant group Hezbollah, Duheini told AFP. As-Safir reported that Hezbollah lawmaker Hussein Hajj Hassan was one of the first people to file a lawsuit against Ezzedine. Former Hezbollah MP Amin Sherry denied any links to Ezzedine in a statement released on Friday.
Earlier Friday, Al-Arabiya news channel had reported that Sherry, along with the head of Hezbollah’s parliamentary bloc MP Mohammad Raad and the party’s politburo member Wafiq Safa, were among those who invested their money with Ezzedine Ezzedine, a Shiite businessman who owns Dar Al-Hadi Publishing House, invested hundreds of millions of dollars prior to declaring bankruptcy and giving himself up to authorities, As-Safir said.
State Prosecutor Saeed Mirza told As-Safir that a number of lawsuits have been filed against Ezzedine, who if found guilty, could be imprisoned for as long seven years.
Under Lebanon's banking secrecy law, banks cannot reveal their clients' names, assets or holdings except in cases of bankruptcy or if granted written authorization by the client.
Meanwhile, central bank governor Riad Salameh said Lebanon’s banks have no exposure to the Ponzi scheme. “There is no exposure by the banks to it,” Salameh told Bloomberg in an interview from Beirut yesterday. “The investigation is ongoing. It has nothing to do with the finance or banking industry. He had his own investors, and it’s a private matter that’s outside of the banking industry
Four Hezbollah officials said to be victims of 'Lebanese Madoff'
Sept 07/09/By Haaretz correspondent and Agencies ,
By Avi Issacharoff
At least four senior members of Hezbollah suffered serious financial losses as the result of embezzlement by the Lebanese Shi'ite businessman Salah Ezzedine, according to the London-based newspaper Asharq Al Awsat. Ezzedine, who has been dubbed "Hezbollah's Madoff," is suspected of embezzling more than one billion dollars.
The four were identified as Mohammad Raad, head of the Hezbollah faction in the Lebanese parliament, Hezbollah MPs Amin Shari and Hussein al-Hajj, and Wafiq Safa, head of the organization's coordinating committee. Safa was the person who handed over the bodies of missing Israeli soldiers Eldad Regev and Udi Goldwasser, to the United Nations, during a 2008 prisoner swap between Hezbollah and Israel. At the time, he stood in front of the Al-Manar television cameras and declared: "You will know immediately what their fate was," as he pointed to the coffins containing the remains. According to assessments in the Arab media and the news agencies, Ezzedine succeeded in defrauding hundreds of investors out of sums totaling between $600 million and $1.3 billion. He was arrested at the beginning of last week after persuading a large number of investors - including businessmen from Qatar and the Gulf states and thousands of villagers from southern Lebanon - to transfer sums of money to him, which he promised to invest with returns of 25-55 percent. After he declared bankruptcy, Ezzedine turned himself over to the Lebanese authorities.
Ezzedine, who was well known as an investor mainly among Lebanon's Shi'ite community, is suspected of having used the money as part of a "Ponzi scheme" in which he transferred the sums invested by new investors to the accounts of more veteran investors, in much the same way as Bernard Madoff did in the United States. It is believed that Ezzedine's family has escaped from Lebanon. Lebanese reports say that Ezzedine and his associates are being interrogated at present but that no formal charges have yet been brought against them. The Kuwaiti newspaper Al Watan reported last week that Hezbollah's losses in the affair are estimated at some $680 million, a gigantic sum for the organization, most of whose budget comes from Iran. In the past decade, Hezbollah has succeeded in developing economic systems, including drug and real estate deals that brought in good returns.
Ezzedine is the owner of the Dar Al-Hadi publishing company, one of Lebanon's leading publishers of Shi'ite religious texts. It also publishes the writings of Hezbollah officials and has shares in the children's "Al-Hadi" television channel. A Lebanese court on Thursday ordered the closure of the publishing house and all 250 workers lost their jobs suddenly. Ezzedine was also involved in arranging trips to Mecca. Ezzedine's money was invested in iron and energy companies and he lost a fortune when the price of oil plummeted.
"Everyone invested with him, everyone," said the owner of a grocery store, Muhammed Shur, in an interview with Al-Jazeera Television. "He was supposed to be a religious man and gave a lot of money to charity." He said he had placed his family's entire savings, $45,000, in Ezzedine's hands. "You can go through this village one by one," he added. "Some of the people even mortgaged their homes to invest with him."
ur Share of
Mon, 07 September 2009
Husam Itani/All Hayat
Apart from security/political analyses, conspiracy theories and their profuse offshoots in explaining the disaster that has afflicted thousands of Lebanese who had invested with Salah Ezzeddine, the matter can be dealt with as the share of the Lebanese of the global financial crisis and of the current phase of globalization.
There is a moral vileness that first appeared from some voices and writings that exuded abuse towards what afflicted Ezzedine because of his connection to Hezbollah. Indeed, the issue, at the end of the day, is not restricted nor should be restricted to a bankruptcy, whether it was compulsory or based in deception (determining which of the two is left to the justice system). It has come at the cost of hundreds of millions of dollars that belong to Lebanese and Arabs who had placed their trust in a businessman who misestimated the dangers that accompany excessive growth lacking proper study. It falls within the same context regardless of if Hezbollah lost a few millions and to what extent the issue relates to the party’s financial and security procedures, as long as the great majority of injured parties are people belonging to middle and low income social classes, who sought to improve their income by investing under a banner that puts their political and religious “conscience” at rest. It is also the same whether or not Ezzeddine had abused his connections with Hezbollah to benefit from a large financial cluster, as long as the naivety of small and middle investors is still considerably present in the bankruptcy cases which Lebanon witnesses once every five or six years.
The importance of Ezzeddine’s case, at the internal Lebanese level, resides in the fact that, on the one hand, it has stricken a specific social and political circle, making it equivalent to an “economic July War”, as one Shiite minister was quoted as saying, while on the other it has shown that the “immunity” enjoyed by Lebanese politicians and financiers to the hurricane that struck the world’s economy nearly a year ago is devoid of real meaning.
Indeed, if the scarcity of exchange in the local stock market and the obstacles placed by the central bank to investing in “hot funds and markets” have prevented the Lebanese economy from being harmed in the first wave of global market collapse, the case of Ezzeddine shows that Lebanon, in addition to other Arab countries that have adopted conservative monetary policies, is firmly connected to the world’s economic cycle, whether it rises or falls. Deluded are those who think that they can board a ship to safety at a time when the whole world is discovering that all lifeboats are pierced at the bottom, according to the latest numbers regarding the delay in the recovery expected in the economies of industrial countries.
The most prominent characteristic being placed under the spotlight by the bankruptcy of Ezzeddine’s businesses can be summed up in that our share of the global crisis came to our likeness, or to the likeness of the most active segments of our societies. Financial interests and sectarian and political identity are interconnected, and thus “Hajj” Salah would go to holy sites to meet potential investors, making use of connections that may or may not be truthful or strong to a political party that prides itself in its honesty and virtue in politics and high morals. There is talk of security motives and traps set by the forces of arrogance to strike a blow against the Resistance… However, the facts show that the money of pilgrims and visitors of holy sites was used in speculations in the oil, iron and currency markets, which answer only to the laws that govern their movement, without being affected by the masks that were used to accumulate funds used in risky trading.
Investors from Maaroub, Toura, Yaroun and dozens of small towns and villages in South Lebanon and Beirut’s Southern suburb are not sufficiently informed about the laws of global markets. Yet they have suddenly found themselves partners in a fierce globalization in which they play the role of victims, without warning or notice, as usual.
LEBANON: Local Bernie
Madoff allegedly swindles Shiites, Hezbollah
September 7, 2009
Los Angeles Times
A successful and outwardly pious businessman, Ezzedine handled investments for thousands of people, from poor villagers in southern Lebanon to expatriate millionaires in West Africa, and even officials from the militant party Hezbollah.
But that all came crashing down last week when Ezzedine declared bankruptcy, prompting an investigation that revealed the shocking extent of his alleged fraud.
Local media reports now estimate that Ezzedine lost up to $1.5 billion of his clients' money. He's now being dubbed Lebanon's Bernie Madoff.
The scandal has rocked the Shiite community, which made up most of Ezzedine's clientele.
While initial reports centered on the connection between the disgraced businessman and Hezbollah, the party's international relations chief, Ammar Moussawi, told the Lebanese daily Al Akhbar that Ezzedine had no official relationship with the party, but that he did maintain personal ties with some members. The paper went on to say that the only official legal action filed against Ezzedine so far was on behalf of Hezbollah lawmaker Hussein Hajj Hasan, who reportedly lost about $400,000.
In addition to well-to-do investors, Ezzedine's victims included some of the most vulnerable members of the community. In the poor southern village of Yaroun, some 40% of residents had pooled their savings to invest with Ezzedine. "One of the residents took out a mortgage on his house and then invested the money with Ezzedine. I don't know what he's going to do now," the former mayor, Ali Ghashem, told Al Akhbar. Ezzedine supposedly had a number of ventures in tourism, real estate, construction and the gold trade, some of which were based in West Africa, home to a large Shiite expatriate population. He also owned a religious publishing house, Dar al-Hadi, which was closed following his arrest.
In Ezzedine's native village of Maaroub, residents are still in shock. Some refuse to believe the allegations against him.
"The situation is very unclear, and people are confused," the town's mayor, Hussein Fneish told Al Akhbar. "They bemoan the loss of their money on the one hand, but on the other hand, they worry about Salah." -- Meris Lutz in Beirut
'Hezbollah's Madoff' brings serious financial losses to top members
By Avi Issacharoff, Haaretz Correspondent, and Agencies
At least four senior members of Hezbollah suffered serious financial losses as the result of embezzlement by the Lebanese Shi'ite businessman Salah Ezzedine, according to the London-based newspaper Asharq Al Awsat. Ezzedine, who has been dubbed "Hezbollah's Madoff," is suspected of embezzling more than one billion dollars.
The four were identified as Mohammad Raad, head of the Hezbollah faction in the Lebanese parliament, Hezbollah MPs Amin Shari and Hussein al-Hajj, and Wafiq Safa, head of the organization's coordinating committee.
Safa was the person who handed over the bodies of missing Israeli soldiers Eldad Regev and Udi Goldwasser, to the United Nations, during a 2008 prisoner swap between Hezbollah and Israel. At the time, he stood in front of the Al-Manar television cameras and declared: "You will know immediately what their fate was," as he pointed to the coffins containing the remains.
According to assessments in the Arab media and the news agencies, Ezzedine succeeded in defrauding hundreds of investors out of sums totaling between $600 million and $1.3 billion. He was arrested at the beginning of last week after persuading a large number of investors - including businessmen from Qatar and the Gulf states and thousands of villagers from southern Lebanon - to transfer sums of money to him, which he promised to invest with returns of 25-55 percent. After he declared bankruptcy, Ezzedine turned himself over to the Lebanese authorities.
Ezzedine, who was well known as an investor mainly among Lebanon's Shi'ite community, is suspected of having used the money as part of a "Ponzi scheme" in which he transferred the sums invested by new investors to the accounts of more veteran investors, in much the same way as Bernard Madoff did in the United States. It is believed that Ezzedine's family has escaped from Lebanon.
Lebanese reports say that Ezzedine and his associates are being interrogated at present but that no formal charges have yet been brought against them. The Kuwaiti newspaper Al Watan reported last week that Hezbollah's losses in the affair are estimated at some $680 million, a gigantic sum for the organization, most of whose budget comes from Iran.
In the past decade, Hezbollah has succeeded in developing economic systems, including drug and real estate deals that brought in good returns.
Ezzedine is the owner of the Dar Al-Hadi publishing company, one of Lebanon's leading publishers of Shi'ite religious texts. It also publishes the writings of Hezbollah officials and has shares in the children's "Al-Hadi" television channel.
A Lebanese court on Thursday ordered the closure of the publishing house and all 250 workers lost their jobs suddenly. Ezzedine was also involved in arranging trips to Mecca. Ezzedine's money was invested in iron and energy companies and he lost a fortune when the price of oil plummeted.
"Everyone invested with him, everyone," said the owner of a grocery store, Muhammed Shur, in an interview with Al-Jazeera Television. "He was supposed to be a religious man and gave a lot of money to charity." He said he had placed his family's entire savings, $45,000, in Ezzedine's hands. "You can go through this village one by one," he added. "Some of the people even mortgaged their homes to invest with him."
Lebanese Madoff’ mystery stuns investors
By Ferry Biedermann, Toura, South Lebanon
September 9 2009
The leisurely chit-chat over sweet tea that usually follows the iftar, the breaking of the fast every evening during the Muslim holy month of Ramadan, has been replaced by heated discussions at the home of the mayor of Toura, a hilltop village in south Lebanon.
Lebanon spoilers must end political paralysis - Aug-31Beirut steps out of war zone into tourist trap - Aug-24Politics clouds state sell-offs in Lebanon - Aug-17Lebanon leader inherits mixed legacy - Jul-01Lebanon’s Hariri faces tough team building - Jun-29Hariri seeks to defuse Hizbollah dispute - Jun-09The topic of conversation is the spectacular bankruptcy and detention of a prominent businessman from the area, who is close to Hizbollah, the powerful Shia militant movement.
Salah Ezzedine, who has been dubbed “the Lebanese Madoff” by the country’s media after Bernie Madoff, the convicted US fraudster, may have lost hundreds of millions of dollars of his investors’ money.
The prosecutor, Said Mirza, said: “The case involves hundreds of millions of dollars and several countries”.
Like countless others among the Shia Muslim community in Lebanon and in the Gulf, many people in Toura have lost their life savings.
“It is a catastrophe for us – not only for us, but for all the people in the south,” says Mohammed Hassan Duheini, the village mayor.
The Shia community, poor and long ignored by the Lebanese government, has been stunned by the news. The financial scandal also threatens to embarrass Hizbollah, which is hailed by much of the Arab world as a resistance movement against Israel and prides itself on its austere religious image, but which is seen by Washington as a terrorist group.
Path to ruin
Salah Ezzedine was born in the southern Lebanese village of Maaroub near the port city of Tyre, about 50 years ago.
He lived in Beirut’s southern suburbs in the 1980s where several contemporaries say he was involved with a Shia Islamic group close to Iran, which was one of the precursors to Hizbollah. He is said to have been an ideologue rather than a politician or fighter.
He guided pilgrims to Mecca and Medina in the mid-1980s, and set up the Bab el-Salam travel agency for the Hajj pilgrimage. In the 1990s he started Beirut’s Dar al-Hadi publishing house, which has been accused of being a propaganda arm of Hizbollah. He was taken into custody in the past 10 days after, according to local media, giving himself up and filing for bankruptcy.
Beyond acknowledging that Mr Ezzedine has declared himself bankrupt, and then been taken into custody the Lebanese authorities have not given any details on the case during the past 10 days. It is unclear if they are investigating a Ponzi scheme. Mr Ezzedine has not been charged and the Beirut Bar Association could not even yet say who his lawyer is in this case.
A central bank official, however, has estimated that some $400m (€275m, £242m) of invested capital could be missing.
Investors say they were lured by the promise of improbably high returns. They mention 20, 30 and even 60 per cent annual profits that Mr Ezzedine’s middlemen said were “guaranteed”. In order to conform to Islamic law, such proceeds were described as profits from projects rather than interest.
Half of the missing capital is from investors in the Gulf and the other half from Lebanon, according to the central bank official. In the Gulf, it seems that Qatar and its small Shia community have been particularly hard hit. Qatari banking insiders say the loss amounts to $180m, although it is not clear yet whether that includes anticipated profits.
Mr Ezzedine hails from Maaroub, a neighbouring village to Toura, and was trusted partly because he was close to Hizbollah, investors say. Even now, several of those affected say they will hold off on legal action because they hope Sayyed Hassan Nasrallah, Hizbollah’s leader, will compensate them.
The Lebanese media have reported that senior Hizbollah figures themselves lost money in Mr Ezzedine’s schemes but some of them denied this. Mr Nasrallah denied on Tuesday that senior leaders or the movement itself had any connection to the case, according to Al-Manar, Hizbollah’s television station.
Much of the money came from small Shia investors who bundled together remittances from relatives overseas and had a representative invest for them. Mr Duheini estimates that between 200 and 250 people invested $10m to $15m with Mr Ezzedine in Toura alone. He says many smaller investorsmortgaged their homes or businesses to invest. “The problem will really hit when the banks start calling in these loans,” he predicts.An investor in Maaroub said his grandmother mortgaged her bakery to invest $25,000 with Mr Ezzedine. “We saw what other people were making and thought that it would be stealing from ourselves if we didn’t do it,” he said.
One of the middlemen in Maaroub, Youssef Faour, was known as Mr Ezzedine’s representative for the south, say the investors in Toura. One man says he invested $485,000 with Mr Faour on August 22, shortly before he was taken into custody.
Mr Faour’s sister Dalal, who owns a clothing shop in Maaroub, denies any wrongdoing on his part. “We are victims like everybody else. We sold land in Beirut in order to invest.”
For the large sums, Mr Faour gave cheques equal to the amounts invested as collateral. They were issued in the name of the Société Trans-Golf pour le Commerce et l’Industrie.
The business was registered in Baabda, next to Beirut, and owned by Mr Ezzedine. It has been declared bankrupt: people who tried to cash the cheques last month discovered that the account was empty. Sometimes, investors were told that their money would be invested in commodities such as oil. But in many cases, they say, no specific investments were mentioned and receipts were optional. One investor in Toura showed the Financial To,es a simple printed sheet of paper purported to be a receipt for $445,000, which he and a group of friends had invested with one of Mr Ezzedine’s middlemen. On the printout, dated October 31 2008, the company that accepted the money is named as East Line, and the general director Mr Ezzedine. East Line appears to be one of the investment vehicles that Mr Ezzedine used. In June 2008, Yahya Jammeh, the president of the Gambia, issued a statement saying that he had received a cheque for $200,000 for “royalties paid to the Gambian government by Salah Ezzedine of East Line Company, for 10,000 tonnes of sand minerals exported from the Gambia”.
Many who invested with Mr Ezzedine still refuse to believe that he defrauded them. They point to his legitimate business ventures and say these fell victim to the financial crisis.
But one older man in Toura, who says he invested $50,000, rails at Mr Ezzedine’s defenders: “They are all thieves. I don’t care what anybody says.”
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Hezbollah chief denies links to allegedly crooked moneyman
September 8, 2009 | 12:56 pm
It's turning into the biggest financial scandal to hit Lebanon in years, perpetrated by a businessman being dubbed the nation's Bernie Madoff.
Now, Hezbollah chief Hassan Nasrallah is weighing in on the topic amid allegations that Salah Ezzedine (pictured, at right) was a financier of the Shiite militant group and political organization. In a speech last night, Nasrallah said the party had nothing to do with Ezzedine, now in jail after allegedly losing $1.5 billion of investors' money in what some are calling a Ponzi scheme. Ezzedine was a financier and owner of a publishing house close to Hezbollah. But Nasrallah denied allegations that Hezbollah leaders had invested huge unexplained sums with Ezzedine, who reportedly offered returns of between 25% and 55% to investors, luring families.as well as charities to pour cash into his company.
"I tell you that these are false allegations," he said. "These Hezbollah leaders own nothing of the funds that people claim they own."
Jokingly, he added, "I wish they owned those amounts; that would not have upset us." He said it was up to Lebanon's judiciary to figure out how much money Ezzedine swiped.
But he acknowledged that something awful had taken place. "What was worse and more dangerous, however, was the attempt to use this tragedy -- and it is really a human and social tragedy -- to tarnish Hezbollah's image, march, leadership, line, and history," he said in televised remarks. "There were many grievances here.... I just wanted to say that this is a tragedy that affected a large number of Lebanese families. It causes pain and sorrow." But he added that Hezbollah's leadership, organization and leaders have "nothing whatsoever to do with this issue, from beginning to end." He said Hezbollah would issue a more-detailed account of the the Ezzedine affair shortly.
-- Borzou Daragahi in Beirut
biggest Ponzi scheme?
Mona Alami, Now Lebanon, September 9, 2009
The door of one of Salah Ezzedine's institutions is sealed with red wax in the Bir al-Abed southern suburb of Beirut on September 07, 2009. AFP /Ramzi Haidar
The employees of Dar al-Hadi publishing are jobless and locked out of their offices. The Judicial Police sealed the glass doors of their former workplace with red tape last week following the August 31 arrest of the firm’s owner, Salah Ezzedine, now infamous as “Lebanon’s Madoff.” “Officers came last Thursday [Sept 3] and seized the company headquarters,” said a person who lives next to the publishing house. “No one has been allowed in since.”Ezzedine, a prominent Lebanese businessman known for his piety and closeness to Hezbollah, is bankrupt and accused of defrauding scores of investors through a Ponzi scheme like one pulled by Bernard Madoff, a former American financial advisor sentenced to 150 years in prison at the end of June. It seems Ezzedine took investments mainly from those in Lebanon’s Shia community, promising returns of 40 to 50%.Though many fell for the scheme, such high returns on an investment are rare, and raised suspicion with one economist. “The fact that Ezzedine promised a 40% return to his clients does not appear to fall into the range of normalcy,” said Nassib Ghobril, chief economist and researcher with the Byblos Bank Group. “Often disproportionate returns are guaranteed in cases of pyramid or Ponzi schemes.”
The exact amount Ezzedine lost is unclear. Initial news reports put the number at $1.9 billion, though an accountant with Dar al-Hadi publishing told NOW he thinks the figure is between $700 million and $1 billion. A banker familiar with the case, however, explained that Ezzedine probably only lost $500 million in actual investment money with $700 million to $1 billion representing losses including expected interest returns.
Amid widespread fear in the Lebanese financial community, Central Bank Governor Riad Salameh recently told the Bloomberg News Agency that Lebanon’s banks did not invest with Ezzedine and will not be affected by the bankruptcy.
“It has nothing to do with the finance or banking industry,” Salameh told Bloomberg. “He had his own investors, and it's a private matter that's outside of the banking industry."
However, a banker familiar with the case told NOW that Ezzedine’s investors included more than just individual families whose savings are now gone. “Many real estate owners and large traders in the Dahiyeh who were involved with Ezzedine are now faced with payment obligations and loans to settle, which might cause wider economic repercussions,” said the banker, who spoke anonymously given the sensitivity of this issue. There were also reports that Hezbollah officials Mohammed Raad, Amin Sherri and Hajj Wafiq Safa lost significant sums in Ezzedine’s bankruptcy and that MP Hussein Hajj Hassan filed a complaint against Ezzedine for bouncing a $200,000 check. Only Safa denied the reports.
“Many party members are afraid to fully admit their losses to avoid questions about the origins of their wealth,” the banker said. Lebanese authorities are currently investigating Ezzedine’s case. Judge Said Mizra, whose office is leading the investigation, said on Saturday that it will not be finalized soon. Ezzedine is currently in police custody but has not been charged with any wrongdoing.
In addition to the publishing company, Ezzedine owned the Al-Hadi TV for children television station and was involved with a number of companies tied to energy and base metals. “He was an honest man who sold future contracts in oil, gold and base metal,” said one of his former employees at Dar al-Hadi. In late June, Ezzedine paid around $150,000 for rights to export minerals from Gambia through the East Line Company, according to Gambia’s Daily Observer. Attempts to reach both the company and the newspaper were unsuccessful. Ezzedine is also the fund manager and one of three major shareholders in al-Mustathmer, a Beirut-based financial institution that focused on money management and corporate finance. Mustathmer registered with the Central Bank in April 2007 and offers investors two commodities funds for investment. By the end of 2008, clients had invested nearly $18 million in the two funds. The only non-bank financial institution with more invested in the funds Mustathmer managed at the time was Fidus, which offered over 60 funds that drew $22.9 million in investments, according to the Central Bank.
The company has an “appetite for high risk/high potential investments,” according to the Oxford Business Group, referring to a $4.5 billion co-investment in Yemen Mustathmer announced in April 2008. Ali Jachi, one of Mustathmer’s three major shareholders and brother of former Central Bank First Vice Governor Ahmed Jachi, refused to comment on how Ezzedine’s bankruptcy and arrest will impact the financial firm. Initial news reports said Ezzedine turned himself into authorities on August 31, when he realized he’d gone bankrupt. However, the Beirut-based Central News Agency reported on September 4 that Hezbollah nabbed Ezzedine in “a quick raid” and “questioned him and later handed him to judicial authorities.” Hezbollah Secretary General Hassan Nasrallah, however, denied the party had any links to Ezzedine in a speech on Monday. Residents in towns near Tyre and Dahiyeh, however, are not convinced. Numerous reports of people upset with Ezzedine, whom they trusted because of his reputation as a pious man close to the party, have surfaced in the local and international press in recent days. “People placed their life savings with Ezzedine because of his close connection with Hezbollah, which thus bears a moral responsibility for the bankruptcy scheme,” Ayman, a resident of the Dahiyeh, told NOW.
**Matt Nash contributed reporting to this article
Hezbollah leaders lose big to 'Lebanese Madoff'
Wafik Safa, who refused to reveal status of Regev and Goldwasser, is one of biggest losers in scheme
Roee Nahmias Published: 09.04.09,Israel News
Three senior Hezbollah operatives are among those who invested and lost funds with Lebanese businessman Salah Ezzadine, who has been nicknamed the 'Lebanese Madoff' after being accused of losing over a billion dollars of his clients' money. One of the three is Wafik Safa, the first to disclose during Israel's prisoner swap with Hezbollah in 2008 that IDF reservists Ehud Goldwasser and Eldad Regev, kidnapped by the organization two years earlier, were dead. During the prisoner swap Wafik Safa became known in Israel for refusing to reveal the status of the two captured soldiers until the very last minute, just before their bodies were brought out in coffins. Al-Arabiya reported that the other two men were the leader of Hezbollah's parliament bloc, Mohammad Raad, and a member of the bloc, Amin Sherri. The report did not say whether they had lost their own private funds or those of the organization. Sources affiliated with Hezbollah have estimated Ezzadine's losses at around a billion dollars, and a Kuwaiti daily reported Thursday that the organization had lost around $683 million. Hezbollah, said to be still recovering from the 2006 Second Lebanon War with Israel, is now considered to be in financial dire straits. Earlier this week the Lebanese a-Safir reported that Ezzadine, a prominent Lebanese businessman, is accused of leading a giant Ponzi scheme and that he was arrested by Hezbollah in Beirut while attempting to flee the country.
'Lebanese Madoff' faces charges
Man believed to have invested hundreds of millions of dollars charged with embezzlement
Reuters Published: 09.12.09,
Lebanese businessman Salah Ezz el-Din, thought to have invested hundreds of millions of dollars for Shiite investors in Lebanon, including Hezbollah officials, was charged on Saturday with embezzlement, a prosecutor said. Prosecutor judge Fawzi Adham said six other people were charged, five in absentia, in the case, the total losses from which are being assessed by financial experts. The charges included issuing cheques without sufficient funds and breaching financial laws. Ezz el-Din's depositors included members of the Lebanese Shiite political and military movement Hezbollah, listed as a terrorist organization by the United States. Hezbollah leader Sayyed Hassan Nasrallah said this week "a very, very limited" number of party officials had deposited money with Ezz el-Din. Funds deposited by the party did not exceed $4 million, he added. Ezz el-Din was arrested last month after going bankrupt. His business interests included a publishing house and a tour company that arranged for pilgrims to go on the annual haj pilgrimage.