12 December 2003

State blocks early release for Abu Ayyash

The state prosecution continued its investigation on Thursday into the controversial Al-Madina Bank case and refused appeals to release former director-general and bank owner Ibrahim Abu Ayyash until completion of the investigation.
Abu Ayyash demanded release from custody even though there were four cases pending against him regarding his “mismanagement” of the bank. His appeals, which were made by his attorney, Abdullah Rafei, were rejected by Beirut’s chief investigating magistrate, Hatem Madi.
Meanwhile, the assistant state prosecutor, Rabia Qaddoura, listened to bank chairman Adnan Abu Ayyash’s official statement, which was presented by his attorney, Antoine Ghanem.
Ghanem provided a detailed explanation of the documents related to the charges of fraud, embezzlement and violation of monetary and credit law, which Abu Ayyash filed against bank assistant Rana Qoleilat.
He showed Qaddoura documentation related to a savings account signed by Qoleilat and a bank employee, Iman Daher, as well as records showing $800,000 worth of money transactions that Abu Ayyash transferred to his account at the bank.
Abu Ayyash’s attorney also presented a document of cession in which Qoleilat ceded an account at the Agricultural Credit Bank in Switzerland that was later determined to be nonexistent. It was discovered that the number of the account was identical to the Al-Madina Bank post office box number in Beirut, Ghanem said, adding that her account in Switzerland was fake.
After to listening to Ghanem, Qaddoura decided to hold a larger session in the presence of Qoleilat in order to ask her about the content of the charges filed against her.
In the case of the former Agriculture Minister Ali Abdullah and his brother, who were arrested Tuesday on suspicion of embezzling and squandering public funds, Madi ordered both to remain in prison pending the completion of investigations.
In another development, the Publications Court decided to postpone the trial of university professor Adonis Akra, who was accused of undermining Lebanon’s relations with Syria, as well as tarnishing the reputation of the government and the army in a book he wrote after he was arrested in demonstrations on Aug. 7, 2001.
The court rescheduled Akra’s court date for March 10, 2004.
In a different case, investigations regarding an imaginary money trade company in Tyre revealed that Bassam and Ghassan Shaghri, in addition to Jumana Qashaqesh, established a fake stock market.
They allegedly deceived people by telling them that their brokerage firm had relations with world stock markets in London and New York, allowing them to collect around $7 million from depositors.-(DStar)

29 September 2003

Pressure still on Al-Madina results of investigation

Pressure still on Al-Madina results of investigation coming soon
State prosecutor’s case ‘separate to Central Bank money laundering probe’

The Central Bank’s Special Committee on Money Laundering is still looking into charges against some individuals involved in the troubled Al-Madina Bank, the Central Bank’s governor, Riad Salameh, said Thursday.

Speaking to reporters at the Central Bank’s headquarters in Beirut, Salameh said that the results of the investigation would be soon disclosed. [Pressure still on Al-Madina results of investigation coming soon (Daily Star)]

The committee was established three years ago to investigate money laundering activities in Lebanon. Salameh added, however, that the investigations into Al-Madina Bank did not concern the Central Bank.

Al-Madina Bank is suspected of money laundering activities, embezzling funds, counterfeiting documents and breaching the money and credit law. Sources said the bank issued over $350 million in bad checks to customers.

The Central Bank promptly stepped in and appointed a temporary general manager to ensure that all deposits were returned to their owners.

Hotels and prime properties in landmark locations belonging to the chairman of the bank and some of his clients were re-possessed by the Central Bank in order to liquidate them.

The governor said that the bulk of the money has been retrieved and depositors were getting 10 percent of their money each month. This is a process that is expected to last for another few months.

Andre Bandali, the temporary general manager of Al-Madina, has filed charges against many suspects. Ahmed Ali Ahmed had filed a law suit against the owner of the bank for writing a $21 million check without provision.

Salameh asked the state prosecutor last month to send back the file of Al-Madina after most deposits were retrieved from the owner of the bank Adnan Abu Ayyash.

The sudden and unexpected closure of the case caused a public outcry among many politicians and bankers, who wondered why the owner of the bank and other individuals were not detained.

Ibrahim Abu Ayyash, the vice chairman of Al-Madina, is currently in police custody at the request of State Prosecutor Adnan Addoum.

However, the chairman of the bank, Adnan Abu Ayyash, is still in Saudi Arabia despite many appeals to repatriate him to Lebanon.

On Thursday, Assistant State Prosecutor Rabiaa Qaddoura questioned the manager of the bank’s Hamra branch, Iman Daher, in addition to the heads of the bank’s departments, including Joumana Abdel-Baqi, Youssef Hashi and Kazem Bahlawan.

They were all interrogated in the case of violating the Monetary and Credit Law, forfeiting notices and granting loans without guarantees or with illusionary guarantees.

According to a source, they all denied knowledge of any of the aforementioned crimes, so the judge decided to release them pending investigation.

At the news conference, Salameh expressed doubt that the owner of Al-Madina would keep his bank even if the case against him is closed.

Among the few scenarios that the Central Bank will be considering in the future is either liquidating Al-Madina or merging it with another bank.

Salameh stressed that the case had no impact on the Lebanese banking sector, which has an annual growth of 15 percent each year. He added that in the month of August alone, the balance of payment recorded a surplus of $271 million. “Our main concern is to retrieve the money of depositors irrespective of the results of the courts,” Salameh said. But the governor refused to speculate on the outcome of the investigation.

Salameh said the Central Bank will release the names of all the properties that were repossessed from the Abu Ayyash family and other clients.

Taha Qoleilat, a prominent businessman, is one of the key suspects in the Al-Madina case. Most of Qoleilat’s properties, including the Sheraton Coral Beach hotel, were repossessed by the Central Bank.-(DStar)

25 September 2003

Al-Madina Bank: The suspense continues

The Al-Madina Bank issue resurfaced following the return of Adnan Addoum, public prosecutor for the Court of Cassation, from his official visit to Ukraine.

This issue caused a political and media controversy when the special investigating committee of the central bank withdrew the case in which the bank is accused of money laundering.

Questions were raised and predictions were made concerning coverage of this entire file, which Addoum tried to clarify in a press conference he held on his return, at which he affirmed that the committee’s withdrawal of the case does not necessarily mean that it will not be examined by the judicial authorities.

Addoum’s press conference held last Tuesday coincided with the arrest of Ibrahim Abou-Ayash, one of the bank’s owners in Broummana after a pursuit of about two months.

The main person in this affair is Adnan Abou-Ayash, chairman of the bank’s board, who lives in Saudi Arabia.

More than 30 summons were sent to him through the Foreign Ministry and the Lebanese embassy in Saudi Arabia for him to appear before Judge Rabiha Ammash Kaddoura. However, Abou-Ayash refused to heed any one of them.

The outcome of the interrogations of Rana, Basill, and Taha Koleilat, Ibrahim Abou-Ayash, as well as Al-Madina Bank managers Joumana Abdelbaki, Youssef El-Heshi, Kazem Bahlawan and Iman Daher are not yet known. Ibrahim Abou-Ayyash has been remanded in custody; the others have been released.

The first interrogation addressed accusations that those involved were in illegal possession of foreign currency and that they had written bad checks. Ibrahim Abou-Ayash was questioned about a check with a value of 21.75 million dollars endorsed to Ali Ahmad. The inquiry will then focus on a check endorsed by Adnan and Ibrahim Abou-Ayash to Rana Koleilat and paid to the (central) Bank of Lebanon.

Charges that the bank was involved in money-laundering are meanwhile being investigated by the Bank of Lebanon’s special inquiry committee which, under Al-Madina’s interim chairman, AndrĂ© Bandali, (who has been appointed by the BDL) is handling liquidation of the bank’s assets. The committee is also empowered to guarantee that depositors will receive the funds they placed in the bank.

Numerous other charges pertaining to specific persons are being investigated by the general prosecutor for the Court of Cassation and the examining magistrate of Beirut, Hatem Madi.

The question is whether legal action will be taken against the bank’s owners following the inquiries, which are supposed to be finalized by September 28, after which Ibrahim Ayash would be set free, given that his provisional detention cannot exceed a few days, according to the law on penal procedure.-(ezboard)

01 September 2003

Authorities ‘will not rest’ till Al-Madina settles debts

The banking authorities will not rest until the depositors of the troubled Al-Madina Bank get their last penny, Walid Alameddin, the chairman of the Banking Control Commission, said Wednesday. “We want to make sure that the owners of the bank pay back all the money they owed to depositors. [Authorities ‘will not rest’ till Al-Madina settles debts - Troubled bank gains new temporary chief (Daily Star)]

We expect the depositors to get their money back in due course,” Alameddin told The Daily Star. He added that the Central Bank has appointed a temporary general manager for the bank to ensure that the money is restored to depositors. Adnan Abu Ayyach and his brother Ibrahim, the owners of Al-Madina Bank, have been summoned by the attorney general’s office after the bank suffered a liquidity crunch of nearly $350 million.

The Banking Control Commission, which supervises the performance of all banks operating in Lebanon, sent a full report to the attorney’s office a few months ago, detailing the numerous violations the owners of Al-Madina Bank committed. But Alameddin declined to disclose further details about the bank.
“Our main concern is to retrieve every penny. If this is done, then there is no need to liquidate the bank,” Alameddin stressed.

But some bankers expressed doubt as to whether the owners of Al-Madina Bank will be able to raise $350 million even if all the properties the family owns are sold.

The assets of the Abu Ayyach family, along with leading investors allegedly involved in the financial scam such as Taha Qulilat and his brother and sister, were seized by the Central Bank. Sources said the Central Bank has already liquidated some $50 million worth of assets in the form of property.

Some leading investors and management questioned by the authorities may find themselves implicated in money laundering, mismanagement of funds and failing to implement basic accounting practices.

Alameddin said the banking commission is already working closely with all banks to implement the Basel II requirements in an attempt to improve risk management. He added that banks are supposed to implement the requirements of Basel II before 2004.

Commercial banks are expected to have a better risk management system as of September this year. “We are trying to protect our banks from any foreseeable risk,” Alameddin said. He added that Basel II may also encourage bank consolidations in the future. “Even some of the small banks will be able to apply the requirements of Basel II if there is a desire to do so.”
Alameddin said that Basel II does not necessarily require increasing the provisions for non-performing loans. “In some cases, the provisions for loans may be lower if the credit risks are not high.”

Basel II calls on the banks to keep all the credit files of their clients, from both the private and public sectors, and urges the banks to apply a unified supervisory system and to update their files at least once a year.

The Swiss-based Basel committee issues recommendations for banks and international financial institutions on how they can tighten supervision and reduce credit risks.

In Lebanon, the Central Bank and the Banking Control Commission have applied several laws to reduce the exposure of possible defaults on the payment of debts.

Included in the measures applied by banks are raising the capital adequacy ratio to 12 percent and allocating more provisions for non-performing loans.

The high provisions for bad loans have affected to some extent the profitability of banks, but have also reduced the risk of default payments. He added that Basel II will help improve the credit ratings of Lebanese banks. “Some of the banks in the Arab states are rated better than their own governments,” Alameddin said.
International rating agencies Standard & Poor and Moody’s believe that the performance of local banks may be affected by the government’s fiscal deficit.

But recently, the rating agencies have given leading banks better credit ratings than they gave the government. Alameddin believes that assets of local banks have the potential to reach over $100 billion if the government passed the draft law on banking consolidation.

He also said that better risk management does not mean that banks will reduce their lending to the private sector. “Banks are required to assess the credit ratings of all their clients and improve the efficiency of their management,” he said.

Alameddin also commented on Paris II and its impact on banks, saying: “There were good results from Paris II as interest rates on deposits fell considerably. But we want banks to lower rates on loans to stimulate the economy.”-(DStar)

01 July 2003

Rana Koleilat

Rana Koleilat was born in 1967, Rana was accused of playing a key role in a bank and money fraud so big it collapsed Al Madina Bank. Rana Koleilat kept living the high life even behind bars in Lebanon. She reportedly repainted her jail-cell and ordered takeout food before skipping her bail and fleeing out of Lebanon to Brazil.

Rana Koleilat connection with the private bank of Al Madina was circled with controversy. Rana worked with the Madina Bank for 12 years. Rana started her career as a clerk and soon moved to an executive making top decisions.

Soon after Rana Kolailat became the center of the scandal shortly after it broke at Al Madina in July 2003. After detecting a cash deficit of more than $300 million, the Central Bank stepped in and took control of Al Madina Bank.

A suit by the owners of the bank accused Rana Kolailat of issuing a bad check for $3 million and of forging bank documents with the aim of embezzling.

In no time at all Rana Kolailat became an instant Lebanese and world celebrity at the height of the banking scandal in 2003.

Rana Koleilat reportedly handed out presents of expensive cars, apartments and houses to powerful people in Lebanon and Syria.-(lebanonlinks)

Lebanon Time-Line

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Introducing Lebanon

Coolly combining the ancient with the ultramodern, Lebanon is one of the most captivating countries in the Middle East. From the Phoenician findings of Tyre (Sour) and Roman Baalbek's tremendous temple to Beirut's BO18 and Bernard Khoury's modern movement, the span of Lebanon's history leaves many visitors spinning. Tripoli (Trablous) is considered to have the best souk in the country and is famous for its Mamluk architecture. It's well equipped with a taste of modernity as well; Jounieh, formerly a sleepy fishing village, is a town alive with nightclubs and glitz on summer weekends.

With all of the Middle East's best bits - warm and welcoming people, mind-blowing history and considerable culture, Lebanon is also the antithesis of many people's imaginings of the Middle East: mostly mountainous with skiing to boot, it's also laid-back, liberal and fun. While Beirut is fast becoming the region's party place, Lebanon is working hard to recapture its crown as the 'Paris of the Orient'.

The rejuvenation of the Beirut Central District is one of the largest, most ambitious urban redevelopment projects ever undertaken. Travellers will find the excitement surrounding this and other developments and designs palpable - and very infectious.

Finally, Lebanon's cuisine is considered the richest of the region. From hummus to hommard (lobster), you'll dine like a king. With legendary sights, hospitality, food and nightlife, what more could a traveller want?

Introducing Beirut

What Beirut is depends entirely on where you are. If you’re gazing at the beautifully reconstructed colonial relics and mosques of central Beirut’s Downtown, the city is a triumph of rejuvenation over disaster.

If you’re in the young, vibrant neighbourhoods of Gemmayzeh or Achrafiye, Beirut is about living for the moment: partying, eating and drinking as if there’s no tomorrow. If you’re standing in the shadow of buildings still peppered with bullet holes, or walking the Green Line with an elderly resident, it’s a city of bitter memories and a dark past. If you’re with Beirut’s Armenians, Beirut is about salvation; if you’re with its handful of Jews, it’s about hiding your true identity. Here you’ll find the freest gay scene in the Arab Middle East, yet homosexuality is still illegal. If you’re in one of Beirut’s southern refugee camps, Beirut is about sorrow and displacement; other southern districts are considered a base for paramilitary operations and south Beirut is home to infamous Hezbollah secretary general, Hassan Nasrallah. For some, it’s a city of fear; for others, freedom.

Throw in maniacal drivers, air pollution from old, smoking Mercedes taxis, world-class universities, bars to rival Soho and coffee thicker than mud, political demonstrations, and swimming pools awash with more silicone than Miami. Add people so friendly you’ll swear it can’t be true, a political situation existing on a knife-edge, internationally renowned museums and gallery openings that continue in the face of explosions, assassinations and power cuts, and you’ll find that you’ve never experienced a capital city quite so alive and kicking – despite its frequent volatility.