MAAROUB // Enter any shop on the main street of this small village in the south of Lebanon and chances are that the owners or clients or both will have invested with the local businessman Salah Ezzedine. But over the weekend Mr Ezzedine and an associate, also from Maaroub, were charged with embezzlement, 10 days after being taken into custody. Another five persons have been charged in absentia, two of them outside Lebanon.
The affair, which is thought to involve hundreds of millions of dollars, weighs heavily on Lebanon's Shia community this Ramadan. One merchant on Maaroub's main street says: "I lost some money, some savings but I'm OK. I know people who have lost everything they had. They even borrowed money to invest with him." One of his colleagues says his grandmother mortgaged her bakery in order to invest US$25,000 (Dh91,825) with a middleman who said that he was working with Mr Ezzedine. She was convinced by the promise of a 10 per cent return, $2,500, every six months.
Such small investments, often gathered together into larger sums and handled to middlemen, along with much larger ones in the order of tens of millions, add up to a case in which "hundreds of millions of dollars and several countries" are involved, according to Said Mirza, the Lebanese state prosecutor. Many people in the south of Lebanon who invested with Mr Ezzedine still refuse to believe that he defrauded them, as he is alleged to have done.
They point to his legitimate business interests, such as his publishing house, Dar al Hadi in Beirut and his travel agency for pilgrims to the Haj, as evidence of his trustworthiness. They say that he has become the victim of the global financial crisis and that he has lost the money because of the downturn, particularly in the commodities markets, in which he was said to have invested.The suspicion in the Lebanese media and elsewhere is that the large returns that were offered, of 20, 30, and sometimes even 60 per cent, indicate that this could have been a Ponzi scheme. Mr Ezzedine also had close ties to senior members of the armed Shia Hizbollah movement, adding to the profile of the case in Lebanon and abroad.
In Lebanon's polarised media landscape, those news outlets opposed to Hizbollah have had a field day, naming several leaders, including members if parliament, who were said to have invested with Mr Ezzedine. Some, but not all, have denied this. The movement's leader, Sayyed Hassan Nasrallah, even saw fit to address the issue via Hizbollah's Al Manar Television last week, denying that the leaders or anybody connected with them had any of the missing money and saying that much of the media coverage, "is aimed at tarnishing the image of many of the party cadres".
But Hizbollah has confirmed that some of its members invested with Mr Ezzedine, including one MP, Hussein Haji Hassan. The largest sum from outside Lebanon appears to have come from a Qatari businessman, also a Shia, who gathered his own and other people's money to invest with Mr Ezzedine. The sum involved is said to be $180 million, though it is still unclear if this also included anticipated interest. Lebanon's central bank has said that none of the country's banks is exposed to Mr Ezzedine's collapse, while the minister of finance has said that the case does not have any systemic consequences.
Mr Ezzedine was first reported to have acted completely outside the supervision of the Central Bank. But in recent days local media have reported that he was also a fund manager at one registered investment firm, Al Mustathmer. Much of the business that Mr Ezzedine conducted seems to have gone through middlemen and was based on trust, his investors say. Receipts were often not deemed necessary for smaller sums and even in the case of larger amounts, the administration seems to have been half-hearted. For larger sums, cheques were given to investors as collateral.
But one investor in the village of Toura, not far from Maaroub, says that the middleman in his case asked to have a cheque for $200,000 returned weeks before Mr Ezzedine's problems started, "to renew it". The investor said he did not get the cheque back, despite repeated demands. Toura was particularly hard-hit: the small hilltop village's mayor estimated that some 250 people may have lost a total of up to $15m.
Much of the money comes from remittances sent back by Lebanon's large expatriate community. Many Lebanese Shia have gone to Africa, in particular, to seek their fortune and the once mostly poor villages in the south are now dotted with ostentatious homes. Many of the cheques that were used as collateral were issued in the name of one of Mr Ezzedine's companies, Societe pour le Commerce et l'Industrie, a simple one-owner business registered in the Beirut suburb of Baabda.
When some of the investors started suspecting trouble late last month, they tried to cash their cheques, only to discover that the account was empty. Another company Mr Ezzedine used was listed as East Line on one receipt. In July last year, the president of the Gambia, Yahya Jammeh, issued a statement, accompanied by a photo in which Mr Ezzedine handed over a cheque for close to $200,000 in "royalties paid to the Gambian government by Salah Ezzedine of East Line Company, for 10,000 tonnes of sand minerals exported from The Gambia".
business@thenational.ae
