'Lebanon's Madoff' bankrupted after bouncing $200,000 cheque to Hizbollah

Businessman promised customers a 40 per cent return on their investment

Share
Related Topics

Everyone trusted Salah Ezzedine. A billionaire Shia Muslim businessman and financier from southern Lebanon, he organised pilgrimages to Mecca, ran a major Beirut publishing house and a children's television station, held major investments in east European oil and iron conglomerates, and – much more to the point – was a close personal friend of very senior leaders of the Hizbollah. Indeed, many members of the world's most powerful and successful guerrilla movement, along with the families of their "martyrs" in the war against Israel, placed both their faith and their inheritance in Mr Ezzedine's hands.

To the deep embarrassment of the Iranian-financed and Iranian-armed militia, however, Mr Ezzedine turns out to be an "Abu Madoff", declaring himself bankrupt, to the tune of $1.195bn (£760m), after promising his trusting investors an astonishing 40 per cent interest on their deposits – which, according to judicial officials in Lebanon, he eventually could not pay.

The Hizbollah have remained as silent as the grave – of which there are a lot in Lebanon – as well they might. For both Mr Ezzedine's radio station and his publishing business were named after Hadi Nasrallah, son of Hizbollah's general secretary, Hassan Nasrallah, who was killed leading a brave but suicidal attack on Israeli occupation troops in southern Lebanon.

But things were worse than this. It now appears that Mr Ezzedine's financial collapse became inevitable after he wrote a $200,000 cheque to Hussein Haj Hassan, one of Nasrallah's closest political advisers and a Hizbollah member of parliament. The cheque bounced. The response to this within Hizbollah's bunkers can only be imagined.

The movement, created in 1982 as a result of Israel's Lebanon invasion, had built up its prestige in the Arab world on its squeaky-clean reputation for financial and political probity. Middle East dictatorships and the third-rate leadership of the Palestinian Authority may salt their millions away in foreign bank accounts, but not the incorruptible Hizbollah. Or so the world thought, until the scandal that burst around Salah Ezzedine. He is now being interviewed by the Lebanese judiciary, and is allegedly being held in the grim old prison at Roumieh, north of Beirut.

The story seems a familiar one. Flushed with massive profits in the oil business, Salah Ezzedine – so say economists in Beirut – began investing the savings of Lebanon's Shia population, rewarding them with 40 per cent interest on their deposits – with the money from yet newer investors attracted by the rewards of his scheme. Whether Salah Ezzedine did this with the calculation of a Bernard Madoff or with a charitable desire to spread his own wealth among the largest single community in Lebanon, we do not know.

The Hizbollah – the "Party of God" in Arabic – has been strangely silent this past week, an unusual characteristic for such a publicity-conscious movement whose own millions – faithfully shipped in US currency bills to Beirut from Tehran – rebuilt dozens of Shia Muslim villages destroyed in Israel's bombardment of southern Lebanon in 2006. Hizbollah members could be seen handing out bundles of newly minted hundred-dollar bills to villagers and thousands of home-owners in the Dahiya area of Beirut whose property was "rubble-ised" in Israel's bombing. Many of these civilians, Lebanese newspapers are reporting, have now lost their money with Salah Ezzedine's collapse.

While traditionally ignored by the country's government and living in the stony hills of southern Lebanon – many grow tobacco crops – as well as the Bekaa valley, members of the Shia Muslim community have been emigrants to west Africa, Brazil and Holland and have made fortunes abroad (especially on the Antwerp diamond market). The size of their remittances home is made manifest in many of their ancestral towns. Villas of unseemly conspicuous wealth – replete with marble colonnades, Greek pillars and manicured lawns – sit on desolate hillsides, sometimes only metres from the Israeli border.

Of course, there is another reason why Hizbollah might want to keep quiet just now. Many Muslims believe that bank interest is un-Islamic, which is why the Lebanese Shia put their money in businesses run by Salah Ezzedine, who was known as a "pious" man – an optional extra for all friends of the Hizbollah – and whose Haj pilgrimages had become an essential element of that fixed part of the Muslim calendar in Lebanon.

React Now

iJobs Job Widget
iJobs General

Business Analyst Consultant (Financial Services)

£60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

Systems Administrator - Linux / Unix / Windows / TCP/IP / SAN

£60000 per annum: Harrington Starr: A leading provider in investment managemen...

AVS, JVS Openlink Endur Developer

£600 - £700 per day: Harrington Starr: AVS, JVS Openlink Endur Developer JVS, ...

E-Commerce Developer

£45000 - £60000 per annum + competitive: Progressive Recruitment: Exciting opp...

Day In a Page

Read Next
The first lesson of today is... don't treat women unequally?  

Yvette Cooper is right: The classroom is the best place to start teaching men about feminism

Chris Maume
Forty per cent of global trades in euros are cleared through London  

The success enjoyed by the City of London owes nothing to the EU

Nigel Farage
A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice
Hollywood targets Asian audiences as US films enjoy record-breaking run at Chinese box office

Hollywood targets Asian audiences

The world's second biggest movie market is fast becoming the Hollywood studios' most crucial