Lebanese smash counterfeit dollar ring

Lebanese police yesterdayclaimed to have broken an international forgery syndicate responsible for printing up to $1bn (pounds 630m) in American, German and Arab currencies.

According to Moukhtar Saad, the investigating judge in central Lebanon, five sophisticated printing presses were found in caves north of Beirut from which bundles of counterfeit notes were being taken out of the country - by speedboat to ships in the Mediterranean and in the secret compartments of suitcases carried by passengers through Beirut airport.

Although the counterfeits included $100 notes, these are said by bankers not to include the new "perfect'' $100 notes flooding the Middle East market and whose existence was reported in the Independent on Monday. The police here have arrested 13 Lebanese and say that the latest scam also involved Jordanians, Iraqis, Iranians, Egyptians, Cypriots, Bulg- arians, Czechs, Russians, Ukrainians and people from the former Yugoslavia.

The main presses uncovered by the security forces over the past two months were in Jeita and Jbeil, both Christian areas of Lebanon, while dismantled equipment was also found in the mainly Shia Muslim Bekaa Valley, controlled by Syrian troops.

The Jeita caves, in which the five presses were discovered, were used as arms and equipment depots by the right-wing Christian Phalangist militia throughout much of the civil war. Authorities in Beirut believe the Lebanese forgers liaised with a mafia gang in Sofia, capital of Bulgaria, and have issued arrest warrants for 15 other men. As well as $100, $50 and $20 notes, the counterfeiters were producing German marks, Emirates dirhams and Saudi Arabian riyals. Other printing equipment was found dismantled in Byblos, north of Beirut.

This was the largest forgers' syndicate broken by the Lebanese police since the end of the civil war in 1990, and will no doubt be publicised as further evidence that the government is restoring law and order to nation once synonymous with drug-trafficking and forgery.

The United States is still trying to discover the source of the "perfect'' $100 notes circulating in the Middle East.

Washington believes that Iran may be responsible for these notes - which have a sophisticated security thread running through them - and is reported to have sent a State Department delegation to Damascus to seek Syrian help in identifying the country involved.

Senior Lebanese banking officials say they suspect either Iran or Israel of involvement in production of the fakes, pointing out that counterfeit $100 notes have been circulating widely in Israel's occupation zone in southern Lebanon.

The Israeli government has categorically denied any involvement. Beirut police say that in their latest "bust'' they recovered the equivalent of up to $6m in fake notes.