Authorities hold debt-ridden businessman in custody
Financier suspected of defrauding people out of millions of dollars
Lebanese authorities are holding in custody a prominent Shiite financier close to Hizbullah on suspicion of fraud after he invested hundreds of millions of dollars of other people’s money before declaring bankruptcy, judicial officials said Wednesday. Salah Ezzedine gave himself up to authorities earlier this week after declaring himself bankrupt. The officials said he was then taken into custody and is being investigated for possible crimes including “the fraud of large amounts of money.” He has not been formally charged yet.
State Prosecutor Saeed Mirza told As-Safir newspaper in comments published on Wednesday that the Ezzedine case was “under close scrutiny.”
However he regretted that the exact number of investors and the total of the losses could not be specified. “The matter needs some time,” he said.
According to Mirza, numerous lawsuits had been filed against Ezzedine and the sentence he could face for fraudulent bankruptcy is three to seven years in prison. “The sentence for negligence bankruptcy, however, is one to three years of prison,” Mirza said.
Media reports said the bankruptcy case was closely being followed by a number of Shiite figures in Lebanon including Speaker Nabih Berri, Hizbullah chief Sayyed Hassan Nasrallah and senior Shiite cleric Sayyed Mohammad Hussein Fadlallah.
The case has drawn comparisons in Lebanon with that of Bernard Madoff, the New York failed financier whose multi-billion-dollar Ponzi scheme wiped out thousands of investors and charities worldwide. Madoff was sentenced in June to 150 years in prison.
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 publishing houses of religious Shiite books which also prints books written by Hizbullah officials – and Al-Hadi TV for children.
Employees at the publishing house have refused to speak to reporters about the case.
An official with close links to Hizbullah confirmed to the Associated Press that Ezzedine “has extensive connections” with senior members of the group but could not say whether any senior members had business dealings with him. The official spoke on condition of anonymity.
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 them up to 40 percent interest on their deposits which he could not repay, the officials said, speaking on condition of anonymity in line with regulations.
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 among Ezzedine’s victims are high ranking members of Hizbullah, as well as Shiite investors from south Lebanon and the Hizbullah stronghold south of Beirut.
It was still not clear whether the financier knowingly deceived investors.
Ezzedine is also known for being a pious man involved in charity work. He headed an institution that organized pilgrimage trips to the Muslim holy cities of Mecca and Medina in Saudi Arabia.
In Maaroub, the Ezzedine bankruptcy case drew mixed reactions. While some residents said they were ready to stand by Ezzedine’s side and described him as an honest man “who gave a lot to his community,” others frowned at the mention of the businessman.
Seventy-year-old Samir Abdullah, who has invested a large portion of his money with Ezzedine, said he was “ready to die” for Ezzedine. According to Abdullah, the bankrupt millionaire was “an honest man and he had financed the building of the town’s mosque.”
Ezzedine’s uncle Ali Ezzedine stressed his nephew’s integrity and blamed Israel’s intelligence agency, the Mossad for the bankruptcy. “Some people are scared for their money and that’s their right but others aren’t worried because they know that the truth will be revealed,” he added.
In his home town, the financier was known to have invested his fortune in a number of charity projects.
“Ezzedine offered financial help to all those whose properties were damaged during the summer 2006 war with Israel,” said Um Abdullah, a resident of the town.
“He helped almost everyone, widows, elderly, underprivileged, sick and disabled,” she added.
But not everyone in Maaroun is supportive of Ezzedine, with a number of residents expressing fears that they might have forever lost the money with which they entrusted the man.
Lebanese expatriates who invested money with Ezzedine seem to be the most affected.
“There is no doubt that he is an honest man but we entrusted him with our money and we call on relevant authorities to compensate our losses,” said an investor from the southern town of Yaroun, who wished to remain anonymous.