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LEBANON: Local Bernie Madoff allegedly swindles Shiites, Hezbollah

September 7, 2009 |  7:24 am

Lebanon-madoff

Until recently Salah Ezzedine was a pillar of Lebanon's Shiite community. 

A successful and outwardly pious businessman, Ezzedine handled investments for thousands of people, from poor villagers in southern Lebanon to expatriate millionaires in West Africa, and even officials from the militant party Hezbollah.

But that all came crashing down last week when Ezzedine declared bankruptcy, prompting an investigation that revealed the shocking extent of his alleged fraud.

Local media reports now estimate that Ezzedine lost up to $1.5 billion of his clients' money. He's now being dubbed Lebanon's Bernie Madoff.

The scandal has rocked the Shiite community, which made up most of Ezzedine's clientele. 

While initial reports centered on the connection between the disgraced businessman and Hezbollah, the party's international relations chief, Ammar Moussawi, told the Lebanese daily Al Akhbar that Ezzedine had no official relationship with the party, but that he did maintain personal ties with some members. The paper went on to say that the only official legal action filed against Ezzedine so far was on behalf of Hezbollah lawmaker Hussein Hajj Hasan, who reportedly lost about $400,000.

In addition to well-to-do investors, Ezzedine's victims included some of the most vulnerable members of the community. In the poor southern village of Yaroun, some 40% of residents had pooled their savings to invest with Ezzedine.

"One of the residents took out a mortgage on his house and then invested the money with Ezzedine. I don't know what he's going to do now," the former mayor, Ali Ghashem, told Al Akhbar.

Ezzedine supposedly had a number of ventures in tourism, real estate, construction and the gold trade, some of which were based in West Africa, home to a large Shiite expatriate population. He also owned a religious publishing house, Dar al-Hadi, which was closed following his arrest.

In Ezzedine's native village of Maaroub, residents are still in shock. Some refuse to believe the allegations against him.

"The situation is very unclear, and people are confused," the town's mayor, Hussein Fneish told Al Akhbar. "They bemoan the loss of their money on the one hand, but on the other hand, they worry about Salah."

-- Meris Lutz in Beirut

Photo: Hezbollah officials, including Hussein Hajj Hassan, left, were among Salah Ezzedine's alleged victims, although the party said it had no official relationship with him. Credit: Nabil Mounzer / European Pressphoto Agency

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