Lebanon's Bernie Madoff

BEIRUT, Lebanon — When the Lebanese publisher and financier Salah Ezzedine disappeared last month, Hezbollah officials became nervous. They thought the ardent friend and supporter of Hezbollah had been abducted, or worse.

The well respected and religious Ezzedine published books and materials for the Party of God and was close to the party’s senior officials. Hezbollah officials and supporters at all income levels had trusted him for years and with hundreds of millions of dollars of investments.

It was only when many in the party’s Shiite Muslim support base in Beirut’s southern suburbs and in Lebanon’s south began panicking about his disappearance that Hezbollah officials began to suspect that regardless of Ezzedine wellbeing, something was seriously wrong.

Around Aug. 30, Hezbollah found Ezzedine hiding at a home other than his own in the southern suburbs. They detained and questioned him for three days about his business practices, according to a banker familiar with the case who requested anonymity because he’s not authorized to speak with the media.

By the time Ezzedine was handed over to the Lebanese judiciary, the one-time business mogul had declared bankruptcy, shocking tens of thousands of investors who had entrusted the seemingly devout and pious man with their savings.One of those most surprised was the Hezbollah lawmaker Hussein Hajj Hassan, who had recently invested $200,000 with Ezzedine. Ezzedine conducted business rather informally, the banker said, explaining that Ezzedine would often issue a check to his investors as a receipt in the amount of the investment.

When Hezbollah MP Hassan heard Ezzedine had declared bankruptcy, he tried to cash the check Ezzedine had given him as a receipt for the $200,000 investment. The check bounced, the banker said.

Hassan was first to sue Ezzedine, filing a complaint in Lebanese courts on Sept. 3 — a move that clearly distanced Hezbollah from a man the Arab media are now calling the “Lebanese Bernie Madoff.”

Ezzedine was running a Ponzi scheme, and at least $500 million has disappeared in the course of his bankruptcy, according to a Lebanese Central Bank official who asked to remain anonymous because he was not authorized to speak with the media. Ezzedine was charged by the Lebanese financial prosecutor’s office on Sept. 12 with embezzlement, writing bad checks and breaching financial laws.

Some here are calling the fraud the “Financial July War” of 2009, a play on the Lebanese name for the July 2006 war between Israel and Hezbollah that devastated Lebanon’s impoverished southern region and left a billion dollars in damages, and which people are still recovering from.

The scandal is also a major embarrassment for Hezbollah.

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