Report: NY-Based Activists Seek to Label Beirut as 'Money-Laundering Concern'

Posted on: July 05, 2012 at 01:37
Major Wall Street and European financial firms are coming under pressure to dump their holdings in Lebanese debt and securities from activists who charge that Iran, Syria and Hizbullah are using Beirut's banking system to launder money and evade international sanctions, The Wall Street Journal has reported.

The campaign -- which is being led by New York-based United Against Nuclear Iran (UANI) -- could threaten the Lebanese financial sector, traditionally among the Middle East's most important and vibrant, the U.S. daily said.

Lebanon's banking sector historically accounts for around 35% of the country's total economic output. The U.S. Treasury also has intensified its scrutiny of Lebanon's banks in recent months, concerned that Hizbullah is using them to move alleged illicit funds derived from narcotics trafficking.

UANI has sent letters to private-equity firm Blackstone Group LP, mutual-fund firm Fidelity Investments, international bank HSBC Holdings, and Germany's DekaBank Group in recent months to lobby them to unload their Lebanese holdings, the Journal said.

''UANI calls on you…to divest all such securities…to ensure that you don't unwittingly support Lebanon's role as a sovereign money launderer,'' UANI's Chief Executive Mark Wallace wrote.

Three financial firms, Ameriprise Financial Inc., Finland's Aktia Bank, and Vienna-based Erste-Sparinvest KAG, confirmed that they have divested themselves of their holdings in Lebanese securities in recent months, though they didn't cite the amounts of their investments, according to the U.S. report.

Ameriprise said its decision was made before receiving correspondence from UANI.

Sparinvest, however, wrote to Wallace on June 27 to confirm it was pulling its investments because of the concerns raised by the group. ''We came to the conclusion to divest our holdings in Lebanese bonds, and, therefore, we will follow your recommendation,'' Sparinvest Chief Executive Heinz Bednar wrote.

HSBC and DekaBank both contacted UANI and said they also were investigating the charges raised against Lebanon. According to The Wall Street Journal, Fidelity said it would comply with all U.S. regulations concerning investments in Lebanon. Blackstone said it is reviewing the matter and will respond later.

The effort to target Lebanon's banking system is just the latest effort in a broader campaign against Iran and its allies by UANI, a group formed in 2008 by former U.S. and international security and foreign-policy officials. In recent months, the organization also has successfully lobbied South Korea's Hyundai Motor Co., Italy's Fiat SpA, and the U.K.'s Standard Chartered to end their Iran businesses.

In another initiative, UANI teamed this year with U.S. lawmakers to pressure Belgium's Society of Worldwide Interbank Financial Telecommunication, which facilitates financial transfers world-wide, to expel Iran from its network.

The Wall Street Journal said UANI is also pushing for the Treasury to designate Lebanon's financial system as a ''money-laundering concern'' under a statute of the Patriot Act. Such an action could eventually bar Lebanese financial institutions from participating in the U.S. financial system.

Last week, U.S. Treasury officials sanctioned five men for allegedly laundering drug money into Beirut on behalf of an international narcotics network run by a Lebanese national named Ayman Joumaa. The Treasury alleged that some of the funds were sent directly to Hizbullah, via a joint Lebanese-Colombian national, Ali Mohammed Saleh.

''The Joumaa network is a sophisticated multinational money laundering ring, which launders the proceeds of drug trafficking for the benefit of criminals and the terrorist group Hizbullah,'' said David Cohen, the Treasury's under secretary for terrorism and financial intelligence.

Hizbullah leader Sayyed Hassan Nasrallah has denied any role in narcotics smuggling.

The Treasury last year blacklisted Lebanon's then-eighth-largest bank, the Lebanese Canadian Bank, over charges that it was facilitating the movement of Joumaa drug money and holding accounts for Hizbullah.
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