Lebanon's head of money changers arrested for selling dollars in ‘illegal manner’

A customer wearing a face mask and gloves, is served at a counter of a currency exchange store, during a countrywide lockdown to combat the spread of coronavirus disease (COVID-19) in Beirut, Lebanon. (File photo: Reuters)

In the fight against a steadily increasing Lebanese lira-US dollar exchange rate, Lebanese authorities went after their highest-profile target to date with the arrest of the head of the syndicate representing exchange houses.

Financial Prosecutor Judge Ali Ibrahim told Al Arabiya English that Mahmoud Mrad, head of the Syndicate of Money Changers in Lebanon had been arrested Thursday, along with several others, “as the result of an investigation into money changers selling in an illegal manner.”

The local currency has seen sharp devaluation over the past months, and though the official exchange rate remains set at 1,507 lira to the dollar, the unofficial rate has risen to above 4,000 lira to the dollar, due to a shortage of dollars in the country.

Ibrahim said that Mrad had been “playing with the market” by not adhering to the price the central bank set for dollars.

In an attempt to tamp down inflation, the central bank last month issued a circular setting a maximum price of 3,200 lira for the dollar; in response, the syndicate of exchange houses declared a strike, arguing that it was impossible for them to do business at that rate.

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Mrad has been referred to the First Investigative Judge in the Mount Lebanon district, Ibrahim said, and the investigation is continuing.

Asked about the strike, Ibrahim said, “Let them do their work, and we’ll do our work.”

While many exchange shops have remained closed, some money changers have continued to do business with customers who contact them privately to arrange transactions, at rates higher than the mandated 3,200.

The money changers’ syndicate issued a statement in response to the arrest of Mrad saying that he and the syndicate members have “always been striving to abide by the regulatory circulars and the exchange rate set by the regulatory authorities, despite the great challenges and difficulties that accompany the implementation.”

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The statement added that sticking to “any pre-determined price” in a market determined by supply and demand is difficult. The syndicate noted that under the law, violations of the Central Bank circulars are not a criminal act.

In their statement, the syndicate expressed confidence in the Lebanese judiciary and court system.
The local newspaper Al Akhbar reported that Mrad’s arrest had resulted from an investigation by the Judicial Police in Beirut’s southern suburbs, as part of which, an unregistered money changer told them he had worked with Mrad to buy dollars and sell them at an inflated rate to wholesale traders, who need dollars to do business. The newspaper reported that a bank branch manager had also been arrested for taking part in the scheme.

On Thursday, the Internal Security Forces announced that six people – four Lebanese and two Iranian – had been arrested by the Judicial Police in the southern suburbs for carrying out illegal exchange activities. The ISF statement did not identify the suspects by their full names, but they included one with the initials M.M.

ISF said four exchange shops had been shut down and sealed with red wax, of which two had a legal license from the central bank, but were not adhering to the mandated prices. Two clothing shops that were operating illegal money exchange businesses were also closed.

This was the latest in a series of enforcement efforts that have so far proved largely futile in clamping down on the black market trade in dollars. Authorities have also attempted to block mobile apps that provided information on the black-market exchange rate, claiming that they were spreading false information.

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Last Update: Wednesday, 20 May 2020 KSA 09:54 - GMT 06:54
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