The hacking operation that recently targeted Hezbollah’s lending house, Al-Qard al-Hassan (a US-sanctioned financial institution) will probably have long-term repercussions on the group, and its financial operations. As Hezbollah struggles to contain the damage caused by the hackers, it will be very difficult for them to rebuild the broken trust in the party and its financial system.
According to news reports, the hacker group, who call themselves SpiderZ, published lists of depositors and borrowers of the association, details about the value of loans, and its budget. Multiple accounts held by SpiderZ, detailed activity by Lebanese private banks, including those already sanctioned, such as Jammal Trust Bank.
An unidentified online source, Double Cheque claims dozens of the depositors – who have balances that exceed $300,000 – are business owners, who have dealings and contacts with international markets and institutions, including local and international banks.
These details allow us to realize that Al-Qard al-Hassan was not just another financial institution that was managed by Hezbollah. In fact, it was the group’s main financial and economic structure in Lebanon. SpiderZ exposed the scope of the Al-Qard al-Hassan’s activity totaling $2.7 billion. It manages 15 tons of gold (worth about $500 million) and a membership fees’ reserve of $120 million. Also, as a registered charity it pays zero taxes to the state.
Through this arm, Hezbollah used the clients and depositors and their companies to borrow tens of millions of US Dollars from Lebanese financial institutions and the Central Bank, and used it to finance its operations in Lebanon, and the region.
By exposing Hezbollah’s financial arm, the hackers succeeded in pushing depositors to withdraw their money, for fear of sanctions or financial restrictions from international markets.
Several reports show that many major depositors are withdrawing their money, and requesting to close their accounts at Al-Qard al-Hassan. This will lead to a vicious circle of trust erosion and budget shrinking, and will advance Hezbollah’s inability to lend money to its vulnerable constituency, and fund its military and soft-power operations in the region.
The Lebanese banks connections is most troubling, for Lebanon as a whole. As a sanctioned institution, the country’s financial institutions should not deal with Al-Qard al-Hassan because they will be subject to sanctions if they do. In the midst of Lebanon’s economic crisis, no bank should risk this kind of affiliation.
Despite denials of affiliation with Al-Qard al-Hassan post 2019, it remains an issue for the banks because sanctions from 2007, and any dealings with Al-Qard al-Hassan after this date, risks serious damage to both them, and their partners.
We still have to see if the hackers are going to release a second round of information, as they promised, and the names and accounts they still have. In any case, the revelations, so far are enough to undermine Hezbollah’s financial operations, and hold local banks responsible if they continue dealing with Al-Qard al-Hassan.
A more symbolic and long-lasting implication is the broken trust between Hezbollah and the Shia constituency. For Hezbollah, there are two Shia communities: the one they serve, and recruit from: that is, the Shia from poor and underprivileged communities.
For these, to be able to borrow money from Al-Qard al-Hassan, they need to leave some kind of “assurance” at the association. They majority of the borrowers leave their gold, in the form of jewelry.
When the financial crisis hit Lebanon in 2019, and the borrowers were no longer able to pay back their loans, Hezbollah started to confiscate their gold. These people have already been complaining about Al-Qard al-Hassan acting as any bank, instead of its claim that it's a charitable association.
The hacking operation did not need to expose these complaints; they were already loud and clear.
The other Shia community that Hezbollah cares most about is the depositors at Al-Qard al-Hassan. This group didn’t have to worry as long as their status as clients was kept secret. The hacking that exposed their affiliation, worth, accounts, and personal information, will push more and more of them to distance themselves from Hezbollah, beyond Al-Qard al-Hassan. This is something that will mostly impact Hezbollah, and undermine its finances. Whoever was behind the breach probably knew this.
Hanin Ghaddar is the Friedmann Fellow at The Washington Institute’s Geduld Program on Arab Politics, where she focuses on Shia politics throughout the Levant.