by Nada Raad – BEIRUT — A prominent Lebanese businessman was charged over the weekend with embezzlement, distributing invalid checks and violating Lebanese fiscal laws in a case that local media have estimated could represent a loss of hundreds of millions of dollars to investors. Salah Ezzedine, a financier and business mogul from Lebanon’s Shiite Muslim community has been in custody since early September, when he declared bankruptcy and gave himself up to authorities. His associate, Yousef Faour, also has been charged on the same counts. Lebanon’s Financial General Prosecutor Judge Fawzi Adham ordered the prosecution of five other people in absentia on the same charges: Ali Habshi, Hiba Tahina, Anis Qanso, Mohammed Bazzi and Ali Qaeek, according to Lebanon’s official news agency.

The National News Agency’s statement on the charges made reference to the five as "runaways," but Mr. Qanso issued a statement, also published by the agency Saturday, denying that he was on the run or that he was managing Mr. Ezzedine’s finances. None of the others accused made public comment.

Mr. Ezzedine remains in detention. It is unclear whether he has hired an attorney, and a representative hasn’t been identified.

News of the weekend charges roiled Lebanon’s tight-knit business community, just as optimism was picking up in the country after peaceful elections, a booming tourism season and Lebanon’s so-far successful navigation of the global economic downturn.

The scope of the alleged fraud is still cloudy. Lebanese authorities haven’t made any public estimates. Local media, which have dubbed Mr. Ezzedine "the Lebanese Madoff," have put possible losses among investors — mostly Lebanese inside and outside the country — at hundreds of millions of dollars. But there is little information about much of his business dealings or the size of his financial assets.

Mr. Ezzedine is a wealthy businessman from the town of Maaroub near the southern city of Tyre. He owns Al Hadi Publishing House in Beirut’s southern suburbs, a stronghold of Hezbollah, that publishes books on Hezbollah and on religious themes.

Hezbollah’s secretive leader Hassan Nasrallah distanced his group from Mr. Ezzedine and his financial trouble amid the controversy, saying last week that speculation the group had business dealings with the financier was a smear campaign meant to tarnish the group’s image. He said Hezbollah was investigating the case.

But one senior Hezbollah official already has said he is a victim of Mr. Ezzedine’s alleged fraud. Hezbollah lawmaker Hussein Hajj Hassan has filed a legal complaint against Mr. Ezzedine related to an alleged bounced check, according to Mr. Hassan’s attorney, who declined to be named or give out any more information about the complaint.

The emerging scandal has clouded Lebanon’s economic picture. Amid the global financial crisis and economic downturn, Lebanon’s banks have been praised for conservative practices and have avoided so far the big losses hobbling much of the rest of the world. There’s no indication that local banks have any exposure to Mr. Ezzedine.

Mr. Ezzedine’s arrest also comes as Lebanon witnesses one of its best summer tourism seasons in decades. That is thanks to the end of a bitter — sometimes violent — clash between squabbling political parties last year and a further easing in tensions after peaceful parliamentary elections in June.


Mr. Ezzedine, 49, remains a mysterious figure. He was best known as the owner of Dar el-Hadi, a publishing house that specialized in religious titles and is based in the heart of Dahieh, Beirut’s Shiite southern suburb. More recently, in 2007, he founded Al Mustathmir, a financial institution based in Beirut that focused on money management. He was known as a deeply religious and charitable man, with a gift for winning people’s friendship.

It is still not clear what happened to the money, according to a judicial official with knowledge of the case who spoke on condition of anonymity, telling The Times that he was not authorized to comment publicly. Mr. Ezzedine, who is now in jail awaiting trial, invested in metals, oil and other commodities in Africa and the Middle East, The Times said, citing several people who knew him.

“Gold, steel, iron,” said the investor, who regularly bundled smaller contributions from dozens or even hundreds of villagers and then presented packages — anywhere from $100,000 to $500,000 — as a single investment to Mr. Ezzedine’s assistants. “Every time, I’d give them the money in a bag, and they’d give me a check for the same amount.”

He leaned forward and showed his cellphone, with a photograph on the screen of rows and rows of stacked $100 bills.

As he reeled off the project titles — zircon, titanium, African oil — the investor began to shake with melancholy laughter. Two friends sitting across from him in his threadbare store — who also lost money with Mr. Ezzedine — laughed with him. The laughs grew louder and louder, and soon all three men were collapsing into wild, helpless bouts of hilarity, tears forming in the corners of their eyes.

“On the day we first heard, we met in the mosque, and we were laughing hysterically for 24 hours,” the investor told The Times.

He soon grew sober again.

“I’m telling you this like it’s just a story,” he said. “But for us, it’s really hard. We are expecting family problems, social problems. Brothers who borrowed money from in-laws and lost it. I have a building I mortgaged.”

Although the scandal is not likely to affect Lebanon’s broader economy, it could create real problems in the Shiite community, where some major real estate owners and businessmen went into debt to finance their investments. The full extent of the alleged swindle remains unclear, but the judicial official said the amount lost appeared to be at least $700 million, and possibly more than $1 billion.

Curiously, some of the investors still defend Mr. Ezzedine. The deep loyalty to Hezbollah that may have helped cause the disaster apparently also prevents many victims from complaining.

In Mahroub, the village a few miles from Tura where Mr. Ezzedine grew up, many local people know him as the pious, likable man who used his money to build a beautiful new mosque a few years ago.

And in some cases the financial naïveté that Mr. Ezzedine played on may even help obscure any crimes. Mustafa Fneish, a wizened 54-year-old taxi driver in Mahroub, said he invested $10,000 with Mr. Ezzedine and had received an 80 percent profit on his investment, or $8,000. When asked whether he had received the principal back, he looked confused, and said no.