Salah Ezzedine’s Ponzi scheme rocks Hezbollah.
According to political opponents, Hezbollah in Lebanon makes the vaunted discipline of the old Soviet Communist Party seem like junior high school. Recognizing that, it was implausible last September that the stories being filed by local Beirut journalists possibly could be true. There was no way that a Hezbollah insider could be involved in his own not-so-little Ponzi scheme. A Bernie Madoff in Beirut — no way!
Maybe a smaller scale Bernie might exist, it finally was admitted by the Beirut gossipers, but initially not by the Hezbollah leadership. How could they? One of the things that provides that Shia organization with its legitimacy, besides the guns and money from Iran, is its purported dedication to personal honesty and other sacred tenets of the Quran. Or has been oft quoted: “To command good and forbid evil.” At this stage, however, it is “CYA” time in the Hezbollah upper ranks.
The bad guy in this squalid affair is Salah Ezzedine, known as a hardworking businessman loyal to Shia Islam and the Hezbollah movement in Lebanon. He came from the predominantly Shia village of Maaroub in the southern portion of the country close to the Israeli northern border. This entire area had sustained serious hits during the Israeli invasion of 2006. Since that time the region has received large amounts of reconstruction funds from the Hezbollah.
The small towns of southern Lebanon have had a return of people who fled over the years to various Lebanese communities around the world. These returnees arrived with substantial sums they had earned while abroad. Sharing this new wealth with their families, those who came back wanted to invest this capital wisely in a reborn Lebanon. Along came Salah Ezzedine, who was more than willing to offer his knowledge and contacts to his Shia brethren.
Ezzedine’s classic pyramid scheme is estimated to have added up to between $500 million and a billion dollars. Even at this late stage no one can be exactly sure of the final figure. Some of the larger towns in the region have calculated their citizens’ losses (mostly ordinary working and middle class investors) as totaling in the tens of millions of dollars. Perhaps most embarrassing, however, is that several of the top Hezbollah capos lost some of their own money — to the tune of several million dollars.
As squeaky clean an image as the Hezbollah organization seeks to project, the substantial sums of money floating around Lebanon from their foundations and other instruments was bound to attract attention among the more unscrupulous of their followers. In this regard, Ezzedine was an equal opportunity scam artist. A great deal of the money in the hands of the faithful of south Lebanon was provided originally by the government and foreign aid as well as Hezbollah. This once impoverished area abutting north Israel is now trying to figure out how to recover from the rape by one of its own.
The “little guys” of the small communities of the south are not the only ones to have felt the sting of the Salah Ezzedin scam. Through his publishing house, his ownership of a travel agency specializing in holy pilgrimages, and a partnership in an investment firm, Ezzedine had established a wide range of contacts on all levels. His business bringing the faithful on trips to Mecca offered contacts with many of the high rollers of the Middle East. His publishing house drew in the more self-important of the Hezbollah command.
Ezzedine was not shy about letting the word slip regarding his Hezbollah contacts that included the #2 man in Hezbollah, whose book was published through Ezzedine’s firm. It was no stretch therefore to assume the well-connected Shia businessman knew others of the Hezbollah command, possibly including Hassan Nasrallah, the leader. Hezbollah members of parliament were also investors in Ezzedin’s operation. Not surprisingly, one of these MP’s was one of those who initiated the original investigation.
The embarrassment of Hezbollah at the derivation, character and scope of the Ezzedine scheme has caused considerable joy among the anti-Hezbollah political circles in Lebanon. They’ve used every occasion to take a swipe at the carefully cultivated image of probity of the Shia organization. From the outset the similarity was drawn with Bernie Madoff’s enterprise. In Middle Eastern terms the fact that Madoff is a Jew added an extra pejorative character in relating one scam to the other. The personal embarrassment of the high-flying Shia power players has been enormous.
The scandal has been a journalistic bonanza for over three months both in Lebanon and Europe. Only recently the Financial Times ran a special feature story on the exposé. The extensive media coverage was perhaps not the recognition for which the millionaire entrepreneur from a poor village in south Lebanon had yearned. It certainly has shaken the usually unflappable Hezbollah.
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