LEBANON: THREE LOCAL BANKS WORTHY CANDIDATES TO

S E C R E T BEIRUT 003311

SIPDIS

SIPDIS

NSC FOR ABRAMS/DORAN/MARCHESE/SINGH
TREASURY FOR SENIOR INVESTMENT OFFICER MARK SPROLES

E.O. 12958: DECL: 10/13/2016
TAGS: EINV PTER ECON LE
SUBJECT: LEBANON: THREE LOCAL BANKS WORTHY CANDIDATES TO
WORK WITH OPIC AND CITIBANK, N.A.

REF: STATE 166170

Classified By: Charge d'Affaires Christopher Murray. Reason: Sections
1.4 (b) and (d).


1. (SBU) This cable responds to reftel action request. The
Embassy finds no reason to object to an Overseas Private
Investment Corporation (OPIC) proposed investment guaranty
that would result in Citibank N.A. and OPIC together lending
to three selected Lebanese banks: Byblos Bank, Bank
Mediterranean (now known as BankMed),and Audi Bank. The
Embassy supports OPIC's renewed business in Lebanon and
particularly its proposed support to local banks to help the
financial and private sectors cope with reconstruction needs.



2. (SBU) The Embassy made inquiries into the following
banks and owners. The owners of Byblos Bank are primarily
Dr. Francois S. Bassil, Semaan F. Bassil, Karim S. Bassil,
and Joumana Bassil Chelala. The owners of Bank Audi are
primarily Deutsche Bank Trust Company Americas, Georges W.
Audi, Raymond W. Audi, Marc J. Audi, Lucienne Saradar Azar,
Marianne Saradar Barakat, Mario J. Saradar, Marielle Saradar,
Maria Saradar, Marie-Claude Saradar, Henriette Saradar, Abdo
Jeffi, Salim Meouchi, Mariam N. Al-Sabbah, and Suad H. Al
Homaizi. The owners of Bank Mediterranean are primarily
Nazek Hariri, Baha'a Eddine Hariri, Saad Hariri, Ayman
Hariri, Fahd Hariri, and Hind Hariri.


3. (SBU) The Embassy has made inquiries of a wide variety
of USG agencies and local Lebanese contacts and cannot find
any evidence that the intended participants in this project
have systematically engaged in or been convicted of behavior
that would cause the Embassy not to support the project,
including but not limited to violations of local
anti-corruption laws, money laundering, or terrorist finance.
Central Bank officials from the Special Investigation
Commission Fighting Money Laundering and Terrorism Finance,
leaders of the Lebanese Bankers' Association, and regulatory
officials all described the three banks as professionally
managed, responsible, and compliant with all laws.


4. (S/NF) The Embassy did find a few USG classified (S/NF)
allegations that individual accounts in bank branches outside
Lebanon were used to finance Hizballah, and that one bank
official in Lebanon in 2003 called a Hizballah-affiliated
account holder to suggest he remove his assets from the bank.
The Embassy assesses that these were individual incidents
that do not mar the overall professionalism of the three
banks in question.


5. (SBU) Two recent developments in Lebanon are potentially
relevant to this project and the local financial sector.
First, the GOL warmly welcomes international aid channeled
through the Lebanese banking system. Various Finance
Ministry officials have told embassy officers they are eager
to use Lebanon's banking system to multiply the effectiveness
of small foreign reconstruction grants or loans to reach a
broader spectrum of the Lebanese private sector. Second, the
World Bank Beirut office's lead economist in early October
told embassy officers that up to USD 20 million of its USD 70
million reconstruction grant to Lebanon will fund an IFC
banking facility to help local banks lend to small and medium
enterprises at below market rates. This project is still in
the planning stage and it has yet to be determined with which
banks the IFC will partner.
MURRAY