SARG ORDERS SYRIAN BANKS TO FREEZE KHADDAM'S ASSETS

C O N F I D E N T I A L DAMASCUS 000069

SIPDIS

SIPDIS

NEA/ELA
NSC FOR ABRAMS/DORAN/SINGH
TREASURY FOR GLASER/SZUBIN/LEBENSON
EB/ESC/TFS FOR SALOOM

E.O. 12958: DECL: 01/04/2015
TAGS: ECON EFIN SY SANC
SUBJECT: SARG ORDERS SYRIAN BANKS TO FREEZE KHADDAM'S ASSETS

REF: A. DMS 00019


B. DMS 06544

Classified By: Charge d'Affaires Stephen Seche, reasons 1.4 b/d


1. (C) On January 2, the SARG ordered all Syrian banks, as
well as those subsidiaries of foreign banks operating in the
Syrian free zones, to freeze immediately the assets of former
Vice President Abdul-Halim Khaddam and his family. A faxed
letter from the Central Bank's Combating Money Laundering and
Terrorism Financing Commission, signed by Governor of the
Central Bank Adeeb Meyala, in his capacity as President of
the Commission, specifically designated five individuals for
asset freezing: former Vice President Khaddam, his two sons
Jemal and Jihad, Khaddam's wife Nijlah, and his son-in-law
Arfan Tarabishi. The letter also ordered the banks to freeze
the assets of the members of each individual's family.


2. (C) Nabil Hchaime, General Manager of Bank BEMO Saudi
Fransi, one of five private banks operating in Syria, stated
that he responded to the order on January 3. He did not say
whether the Khaddam family maintained accounts with his bank,
although Post has heard from others that the Khaddam family
liquidated all of its financial holdings in Syria- including
one of the most popular Damascene restaurants- over the past
three months. According to Hchaime, the Commission's action
will resonate loudest among current and potential customers
of the new private banks, who now will fear that their own
money is less safe because the SARG is capable of
capricuously lifting bank secrecy protections on the accounts
of its critics. (Note: Bassel Hamwi, the General Manager of
another private bank, Bank Audi Syria, stated that under
Syrian law, banks are required to comply with an order from
the Commission. Further, banks are not allowed to perform
due dilligence in assessing the legal basis or legitimacy of
the order. End note.)


3. (C) Comment: It is unlikely that the SARG action will
have any financial effect on Khaddam or his family. The
order to freeze assets counts simply as one more front in the
SARG's vitriolic attacks against the former regime insider
following his December 30 interview on Al-Arabiyya (ref A).
The immediate outcomes of the SARG's order are the
politicization of the Combating Money Laundering and
Terrorism Financing Commission and the erosion of confidence
in Syria's nascent banking system. This in turn will
undermine the SARG's recent efforts to stabilize the Syrian
pound (SYP) (ref B),which showed new volatility in the days
following the Khaddam interview as it dropped from 55.5 SYP
to 58 SYP per USD on the blackmarket.
SECHE