Lebanese Businessmen, Lawmaker Sanctioned by U.S. for Profiting From Corruption

Both businessmen received contracts linked to a garbage crisis in Beirut

Trash lines the street of Beirut, Lebanon, in October 2020. (Source: Shutterstock)

By Samuel Rubenfeld

Thursday, October 28, 2021

The U.S. Treasury Department on Thursday sanctioned two Lebanese businessmen and a lawmaker for personally profiting from corruption and cronyism in Lebanon.

As the Lebanese people struggle for basic public goods such as medicine, electricity and food during an economic crisis, members of the country’s elite “operate with impunity,” enriching themselves and hiding their wealth, the Treasury said. Lebanon has collapsed under the weight of crises “decades in the making,” The New York Times Magazine reported Thursday.

“The Lebanese people deserve an end to the endemic corruption perpetuated by businessmen and politicians who have driven their country into an unprecedented crisis,” said Andrea Gacki, director of the Treasury’s Office of Foreign Assets Control (OFAC). 

The sanctions were imposed under an executive order issued in 2007 by President George W. Bush that authorizes designations of any person contributing to the breakdown of the rule of law in Lebanon. Since the end of a 15-year civil war in 1990, a handful of politicians have dominated and exploited every facet of the state, the Times report said, noting that the country’s people are suffering under one of the world’s worst economic meltdowns of the past 150 years. 

Jihad al-Arab, a wealthy businessman who is the brother of an aide to former Prime Minister Saad Hariri, has been awarded multiple public contracts in exchange for kickbacks to government officials, the Treasury said. Members of Al-Arab’s family are owners and managers of his companies, according to a review of corporate records by Kharon. JCC SAL Al Jihad Commerce & Contracting, one of the companies tied to the family, is involved in several large infrastructure projects in Lebanon, according to its website.

In late-June, though, al-Arab announced he was closing all of his businesses in Lebanon following insults hurled at his daughters by protesters in Beirut, according to a media report. 

Concerns from municipal officials about the cost and safety of an USD 18 million contract al-Arab’s company received to rehabilitate a bridge in Beirut were overruled, “almost certainly” due to his relationship with powerful politicians, according to the Treasury. 

Al-Arab also served as an intermediary as of 2014 to broker a meeting between top Lebanese officials in advance of a Lebanese presidential election in exchange for USD 200 million in contracts, the Treasury said. 

Both al-Arab and Dany Khoury, the other businessman sanctioned Thursday, have ties to the country’s sanitation sector, according to the Treasury. Al-Arab received a USD 288 million contract in 2016 to build a landfill as garbage clogged Beirut’s streets, but as of 2019 the situation “remained urgent,” the Treasury said. Khoury received a USD 142 million contract to operate a separate landfill, but he and his company have been accused of dumping trash and toxic waste directly into the Mediterranean Sea, according to the Treasury.

The Beirut garbage crisis was the subject of a December 2019 report by the New York TImes, which also profiled the contracts handed to al-Arab and Khoury’s companies. In its statement, the Treasury cited the Times report’s finding that al-Arab’s company was adding water to garbage containers to inflate their billable weight, and that Khoury’s firm had dumped trash into the sea.  Both denied wrongdoing at the time.

Khoury has also benefited from his close ties to Gibran Bassil, the head of a Lebanese political party who was sanctioned by the U.S. in November 2020, the Treasury said. Bassil has held several high-level posts in the Lebanese government, including several ministerial positions, the Treasury said at the time. As Minister of Energy in 2014, Bassil was involved in approving several projects that would have steered funds to people close to him through front companies.

Due to their relationship, Khoury received large public contracts while failing to fulfill their terms, according to the Treasury. Bassil and Khoury are not partners in politics or in business, Bassil said in a social media post after Thursday’s designation.

Jamil Sayyed, the member of the Lebanese parliament sanctioned Thursday, has sought to skirt domestic banking policies and regulations, the Treasury said. He was aided by a senior government official in transferring more than USD 120 million to overseas investments, according to the Treasury, which did not name the person. 

When demonstrators protested outside his home in 2019, Sayyed called for them to be shot. He was Lebanon’s intelligence chief during Syria’s post-civil war domination of the country and plotted a comeback with the help of Hizballah, the terrorist group, Reuters reported in 2018. 

Sayyed had quit government after the assassination of former Prime Minister Rafik al-Hariri and spent four years in jail until he was released without charge over the killing, the report said.

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