End of a salesman

The story of Wael Hafez, the 21-year-old car dealer who fled Lebanon with reported debts of around $20 million, is a supreme HISTOIRE DE NOS TEMPS. Not only is it a story of personal greed, it also offers an insight into how the “used” luxury car market has become a magnet for those who seek glamour and a quick return on their money. Although nothing more than a insignificant footnote in history, it is a typical Lebanese story: bankers, cars dealers and private investors were all burned by a young man barely out of school, blinded by the shallow dividends that make up the modern Lebanese dream.

A scion of a respectable and wealthy family, Wael Hafez was elevated from small-time businessman to selling luxury cars bought mainly from disgraced banker Ibrahim Abou Ayache. In order to finance the purchase of these $50,000 to $250,000 dream machines, Hafez offered investors outrageous return on short-term loans.

“If you loaned him $100,000 he would immediately write you two post-dated checks for $60,000,” said one ex-associate. “He was offering the best interest rates on the planet.”

The system, essentially the final stages of an international money laundering operation, was straightforward. According to insiders, all of whom refused to be named (“These are powerful and dangerous people,” one said), Hafez would buy a car, worth say $100,000, for $75,000 from Abou Ayache, who had brought it from a dealer in Germany with money from Al Madina Bank. He would sell it at a shade under market value, take his cut and repay the loan. During its brief incarnation, Hafez’s Link Motors sold 500 between January and May 2003. “That is nearly as much as is sold by all the authorized dealers in Lebanon in a month,” said one insider. When Abou Ayache’s Al Madina bank went into receivership in Spring 2003, the boy who began his career by selling cars over the phone found himself facing millions of dollars worth of debts. In order to keep creditors at bay, Hafez resorted to check fraud. This desperate stopgap strategy, (Hafez thought his luck would turn), only delayed the inevitable. After he fled the country, his many creditors besieged the Hafez family home in Verdun demanding their dues, but his father, who is allegedly in regular contact with his fugitive son, has offered all the debtors approximately 20% of their claims. Despite the uproar from many who say they have lost their entire life savings or inheritances, many of those close to Hafez have little sympathy for those who claim they were ripped off.

“A lot of people made serious money out of Wael. If they lost on some of the final deals, so what,” shrugged one. “Anyway they were all grown up and they knew what they were doing and no one put a gun to their heads. No borrower gives those rates if there is no risk.”

Wael Hafez was born in 1982 into a respectable Beiruti family of Syrian origin. Educated initially at the International College, he later changed schools and was sent to the more conservative Al-Bayader High School. Those who know him say the move was for religious reasons, while others suggest he failed to make the grade at the hugely competitive IC and that Al-Bayader was the only school that would take him.

The family was very wealthy; reputed to be worth around $300 million, a fortune built up from the manufacturing of household appliances, refrigerators, ovens and washing machines. Life for young Wael was carefree. The family was initially liberal (Wael’s mother drove an open-top Mercedes) but in his teens the family became increasingly conservative. This new prohibition brought with it a new set of rules: no movies, no going out, and no girlfriends. However, at 17, Hafez fell in love with Zein Hrake, a 15-year-old, “open-minded” girl. Early marriage was nothing new to the Hafez family and when Wael turned 18, his mother agreed to the union.

Hafez briefly enrolled at LAU but never completed his first semester. Those who knew him then and know him now, remember him for his charm and charisma. “Wael is a genius,” said one fellow student. “Everything seems so easy for him. He is very positive and not afraid of anything.” The good news for Hafez was that his marriage meant freedom. He no longer lived with his parents and his monthly allowance had increased from $4,000 to $10,000. Leaving his by-now-veiled wife at home, he started going out at night with his friends.

According to many of those friends, Hafez found security and a sense of camaraderie in their presence, a welcome antidote to the conservatism of home life. At the height of his “reign,” he invited around a dozen friends on an all expenses paid trip to Dubai, where they stayed at the Burj El-Arab. “He paid for the lot,” said one ex-associate. “The food the booze and even the girls.” Those who were around him at this time, remember Hafez asked his friends to call him “the Prince” (IL BRINZ) and then surrounded himself with four bodyguards. He was styling himself and his lifestyle on that of Taha Qoleilat, the local businessman who seemingly came from nowhere to own five star hotels, restaurants, and luxury car dealerships. In fact, Hafez’s weakness was cars. “He was a car nerd,” said one friend. “He could dismantle and put back together any model you could name. He knew where every little nut and bolt went.”

Not surprisingly therefore, for a young man who would change his car up to four times a month, he began to get an understanding of how the car market worked, buying and selling cars. By September 2002, Hafez had established a cellular phone shop and two months later opened Savoy Café on Raouche, the motto of which was “Where friends become brothers.” Hafez would buy his cars from Highway Motors, owned by Fouad Kahwaji, who sourced luxury vehicles from Abou Ayache. In 2002, Hafez was introduced to Mohammed Doughan, Abou Ayache’s trusted fixer.

Abou Ayache needed a new outlet for his cars. Both Highway and Quatro Motors (owned by Taha Qoleilat) were beginning to raise eyebrows. He needed a front man who was young, ambitious, wealthy, and above reproach. Wael Hafez fitted the bill and in March 2003 Link Motors was established at the UNESCO intersection on an already established car lot rented from Abdel Salam Al Wazzan, whom Hafez would later rip off for $400,000. Hafez sought investors to finance the purchase of the cars. With the kind of returns he was offering, they were queuing up to give him their savings or inheritance.

One car dealer recounted how Wael once walked in his showroom carrying a paper bag filled with money. Emptying the bag on the floor, Hafez counted the bills, the total of which came to $500,000. He then called Tarek Issa, his Kurdish office boy, who came on a moped, threw the bag in his face and told him to go and deposit the money at the bank. Without a receipt, the boy put the bag between his legs and zigzagged his way through the traffic.

These vulgar displays of wealth convinced investors that Hafez was somehow connected with a money-laundering ring. “We assumed that he was well-protected, that’s why we trusted him with our savings and the savings of our relatives,” said one investor.

Hafez was a one-man money machine. Sitting in his office he would go through a checkbook in less than half an hour. This impressive movement of funds did not escape the attention of the Al Ahli International Bank, which by now had identified Hafez as a blue chip client.

In late April 2003, with the indictment of Abou Ayache, Hafez’s mini empire began to crumble. “The cars dried up and there were loans to be paid back,” said one associate. “He had been overspending, which didn’t help matters.” He certainly had. In the fine tradition of Lebanese excess, Hafez had displayed rare vulgarity. On one occasion, he ordered four Quads worth $12,000 each from Itani, and which were only used once and then given away. On another, after his morning jog, he went into Aïshti in Verdun, where none of the sales staff paid him much attention. Hafez, presumably irked at the lack of respect, proceeded to spend $17,000 and ordered the shop manager to carry the bags up to his apartment.

But by now the chickens had come home to roost. As a stopgap Hafez resorted to check kiting, a process whereby a person with accounts in two banks can create an illusion of money in his account. A check drawn on the first bank is deposited with the second bank and before the check reaches the first bank for payment, a check drawn on the second bank is deposited to the first bank. If that bank is willing to give immediate credit in the interim, the person can use the bank’s money without first providing collateral and without paying interest. This scheme can go on as long as the person keeps depositing checks in both banks and both banks believe there is money behind the checks. However, instead of using two banks Hafez is alleged to have used two accounts in the same branch, a claim that casts doubt on the bank’s later contention that it was unaware of his activities. Using this method, Hafez was able to hold off creditors. The bank, which until that point had been satisfied with the millions that he allegedly passed through his account, was presumably cutting its star client some slack. During this period he was able to generate enough money, thorough gullible investors, to pay the alleged $20 million dollars he is thought to have owed Abou Ayache. By this time, the checks to his investors were being broken down into smaller amounts and post-dated over longer periods. In the last weeks Hafez was working long hours and living on Red Bull, while staying at the presidential suite at the Mövenpick Hotel. Friends said that he was looking stressed and tired. Then, when the checks started to bounce and with only the clothes on his back, he and his wife fled the country on June 2. “His family told him to go,” said one close friend. “They need time to sort out his affairs and this is why they are handling his debtors”

The fallout has been considerable. The Al Ahli International Bank, with whom Hafez deposited up to $45 million over a period of less than six months, were quick to place any knowledge of Hafez’s check kiting scams on the shoulders of its branch manager Samir Tutunji. For his part Tutunji claims that the incriminating bounced checks found in his possession were given to him by the bank to follow up on and that the Hafez account was handled from the head office in Bab Idriss. Either way, the bank appears to have been negligent in its surveillance of Hafez’s banking activities.

Hafez’s brief incarnation as a small time tycoon had come to an end. Those of his debtors who have not accepted the 20% pay-off are seeking, through the Lebanese courts, an international arrest warrant to be issued. Khaled Dairaki, one of Hafez’s two trusted associates (the other was Tarek Issa the office boy), was approached by the family to retrieve the post-dated checks. The family promised that all monies owed to Dairaki – a reported $600,000 – would be honored. The well-connected Dairaki was able to get back a reported $11 million worth of checks but is reported to have been given the runaround by the Hafez family when it came to his own debts. Finally Dairaki’s patience ran out and, through his lawyers, issued seven writs against Hafez, one of which led to the sealing of his apartment and the selling off of assets. A nation’s moral compass can be gauged by the caliber of its heroes. In more developed nations, heroes set the benchmark for those to come. They may have suffered for a cause, encouraged the underprivileged, set new standards of sporting excellence, pushed back artistic boundaries or simply demonstrated such distinction in their individual fields as to have left us gasping and inspired at their accomplishments. In Lebanon, it seems that our heroes can be crooked, corrupt and downright nasty, just as long as they are rich.