Merhi Abou Merhi, a Lebanese business tycoon and former board member of IBL Bank, has not been acquitted by federal prosecutors, sources at the United States Department of Justice and the Department of Treasury told Executive March 8. A report carried by Lebanon’s state-run National News Agency (NNA) on March 7 claimed that Abou Merhi, family members and their companies had been acquitted of charges of facilitating a narcotics and money laundering ring overseen by the Joumaa Criminal Organization.
The Treasury Department says that the report is false and that sanctions are still in place for the Abou Merhis and 11 companies. “They all remain designated. Claims that Mr. Merhi has been “found innocent of the claims by OFAC” are inaccurate and there has been no action regarding Mr. Merhi that would change his status as a Specially Designated National and Blocked Person,” says Betsy Bourassa, spokeswoman for Terrorism and Financial Intelligence at Treasury.
Treasury’s Office of Foreign Assets Control (OFAC) had sanctioned Abou Merhi, alongside three family members that held management positions in eleven designated companies, in October 2015 for alleged business dealings with members of the Joumaa network that had previously been sanctioned by OFAC. Acting Director of OFAC, John Smith, said in a statement announcing the sanctions that, “Merhi Ali Abou Merhi operates an extensive maritime shipping business that enables the Joumaa network’s illicit money laundering activity and widespread narcotics trafficking. The Joumaa criminal network is a multi-national money laundering ring whose money laundering activities have benefited Hizballah.”
Treasury sanctioned Abou Merhi pursuant to the Kingpin Act and added him and the family members to the OFAC’s Specially Designated Nationals (SDN) list. A listing on the SDN freezes the financial assets of the Abou Merhis and eleven companies held in banks under US jurisdiction and blocks them from accessing the international financial system. Getting off the OFAC list is an arduous process requiring those listed to sever business and personal relationships and provide financial records. Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics and former deputy assistant secretary at the Treasury Department, has previously told Executive that it is an expensive and timely process that places the burden of proof on the designated entities. Designation under the Kingpin Act also carries possible fines of up to $5 million and criminal penalties of up to 30 years in prison for each listed individual. The designated companies could each be fined up to $10 million.
When the NNA broke the news that a US court had acquitted the Abou Merhis of any alleged wrongdoing Executive was skeptical. The timing of the report is peculiar in that only 6 months have passed since the sanctions were announced, a very short period of time considering the allegations they face.
According to the NNA, the US Attorney’s Office for the Eastern District of Virginia (EDVA) has dropped the case against Abou Merhi, his family and the companies. But Joshua Stueve, a Justice Department spokesman for the EDVA, told Executive that “The reports are false.” Stueve did not elaborate and did not respond to follow-up questions sent by email.
The NNA says the statement was issued by the EDVA and reported by its correspondent in the United States. Executive reached the NNA’s director, Laure Saab, by telephone and was told that all pertinent information regarding the source of the statement and any other details could be found in the Arabic version of its article published Monday, March 7. But the article neither indicates whether the NNA correspondent actually spoke with the prosecutor’s office or with the Abou Merhis’ legal counsel.
According to the statement obtained by the NNA, “the United States has conducted a lengthy and broad investigation into the allegations against Merhi Abou Merhi, his family and companies. It turned out that the allegations made void of any party, but the prosecutor’s office in the United States has taken the decision to close this case and has informed OFAC of the innocence of Abou Merhi, his family and companies and there is no need to carry the investigation any further.” The NNA stands by its report that the statement acquitting the Abou Merhis came from the EDVA.
The fact that the NNA does not clearly identify and attribute sources, even anonymous ones, is an alert to the need of higher reporting standards when tackling such issues that have implications for the Lebanese–American relationship, Lebanon’s financial system and the business community at large. These stakeholders need to have reliable information because any type of business relationship with a sanctioned entity can raise red flags with Treasury.