Lebanon's banks not exposed to Ponzi scheme: Central Bank

Beirut: Lebanon's banks have no exposure to a Bernard Madoff-style Ponzi scheme run by a Lebanese businessman accused of defrauding investors, Lebanon's Central Bank governor said.

"There is no exposure by the banks to it," Riad Salameh said. "The investigation is ongoing. It has nothing to do with the finance or banking industry. He had his own investors, and it's a private matter that's outside of the banking industry."

Salah Ezzedine is under investigation after turning himself in to authorities last week, said Major General Ashraf Reefi, head of Lebanon's internal security forces.

The As-Safir newspaper, citing unidentified judicial officials, reported last week the losses do not exceed $500 million and that $180 million of that amount belongs to an unidentified Qatari investor.

"He was using people's money with the promise of high and unrealistic returns," Reefi said in a September 3 interview with Bloomberg News. "The investigation is ongoing and any number that is suggested at the moment is presumptuous and not accurate."

Some members of the Shiite Hezbollah movement may have invested with Ezzedine, who is not part of the group, Lebanese media, including the Daily Star reported.

As-Safir reported that Hezbollah lawmaker Hussain Hajj Hassan was one of the first people to file a lawsuit against Ezzedine. Phone calls by Bloomberg News to Hajj Hassan on Sunday were unanswered.

Ezzedine, a Shiite businessman who owns Dar Al Hadi Publishing House, invested hundreds of millions of dollars prior to declaring bankruptcy and giving himself up to authorities, As-Safir said.

State Prosecutor Saeed Mirza told As-Safir that a number of lawsuits have been filed against Ezzedine, who if found guilty, could be imprisoned for as long seven years.

Madoff was sentenced in June to 150 years in US federal prison for a $65 billion Ponzi scheme.