US imposes sanctions on 2 Lebanese contractors, lawmaker

The U.S. Treasury Department has imposed sanctions on two Lebanon businessmen and a lawmaker, saying they have profited from corruption in the struggling country

Lebanon US Sanctions (Copyright 2021 The Associated Press. All rights reserved.)

The U.S. Treasury Department imposed sanctions Thursday on two Lebanon businessmen and a lawmaker, saying they have profited from corruption while the country struggles through its worst economic crisis in modern history.

The two businessmen, Jihad al-Arab and Dany Khoury, are influential contractors in Lebanon who have taken over major infrastructure contracts in Beirut and other parts of Lebanon in recent years. Jamil el-Sayyed, a former security chief and a current member of parliament also sanctioned Thursday, is an ally of the militant Hezbollah group.

The sanctions were a clear warning from Washington to Lebanon's political class that has failed to implement reforms two years after the crisis began with nationwide protests.

The U.S. has targeted Hezbollah officials and institutions over the years and more recently imposed sanctions on politicians allied with the group. Thursday's move was rare, since it is the first time a businessman has been targeted who is not an ally of Hezbollah.

Al-Arab, dubbed by some in Lebanon as the “contractor of the republic,” is close to former Prime Minister Saad Hariri who resigned from his post in October 2019 following nationwide protests against corruption.

The third man sanctioned, Khoury, is close to President Michel Aoun’s powerful son-in-law, Gebran Bassil, who himself is under U.S. sanctions.

The Treasury Department said each of the three have "personally profited from the pervasive corruption and cronyism in Lebanon, enriching themselves at the expense of the Lebanese people and state institutions.”

It said the three are being designated pursuant to an executive order which targets people contributing to the breakdown of the rule of law in Lebanon.

Lebanon is being hit by its worst economic and financial crisis in its modern history in what the World Bank has described as one of the worst in the world since the 1850s. The Lebanese pound has lost more than 90% of its value and more than 70% of the population now lives in poverty.

The crisis is mostly the result of widespread corruption and mismanagement by a political class that has run the small nation of 6 million people, including 1 million Syrian refugees, since 1990, the end of the country's civil war.

“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 Director of the Office of Foreign Assets Control Andrea M. Gacki.

The statement said that because of close political connections, al-Arab has been awarded multiple public contracts in exchange for kickback payments to government officials. It said among the contracts al-Arab won was a deal in 2016 in which he received a $288 million from a government development arm to build a landfill after garbage filled the streets of Beirut. Three years later, the statement said, the garbage situation remained urgent.

U.S. Secretary of State Antony Blinken tweeted that the sanctions are an important step in promoting accountability in Lebanon. He added that Lebanese officials “must end corruption and take urgent action to address the crises the Lebanese people face.”

In June, al-Arab announced that he will close all his business in Lebanon, saying his companies and family are being subjected to an “illegitimate campaign of fabrications." His announcement came days after his daughters were verbally attacked by anti-corruption protesters in Beirut.

The Treasury Department said Khoury has been the recipient of large public contracts that have reaped him millions of dollars while failing to meaningfully fulfill the terms of those contracts.

The U.S. agency said el-Sayyed sought to skirt informal capital controls imposed by local banks since November 2019 and was aided by a senior government official in transferring over $120 million to overseas investments, presumably to enrich himself and his associates. The statement did not name the government official.

El-Sayyed tweeted that he will not comment on the accusation, adding that he will be holding a news conference on Friday.