• Home
• /
• Business

Lebanese bank owner freed on bail in fraud probe

The freed man is one of several administrators at Bank al-Madina who came under judicial scrutiny in July after months of speculation about the bank's ability to meet commitments forced the central bank to reassure depositors.

The banker, who was detained last week, was released on bail of a million Lebanese pounds ($663), but state investigations into possible fraud at the bank remain active, the sources said.

Prosecutor Adnan Addoum said last week he had turned investigation of possible money laundering at the bank over to the central bank, which has played the leading role in trying to protect the bank's depositors.

Separately, a Lebanese plaintiff dropped a private law suit against the banker after he settled a $21 million claim over a bad cheque, the sources said.

Banking sector sources said in July that the central bank appointed temporary managers for the bank and an affiliated institution after they failed to make good on obligations to depositors, reported in the local media to be over $200 million.

Lebanese authorities have come under criticism for not acting faster to resolve the Madina problem and protect Lebanon's financial sector -- long a haven for Lebanese and other Arab investors due to its tradition of banking secrecy.

Lebanon's central bank has periodically intervened in the administration of troubled banks, injected capital into them or provided soft loans to encourage their acquisition by stronger banks in order to keep the sector stable.