Israel Matzav

Hezbullah's Bernie Madoff files for bankruptcy

Hezbullah has its own Ponzi scheme, and the perpetrator, Salah Ezzedine, has turned himself in to Lebanese authorities and filed for bankruptcy.

Ezzedine was closely tied to Hezbollah and several top Hezbollah leaders personally lost money in investments with him. Now referred to as Hezbollah’s Madoff, he had once been known as the Mughniyeh of money (in reference to Hezbollah’s long-time operations chief Imad Mughniyeh who was killed in a car-bombing in February 2008.)

Hopefully this will put a crimp in Hezbullah's ability to purchase weapons, even though it apparently will not stop them from becoming a part of the Lebanese government (they were offered one third of the cabinet seats on Tuesday):

This is a double-hit on Hezbollah. First it appears that they have lost a great deal of money (some reports are that it was over $600 million). What’s more, they will be challenged in replacing these lost funds as donors become more wary of donating or investing with Hezbollah.

But there is a second aspect to this. Imagine if Madoff were closely linked with a political party. Even if the party had not done anything wrong, the relationship would have seriously damaged that party’s public standing. Hezbollah was regarded as being a basically clean political party in a country where corruption runs rampant. Further, for Hezbollah to counter this perception they will need to spend money – and they will have far less of it to spread around.

Read the whole thing.

This ought to give you some idea of the impact on 'ordinary people':

I want to focus on a town that was hit hard by Ezzeddine, you have to give it to this guy for good scouting. Speculation has the border village of Yaroun south of Bint Jbeil as the number one loser in this ordeal with 160,000,000 in solid assets..... no, liquid cash.... no, what is the vapor form of the US dollar? The thing about Yaroun is that even though it is infested with tens of million dollar mansions, its population outside of summer is under 160, the biggest business investments in it are a gas station and a falafel shack. In the pre-war years its people lived off the land, tobacco farming more specifically, today they live on and off foreign lands...and we're not talking about Dubai here, the closest choice of a settling point for Yarounis is 10 time zones away. So what to expect of a group of people who have $160,000,000 disposable cash for shady investments yet have not invested in say a school, even though $160 million dollar are enough to create job opportunities in productive sectors for a few thousand people and put much of the youth in the whole kazaa of Bint Jbeil to work.... at home. Off course, to be fair this behavior is not unique to the people of this village although it is strongly marked there.

But the financial implications for Hezbullah may be much more serious:

Therefore the businessman Salah Ezz al-Din being given the nickname the Imad Mughniyeh of money signifies his importance to the Hezbollah movement, whether through his own operations, or through his investment in the movement, either in Lebanon or abroad. If the information is correct, this may lead to talk that Ezz al-Din was a front for Hezbollah, or the movement's financial mastermind, in the same way that Mughniyeh was its military mastermind.

Ezz al-Din's importance can be seen in the volume of information that is being circulated outside of the Lebanese media, and it seems that many facts have yet to be uncovered. There is information that indicates that there is Gulf investment in Ezz al-Din's real estate project and others, and a Kuwaiti newspaper also revealed that Ezz al-Din has Kuwaiti investors.

There are puzzling questions, such as; how was Hajj Ezz al-Din able to obtain investors from the Gulf and Hezbollah, or at least some high-ranking members of Hezbollah?

What is the relationship between these Gulf investors and the Iran financed and sponsored Hezbollah movement, especially since the bankrupt Hajj Ezz al-Din's relationship to Hezbollah does not seem to have been a secret?

The Lebanese pro-Iranian and pro-Hezbollah newspaper al-Akhbar" published an article describing Salah Ezz al-Din as being "a close mediator to Hezbollah...as the majority of deposits from the families and supporters of the movement are made with him. Many people deal with him with great confidence, and this has resulted in a number of things, most notably, the rumors that he is a partner to Hezbollah."

By the way, if anyone has a picture of this guy, please send it along. I couldn't find one to put on this post.

Wouldn't it just be heart-rending if Hezbullah went broke? Maybe we can get the UN to bail them out.... Heh.

posted by Carl in Jerusalem @ 10:53 PM