Investment scandal damages Hezbollah
Even backers question 'Party of God' over ties to indicted financier

By Alia Ibrahim
Special to The Washington Post
Thursday, November 26, 2009

YAROUN, LEBANON -- Suleiman's brother was a Hezbollah fighter, killed in the 2006 war with Israel. His house was destroyed by an Israeli shell. And now, his life's fortune is gone, too, lost along with the money of thousands of other Lebanese who put their faith in a billionaire financier with close ties to Hezbollah.

The investment scheme, which is being called the Lebanese version of the Bernie Madoff scandal, threatens to tarnish the Shiite group's carefully cultivated image as a pious defender of the masses that is above the corruption endemic in many of Lebanon's political parties.

As Hezbollah enters the new coalition government and plots its next move in the rough-and-tumble world of Lebanese politics, the "Party of God" is facing unprecedented questions, even among supporters, over its basic integrity.

Suleiman, who would not allow his last name to be published, said he gave $261,000 saved over 22 years of work to Youssef Faour, a partner of financier Salah Ezzedine. Suleiman, 40, said he was "comforted by Ezzedine's ties with Hezbollah," which are well-known, and ignored warning signs that something was wrong.

It is not known yet whether Ezzedine's investments were fraudulent and who, if anyone, profited. Ezzedine and Faour are in custody as their trial slowly progresses.

"These two are just crooks who conned people and stole from them by telling them this was divine money that will bring them 40 percent interest in profit," said Suleiman, a father of five.

Hezbollah has denied any relationship with the financier. During a speech in September, Hezbollah leader Hasan Nasrallah said that the group had never encouraged its members to invest with Ezzedine but that it had launched an investigation. He said "a small number" of party officials had invested $4 million with Ezzedine -- a figure the Lebanese media described as significantly understated.

Observers also scoffed at the notion that Hezbollah had nothing to do with Ezzedine, noting a long track record of ties.

Either way, the damage to Hezbollah's reputation is real.

The group and its top officials have long had access to large sums of money by virtue of generous support from Shiite businessmen and from Iran. But Hezbollah has gone out of its way to avoid flamboyant displays of wealth, instead projecting itself as an organization ready to stand shoulder to shoulder with residents of the Shiite slums of southern Beirut and the villages of southern Lebanon.

Hezbollah's propaganda advertises its membership as a group of dedicated and selfless "martyrs" who liberated the land and whose only agenda is to protect it from Israel. To make up for a lack of government services, the group has built its own network of schools, hospitals and even financial institutions.

That track record has set Hezbollah apart from other parties in Lebanon and from the Palestinian organization Fatah, whose political corruption is legendary. Nasrallah has signaled that he knows how dangerous corruption scandals could be for his party. At a recent meeting with female Hezbollah members, he reportedly spoke out against "Envoy culture" -- referring to the SUV brand that is popular among party members and that has become a symbol of their affluence.

Allegations of involvement in the drug trade have further damaged Hezbollah's reputation. In a recent speech, Nasrallah raised the issue and spoke of an attempt to "destroy the culture of resistance."

Some wonder whether his statements will be enough.

"Hezbollah is not the first revolutionary movement to be corrupted by money, and it won't be the last," wrote columnist Sateh Noureddine in the pro-Hezbollah newspaper As-Safir.

Much of the change in behavior can be traced to the aftermath of Hezbollah's 2006 war with Israel, when government compensation money flooded impoverished Shiite neighborhoods devastated by Israeli attacks.

Some of the money went toward reconstruction, but much of what was left ended up with Ezzedine. Some Hezbollah backers sold their land and their homes so they would have extra money to invest with the businessman, who promised eye-popping returns. He even appealed to his customers' piety by insisting that his investment strategies were compatible with Islamic banking principles, which generally prohibit interest-bearing accounts.

Ezzedine's services sparked a boom -- new cars, restaurants, cafes and fashions.

"All logic and reason suddenly disappeared in one day, as well as the simplicity in life and its requirements," wrote Ibrahim al-Amin, editor in chief of Al-Akhbar, a pro-Hezbollah newspaper.

But now, the morality of Hezbollah's cadres is being questioned for the first time by supporters suffering amid the country's rough economic situation, said Mona Fayyad, a sociology professor at the Lebanese University.

"People have started asking questions. Where is the money coming from? Till now, they avoided speaking about this loudly, because they are terrorized," she said.

In the long run, she said, damage to Hezbollah is unavoidable because its success, to a large extent, depends on an image of superiority that its cadres reflected -- and that is now gone.

"Sayyed Nasrallah used to address his supporters by calling them the most honorable people, placing them above all other humans," she said. "What happened showed they are just as corruptible as everybody else."

Ibrahim is a special correspondent.

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