While Lebanon implodes, its expatriates have helped define the global economy

Just this week, Nissan filed a $90 million lawsuit against its former chairman in Yokohama, seeking to recover damages from Ghosn’s alleged misuse of company assets and payments the company claims were fraudulent. Ghosn has filed a suit of his own in Amsterdam, claiming Nissan owes him €15 million for wrongful dismissal.

While Carlos Ghosn’s legal battles with the Japanese carmaker span the globe, Lebanon has found itself at the epicentre of his story. Ghosn, born in Brazil and naturalized in France, is one of millions of members of a Lebanese diaspora known for strong ties with their ancestral home. Indeed, the Franco-Brazilian-Lebanese executive is celebrated as something of a hero in Lebanon, where postage stamps have even been issued in his honour.

The affection between Ghosn and Lebanon is mutual. After charges of financial misconduct were announced against him in Japan in 2018, Lebanese Foreign Minister Gebran Bassil vouched for him as “a Lebanese citizen who represents Lebanese success abroad.” Those close ties to the Lebanese political and business elite helps explain why Ghosn made good his escape from Japan’s controversial justice system there (instead of, for example, France). Lebanon’s refusal to cooperate with Japanese requests for Ghosn’s extradition have seemingly validated Ghosn’s choice of hideaway.

A posterchild for success abroad – and failure at home

As Bassil’s statement made clear, Ghosn is emblematic of a global network of entrepreneurs, academics, and entertainers of Lebanese descent who remain attached to the country long after they (or their families) left. Ghosn personally has investments in several Lebanese companies, but his is just one name on a list that also includes Carlos Slim, Swatch’s Nicolas Hayek, and even Shakira (who used her Super Bowl appearance to introduce Americans to a few elements of Lebanese culture).

15-20 million people of Lebanese origin live and work outside of Lebanon, far exceeding the population of Lebanon itself. Unfortunately, the success of the Lebanese abroad has been matched only by political dysfunction and socioeconomic crisis at home. As the situation worsens, an ever-greater number of Lebanon’s best and brightest are choosing to leave.

With major anticorruption protests beginning last year, the number of educated Lebanese people emigrating in 2019 increased 42% compared to 2018. Those protests have taken direct aim at the country’s confessional power-sharing system, drawing people of all faiths to demand an overhaul of the country’s politics and notoriously high levels of wealth inequality.

A broken system keeps it in the family

Since Lebanon’s 1975-1990 civil war, national politics have focused on juggling the interests of competing religious groups – in particular Sunni and Shi’a Muslims and Maronite Christians – and effectively institutionalized corruption and nepotism. While basic services like electricity, water, and trash collection are gripped by chronic crises, Lebanon’s well-connected sectarian elite has monopolised power and wealth.

The aforementioned Gebran Bassil, for example, is the son-in-law of Lebanon’s president Michel Aoun, founder of the Christian-dominated Free Patriotic Movement. To protestors in Beirut, that makes Bassil one of the faces of nepotism and cronyism among the Lebanese elite, particularly because Bassil formerly headed the telecommunications and energy ministries in a country facing extortionate telecoms costs and an electric grid that has failed to provide a consistent power supply since the 1970s. That context helps explains how a so-called “WhatsApp tax” sparked protests big enough to bring down former premier Saad Hariri’s government.

Shielding Lebanese businessmen from foreign consequences

Given this tradition of corruption, it is easy to understand why the government in Beirut would be so untroubled by the relatively pedestrian allegations of misconduct facing Carlos Ghosn. The reality for most Lebanese elites is that the only legal repercussions they are likely to face for corrupt transactions are those coming from abroad. As Ghosn has now demonstrated, Lebanon is willing to shield its moguls from foreign judiciaries.

Take, for example, Lebanese business tycoon Raymond Rahme, who together with his brother Teddy is active in Lebanon’s banking, energy, and hospitality sectors. Raymond Rahme is influential in Lebanon but faces intense legal scrutiny over his activities in Iraq, where he has been accused in American courts of involvement in the murder of American contractors Dale Stoffel and Joe Wemple in 2004. According to a ruling in US district court in Washington last year, Rahme received a $25 million payment that was due to Stoffel before the American was ultimately ambushed in a roadside attack.

More recently, Raymond Rahme allegedly used London real estate to bribe officials on the Iraqi Communications and Media Commission (CMC) in order to help Kurdish military commander and businessman Sirwan Barzani regain control of telecommunications operator Korek from France’s Orange and Kuwait’s Agility. The companies, which had collectively invested over $800 million into Korek, are now suing both Sirwan Barzani and Raymond Rahme. In addition to bribing members of the CMC to cancel the companies’ joint investment in Korek, they accuse Rahme of using his position as a Korek executive to obtain fraudulent loans while failing to disclose conflicts of interest.

A missing culture of accountability

While the three men face different accusations from local critics and foreign plaintiffs, their cases typify how Lebanon’s status quo protects the interests of corrupt elites even while failing the average Lebanese citizen. Could the ongoing protests bring much-needed change to Lebanon’s discredited political and economic structures?

At minimum, Lebanon must respond to popular demands for an overhaul of the political apparatus with more transparent governance that tackles endemic corruption, reduces inequalities, and makes the business climate more conducive to entrepreneurship and investment. The country’s diaspora has already demonstrated how adept the Lebanese are in overcoming challenges in pursuit of economic success abroad. Systematic reform could finally help Lebanon channel that talent at home and recapture the status of economic hub that it lost in 1975.

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