Bank Failure, Drug Monay and Political Missteps in Lebanon

by Ghassan Karam 

This is the third installment of the brief summary of the book: The Lebanese Connection: Corruption, Civil War and the International Drug Traffic by Jonathan V. Marshall published by Stanford Press. This series is motivated simply by the implicit right of citizens to know. Apparently the Lebanese authorities do not share this view and would much prefer that the citizens live in the dark. Why else would they have banned this book that makes many allegations and presents many academic references that condemn practically the whole Lebanese political class ever since the inception of the country that just celebrated its 69th independence day.

The following account is based on chapters 3 of the book.  This leaves chapters 4-8 for the next 3-4 installments.

 

As a result of the shuttering down of Intra Bank in Beirut on October 14, 1966 Lebanon had suffered what was described as “the world’s greatest bank catastrophe since the Second World War”. It is no exaggeration to suggest that the effects of that event shook the already weak foundations of the Lebanese experiment and set up the stage for many other catastrophes to come.

Intra Bank was established by Yousef Baydas one of the 100000 Palestinian refugees who came to Lebanon after the 1948 Arab-Israeli war. He arrived in Beirut with only $4000.00 to his name but yet was able to establish Intra bank in 1951. Intra had the backing of President Khoury and PM Yafi in addition to the Deputy speaker Mounir Abou Fadel.  Mr. Baydas was able to steer Intra to become a major banking power in the Middle East whose assets included a majority stake in Middle East Airlines, The Casino Du Liban, the Beirut Harbour and Hotel Phoenicia, a Marseille shipyard, a high rise on Fifth Avenue in NYC, CEMA (a French construction concern) in addition to 56% of all Lebanon’s banking asset among other assets.

The Lebanese Bank Secrecy Laws passed in 1956 and the lack of a Lebanese Central Bank until 1964  helped also in creating an environment that did not feel constrained by rules, regulations or moral inhibitions, an environment of unfettered free markets.  Intra took advantage of the gold trade, Lebanon charged no import duty on the yellow metal, and was helped by the capital flight from Egypt and Syria after Nasser took over and formed the UAR. Intra, through its charismatic leader, Yousef Baydas, was also sure to maintain a strong  relationship with Mr. Francisci, the Corsican underworld lord whom we met in the previous installment. Mr. Francisci owned the gambling concession of the Casino Du Liban, and was friendly with Gaby Lahoud of the Deuxieme Bureau as well as a strong working relationship with the CIA especially their money laundering operations.

It was also concluded by no less than Wilbur Eveland, a US emissary to Lebanon that the CIA had used Intra to bankroll the Chamoun1957 bought election which is a major event that lead to destabilizing the country. Intra also had strong ties to many Gaullist operatives, such as Gilbert Beaujolin and Roger Barberot who had recruited the French Connection heroin courier, Delouette.Mr. Baydas was an equal opportunity employer and believed in diversification so much that he had on the Board of Directors of the bank Kamal Adham, the top Saudi Intelligence officer.

Yet all was not as good as the above suggested. This is, after all, clannish Lebanon. Mr. Baydas’ success was not welcomed by many of the “natives” and especially when the bank turned down requests for unsecured loans from Saeb Salam among others. According to Said Aburish Intra was a “challenge to Maronite hegemony” that was also viewed by the Lebanese Maronite Patriarch, Mouchi, “as a predominantly Moslem organization which was… becoming a threat to Christian domination.”

The ultimate collapse of Intra Bank did not have to happen. The higher interest rates in the US and Europe attracted away many of the deposits from Intra creating a classical liquidity squeeze. All what Intra needed at the time was a $33 million bridge loan but reportedly the Central bank told Mr. Baydas: “You are not Lebanese and Lebanon does not want you controlling its economy” How provincial is that?

Mr. Alamuddin, the CEO of Middle East Airlines and Mr. Aburish concluded that this event was the beginning of the disintegration of Lebanon. Mr. Aburish was the one who was most blunt: “The fall of Baydas served notice that the Maronites were declaring war on the Palestinians…… Above all, the Maronites demonstrated a willingness to destroy the country to maintain their supremacy.”

Intra Bank , according to the IMF and many others did not have to shut down. It could have been easily saved but President Helou refused to do so without providing any convincing rationale for his position. The perception at the time was that the bank was “murdered” and did not fail as a result of incompetence. Mr. Baydas was arrested in Switzerland where he died in custody. The death of Intra Bank, a financial institution that reportedly resorted to many unsavoury short cuts, caused Lebanon to lose “an important basis for moderating Palestinian behaviour….. Institutions like Intra Bank represented an alternative to violence as a way for Palestinians to survive their statetelessness in Lebanon” according to Mr. Winslow Charles Winslow. But unfortunately Lebanon took the unfortunate fork in the road that led to more reliance on drug money and disintegration.

  • Hannibal

    Ghassan,
    On what charges was Mr. Baydas arrested in Switzerland?
    Also there is a contradiction of the politics of the Maronites towards the Palestinians… It is a very well know fact that the Maronites (Chamoun at the U.N.) were staunch defenders of the Palestinian cause, as a matter of fact they were the only “arabs” who defended the Palestinians and championed an internationalized Jerusalem… Secondly, ALL of the Palestinian camps are property of the Maronite church (waqef marouni)… No other sect volunteered land for their stay in Lebanon… So what changed between the initial Palestinian exodus and the 60s for the Maronites? Curious…
    Finally, was Mr. Baydas a Christian?

    • http://profiles.google.com/wp.karam Ghassan Karam

       Yousef Baydas was a Christian Palestinian and was arrested in Switzerland  as a result of an Interpol warrant. I do not know why he was not handed over to the Lebanese authorities. Many of the Palestinians that had Christian relatives did not have as big of a problem assimilating in Lebanon. Some close family members on my fathers side were able to get the Lebanese citizenship early on. The tension with the Palestinians grew as the camp population grew and did not assimilate. Besides the camps are breeding grounds for leftist leaning ideologies of liberation that were inimical  to the Maronites. One must also keep in mind that most of the camp dwellers were Moslems and many of the Maronites felt that they were the only genuine Lebanese. (Aoun up until know makes allegations about how the Christians in Lebanon deserve to be dis-proportionately represented in the Parliament because they are special….).

      • libnan1

        Yes our situation is special, not the meaning of special you intended. We are special because most of us immigrated or displaced and we can’t vote, that is what Aoun meant by special Mr. G.K.

        Lebanon was never intended to be the Palestinians playground. They were welcomed as visitors and later turned on us to support the Sunni agenda of taking over Lebanon. Lebanon is blessed to have leaders like Aoun and HA to stop the Arab/Harirri/Sunni Hegemony against Lebanon.         

        • http://profiles.google.com/wp.karam Ghassan Karam

           libanan1,
                       If the Christians represent less than 40 % of the population and they are guaranteed 50% of the parliamentary seats then this means that Christians are more valuable. That is what discrimination is all about. What would the Christians do when they become 30% or even 25% of the population? would they keep on insisting on 50% of the seats of parliament. The Maronite Church leadership is in for a big shock. Their efforts to postpone the day of reckoning are misguided, to say the least.

        • libnan1

           Ghassan,

          The Christians are more than 50% if you count the ones that live outside Lebanon. As you can see from this blog, We care about Lebanon as much as the Lebanese that live there. I hope all Lebanese be allowed to vote in the next election from all over the world, that will balance your equation. Happy Thanks Giving    

  • Hannibal

    Ghassan,
    On what charges was Mr. Baydas arrested in Switzerland?
    Also there is a contradiction of the politics of the Maronites towards the Palestinians… It is a very well know fact that the Maronites (Chamoun at the U.N.) were staunch defenders of the Palestinian cause, as a matter of fact they were the only “arabs” who defended the Palestinians and championed an internationalized Jerusalem… Secondly, ALL of the Palestinian camps are property of the Maronite church (waqef marouni)… No other sect volunteered land for their stay in Lebanon… So what changed between the initial Palestinian exodus and the 60s for the Maronites? Curious…

    • http://profiles.google.com/wp.karam Ghassan Karam

       Yousef Baydas was a Christian Palestinian and was arrested in Switzerland  as a result of an Interpol warrant. I do not know why he was not handed over to the Lebanese authorities. Many of the Palestinians that had Christian relatives did not have as big of a problem assimilating in Lebanon. Some close family members on my fathers side were able to get the Lebanese citizenship early on. The tension with the Palestinians grew as the camp population grew and did not assimilate. Besides the camps are breeding grounds for leftist leaning ideologies of liberation that were inimical  to the Maronites. One must also keep in mind that most of the camp dwellers were Moslems and many of the Maronites felt that they were the only genuine Lebanese. (Aoun up until know makes allegations about how the Christians in Lebanon deserve to be dis-proportionately represented in the Parliament because they are special….).

      • libnan1

        Yes our situation is special, not the meaning of special you intended. We are special because most of us immigrated or displaced and we can’t vote, that is what Aoun meant by special Mr. G.K.

        Lebanon was never intended to be the Palestinians playground. They were welcomed as visitors and later turned on us to support the Sunni agenda of taking over Lebanon. Lebanon is blessed to have leaders like Aoun and HA to stop the Arab/Harirri/Sunni Hegemony against Lebanon.         

        • http://profiles.google.com/wp.karam Ghassan Karam

           libanan1,
                       If the Christians represent less than 40 % of the population and they are guaranteed 50% of the parliamentary seats then this means that Christians are more valuable. That is what discrimination is all about. What would the Christians do when they become 30% or even 25% of the population? would they keep on insisting on 50% of the seats of parliament. The Maronite Church leadership is in for a big shock. Their efforts to postpone the day of reckoning are misguided, to say the least.

        • libnan1

           Ghassan,

          The Christians are more than 50% if you count the ones that live outside Lebanon. As you can see from this blog, We care about Lebanon as much as the Lebanese that live there. I hope all Lebanese be allowed to vote in the next election from all over the world, that will balance your equation. Happy Thanks Giving    

  • http://profiles.google.com/wp.karam Ghassan Karam

    Hannibal,
                 I have just made some more inquiries and it looks like the Lebanese government was interested in extraditing Mr. Baydas from Switzerland but he died before the the completion of the process. Many suggest that this worked for the benefit of the government since as a result no trials were held and no dirty laundry was aired. Some , on the left, suggest even a role by the Kuwaitis in bringing Intra down but we will never know. This is the mysterious orient , right? :-)

    • Hannibal

      Mr. Karam
      I have done some research, not on the internet nor on wikis but in books and I can send you a reference or two if you’d like. Mr. Baidas was not an angel, he and his associates were cooking their books and stealing therefore the interpol’s warrant for his arrest since his bank reached clienteles from all over the globe every nation had some grievances against him… That is why Switzerland did not want to extradite him because they weren’t done with him. So there is some bias in here with what you are quoting as the people analyzing Lebanon see only the cover but never dig inside the complexity of Lebanon. If you speak to the Palestinian Christians residing in Palestine, and I have, they will tell you how they have been persecuted by their brethren and next door Sunni neighbors as the Zionists have done to them… Therefore the exodus of Christianity from the Middle East… The Maronites fighting back for their survival? you bet… 

  • http://profiles.google.com/wp.karam Ghassan Karam

    Hannibal,
                 I have just made some more inquiries and it looks like the Lebanese government was interested in extraditing Mr. Baydas from Switzerland but he died before the the completion of the process. Many suggest that this worked for the benefit of the government since as a result no trials were held and no dirty laundry was aired. Some , on the left, suggest even a role by the Kuwaitis in bringing Intra down but we will never know. This is the mysterious orient , right? :-)

    • Hannibal

      Mr. Karam
      I have done some research, not on the internet nor on wikis but in books and I can send you a reference or two if you’d like. Mr. Baidas was not an angel, he and his associates were cooking their books and stealing therefore the interpol’s warrant for his arrest since his bank reached clienteles from all over the globe every nation had some grievances against him… That is why Switzerland did not want to extradite him because they weren’t done with him. So there is some bias in here with what you are quoting as the people analyzing Lebanon see only the cover but never dig inside the complexity of Lebanon. If you speak to the Palestinian Christians residing in Palestine, and I have, they will tell you how they have been persecuted by their brethren and next door Sunni neighbors as the Zionists have done to them… Therefore the exodus of Christianity from the Middle East… The Maronites fighting back for their survival? you bet… 

  • Constantin7

    Please use a spell check before posting publicly your articles. Any spelling errors discredit the content of the message no matter how good, relevant or truthful it is.

    • Ghassan Karam

       Constantin7,
                        So your sensibilities have been offended as a result of a lonely w :-) I would have never guessed  the damage that error has inflicted was so objectionable.

      • Constantin7

        In a professional world, subtance and form are strictly observed, and me as a professional got used to it :-) . However, did not mean my comment negatively as much as constructively. Thanks.

        • Hannibal

          “and I, as a professional, got used to it…” 
          “Do not judge others and you will not be judged,” — Jesus

  • Constantin7

    Please use a spell check before posting publicly your articles. Any spelling errors discredit the content of the message no matter how good, relevant or truthful it is.

    • http://profiles.google.com/karam.ghassan Ghassan Karam

       Constantin7,
                        So your sensibilities have been offended as a result of a lonely w :-) I would have never guessed  the damage that error has inflicted was so objectionable.

      • Constantin7

        In a professional world, subtance and form are strictly observed, and me as a professional got used to it :-) . However, did not mean my comment negatively as much as constructively. Thanks.

        • Hannibal

          “and I, as a professional, got used to it…” 
          “Do not judge others and you will not be judged,” — Jesus

  • http://profiles.google.com/wp.karam Ghassan Karam

    Liban1,
             I have written about the proposal to extend the votes to the Lebanese abroad. If the proposal goes through then all what is going to happen is to have very few people vote because of the logistics. To vote one must go to an embassy or a consulate. I think that there are only a handful in Canada and another handful in the US. How many people live within 10-20 miles of such am embassy? Not many. And I have heard it said that there are more Lebanese outside of Lebanon than in Lebanon. Technically that might be true but very few of these have the right to vote since most are of a Lebanese decent but are not registered in Lebanon. Those that are actually Lebanese citizens are not that many and so will not make as big of a difference as you suggest. Then there is the issue of whether it is democratically fair to give those that do not speak the language or understand the culture the right to influence the laws under which they will never have to live. Bottom line: extending the vote to those that are temporarily living abroad is a good idea, but I do not think that it will be very effective unless we are to allow voting by mail or even internet and you know that is not going to happen. 

  • http://profiles.google.com/wp.karam Ghassan Karam

    Liban1,
             I have written about the proposal to extend the votes to the Lebanese abroad. If the proposal goes through then all what is going to happen is to have very few people vote because of the logistics. To vote one must go to an embassy or a consulate. I think that there are only a handful in Canada and another handful in the US. How many people live within 10-20 miles of such am embassy? Not many. And I have heard it said that there are more Lebanese outside of Lebanon than in Lebanon. Technically that might be true but very few of these have the right to vote since most are of a Lebanese decent but are not registered in Lebanon. Those that are actually Lebanese citizens are not that many and so will not make as big of a difference as you suggest. Then there is the issue of whether it is democratically fair to give those that do not speak the language or understand the culture the right to influence the laws under which they will never have to live. Bottom line: extending the vote to those that are temporarily living abroad is a good idea, but I do not think that it will be very effective unless we are to allow voting by mail or even internet and you know that is not going to happen.