The US Treasury building. (Credit: AFP)
WASHINGTON — The United States imposed new sanctions on Tuesday on two Lebanese brothers, Raymond Zina Rahme and Teddy Zina Rahme, as well as several of their companies, who it said had used their wealth to engage in corrupt practices that contribute to the breakdown of the rule of law in Lebanon.
Originally from North Lebanon, Teddy and Raymond Rahmeh maintain relations with a good part of the Lebanese political class. Teddy is known to be rather close to the Lebanese Forces. His brother is close to Sleiman Frangieh, the head of the Marada, who has publicly affirmed on several occasions his "friendship" towards the businessman. These sanctions come at a time when the Hezbollah-Amal tandem, along with France, support the candidacy of Sleiman Frangieh in the presidential elections.
"Today's action underscores the United States’ commitment to shining a light on corrupt actions, which continue to unjustly impact the Lebanese people," Treasury's Under Secretary for Terrorism and Financial Intelligence Brian Nelson said in a statement.
"Now more than ever, the Lebanese government should implement desperately needed economic and political reforms."
The two billionaires made their fortune in Iraq and became known to the general public following the scandal of "defective fuel" delivered to EDL. In 2020, the Lebanese justice system took on the case of this fuel that did not meet the required standards. The complaints were initiated by the Free Patriotic Movement, headed by Gebran Bassil, a political opponent of Sleiman Frangieh. At the time, indictments were issued against the companies ZR Energy and ZR DMCC and the director of ZR Energy Teddy Rahmeh was prosecuted for fraud and money laundering. The head of the Marada party criticized the justice system at the time.
Following this scandal, the Algerian state-owned company Sonatrach informed the Lebanese government that it would not extend its contract for the export of fuel oil, which Hassan Diab's cabinet had initially wanted to renew.
The US Treasury Department in the statement said it imposed sanctions on Raymond Zina Rahme and Teddy Zina Rahme, accusing them of using companies under their control to win multiple government contracts through "a highly opaque public tendering process."
The Treasury said that in 2017, the brothers and businessmen secured a subcontract to import fuel for use by Lebanon's state-owned national electricity utility and to import fuel on behalf of the Lebanese Ministry of Energy and Water in a reportedly corrupt bidding process.
Washington said the two imported tainted fuel, causing significant harm to power plants in Lebanon.
Through their United Arab Emirates-based company ZR Energy DMCC, which was also hit with sanctions on Tuesday, they "passed off their dangerously compromised fuel product by blending it with other fuels," Treasury said.
According to the statement published by the US Treasury Department, "Rahme brothers used ZR Group Holding SAL to provide the funding necessary to establish ZR Energy DMCC, ZR Group Holding SAL has used its influence among Lebanese financial institutions to open letters of credit for ZR Energy DMCC and the two companies share employees. Lebanon-based ZR Logistics SAL is also owned by the Rahme brothers through ZR Group Holding SAL," the statement explained.
"As a result of today’s action, all property and interests in property of the individuals named above and of any entities that are owned, directly or indirectly, 50 percent or more by them, individually, or with other blocked persons, that are in the United States or in the possession or control of US persons, must be blocked and reported to OFAC [The Office of Foreign Assets Control administers]," the statement concluded.
"While the Rahme brothers enriched themselves with this scheme, the Lebanese people suffered and the country’s infrastructure further deteriorated. Power stations across Lebanon increasingly malfunctioned and daily electricity cuts increased," the Treasury said in the statement.