Illustration (Credit: Guilhem Dorandeu)
“I recommend you not to dig too deep”; “I’d rather not see my name associated with this paper” — these are a sample of the responses L’Orient-Le Jour received from sources close to the Rahme brothers. Many refused to speak and the few who dared to do so declined to be named. Because in a country where one rarely hesitates to show one’s success, the Rahme brothers — or Zina brothers, according to the official registers — have never stopped trying to protect their reputation. A discretion on which their legal representative, Schillings, which has the Duchess Meghan Markle and the Prince Harry among its prestigious clientele, keeps a careful eye, by monitoring each article evoking the duo or by sending multiple emails including warnings with dissuasive purpose, as in the case of this investigation.
But this tendency to keep things secret has been seriously undermined by the sanctions imposed on Tuesday by the US Department of Treasury. The US administration accused the two brothers, among other things, of having “used their wealth, power, and influence to engage in corrupt practices that contribute to the breakdown of the rule of law in Lebanon,” the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) said in its statement on the matter. The latter indicated that the brothers “used companies under their control — located both inside and outside of Lebanon — to win multiple government contracts” in the energy sector.
In order to understand this accusation, one must go back to 2017, when a Dubai-based company called ZR Energy DMCC began to make a clean sweep of nearly all of the Energy Ministry’s Directorate General of Oil’s domestic diesel import contracts.
When contacted by L’Orient-Le Jour as part of this investigation, months before OFAC’s statement, the director of the oil facilities, Sarkis Hleiss, a civil servant close to the Marada Movement, dismissed any suspicions of cronyism, insisting in particular on the “transparency and competition in the award of contracts,” which according to him the open tendering process guaranteed.
He also said that he only met the Rahme brothers after the contracts were signed. The same year, ZR Energy DMCC became,discreetly , the subcontractor for a subsidiary of the Algerian oil company Sonatrach, within the framework of its contract with the Lebanese state.
According to the Dubai Commercial Register, ZR Energy DMCC is not owned by the Rahme brothers, but rather, and fully, by Ibrahim Zaouk — who happens to be associated with Teddy Rahme in another Lebanese company, Domaz Holding.
It was the so-called case of the “tainted fuel” delivered to Electricité du Liban (EDL) that prompted the Lebanese judiciary in 2020 to question the link between this company and the Rahmes main holding company, which has an oddly similar name: ZR Group Holding SAL. Since then, the Zina/Rahme brothers have been denying any involvement in the fuel sector in Lebanon, particularly through ZR Energy DMCC.
The legal representatives of the latter explained the similarity in the companies’ names and logos by a sponsorship agreement between the two businesses, while Schillings insisted, in various responses to previous articles published by L’Orient-Le Jour, that its “clients have never had any stake or beneficial interest in [ZR ENERGY DMCC], nor have they ever been directors [of this company],” and added that their holding company ZR Group has never had “any contract with the Lebanese state.”
This unchanged position did not prevent Nicolas Mansour, the first investigating judge of Mount Lebanon, from charging the two companies for money laundering, bribery and fraud. But the indictment chamber dismissed the Rahme holding company from the proceedings, on the grounds that the link between ZR Energy DMCC and ZR Group remained to be proven. This reasoning raises questions, given some testimonies collected: in front of the judge, the secretary of the Dubai-based company herself declared that the real directors of her employer were the Rahme brothers. Pending the trial of the 22 defendants, the date of which has not yet been set, the only charge upheld against Teddy Rahme and ZR Group is the payment of bribes.
When it comes to OFAC, however, the die is cast: “The 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,” said the press release, before adding that ZR Energy DMCC is considered by the OFAC as “owned or controlled by, directly or indirectly, Raymond Rahme and Teddy Rahme.”
Wide network of connections
By adding the two billionaires to its Specially Designated Nationals And Blocked Persons List (“SDN List”), the US Treasury could seriously complicate the business of an empire operating in multiple fields, from energy to telecoms, including real estate and land, particularly in Lebanon. The land registers checked by L’Orient-Le Jour list more than 260 plots of land and properties in the name of Teddy Zina — mainly in the north of the country — and 27 in the name of Raymond Zina.
The media also regularly reports their new acquisitions: they own the Bustros Palace, which houses the Ministry of Foreign Affairs, also own all of Banque Pharaon and Chiha’s real estate assets, purchased for $27 million in 2014. The latest acquisition mentioned in the land registry is the very select Faqra Club, for around $38 million. The duo has also targeted the Lebanese banking sector and, after several failed attempts to enter the sector, managed to acquire a stake in Byblos Bank, when it bought Banque Pharaon and Chiha in 2016.
By targeting these two “politically connected brothers,” according to the title of its press release, the US administration is also targeting a network of relationships that is not affected by partisan tensions. On the one hand, Teddy appears in the town with Lebanese Forces leader Samir Geagea and sponsors his wife Sethira’s Cedars Festival. On the other hand, Raymond has forged ties with Sleiman Frangieh, the leader of the Marada Movement who is currently a main contender in Lebanon’s presidential election and who did not hesitate to publicly stand by this “friendship” during the tainted fuel scandal. According to the land registry, the two brothers are also shareholders in at least five companies in the telecoms sector, alongside Ayman Jomaa, the son-in-law of Parliament Speaker Nabih Berri.
Their extensive connections allowed them to quickly break into the energy sector. In 2019, they became part of the consortium appointed by the government to take over the construction project for a new power plant in Deir Ammar — a project which has since been postponed by Lebanon’s ongoing economic crisis. At their side is Alaa Khawaja, a wealthy Jordanian businessman close to former Prime Minister Saad Hariri.
“From Hariri to the Free Patriotic Movement, which has the final say on any decision within the Ministry of Energy — the deal was concocted thanks to a broad alliance between the political parties,” said a source within the sector, who, like all the others, wished to remain anonymous because of the sensitivity of the topic. While then-Energy Minister Raymond Ghajar denied any favoritism at the time, assuring that the bid was “very competitive,” the fact that the contract was concluded by mutual agreement, without relying on the public-private partnerships (PPP) law — a common breach in the award of contracts in Lebanon — has fueled suspicions among observers.
A regional saga
Initially, Teddy and Raymond, born respectively in 1963 and 1968 in Bsharrri to a father who was a chocolate spread factory manager and a mother who was a teacher, did not seem destined for such a quick ascent in political and business circles: the only known affiliation of the family links them to the feudal clan of Kabalan Issa el Khoury. Indeed, the family member with the greatest public profile is the youngest of the siblings, Rudy, born in 1967. Rudy is a well-known sculptor — and so far the only sibling to have his own Wikipedia page — who created the statue of Gibran Khalil Gibran at the entrance of the poet’s museum, and who sculpted the famous Lamartine Cedar tree in the forest of Bsharri. His inseparable brothers followed a completely different path: After carrying out their studies in the north of Lebanon, Teddy and Raymond joined the catering trade, in the Cedars of Bsharri in the 1980s, without much success. The start of what would turn out to be a regional saga was launched the following decade, when they headed to Saudi Arabia in the 1990s, where they worked in the billboard sector.
But it was in Iraq, in the aftermath of the 2003 US invasion, that the duo began to accumulate their colossal fortune in the arms industry, an extremely profitable sector in the midst of the chaos. “It was [Raymond Rahme] who was in charge of the Iraqi part of their business,” said a source who worked with him at the time. According to the American press, they were introduced in 2004 as middlemen in the very lucrative market of military equipment rehabilitation by an advisor to the Iraqi Ministry of Defense, Mishal Sarraf, who lived in exile in Beirut.
The period was conducive to the “reconstruction of the networks of corruption established under S[addam] Hussein,” in Iraq in the post invasion era, as summarized by researcher Dimitri Deschamps in a thesis published in 2019 on Lebanese businessmen who fly back and forth in the region, including “Raymond Rahma Zayna” — as his name is spelled in several American documents.
From Iraq, he quickly established his network in Iraqi Kurdistan, which was booming economically, and developed close relations with the very influential family of the president of the autonomous region, Massoud Barzani. Very quickly, the business deals came one after another: from the aviation sector — his company Nour Aviation was entrusted with the management of the Erbil airport in 2008 — to catering and telecoms.
“He was making millions of dollars,” recalls another source who worked with him.
Judicial cases
It was also in these years that the judicial cases began.
The first originated in a story of commissions around a military equipment contract signed in 2004 between the Iraqi Ministry of Defense and Wye Oak Technology (WOT), an American company headed by a former US intelligence officer, Dale Stoffel. The case was the subject of a 2019 ruling issued by a federal court in Washington DC in the case brought by WOT against the Iraqi state. According to the facts stated in the judgment, the situation turned sour when General Investment Group (GIG) — headed by Raymond, who was acting as an intermediary for the Department of Defense — refused to transfer more than $20 million owed to WOT for its services.
The reason? “It was an illegitimate demand for payment,” said the Rahmes’ legal representatives.
“Stoffel believed there was another reason for Zayna's withholding money: he was refusing to pay kickbacks,” writes investigative journalist and Pulitzer Prize winner T. Christian Miller in his book Blood Money: Wasted Billions, Lost Lives, and Corporate Greed in Iraq (Little Brown and Company, 2007).
According to Miller, Dale Stoffel complained about collusion between Raymond and Iraqi officials, accusing the Lebanese intermediary of “taking a 3 percent fee on financial transactions,” with a portion going to the Defense Ministry. “For months, Wye Oak continued to perform under the contract while desperately trying to extract the funds it was owed,” the US court noted.
Washington finally dealt with the issue, and after several meetings between officials from both countries, it was agreed that Raymond would give Stoffel an advance of more than $4 million. But on Dec. 8, 2004, while on his way to collect the money, Stoffel was murdered in an ambush for which a terrorist group, the Islamic Jihad Brigades, claimed responsibility.
While the FBI opened an investigation to determine whether the assassination was in retaliation for Stoffel’s allegations, the crime remains officially unsolved.
“Numerous witnesses speculated this terrorist group was just a coverup and Zayna and
Cattan [the deputy secretary-general of the Ministry of Defense] were actually responsible for [it],” the federal court emphasized in its 2019 ruling, adding, however, that this testimony remains insufficient to “to make a definitive assessment” the responsibility for the crime. The Iraqi government was ordered to pay the company more than $90 million for having used a middleman, a breach in the contract.
In Iraqi Kurdistan, Raymond was then involved in a case concerning another high-potential sector, telecommunications. This case pitted a consortium (IT), formed by the French operator Orange and the Kuwaiti company Agility, against the local heavyweight Korek telecom, founded by Sirwan Barzani, a nephew of the former president of Iraqi Kurdistan. After injecting hundreds of millions of dollars into the Kurdish company, the two operators saw their contract canceled two years later by the Iraqi telecoms regulatory body (the CMC), to the benefit of Barzani and his associates. Convinced of their collusion, Orange and Agility multiplied the legal claims against the Iraqi State, Korek and some of its directors, including Raymond Rahme.
“The real reasons behind the CMC’s decision were that IT failed to present the required level of financial and technical investment,” commented Shillings. “Rather than accepting that [this] decision [was] the result of their own mistakes, Agility and Orange decided to invent a conspiracy theory to deflect the blame onto Korek and associated parties,” it added.
None of the three operators responded to our requests for comment.
After losing a first battle at a World Bank body tribunal in February 2021, Agility has so far won two more rounds against its Kurdish opponent, in Beirut in September 2021 and Paris last month.
If these cases have already earned them several journalistic investigations in the international press, the Rahme brothers have so far never been convicted by judicial courts. In multiple letters sent to L’Orient-Le Jour, their British legal representative dismisses the validity of all the “allegations” against his clients, seeing them as elements of a political conspiracy. It seems that this conspiracy is now extending its ramifications to the corridors of the US Treasury.