Lebanon’s attorney general has ordered the release of a distraught depositor who took hostages at a Beirut bank a week ago to demand funds from his frozen account to provide medical care for his father and son.
When Bassam al-Sheikh Hussein entered the Federal Bank of Lebanon armed with a hunting rifle and a jerrycan of petrol he became an instant hero for Lebanese whose savings are also trapped. Hundreds flocked to the bank’s branch in the west Beirut Hamra district to cheer and shout, “Down with the banks”.
Heavily bearded, dressed in a t-shirt, shorts and flip-flops, Mr Hussein held eight staff for eight hours until managers agreed to give his brother $35,000 from the $210,000 in his account and to refrain from prosecuting. His first demand was met but, once he was in police custody, the bank reneged on the second.
Beirut’s news outlets slammed the bank, Mr Hussein’s relatives blocked a strategic coastal road and the Depositors’ Outcry Union, an advocacy group of activists and lawyers that sues banks on behalf of depositors, staged a sit-in outside the justice palace.
Pressure and precedent compelled the bank to drop criminal charges as did another bank in January when a coffee shop owner held hostages until he was given $50,000 of his own money.
Although Mr Hussein was entitled to access funds for emergencies, the bank not only refused but also withheld for two months his monthly entitlement of $400 in cash and $400 worth of Lebanese pounds adopted since Lebanon’s financial crisis began in 2019.
Ahead of the crash, when the interest rate on US dollars was eight per cent, Mr Hussein sold his house and his parents’ house and deposited the money in the Federal Bank. A food truck driver with limited means, he believed his savings would grow and his family would be better off.
Thousands of Lebanese fell into this trap which the World Bank dubbed a ponzi scheme. High interest rates for both dollars and Lebanese pounds attracted clients who were paid from the deposits of others rather than profits from legitimate investments.
This continued until 2019 when Lebanon’s financial crash forced banks to block $100 billion in deposits and impose punitive limits on withdrawals. As there were no immediate bans on foreign transfers, bankers, politicians and the wealthy sent abroad billions of dollars, deepening Lebanon’s financial woes.
The economy has contracted by 58 per cent, the currency has lost 90 per cent of its value, the inflation rate has reached 211 per cent and poverty has overtaken 80 per cent of Lebanese.
To alleviate food insecurity, the US has allocated $29.5 million for Lebanon while a $150 million World Bank loan is set to pay for wheat imports for six months.