O 080510Z SEP 09
FM AMEMBASSY BEIRUT
TO SECSTATE WASHDC IMMEDIATE 5679
NSC WASHDC PRIORITY
ARAB LEAGUE COLLECTIVE PRIORITY
EU MEMBER STATES COLLECTIVE PRIORITY
USMISSION USUN NEW YORK PRIORITY 
USMISSION USNATO PRIORITY 
CDR USCENTCOM MACDILL AFB FL//CCPA PRIORITY

UNCLAS BEIRUT 000996 
 
 
STATE FOR NEA/ELA - LAWSON, NEA/ELA - IRWIN, NEA/PPD, R, INR/R/MR, 
INR, NSC - MCDERMOTT 
 
E.O. 12958: N/A 
TAGS: PREF PREL KMDR OPRC KPAO KISL KPAL LE
SUBJECT:  LEBANESE PRESS JUMPS ON STORY OF POSSIBLE HIZBALLAH MONEY 
WOES 
 
¶1.  Summary:  Since August 31, several Lebanese newspapers have been 
reporting on Salah Ezzeddine declaring bankruptcy.  Business tycoon 
Ezzedine was perceived as a trustworthy businessman because of his 
Hizballah connections.  His bankruptcy caused severe financial 
damage to Shi'a investors from South Lebanon, the Bekaa, and 
Beirut's southern suburbs.  The papers have reported that this issue 
is being monitored closely by the Shi'a community, particularly by 
Hizballah Secretary General Hassan Nasrallah, because of the impact 
on Shi'a investors and on Hizballah's credibility.  End summary. 
 
¶2.  Arab nationalist As-Safir newspaper reported August 31 that 
Lebanese businessman and Hizballah publishing executive Hajj Salah 
Ezzeddine declared bankruptcy amounting to an estimated $1.195 
billion.  The news was disastrous for many Lebanese - mostly Shi'a 
-- investors.  Ezzedine's case has been transferred to the judiciary 
which will decide whether the bankruptcy is technical or fraudulent. 
 
 
¶3. The Middle East News Agency (MENA) reported on September 1 that 
Ezzeddine owned the Dar Al-Hadi Publishing House, named in honor of 
Hizballah Secretary General Hassan Nasrallah's son, Hadi.  The firm 
played a critical role in Hizballah's media campaigns and has, as 
MENA noted, "functioned as the organization's primary publishing 
source, printing anti-Israeli and 'resistance books' that include 
publications by Hizballah's deputy Secretary General Sheikh Na'im 
Qassem." 
 
¶4.  Also on September 1, As-Safir carried an article entitled, "Many 
people were affected by the bankruptcy of the man known for his good 
deeds."  It noted that thousands of investors were stunned following 
the news of the bankruptcy; some were even admitted to hospitals. 
According to the article, investors expected and had been promised 
high returns, although many lack receipts to prove their 
investments.  As-Safir reported that parliamentary Speaker Nabih 
Berri, Hizballah SecGen Nasrallah and Shi'a religious authority 
Allamah Mohammad Hussein Fadlallah were following the issue. 
As-Safir also said that those who lost money were worried because of 
rumors that Ezzeddine did not possess enough real estate or cash 
cover his company's loss.  Pan-Arab Al-Hayat newspaper reported 
September 2 that Ezzedine had only $30 million worth of real estate 
and cash on hand. 
 
¶5.  Ezzeddine was the Dar Al-Hadi CEO and invested in the Al-Hadi 
children's television station.  He also ran companies involved in 
iron, oil, jewelry, mines, and recycling of abandoned ships, and he 
organized trips for the hajj.  The apparent high confidence in 
Ezzeddine's credibility stemmed from his closeness to Hizballah and 
his zeal for offering assistance wherever needed. 
 
¶6.  Khitat.com, a website that deals with Shi'a affairs from an 
anti-Hizballah point of view, posted a report doubting the 
legitimacy of the bankruptcy.  It emphasized that Ezzeddine's 
businesses were intertwined with Hizballah's, and said that it was 
impossible for him to have been deceitful or have taken risks with 
money because he would have been risking Hizballah's money and 
credibility.  The article questioned the veracity of the bankruptcy 
claim because the "man was not managing the money of Lebanese 
investors only, but was also managing Hizballah's money."  Khitat 
concluded, "Ezzeddine's great fall, and the expected fall of other 
important Hizballah figures, cannot be characterized as mere 
bankruptcy.  It should be placed within the framework of open war 
between Hizballah and a number of international monetary inspection 
organizations . . . In this sense, Ezzeddine's fall can be seen more 
as a security violation than a businessman who acted rashly. 
Perhaps this is the reason why one of the Shi'a ministers described 
this event as similar in its financial results to the 2006 July 
war." 
 
SISON