How Did Hizballah's Cash-Oil-Diamonds Empire Go Under?

No more than three people in Lebanon and half a dozen in Iran knew that Salah Ezzedine 49, the fraudster now notorious for robbing hundreds of fellow-Shiites of their assets and savings, was in fact for almost two decades the secret money manager of Hizballah's special security branch and its worldwide terror networks.

Two of the Lebanese were Hizballah's secretary general Hassan Nasrallah and his deputy Sheik Naim Qassem. Among the Iranians in the know were Revolutionary Guards chiefs from the mid-1980s and the commanders of its dread terrorist arm, al Qods, including the incumbent, Gen. Qassem Suleimeni.

Since his swindles were uncovered, Salah Ezzedine has been described in the media as a mystery man.

His real function in the Lebanese terrorist movement was well hidden behind his innocuous ownership of the Dar el-Hadi publishing house for religious titles based in the Shiite Dahiya quarter of Beirut, a Hizballah stronghold.

Locally, he had the reputation for piety and philanthropy with an easy genial manner which helped dupe his victims.

However, DEBKA-Net-Weekly's intelligence and counter-terrorism sources report exclusively that Western and Israeli undercover agencies were well away of his covert identity and activities. They first spotted him twenty-nine years ago as the alter ego of the Imad Moughniyeh, who played moneybags and close confidant to Hizballah's late legendary military commander.

The search for the sources of Mughniyeh's funds for his terror-cum-abduction networks and operations which targeted Westerners in the Middle East led to Salah Ezzedine, the amiable Lebanese, who reinvented himself in 2007 as head of a new Beirut investment firm called Al Mustahmir.

Black gold sold on the black market to fund terror

DEBKA-Net-Weekly's sources reveal that Ezzedine was born in the southern Lebanese village of Dir Dara two years before Mughniyeh and a stone's throw from his village of Tayr Dibba.

Mughniyeh's family later moved to the village of Maroub, bordering on the fields and houses of Salah Ezzedine's home hamlet and the boys grew up together.

In 1979, when Mughniyeh set up his first armed gang, an embryonic Shia militia of local youths, he had Salah Ezzedine join and put him in charge of fundraising. In those years, this meant simply knocking on doors for pennies in Lebanon's Shiite towns and villages and the poor neighborhoods of southern Beirut.

Then, in the 1980s, when Mughniyeh and his followers branched out into large-scale terror operations, which included blowing up the US embassy and Marine Corps Headquarters in Beirut in 1983, and taking dozens of Americans and British nationals hostage, sizeable sums started rolling in from two primary sources: Syrian military intelligence and the Iranian Revolutionary Guards.

By 1986, the pair fearing they were on Israeli and US intelligence hit lists turned their backs on Lebanon. The permanent funding arrangement set up by Tehran for its Shiite terrorist surrogate, Hizballah, consisted of a regular quota of crude oil from the Revolutionary Guards in Mughniyeh's name. It was his sidekick's job to sell the black gold on the black market for cash.

This revenue increased in the early 1990s as the Shiite terror master expanded his organization from South Lebanon to both African coasts, where the pair built up a profitable enterprise in pursuit of terror, assassination, espionage and smuggling, using the local Lebanese Shiite expatriate communities as their bases of operation.

Those communities welcomed the fugitives with open arms and soon helped them diversify their income substantially with oil, precious metals and diamonds from countries such as Sierra Leone, Ivory Coast, Togo, Benin and Ghana.

Terror-cum-business empire crashes with Mughniyeh's assassinaton

To this day, the black economy they established for the Shiite communities behind legitimate business fronts in those countries flourishes, largely by smuggling. Mughniyeh and Ezzedine acquired vast wealth while ruthlessly eliminating competitors.

As the prices of oil, diamonds and metals skyrocketed, so too did their profits. In the early 2000, the pair decided to cut the Hizballah institutions in on their earnings – not out of altruism, but to tighten their control over the Shiite group's top leaders and gain an inside track on their finances.

This brought Ezzedine to the starting point of the scam which broke surface this year.

He drew up contracts with the families of Hizballah high-ups, commanders, officials, lawmakers, mayors and village chiefs under which they signed away their savings to Mughniyeh's partner against a guaranteed annual return of 20-30 percent and often as much as 40 percent.

For years the arrangement worked without a hitch. The turning point for the two partners' terror-cum-business empire occurred Feb. 12, 2008, the day Mughniyeh was assassinated outside his apartment in Damascus. He always insisted on driving himself. On that day, a bomb planted in the headrest of his car blew up, killing him and placing his far-flung enterprise on the road to decline.

Ezzedine faced disaster: Saddled with a mountain of commitments to his “investors”, he found himself stranded with no resources for meeting them: The Iranian Revolutionary Guards cut off their oil allocation until a replacement was found for Mughniyeh and, in Africa, the Shiite tycoons stopped sending him diamonds and precious metals. He was thrown out of the smuggling networks and black market he had helped fashion.

Nasrallah fudges on Hizballah's responsibility to its cheated followers

Mughniyeh had been the financier's sole mainstay and mentor and he had therefore never developed any other sponsors or associates. His partner's death left him high and dry – and alone.

By 2009, he faced ruin. To satisfy his clamoring “clients” he had dipped into investment funds to which he had access. By August, those funds had practically run dry.

Last week, Salah Ezzedine was arrested on the orders of the Lebanese general prosecution and indicted for theft and fraud to the tune of 1.5 billion dollars.

Hassan Nasrallah was quick to deny his movement had any official ties to Ezzedine.

This was a lame attempt to get himself off the hook of liability for damages to its followers and, according to DEBKA-Net-Weekly counter-terrorism sources, the lie did not go down well with the Hizballah commanders who knew or suspected the truth. A few days later, during a Ramadan dinner with Hezbollah partisans, Nasrallah speaking as usual by video link, conceded the party's responsibility and announced it was setting up a “crisis network” to assess each investor’s losses. He thus took the politician's way of promising under duress to address a crisis but refraining from putting his hand in his pocket to refund its victims.

His first priority now is to find fresh sources of funding to keep Hizballah's terror and intelligence networks afloat and only then to turn his attention to compensating the Shiite families who were cheated of their savings.

Did Salah Ezzedine manage to squirrel away any part of his lost financial empire? No one knows, but the entire affair is still very much in the dark and more revelations will certainly tumble out as it unfolds.