Hizbullah expands financial activity via Al-Qard al-Hasan foundation

BEIRUT -- Hizbullah has been expanding its financial footprint via its Al-Qard al-Hasan foundation, a so-called charity that operates like a bank and has been blacklisted by the US government since 2016.

The Iran-backed party has obtained a plot of land in Souq el-Gharb in Mount Lebanon, where it plans to build a new branch for the foundation, which already has many branches in Beirut, the south and the Bekaa Valley.

Officials and economists who spoke with Al-Mashareq said they view the expansion of Al-Qard al-Hasan -- Hizbullah's "financial backbone" -- as an attempt to profit from Lebanon's financial and monetary crisis.

Al-Qard al-Hasan bought the land, according to political researcher Beshara Khairallah.

The Souq el-Gharb mayor, a member of the Free Patriotic Movement (FPM), issued a construction license for the new building without consulting the members of the municipal council, he said.

Parallel financial network

With the disintegration of the banking sector, "Al-Qard al-Hasan is unofficially imposing itself on the Lebanese scene as an alternative to the official banking sector", former deputy prime minister Ghassan Hasabani told Al-Mashareq.

Those responsible for the expansion of its activities "are those who give permits for the sale of land, and those who offer facilities to complete the building of [a state within a state] and destroy whatever remains of the Lebanese state", he said.

Hasabani called on the Ministry of Interior to withdraw the foundation's license "because it's illegal and isn't being monitored by the banking sector, regulators and the Central Bank of Lebanon".

Al-Qard al-Hasan's expansion can be seen as "the establishment of a parallel state" that started with the military expansion of Hizbullah, he said.

"Hizbullah then expanded to the commercial sector, via illicit trade and smuggling activities across illegal crossings, and then started to infiltrate into different state departments to cover up the illicit trade," he explained.

"After that, it started to destroy the banking sector itself and replace it with a parallel financial network that is turning the Lebanese market into a cash-based market outside financial monitoring," he said.

Hizbullah's policies are pushing people to leave the country "and are changing the demographics of Lebanon and its role in the region", Hasabani said.

"They're also turning Lebanon into an illicit trading platform and threatening to turn it into a failed and rogue state," he said.

Operating outside the system

"The economic, financial and monetary crisis in Lebanon doesn't seem to have affected Al-Qard al-Hasan," economist Violette Ghazal al-Balaa told Al-Mashareq.

The foundation has been expanding, she noted, "and the latest development is its plan to open the latest of its 50 or so branches in Souq el-Gharb".

“The foundation, which claims to be a non-profit, is operating outside the Lebanese system and the banks and financial institutions that abide by laws, circulars, monitoring and the payment of taxes," she added.

Questions about the legal standing of Al-Qard al-Hasan and its mission "are justified as they relate to how it's engaging in business without raising any local money-laundering suspicions", even though it is blacklisted by the United States, she said.

"Al-Qard al-Hasan has turned into a bank at a time when traditional banks have become exchange platforms since the start of crisis," she said.

"This means that Hizbullah has become a state beyond the state and is sabotaging the remaining sectors in Lebanon."

Hizbullah's 'statelet'

Since its establishment, Al-Qard al-Hasan has been considered a tool that Hizbullah is using "to complete its statelet project within the state", economic journalist Antoine Farah told Al-Mashareq.

The dangers of Al-Qard al-Hasan are related to "its expansion outside official or legal monitoring as it has no license and is operating outside Lebanese legitimacy without any monitoring", he said.

"Under the financial collapse and stoppage of operations in the banking sector, we're witnessing a full shift towards the cash-based economy," he said.

With that, Hizbullah is able "to move with greater freedom on the Lebanese scene", he added.

Farah pointed to the recent US sanctions on Lebanese money exchanger Hassan Moukalled and his two sons for their use of the Lebanese market, via their money exchange firm, in financing Hizbullah.

This behaviour by the Moukalled family shows "Hizbullah is planning to have a private financial network capable of accessing the Lebanese financial market without any monitoring", he said.