The Makhlouf episode raises questions about regime’s fortune abroad and Alawites’ future

Most of the disputed wealth, of which Syriatel is a part, is deposited in accounts outside Syria.
Thursday 21/05/2020
A family picture dated 1985 shows Syria’s late president Hafez al-Assad and his wife Anissa Makhlouf (seated) and, behind them, from R to L their five children: Bushra, Majd, the late Bassel (1962-94), current president Bashar, and the youngest son, Maher. (AFP)
A family picture dated 1985 shows Syria’s late president Hafez al-Assad and his wife Anissa Makhlouf (seated) and, behind them, from R to L their five children: Bushra, Majd, the late Bassel, current president Bashar, and the youngest son, Maher.(AFP)

One of the amusing aspects of the crisis inside the ruling family in Syria, with both its Assad and Makhlouf branches, is to hear them talk about the rule of law.

One side is suddenly threatening to appeal to justice as if there has ever been rule of law in Syria since the Ba’ath Party came to power in 1963, and even before that when Abdul Hamid al-Sarraj ruled Syria during the period of Egyptian-Syrian unification between February 1958 and September 1961.

Strangely enough, when the union with Egypt was abolished, there appeared to be a flicker of hope that Syria might revert to being a normal country with a reasonable and modern constitution, governed by normal people.

In 2020, in reaction to the escalating campaign by the Assad family to gain control of the telecommunications company Syriatel, most of which is owned by the Makhlouf family, Rami Makhlouf began talking about the need for everybody to adhere to the rule of law. Makhlouf was slapped with what can only be described as a ransom tax of nearly $180 million by Syrian authorities.
 

A 2010 file picture of Syrian businessman Rami Makhlouf. (AFP)
A 2010 file picture of Syrian businessman Rami Makhlouf. (AFP)

Makhlouf suddenly forgot how he and his brothers became majority owners of Syriatel, and how Egyptian businessman Naguib Sawiris was kicked out of the new venture immediately after the latter’s company played the role required of it in the founding stage.

At that time, Syriatel needed investors and specialised expertise. Certainly, the last thing Rami thought about when Sawiris was removed from Syriatel was the law, which was nothing but a soft tool in his hand.

Things remained as they were in Syriatel until Syrian President Bashar Assad, his wife Asma al-Akhras and his brother Maher started to have greedy ideas about the Makhlouf fortune and how to acquire it all. They started by placing Syriatel in the framework of a new cartel controlled by Asma, who seemed to have recently developed great business ambitions.

Now the matter is not really the small fortune that the Makhlouf brothers owe to the Syrian treasury, but rather the whole fortune of the Makhlouf family that the Assad family is looking to recover. The Assad clan reasoned that they originally owned a part of this fortune, given that Mohamed Makhlouf, the patriarch who created the wealth, served as a business front for the Assad regime and as its financial arm.

Most of this wealth, of which Syriatel is a part, is deposited in accounts outside Syria, in Europe in particular, according to those familiar with the secrets of the Syrian regime. The Makhlouf family, led by patriarch Mohamed, the brother of Anisa, Hafez Assad’s wife, amassed a tremendous fortune worth billions of dollars based on controlling oil interests.

To get a better idea of the size of this fortune, all one needs to do is listen to the testimony given a few days ago to Russian TV channel RT by Firas Tlass, businessman and son of Mustafa Tlass, who was minister of defence during the reign of Hafez Assad. With the death of Anisa and Mohamed Makhlouf’s illness, the Makhlouf clan lost their source of power.

In one segment of the interview, Firas Tlass said: “When Rifaat al-Assad passed away, he was replaced by Mohamed Makhlouf, who had secured the help of Lebanese business advisors, then British ones and then South African ones (to build his fortune), and created a network of lawyers who established for him companies abroad. During this period of the 1980s, foreign companies flocked to invest in oil exploration in Syria, and Makhlouf became a partner with each oil company that entered Syria.”

“There is a popular belief among Syrians that the Syrian oil and its revenues never appear in the Syrian budget (the state’s budget). In fact, this appears either in the General Petroleum Corporation, or in the Ministry of Oil, but what happens is that the Oil Marketing Office, which is responsible for selling the oil, was selling it to only seven companies, and if any company in the world comes to buy oil directly from Syria, there will always be someone from the Oil Marketing Office who will whisper to you: ‘See so and so’. This so and so is Mohamed Makhlouf (aka Abu Rami). And when you go to Mohamed Makhlouf, he tells you: ‘We will make a contract in Cyprus with this company so that you pay it 7% commission’. And this is in fact a high commission because oil commissions usually vary between 0.5 and 1%. But you will recover this 7% in the form of a deduction on the price of Syrian oil. In other words, Syrian oil is in fact sold at 7% less than its real price and the difference is pocketed by companies in the name of the two families, Al-Assad and Makhlouf. This system has been in place since 1986 or 1987. When Syrian oil began to be sold commercially according to real export operations, we started looking at huge figures, even though these figures did not hit the billions until the 1990s, because Syria was not exporting any more than between 200 and 220 thousand barrels.”

Firas Tlass also relayed how Mohamed Makhlouf gained hundreds of millions of dollars from selling operation licenses to companies building infrastructure in Syria. An incredulous interviewer asked him: “But oil is a public sector in Syria; is Mohamed Makhlouf a partner of the state or an agent of the state?”

An advertising billboard of Syria’s largest mobile operator Syriatel, owned by businessman Rami Makhlouf, in the Syrian capital Damascus.( AFP)
An advertising billboard of Syria’s largest mobile operator Syriatel, owned by businessman Rami Makhlouf, in the Syrian capital Damascus.( AFP)

“All of the oil extracted in Syria is sold through the Oil Marketing Office,” Tlass answered, “and no one has the right to buy Syrian oil unless he is registered with the Oil Marketing Office, and if you go to them to register your company, you will be categorically rejected even if you are the largest company in the world … unless you have a contract with Mohamed Makhlouf, who gets his 7% commission. On a $ 50 million sale, the family gets $ 3.5 million, and we are talking here about 6 to 7 million dollars per day.”

In the short run, Bashar Assad will bring Rami Makhlouf to heel. However, that will not stop people from raising many questions, chiefly what future awaits the Syrian regime if Bashar, Asma and Maher defeat Rami. Then again, what effects will this family feud have on the Alawite community itself? This internal tension is unprecedented in the sect’s history.

The big problem for the Alawites is that this vicious internal feud is taking place while Syria’s future is at stake.

Rami Makhlouf has the keys to the foreign accounts. Who then will be able to recover the fortune in these accounts at a time when all Syrian figures associated with the regime are on US and European sanctions list?

Moreover, is there anyone close to the Assad family who can be entrusted with any account that may escape Rami Makhlouf’s control and the myriad of front businesses protecting him from sanctions?

This is truly a tragedy of a colossal fortune and of a family that has been ruling Syria and controlling the fate of the Alawites for a long time now.