New escalation in the Assad-Makhlouf family feud

A Syrian court order places Syriatel, owned by Rami Makhlouf, under judicial custody.
Friday 05/06/2020
A file picture shows refugees at the Syrian-Lebanese border crossing at Jdaidet Yabous talk with their relatives through mobile phones provided free by Syrian telecommunication company Syriatel. (AP)
A file picture shows refugees at the Syrian-Lebanese border crossing at Jdaidet Yabous talk with their relatives through mobile phones provided free by Syrian telecommunication company Syriatel. (AP)

DAMASCUS--One of the most controversial cases in Syria, the Assad-Makhlouf saga, is continuing with new twists and turns, the latest being a Syrian court order placing telecommunications firm Syriatel, owned by prominent businessman Rami Makhlouf, under judicial custody, according to a document posted on the court’s Facebook page.

Makhlouf, the cousin of Syrian President Bashar Assad and one of Syria’s richest men, had his assets ordered seized over alleged back payments owed to the country’s telecoms regulator of around 134 billion pounds, or around $77 million at the current exchange rate on the parallel market.

Once at the heart of Assad’s inner circle, Makhlouf has called the asset seizure illegal and an attempt by the government to take the company from him. The unprecedented public tussle has uncovered a rare rift within Syria’s ruling elite.

The decision to place Syriatel under judicial custody is to “guarantee the rights of the public treasury and the rights of the shareholders in the company,” the administrative court wrote on Facebook.

Makhlouf has addressed the dispute in three video messages, appealing to Assad himself to help save his firm. In his last appearance, Makhlouf said he had been told to quit as head of Syriatel.

Last month, a court placed a temporary travel ban on Makhlouf pending settlement of the dispute.

Assad, who marks 20 years in power this month, has survived nearly a decade of armed conflict with the support of Russia and Iran and a loyal class of businessmen. A number of those businessmen helped protect the state and economic interests by also forming their own militias.

Now the war-ravaged country faces a new level of hardship.

The Syrian pound has fallen to 1,800 to the dollar, from 50 before the war. Prices have soared, and electricity and fuel shortages are recurrent. More than 80% of the population lives in poverty. Once an oil exporter, Syria now lives on a credit line from Iran, which faces its own economic troubles.

 Sanctions in place before the war mean Syria can hardly export anything, and new US sanctions threaten to further choke the country.

 With the crackdown, Assad seems set on bringing the economy more firmly under his control and bolstering the state’s empty coffers.

“Rami’s potential demise is mostly a reflection of a change at the helm of the regime” — in players, not policy, said Jihad Yazigi, editor-in-chief of the Syria Report.

New actors are competing with traditional powers within the family over the shrinking resources, he said.

For instance, first lady Asma Assad has increasingly sought to centralise all charity work under her aegis. She heads the Syria Trust for Development, where most foreign aid for post-war reconstruction is channelled.

 The Makhloufs have been the Assad family’s longtime partners. Makhlouf’s father, Mohammad, was the brother-in-law of Assad’s father Hafez and a mentor to the younger Assad. Notably, he too now appears to have been sidelined.

Rami Makhlouf rose alongside Bashar Assad, who succeeded his father in 2000. Benefiting economic liberalisation, Makhlouf became an overwhelming figure in Syrian business, most importantly controlling the largest telecommunications company, Syriatel.

His name became synonymous with Assad’s power. Early in the conflict, protesters torched his companies — and Makhlouf moved out of the public eye.

Signs of cracks emerged last year. Last spring, a paper owned by Makhlouf criticised a rival businessman, Samer Foz, considered close to the first lady.

Soon after, an audit was launched against Makhlouf’s Al-Bustan charity — with the raid on its offices and interrogation of its staff, details of which were reported in Arab media and confirmed by an emigre Syrian businessman, Firas Tlass.

 Tlass said the crackdown was driven by the first lady.

 A career investment banker, Asma Assad is trying to secure her three children’s future, fearing consolidation of the family wealth in the hands of Makhlouf and his sons, who live in Dubai, said Tlass. He estimates Makhlouf’s fortune at $13 billion.

The audit was the final rupture between Makhlouf and Assad, said Tlass.

After it, Al-Bustan’s director and accountant were replaced by figures close to the presidential palace, and the affiliated militia was integrated into the armed forces.

Makhlouf has reportedly been banking on support from Syria’s Alawite community, from which he and the president hail, and which makes the bulk of the pro-government militias he has long supported.

“It is the weakness of the regime that made it possible for such divisions to be aired in public,” said Tlass, who is the son of a former defense minister and lives in exile but keeps ties with Syria.

 By year’s end, the government openly named Makhlouf and other businessmen or officials in a campaign against corruption. State media, which once called them the “nationalist business class,” now branded them “war profiteers.” Officials spoke of billions of Syrian pounds embezzled. The government said Makhlouf owed it $180 million.

Assets were temporarily seized from Ayman Jaber, a steel and oil trader married to an Assad cousin. Also hit was Hossam Qaterji, a powerful oil trader, who facilitated oil smuggling from eastern Syria and has a militia. Tarif al-Akhras, a food trader and a relative of Syria’s first lady, was also named.

Reports suggest most of those businessmen settled with the government and paid their dues.

Meanwhile, Russia, keen on translating its military role in Syria into economic and political gains, appears to be losing patience with the chaotic, corruption-ridden state.

So it would welcome Damascus moves to tighten control on the economy, said Vitaly Naumkin, a prominent Moscow-based Middle East expert.

Kirill Semyonov, a Syria expert with the Russian International Affairs Council, described the crackdown as a re-distribution of assets among the Assad entourage’s “military-criminal economy.”

 “Makhlouf has become a weak link in the chain,” he told Russia’s leading business daily Kommersant. “Assad needs funds or his regime will crumble, so why not take the money from someone who can pay.”