At a time when solutions seem to be stuck in the various crises facing Lebanon, the economic decline that began at the end of 2019 continues, and since then, the largest banking collapse in Lebanon's modern history has followed, and is accompanied by a parallel collapse in the price of the national currency;
After the Lebanese pound fell against the US dollar by more than 80%.
This prompted Lebanese banks to impose tight restrictions on the accounts of their depositors, after it was found that there was a big loss gap in the accounts of the Banque du Liban, whose estimates exceeded $ 63 billion.
It seems that all the popular demands to stop the collapse did not come to fruition, and the last chapter was obstructing the criminal audit of the accounts of the Central Bank of Lebanon, after the Lebanese authorities extended a period of 3 additional months to deliver the documents demanded by the assigned company "Alvarez & Marsal" By checking.
The criminal audit story began in April 2020, when the Lebanese government decided to use the international company "Kroll", but at the end of last June, the Minister of Finance announced not to sign the contract with this company, on the pretext that it has a relationship with the Israeli Mossad. Bank data for Israel reveal, and after a long debate within the government and among the political poles, the minister signed at the end of last August - that is, after the resignation of the government - a criminal audit contract with the American company "Alvarez & Marsal" based in New York, in addition to two other contracts with my company. " KPMG and Oliver Wyman for Financial and Accounting Auditing.
What led to the extension of the company’s deadline of 3 months was the collision of two paths: On the one hand, the company believes that it did not receive more than 100 documents it requested from the Central Bank, and that the little information it provided was insufficient to initiate a criminal audit.
On the other hand, the governor of the bank, Riad Salameh, armed himself with his independence, stressing that he handed over the documents that the law allows him to hand over, in exchange for his failure to hand over everything that is subject to the "banking secrecy" and "cash and credit" laws in Lebanon.
Accordingly, the criminal audit entered the freezing tunnel, following an apparent legal conflict, resulting from the contradiction of the Alvarez contract with Lebanese laws, while observers of the file consider that the contract was originally booby-trapped by the Lebanese side, as it clearly states that the company's work is subject to the laws Sponsored in Lebanon.
Before extending the deadline with "Alvarez", the Minister of Finance had sent the Central Bank of Lebanon a letter containing a study from the Minister of Justice in the caretaker government, Marie-Claude Negm, which she prepared upon the advice of the Legislation and Consultation Commission in her ministry, stating that "the banking secrecy observed in Lebanese law It does not apply to state accounts or Banque du Liban accounts. "
However, the Central Bank responded at the time that it was the Lebanese state that had to request a detailed disclosure of its entire accounts, so that the Banque du Liban would avoid violating the banking secrecy laws, which would result in criminal consequences.
In the context, the Minister of Justice defends criminal scrutiny, and considers - in a statement to Al Jazeera Net - that the obvious choice for the government was to search for a way of scrutiny, because the Lebanese cannot access their deposits, without the Central Bank providing official figures about its losses.
She points out that the government resorted to criminal scrutiny after it took in March 2020 a decision to default for the first time in Lebanon’s history from paying its Eurobonds (state debt bonds in foreign currencies) and not to pay its dues, in order to preserve the remaining cash reserves at the Banque du Liban. In hard currency, to extend the deadline for subsidizing fuel and basic commodities.
Minister Najm holds the Central Bank responsible for extending the company's work deadline for 3 months, in light of the aggravation of the collapse in Lebanon, and stated that according to the contract signed with the company, it will not receive names but coding numbers, and if it condemns someone, it is referred to as digital coding.
Najm confirmed that the Legislation and Consultation Commission at the Ministry of Justice relied on jurisprudential and legislative references, to show that the coding numbers do not mean disclosing bank secrecy.
In the event that the contract is terminated after the extension period for it, the Lebanese state will pay the company $ 150,000, but if it is able to complete its mission, then the cost will be $ 2 million and 100,000, according to the Minister of Justice, who considers that losing any amount without completing the criminal audit, Lebanon will incur additional losses.
The Lebanese pound fell against the US dollar by more than 80% (Reuters)
The law faltered
On the other hand, there are those who find that Riad Salameh's failure to deliver all the documents required to "Alvarez" is right, and the former head of the Lebanese Banking Supervision Committee, Samir Hammoud, indicates that the resort to criminal scrutiny came at an inappropriate time, as a result of the persistence in defaming the sector Banker.
Hammoud told Al-Jazeera Net that if the intention was to audit financial engineering, the central bank could have taken upon itself the task of auditing under the supervision of its offices abroad, and away from the media to take the necessary measures in light of what the investigations reach.
Hammoud considers that the company's request for certain documents clearly violates the banking secrecy law, and states that Article 151 of the Currency and Credit Law prohibits the Banque du Liban from disclosing the operations of its depositors.
Consequently, the law cannot be violated under the pretext of the exceptional circumstance. He believes that what the Central Bank can present to "Alvarez" is total numbers and not the numbers of transfers, and that extending the time limit for its work will not solve the legal obstacles that prevent the disclosure of banking secrecy.
Observers blamed the Finance and Budget Committee in the Lebanese Parliament, for not moving to finalize a bill that removes obstacles to bank secrecy, which suggested the theory that the contract with "Alvarez" was booby-trapped.
However, a member of the committee, MP Yassin Jaber, explains to Al-Jazeera Net that the freezing of the company's work was natural in light of a government vacuum pending the formation of Saad Hariri's government, and parliament should not be held responsible for that.
He considers that the sufficiency of the demand for criminal scrutiny of the accounts of the Banque du Liban took a political character, while the requirement was to audit all the accounts of the complained institutions, starting with the Electricity of Lebanon Company, which incurred billions of dollars in losses to Lebanon, noting that Parliament had previously approved several laws related to non-enrichment. Project and embezzlement crimes.
Asking the company entrusted with a criminal audit of some documents clearly violates the banking secrecy law that protects people's deposits (Reuters)
Abort a criminal audit
Many fear that the criminal audit will not reach a conclusion, given the pitfalls it faces. Pierre Dokan, the French president’s envoy to coordinate international support for Lebanon, said that “failure to conduct a criminal audit means the disappearance of Lebanon”.
In the context, the economist Dan Azzi considers that the Lebanese have the right to know where their billions of dollars of deposits have gone. He believes that criminal scrutiny is a demand of European countries, and the most prominent conditions for the French initiative.
Azzi states that the International Monetary Fund will not grant Lebanon any loans or aid unless it discloses the sources of losses that have befallen the central bank’s budgets over the past years, noting that America sent a written letter in late August to the Central Bank urging it to complete this audit.
Azzi is likely that the various political forces do not want criminal scrutiny. He asked across to Al-Jazeera Net in response to the invocation of the Banking Secrecy Law: Is it not a crime for banks to violate the law by seizing the money of their depositors for about 15 months without any right?
Azzi considers that suspending the company’s work is not in the interest of Lebanon, because it will ultimately be forced to implement “criminal scrutiny” as an international demand, in exchange for the continued depletion of the BDL’s reserves.
While awaiting what the extension period for the company will arrive at, Azzi summarizes the repercussions of failing to complete the "criminal audit" in several points, most notably: keeping the identity of the perpetrators of the financial disaster unknown, thus not being held accountable, and losing the last opportunity to regain the confidence of the international community, which means withholding international aid to Lebanon. Because forensic scrutiny, which must include all state institutions, is the first step in moving to the stage of structural reforms that the country needs.