Beirut -
The Lebanese judiciary has taken new measures against commercial banks entitled to recover depositors of their withheld money, and this coincided with a frantic political struggle between defenders of judicial procedures and those who reject them, which finally manifested itself in the seizure of one of the largest Lebanese banks, and the arrest of the brother of the Governor of the Central Bank of Lebanon, Riad Salameh.
Local judicial procedures are proceeding at an accelerating pace against banks and bankers and the governance of the Banque du Liban, paralleled by international judicial movements based on lawsuits filed by depositors and associations, and the latest chapters of which are the British court’s decision to compel two Lebanese banks, “Bank Audi” and “Societe Generale,” to pay $4 million to one of the British depositors;
To which Bank Audi responded by closing dozens of accounts belonging to Lebanese nationals holding British citizenship or their relatives.
The latest judicial developments
Yesterday, Thursday, the Public Prosecutor in Mount Lebanon, Judge Ghada Aoun, arrested Raja Salameh, brother of the Governor of the Banque du Liban, pending investigation, against the background of informing him of a crime of money laundering and illegal enrichment, at the expense of the Central Treasury.
Judge Aoun - who is accused by opponents of working for President Michel Aoun's team - said that there are real estate properties in France belonging to Riad Salameh, estimated at about $12 million, and that they were purchased in the name of his brother, Raja.
Prior to that, the Head of the Execution Department in Beirut, Judge Mariana Anani, issued a judicial decision against the “Franspek” bank, ordering the execution of the seizure of all its shares, real estate, assets and branches in all of Lebanon, in preparation for its auction, due to its failure to pay the entire financial deposit belonging to one of the plaintiffs.
Lebanese banks have been holding depositors' money since the end of 2019 and deducting high percentages of their value (Anatolia)
The decision was widely welcomed by the people, and many put it in the court’s support for the depositors whose money Lebanese banks have been holding since the end of 2019 with illegal procedures and deducting high percentages of their value based on the Central circulars.
The Association of Banks described Judge Anani's decision as arbitrary practices.
It was striking the political position of Prime Minister Najib Mikati, who said - the day before yesterday, Wednesday - that what is happening in the banking file is incorrect, describing it as a "show and police method", and considered that the depositors will pay the price again, declaring that "the file will be followed up by the Minister of Justice to put the treatments in place." on the right track."
This escalation comes weeks after Judge Aoun’s decision to place a prohibition sign on real estate, vehicles, shares, and the shares of the heads and members of the boards of directors of a number of Lebanese refineries, while preventing them from traveling. Now, against the backdrop of complaints filed against him by activists accusing him of illicit enrichment, money laundering, and squandering public money.
Data speak of the possibility of government intervention, and the Association of Lebanese Banks directed to escalate in response to judicial decisions, including resorting to declaring a general strike in the banking sector.
Legal backgrounds for these actions
Dr. Sabine El-Kik, an expert and legal researcher in banking affairs, refers to several levels of judicial action against banks, internationally and locally, and at the level of civil justice (such as the seizure of Fransabank), and criminal (Judge Aoun's actions).
Cake says to Al Jazeera Net that the judicial decisions taken to recover the rights of legal and constitutional depositors, describe the movement of the judiciary as natural, and explain that its previous reluctance was an abnormal situation from the perspective of the constitution and the laws that protect the rights of depositors in full, and provides for the preservation and retrieval of their deposits in the same currencies in which they were deposited.
Cake believes that the comprehensiveness of the financial crisis, and the authorities' acknowledgment of losses of nearly 70 billion dollars in the banking system, calls for such moves in the courts and justices, independent of attempts to politicize judicial decisions.
Cake reminds that the central governor is facing lawsuits in European courts in Switzerland, France, Luxembourg and Germany, as well as being accused of transferring about 400 million dollars to Switzerland in an irregular manner and with the help and assistance of his brother Raja.
She said that Judge Aoun's decisions are criminal, and she is preparing precautionary measures to complete investigations into the cases submitted before her.
It clarifies that what happened with Fransabank is based on lawsuits directly related to the relationship of depositors with banks and their demand to recover their deposits, as well as the British ruling came in accordance with Lebanese laws.
Cake believes that Lebanon has entered a new escalatory judicial path with the file of banks, money transfers and heavy losses, and that some judges have dared to place the law in its social, not individual, framework;
Especially since the political track is heading towards bearing the bulk of losses for small depositors, in exchange for protecting the big financiers, the influential and the owners of capital.
Escalation of depositors
In parallel, researcher Nizar Ghanem - one of the founders of the Association of Depositors - reveals escalatory measures that will follow later, and the preparation of lawsuit files on behalf of hundreds of depositors who were eager to wage a judicial battle against banks.
He points to depositors' anticipation of bold judicial decisions that devote the rights to recover their withheld money. He says, "If the banks are bankrupt, they must bear their losses and return the money to their owners."
However, the main dilemma facing depositors, according to Ghanem, is that "the authority protects banks by virtue of bankruptcy, in an effort to burden depositors with the greatest losses."
He said that the Association of Depositors has proposed a solution based on the plan of the "Lazar" financial consultancy company, on the basis of protecting a large part of small and medium deposits, in return for deducting and liquidating large deposits and the shares of shareholders in banks.
He adds that the judicial escalation will push a large number of depositors to demand seizure of bank assets if their deposits are not returned, and expresses their fear on the eve of the elections of "providing a political cover for bank corruption in return for bearing the cost to marginalized groups."
Problems and challenges
Lebanon is going through a delicate financial and economic situation, and it is on the verge of preparing for negotiations with the International Monetary Fund, which imposes strict conditions to help Lebanon, including structuring the banking sector, unifying and liberalizing the dollar exchange rate, and equitable distribution of losses, which are issues that do not find any internal consensus, in the opinion of many, It affects the interests of the ruling elite in the political and monetary authorities.
In contrast, the Lebanese are floundering with the multiplicity of dollar exchange rates and money market speculations, as they are governed by 3 main poles: the Banque du Liban, commercial banks and merchants.
Many fear that the current conflict will lead to a new jump in the dollar exchange rate, which recently reached about 22,500 pounds on the parallel market.
And the journalist specializing in economic affairs, Azza Hajj Hassan, believes that the actual crisis began with the banks taking illegal measures, all towards assaulting the rights of depositors, marginalizing the role of the judiciary and politicizing its decisions.
The journalist emphasized that every enforceable court ruling to seize a commercial bank does not mean that its depositors will lose their money, but rather it will be in their interest in the medium and long term.
She told Al-Jazeera Net that any solution begins with controlling the abusive practices of banks, and "declaring the bankruptcy of every bank unable to pay the deposits of its customers, in preparation for the restructuring of the sector."
For his part, Nassib Ghobril, Head of Research and Economic Analysis at Byblos Bank, calls for a return to the roots of the crisis after the sharp decline in capital flows, when a parallel market for the dollar exchange rate appeared in the fall of 2019 for the first time.
And he reminded - via Al Jazeera Net - that the banks had previously demanded the approval of the Capital Control Law, and if it had been implemented - in his opinion - the depositors would not have reached their reality today.
He believes that what damaged Lebanon's financial reputation is the previous government's decision in March 2020 to default for the first time on the payment of treasury bonds "Eurobonds".
He said that fairness to depositors is a necessity, "but this judicial path will harm everyone," as he put it, calling for the development of a comprehensive reform project.
On the other hand, journalist Azza Al-Hajj Hassan believes that the judicial escalation against the banks will continue, and it is unlikely that it will negatively affect the negotiations with the International Monetary Fund, "because the judiciary plays its real role in restoring the rights of depositors and stimulating the restructuring of the banking sector."
However, it expects the political authority to resort to counter-reactions that may undermine the judicial process, without being able to suppress it, given the sensitivity of the situation before the international community and external courts examining cases involving Lebanese banks, bankers and financiers.