MPs can make Lebanon audit happen, justice minister says
▶ Caretaker justice minister says Banque du Liban cannot continue hiding behind 1956 banking secrecy laws
Lebanon’s central bank can be made to hand over documents it is withholding from a forensic audit, the country’s justice minister told The National on Thursday.
The International Monetary Fund and former colonial power France have insisted on major reforms and transparency, including an audit of Banque du Liban, before they provide relief.
BDL handed over less than half of the documents requested by accounting firm Alvarez & Marsal, citing concerns about breaking a 1956 banking secrecy law.
Justice Minister Marie-Claude Najm said the banking secrecy law could be changed.
“If MPs believe that the law should be changed to exclude banking secrecy from the forensic audit, all they must do is change it,” she said.
“But I persist in saying that this is beside the point.”
Earlier this month, the government gave the BDL a threemonth extension to hand over the documents, as critics suggested it was purposely holding on to them to avoid oversight.
“The ball is in [ the BDL’s] court,” Ms Najm said.
There is little hope of an improvement in Lebanon’s finances without the audit.
Lebanon’s central bank is not “above all supervision and all control”, caretaker Justice Minister Marie-Claude Najm said on Thursday.
She was speaking after weeks of a power struggle between the bank and the country’s interim government.
Lebanon’s government wants to push ahead with a crucial audit to uncover the reasons behind the country’s financial collapse, but the central bank argues that would breach a 1956 banking secrecy law.
“To argue that information cannot be delivered because of banking secrecy laws means that the state does not have the possibility of knowing the figures of its own central bank,” Ms Najm told The National.
On August 31, Lebanon’s Finance Ministry commissioned three international consultancy firms to audit Banque du Liban, nearly one year after banks implemented stringent capital controls and suspended transactions abroad.
But Banque du Liban transferred only 42 per cent of the documents requested by Alvarez & Marsal, the firm contracted to carry out the forensic audit, making its work impossible.
On November 5, the government, which says that its accounts at Banque du Liban are not subject to banking secrecy rules, gave the central bank a three-month extension to hand over the documents.
The grace period is a “little long,” said Ms Najm, but not unheard of in the case of forensic audits.
The audit of the central bank was one of the reforms demanded by France, which has led an international effort to help salvage Lebanon’s economy, in exchange for a financial aid package.
All political parties say they support France’s demands for reforms but have yet to carry them out.
The International Monetary Fund estimated Banque du Liban’s accumulated losses at $49 billion, the Financial Times reported in June. The central bank says that its losses are lower but does not publish profit-and-loss accounts.
One solution to the forensic audit dispute would be for parliament to amend Lebanon’s banking secrecy law.
“All political blocs say that they are with France’s initiative,” said Ms Najm, a lawyer by training and former professor of law at Universite Saint Joseph in Beirut.
“If MPs believe that the law should be changed to exclude banking secrecy from the forensic audit, all they must do is change it. But I persist in saying that this is beside the point.”
Alvarez & Marsal representatives told Lebanese officials during a meeting attended by Ms Najm that they managed to conduct forensic audits of private Lebanese companies in the past, despite banking secrecy laws, by keeping the names of bank account holders anonymous.
“The ball is in [the Banque du Liban’s] court,” Ms Najm said.
There is little hope of an improvement in Lebanon’s finances through international aid without an audit of the Banque du Liban.
The economic crisis, which began in the summer last year with a shortage of US dollars and was then exacerbated by the coronavirus pandemic, has pushed more than half of the Lebanese into poverty. The IMF projects that the economy will contract by 25 per cent this year.
In addition to its financial woes, Beirut was devastated by the explosion of 2,750 tonnes of ammonium nitrate on August 4, killing more than 200 people.
More than three months later, an investigation has yet to clarify what is widely viewed as an accident caused by state negligence.
Ms Najm said that investigative judge Fadi Sawan told her that one of the reasons for the delay is that Lebanon is waiting for technical reports from France, which is co- operating in the investigation. The French embassy in Beirut said it could not comment on an ongoing investigation.
Ms Najm declined to give a deadline for the investigation.