Portuguese / Spanish / English

Forensic auditor to review every transaction at Lebanon's central bank

The Central Bank of Lebanon [Karan Jain/Flickr]
The Central Bank of Lebanon [Karan Jain/Flickr]

A forensic auditor is set to review every transaction at Lebanon's central bank, according to Minister of the Economy Raoul Nehme, the Financial Times reported.

According to Nehme, the move is intended to put pressure on the central bank Governor Riad Salameh who has come under fire in recent weeks over mismanagement of the economic and currency crisis.

Nehme told the Financial Times an independent auditing firm "will look into all the transactions" and assess the "validity" of the movement of funds, including "everything that was done".

The review, which was initially announced by Prime Minister Hassan Diab in April, is set to be run by international firms KPMG, Kroll and Oliver Wyman, which were appointed to run the audit as part of an economic rescue plan which includes restructuring the banking sector.

Under the plan, the government is also seeking a $10 billion bailout from the International Monetary Fund (IMF) and to unlock a further $11 billion in conditional aid pledges from 2018.

READ: Lebanon renews curfew as coronavirus cases resurge

An audit of central bank transactions is intended to help improve transparency for creditors and encourage potential investors and aid donors.

Lebanon has long been blighted by a 1956 banking secrecy law, which binds all financial entities regulated by the central bank to absolute secrecy over clients' personal and account-related information, preventing transparent audits from taking place.

The government approved a draft law to lift some areas of banking secrecy in 5 March, after months of anti-government protests which called for the law to be repealed.

Protesters have also called for investigations into transfers of US dollars from Lebanese banks to internationally held accounts, which took place in November and December last year, despite stringent capital controls.

As late as January and February this year, Lebanese bank deposits plummeted by a further $5.7 billion, according to Prime Minister Diab, raising concerns that large depositors are still able to remove money from the country.

READ: Israel demands major changes to UN peacekeeping in Lebanon

The government's financial rescue plan hinges on reforms to the financial sector, which, it estimates, is sitting on $70 billion worth of losses. The Association of Banks in Lebanon (ABL), however, has rejected the disproportionate burden of the economic crises being placed on the central bank and the organisation.

Instead, the ABL are set to produce their own financial rescue plan which, it says, will be "more realistic" than the government's proposals.

According to economic minister Nehme, however, "we're all in the same boat. So, if one of us is going to make a hole in the boat we will all sink." Economic collapse could be averted if "[the government, central bank and political parties] all work hand in hand and forget the political bickering."

Categories
LebanonMiddle EastNews
Show Comments
Writing Palestine - Celebrating the tenth year of the Palestine Book Awards - Buy your copy of the book now
Show Comments