Angel Poligan – Mexico
It is noteworthy that this development coincides with the re-assignment of Prime Minister Saad Hariri to form the government. In this context, this is a return to the zero point in everything related to determining losses and the transparency required of the Lebanese government in dealing with the management of the collapse. The issue may not stop when the Banque du Liban refuses to provide answers to the questions of the Criminal Audit Company, but also that Hariri himself declared his adherence to the governor of the Banque du Liban, Riad Salameh. The latter is considered a basic need for the powers of the government to continue playing the game of buying time and concealing what must be hidden to prevent accountability. Indeed, data were received from international bodies indicating that close to Hariri tried to influence, finally, the position of the International Monetary Fund regarding the issue of determining losses and the mechanisms of extinguishing them with the aim of preferring the plan developed by the banks at the expense of the government recovery plan drawn up by Prime Minister Hassan Diab’s government in cooperation with the financial advisor. Lazar ».
This would not only bring us back to point zero, but would also reopen the debate on dealing with monetary-financial losses, in addition to the fact that the prevailing trend is towards negotiating more aggressively with the International Monetary Fund over the Lebanon lending program. Here, it is possible to understand the political games that led in the past two days to a sudden decrease in the exchange rate of the dollar in the local market, without any actual justifications that would open the way to rational explanations for this decline. Consequently, the power forces will find themselves compelled to deal with a new reality imposed by Hariri and Salame based on the banks’ approach to the issue of determining losses and the mechanisms of extinguishing them and negotiating with the International Monetary Fund.
Of the questions posed by Alvarez to the Banque du Liban, it did not receive any answers, and it includes most of the questions that allow for a criminal audit.
So, what are the questions that the BDL refrained from answering?
In fact, Alvarez & Marsal asked detailed sets of questions to begin preparing its report. A large part of these questions revolve around the financial operations carried out by the Banque du Liban during the period between 2015 and mid-2020. The company asked about documents, reports and minutes related to financial accounting and payment processes, and the accompanying procedures and follow-up mechanisms. It also touched on questions related to BDL’s accounts, its cash operations, buybacks, and placement portfolios, whether those carried for trade or investment. It did not obtain an answer regarding the doubtful deposits as well, nor with regard to the settlement operations in local and foreign currencies that the Banque du Liban carried out with foreign parties, nor about the purchase and sale of real estate, their revenues and the costs of their implementation. Even the BDL’s investments in subsidiary or sister companies were rejected under the pretext of the Monetary and Credit Law, and the same applies to bank deposits at the Banque du Liban (even without mentioning the names of banks and adopting a methodology different from the direct nomenclature), nor with regard to BDL deposits with banks.
In general, the Banque du Liban refused to provide any information related to its financial liabilities or assets and the costs it incurred in the course of these liabilities or assets being acquired.
Interestingly, the Banque du Liban also refused to provide any information regarding the financial engineering that it had implemented with banks from 2015 until mid-2020. It also refused to disclose its account management, and refrained from providing any data on the internal financial reports related to these accounts. He refused to show lists of former and current employees, and he refused to present lists of the financial institutions from which he received deposits or had accounts with them, nor about the balance of these accounts (even without designations).
The details of the operations that the Banque du Liban carried out with commercial banks were also kept secret, whether they were financial engineering, or other dollar sales, buybacks and others. As for the external accounts and the obligations of the Banque du Liban outside Lebanon, the Banque du Liban stated that they are subject to secrecy according to the Currency and Credit Law. The same applies to the accounts of commercial banks at the Banque du Liban and their balance even if it is zero.
The Banque du Liban refused to provide any information about the financial engineering and operations it had with commercial banks
He also refrained from presenting the documents that justify conducting the financial engineering, whether they are the minutes of the central council or any other documents.
In the area of rejection and abstention, also with the same argument, the Banque du Liban did not provide any information regarding the persons authorized to have access to the bank’s accounting systems and internal audits. It is not known if the central bank originally carried out internal audits involving fraud. It is also not known if such operations took place, if they were audited, results were issued or any type of accounting was applied as well. He also abstained from providing data related to protection mechanisms for information on the systems or those available in original copies.
It is also remarkable that the Banque du Liban refused to disclose its written policies and the financial measures taken in this field, and the consultations that were offered to it.
The answers obtained by the company were not sufficient to conduct the audit and issue the initial report
What does all this rejection and abstinence mean? The Banque du Liban refuses to deal with transparency and is concerned about the “hidden” discovery. This “hidden” path is only one of several paths to discover the depth of the gap in the banking system. Without it, no accountability can be made, not even a step forward in the direction of relaunching the economic activity, which is currently suffering from a state of relative certainty that plays its negative role in destroying confidence in the banking sector. In other words, uncertainty will remain over the reform path.
There is no need for much analysis to realize the reality of rejection and refrain from answering, as the Banque du Liban was from the beginning rejecting the criminal audit process. Rather, he believes that such a process will destroy the structure of the banking system, even if there are data indicating that this system is already destroyed, and that deposits in it no longer exist. Rather, it was spent and only a fraction of it remained, representing a basic need for the import of food necessary for the continuation of residents in Lebanon. For the Central Bank of Lebanon, the path it outlines to extinguish losses through local currency issuances and enlarging the monetary mass circulating in the market is the only way to save. It is a path that he drew on his own from the first day. By refusing to answer the questions posed by the forensic auditing company, he also refuses to deal with any other path. He wants to extinguish his losses with inflation. However, he did not manage this ugly game that strikes wages and consumption and increases unemployment and poverty, so he intended a counter-game that, sooner or later, will lead to a massive economic downturn, whose effects will be more severe than the game of monetary expansion. Contradictory policies that the Central Bank imposes on the Lebanese every few months, as if they were “test rats.”
The contract with the company “Alvarez” carried self-explosive terms. It allows the Banque du Liban to evade scrutiny by invoking Lebanese laws that prevent it from providing information to any party, particularly the Monetary and Credit Law and the Banking Secrecy Law. The contract stipulates that the Ministry of Finance undertakes to take – to the extent permitted under the applicable Lebanese laws – and acknowledge that the Banque du Liban will take all reasonable steps to prevent any party from exercising any undue influence or taking any steps to prevent the Alvarez & Marsal Company from performing the services. , As stipulated in the agreement and without any influence from any other party, in accordance with best good practices followed in this field. It also indicates that the company must send a detailed initial list of the information request, and that the Banque du Liban must respond within two weeks from the date of receiving the information request, provided that the company then determines if it has obtained sufficient information to allow it to start Review no later than one week after receiving the response. If it determines that insufficient or insufficient data has been collected to enable the review to begin, the Ministry of Finance must take reasonable steps within the limits of the current Lebanese legal framework in order to ensure the availability of the data requested by the company within a period not exceeding two weeks, and in a manner that suits the company completely. All these deadlines will expire within the middle of this week, noting that in the event that Alvarez & Marsal terminates the agreement due to its inability to make a decision to start the audit due to lack of availability of information, it is entitled to receive an amount of $ 150,000 to stop work. Out of the fees paid to it.
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