Article 1 (a) and (b)
Article 10 (d)
● The possibility of Alvarez & Marshall invoking the Lebanese laws in effect because it did not obtain the necessary information to accomplish its tasks, as the aforementioned materials do not oblige the Banque du Liban under the provision of additional information, and the contract prohibited the company from direct access to the information and scrutinizing it. There is a clear reference to the provisions that are mandatory or related to public order in the Lebanese law, referring to the bank secrecy law and the cash and credit law (Articles 44 and 151). The contract considered that the obligation to adhere to or adopt Lebanese laws is a fundamental condition of the contract, which would not hold it responsible or oblige it to proceed in the event that such laws constitute an obstacle.
■ The banking secrecy law dated 3/9/1956 includes exceptions, some of which can be used, including:
A- Based on Article 2 of the law, it is possible to request the beneficiary (gradually the Central Bank to reach banks and customers) to give prior written permission to divulge what they know and all information and all facts related to the topics covered by criminal audits.
B – Refer to Article 7 of the law so that banks (including the Central Bank) cannot invoke the professional secrecy stipulated in this law regarding requests directed by the judicial authorities in cases of illicit enrichment brought.
– Relying on Anti-Money Laundering and Terrorism Financing Law No. 44, so that the Special Investigation Commission has the authority to lift confidentiality, receive reports, conduct investigations suspected of constituting money laundering crimes, and decide the seriousness of the evidence and evidence and the necessity to take the appropriate decision, especially the temporary precautionary freeze of accounts. It is also up to it to ensure that the parties referred to in Articles 4 and 5 of the law (especially banks and financial institutions) comply with the legal obligations and the regulatory texts issued based on them. In this context, the government should communicate directly, outside the context of the contract, with the Egmont Group to oversee the extent of the Special Investigation Authority’s compliance with the mandatory rules governing its work.
Submitting a bill and / or proposing an expedited bill to amend the relevant articles in the Monetary and Credit Law and allow for criminal audit to be conducted independently of any restriction, condition, or obstacle, or even the absolute abolition of banking secrecy (before the regular October contract devoted to studying and approving the budget). All this with a media and advertising awareness campaign to put pressure on the competent references.
– Putting the contract under the supervision of the Public Prosecution Discriminatory to intervene and do what is necessary to overcome obstacles when needed and to lift confidentiality when necessary, in accordance with what is permitted by the laws in force.
Articles 1 and 2
● The mission of Alvarez & Marshall is mainly based on an initial report that it submits on the results of the forensic audit of the accounts at the Banque du Liban and its activities without clarifying what is required for this report to include as a minimum in terms of violations and potential crimes. This means that the report, in the event that the Central Bank does not cooperate or refrains from providing the Ministry of Finance with documents to discover crimes and violations, will fulfill the purpose (limited and ambiguous), and authorize the company to collect what is due in terms of fees with the consequent results of the authority to absolve the bank. Accounts and potential violators hidden, as well as misinformation and implying that there are no wrongdoing; Not to mention the wide opening of the door to request a second additional report for which a new contract is concluded and additional allocations that increase the burden of the treasury are determined, without specifying whether it is then necessary to return to the Council of Ministers to obtain its approval, as well as obtaining permission or special approval to conclude an expense that is not noticeable and budgeted.● How was the first payment of the company’s fee allowance determined at 40% of the total contract value, while the amount due in case it decided that it was unable to make the decision to start the task is $ 150,000?
■ The solution lies in adhering to the norms and contractual principles followed in all cases similar to forensic auditing, which specify two stages of the audit, from which two reports are produced: a progress report showing the stages of business progress and the obstacles faced by the company, and a final report showing the results of the investigation in a clear and unambiguous manner, and they are covered by the corresponding fees and allocations Originally and all other provisions. For indications, a similar report can be reviewed from Kroll (Kroll Independent audit related to loans contracted by ProIndicus SA, EMATUM SA and Mozambique Asset Management SA – 23 June 2017). Therefore, obstacles and inaccessibility to data or information can be difficult to invoke. Noting that, in the same context, it is necessary to include suspended conditions or suspend the implementation of the contract, the maturity of fees and the expiration of time limits until the obstacles are removed. In any case, it does not hurt to oblige the company in its report to clarify and specify the reasons and obstacles that prevented the implementation of the task explicitly.
The down payment was only required to be $ 150,000; When required, an advance on expenses.
Article 2 (b) compensation
● The contract only authorizes Alvarez & Marsal to terminate the agreement unilaterally, due to its inability to make a decision to start the task due to lack of availability of information while giving it the option to obtain an amount of $ 150,000 plus expenses, or not to terminate and terminate the contract and follow it up to obtain the full amount .
■ In order to preserve the rights and funds of the Lebanese state, and to fulfill the principle of equality and contractual balance, the Ministry of Finance must grant the same right to terminate the contract in advance in the event that it is not possible to obtain information that allows the task to start. It should also be noted here that forensic auditing work usually allows for information request, obtaining documents and hearing statements from other parties related to the task, and this is not available and available in the present contract and clearly requires its moment.
Article 2 (c)
● The contract notes that the client (the Ministry of Finance) agrees that the fees do not include any withheld tax or any other taxes in Lebanon and that the customer (Alvarez & Marsal Company), to the extent that any such taxes are applied in Lebanon, is the one who bears it. It also allows for all payments owed to Alvarez & Marsal to be made without deduction or deduction to account for any taxes whatsoever.
■ The contract must clarify here whether the intention is to exempt Alvarez & Marsal from any tax liabilities and obligations, and in this case an important constitutional violation is recorded as Article 82 states that “A tax may not be modified or canceled except by law.” A second violation has been registered, represented by challenging the principle of equality before tax and public duties stipulated in both Paragraph (c) and Article 7 of the Lebanese Constitution, which makes it open to appeal before the Constitutional Council. A third violation of the territorial tax principle enshrined under Article 3 of the Income Tax Law (Legislative Decree No. 144 of 6/12/1959 and its amendments) or any tax treaty to avoid double taxation that Lebanon has signed with the country in which the company is registered or has established a head office (After selecting that state). In both cases, it is necessary to return to the Representative Council, as well as in the event that the Ministry of Finance decides to bear the burden and burden of taxes in place of the company. Whereas if this declaration resulted from the provisions of a tax treaty to avoid double taxation (here the agreement between Lebanon and the United Arab Emirates promulgated by Law No. 42 dated 3/1/1999 may be the most likely given that the signatory company has chosen a place of residence in Dubai, which suggests that it is registered there. ), Then it is required to clearly and definitively indicate this in the contract and obligate the company to prove its registration and subjection to tax in the Emirates in accordance with the provisions of Article 7 of the Treaty as well as Article 2 of the Code of Civil Procedure and Article 3 (2) of the Tax Procedures Law. Note that the two companies, “Oliver Wyman” and “KPMG”, did not benefit from the same preferential treatment.
Articles 5 and 7
● The contract places restrictions on the scope and ability to publish and disclose the report and limits it to specific cases, as in some cases it required the approval of the Alvarez & Marsal Company.
■ This is contrary to the spirit and objectives of the report and the laws in effect, especially in terms of publishing results in implementation of the principle of transparency and the Right to Information Law No. 28 of 10/02/2017, which states that “Every person, natural or legal, has the right to access the information and documents in Administration and access to it, in accordance with the provisions of this law, taking into account not to abuse the right. ” Included in this scope are public institutions, independent administrative bodies, and other public law persons (if we consider that they are not part of the exceptional: (i) the facts of the investigations before they are read in a public session, the secret trials, and the trials related to events and personal status; (ii) what affects From the financial and economic interests of the state and the integrity of the national currency). Under the same law, the administration is required to publish a ruling on its websites for all transactions whereby public funds in excess of 5 million Lebanese pounds are paid.
● This article noted an arbitration clause stipulating that any dispute or claim arising out of the contract or in relation to it be referred to the arbitration rules of the International Chamber of Commerce and to be settled accordingly.
■ Pursuant to Article 762 of the Code of Civil Procedure: “… the state and public law persons, regardless of the nature of the contract subject of the dispute, may resort to arbitration … However, the arbitration clause or the arbitration agreement is not enforceable in administrative contracts except after it is approved by a decree taken in The Council of Ministers based on the proposal of the competent minister with regard to the state or the guardianship authority with regard to legal persons from public law ». Was such a decree issued in the aforementioned particular?
Annex 1: (Scope of Work / Timeframe)
● This appendix provides for the report to be delivered to the client (Ministry of Finance) 10 weeks after the start-up decision (ie, after a maximum of four weeks according to Article 1 (b)).
■ This is illogical, impractical, and subjective and is completely inconsistent with the norms and examples in the world and similar cases. Forensic audits confined to a specific topic usually take several months as it focuses and checks every detail, stray and incoming, and not on the basis of samples, as is the case in regular accounting auditing.
* Attorney and lecturer in tax law and president of the Lebanese Association for Taxpayers’ Rights (ALDIC)
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