Auditing Lebanon’s central bank was a key condition of releasing billions of dollars in desperately needed donor funds.
Beirut, Lebanon – Lebanon’s Parliament has unanimously backed a concurrent audit of all state bodies including financial institutions, ministries, and independent funds, and said banking secrecy should not be a hindrance.
Parliament made the move on Friday after Lebanon’s central bank cited banking secrecy laws as the reason it declined to provide international auditor Alvarez & Marsal (A&M) with information to carry out an audit it began in September.
A&M pulled out of the audit earlier this month, citing the fact that it had not been provided with the information it requested.
Donor nations and the International Monetary Fund have said Lebanon must carry out an audit of its central bank to unlock billions of dollars in aid the country desperately needs to help remedy an unprecedented economic and financial crisis.
The crisis has seen the local currency lose some 80 percent of its value against the dollar since last year, leading poverty to soar.
President Michel Aoun said parliament’s decision was “an achievement for the Lebanese people who want to know who has wasted their money” and a positive indicator for the international community.
However, some analysts say the decision is of dubious legal standing, and the path to implementing audits on such a wide scale is unclear.
“The MPs are [enlarging the scope] of the forensic audit so much that it becomes impossible to implement,” Nizar Saghieh, director of the watchdog group Legal Agenda, said in a tweet.
Mike Azar, a senior financial analyst and expert on the Lebanese financial collapse said the decision was “no more than political posturing”.
“This ‘decision’ is meaningless. Until we see a proper work-stream being executed by a legally empowered and *credible* body, it’s meaningless,” he said in a tweet.
Meanwhile, Ibrahim Kanaan, the head of parliament’s finance and budget committee, told Al Jazeera after the vote that parliament’s decision was “binding” and it was “not merely a stance”.
He said the audit should begin with the central bank, because the cabinet had already approved an audit of the bank, and then work through other state institutions.
“The government should see how they want to do it … they need to bring in independent institutions to do the audits,” he said.
George Adwan, the head of parliament’s administration and justice committee, also characterised parliament’s move as a decision that would provide legal cover for any audit into any state body.
“Banking secrecy is no longer an excuse,” he said.
But Hadi Hobeish, a member of parliament with Prime Minister-Designate Saad Hariri’s Future Movement, told Al Jazeera that the decision had not lifted banking secrecy and was closer to a “stance” by parliament.
He said it would be up to individual ministries and state bodies to approve individual audits.
‘They have no choice’
Parliament was split between parties who said the audit should commence with the central bank and broaden from there – namely, Hezbollah, the Free Patriotic Movement and the Lebanese Forces – and parties that said an audit must cover all state bodies – the Future Movement, Amal Movement and the Progressive Socialist Party.
The latter three parties have held Lebanese ministries for the longest period following Lebanon’s civil war, which ended in 1990, and are thus seen by many critics as among the most responsible for the eye-watering levels of corruption in the country.
Nevertheless, Dan Azzi, the former CEO of a bank in Lebanon and an expert on Lebanon’s finances, told Al Jazeera he believes the country’s political class feels cornered into undertaking an audit.
“They have no choice because the international community has made it very clear they have to reform if they want money,” he said.
“It’s not that they’re necessarily nice guys. But sooner or later they’ll have to do it. They can choose to do it now, or they can wait till we run out of central bank reserves and sell our gold and the country’s collapse is complete.”