As expected, the forensic audit conducted by Alvarez & Marsal, has brought to light a history of misconduct at Lebanon’s central bank. This long-awaited audit report, fulfilling a crucial international demand, has laid bare a $111 million in “illegitimate commissions” linked to the former governor of the central bank.
LIMS highlighted a stark revelation of the audit’s findings pertaining to Lebanon’s monetary trajectory. Until 2015, the central bank boasted a surplus of $7.2 billion USD. However, the implementation of financial engineering maneuvers in 2015 culminated in a staggering deficit of $50.7 billion USD by 2020. When domestic foreign-currency assets are excluded from the equation, the losses mount to a staggering $71.9 billion USD. Notably, a significant portion of these funds was borrowed by the Lebanese government from the central bank, only to be squandered on ill-fated projects, such as the beleaguered electricity sector. The remainder flowed into the coffers of banks, primarily in the form of premiums and interest payments, and to the Ministry of Finance in the form of profit.
However, LIMS pointed out that the focus on the former governor’s commission stems from the primary objective of the audit—not to track the entire path of misappropriated funds but rather to compile evidence that can be wielded in legal proceedings against the central bank’s governor. The audit has unraveled a web of dubious accounting practices employed by the ex-governor to obfuscate these colossal losses. It also casts a light on the substantial discretionary powers wielded by the governor, underscored by an alarming absence of transparency, scrutiny, and accountability.
Given this financial labyrinth, the imperative now beckons for Lebanon to expand the purview of the forensic audit. A holistic inquiry should encompass the Ministry of Finance, which initially borrowed these substantial sums from the central bank, as well as all ministries that oversaw the allocation of these funds. Prominently among them stands the Ministry of Energy and Water.
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