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Alvarez & Mersal made its decision and decided to officially inform the Lebanese state of its withdrawal from the criminal audit trail, after it became clear that the documents it obtained were insufficient to perform an audit that has the lowest credentials of credibility, and after it appears that the three-month period requested by Lebanon will not change the equation, that is. Thing.
It was clear that the company wanted to maintain its global reputation as a financial advisory company. He preferred to withdraw from the tumult before sinking for another three months in the dissolution of Lebanese politics and the intertwining of the interests of the authority with the centers of influence of the Lebanese financial system. In short, the adventure of the criminal audit is over. The country is on the brink of a bottomless hell, with the fall of the latest reforms requested by the IMF and other donors, after other reform conditions, such as the financial reform plan, Capital Control, judicial formations, the electrical plan, among others, fell in previous stages.
Irreproachable decision
From a legal point of view, there is nothing wrong with the company’s decision. Lebanon has no choice but to accept this decision. The contract stipulated from the outset that the Banque du Liban would have two weeks to fulfill the company’s requests, while the Finance Ministry would have two weeks to address any deficiencies in the documents obtained by the auditing firm. After these deadlines, the company is free to complete the audit or withdraw, while the contract stipulates that the company will receive an amount of $ 150,000 in fees, should it decide not to follow the audit path, due to lack of information in their possession. All these deadlines passed weeks ago, so the company was legally free of weapons, according to the contract that links it with the Ministry of Finance.
In fact, it can be said that the company essentially jeopardized its credibility and reputation, and gave in by being patient over the past period, and circumventing the deadlines stipulated in the contract, in an attempt to allow the Ministry of Finance to correct course. and enforce compliance by the Central Bank with the audit obligations. Therefore, it was unrealistic for anyone to expect an international company to engage in a game of buying time with Lebanon, knowing that the company would have incurred great reputational risks if it decided not to break the contract at this time, as this would place it in the category of companies that trade and barter. About the type of information that you will agree to take in the audit trail.
What was described about the Lebanese official position in the last hours did not go beyond the limits of the “surprise” of the company’s decision, after the Ministry of Finance officially requested the company to give it a period of three months , in order to obtain the documents and documents you require. However, those familiar with the way these types of companies operate know that the request from the Ministry of Finance was unrealistic from the beginning, especially since the company received no indication from Lebanon that it is possible to facilitate the course of the criminal audit or overcome existing obstacles. Additionally, this type of long-term document is rare in forensic avenues. Especially because it means giving the institution subject to the audit (the Banque du Liban in this case) the opportunity to negotiate the information it will provide, which means challenging the results of the audit itself. Knowing that, from the legal point of view, nothing allowed the Ministry of Finance to impose this term on the company, since the company delegation did not sign any annex modifying the terms of the previous contract to extend the deadline for submitting documents.
Towards the great fall
In practice, the first result of what happened in the course of the criminal scrutiny will be the elimination of any remaining opportunities that Lebanon might have to obtain external support, whether from the IMF or others. Knowing that the audit file of the Bank of Lebanon figures has today become a matter of life and death for the French, while the IMF delegation clearly informed the Lebanese delegation during previous negotiations that any support for Lebanon would be impossible without detailing the reasons for the accumulation of losses in the budgets of the Central Bank and commercial banks, and without specifying responsibilities clearly and explicitly. As for the failure to carry out this audit, it would mean that the Fund would repeat the scenario again and waste the money that would be awarded to Lebanon as part of any program to support the Fund. Considering that one of the reasons why the IMF Executive Board did not grant emergency aid to Lebanon after the port explosion was that the audit trail at the Bank of Lebanon was not completed up to that point, as further appears further on in the leaked records of the urgent meeting the Council held after the explosion.
The repercussions will not be limited to hampering any aid that Lebanon may receive during the next phase. Hindering Alvarez & Mersal’s work in the way it happened will practically challenge the credibility of the Lebanese state, and will prevent it from attracting other audit firms in the future, should the state want to relaunch the criminal audit trail again, as either in the Bank of Lebanon or in one of the state institutions. Other. Any reputable international forensic audit firm will not want to be involved in this type of process with Lebanon in the future, with the risks this will bring to its reputation and doubts about the success of the audit as a whole.
Corruption system
Riad Salameh would not have dared to refuse to cooperate in this way with the criminal scrutiny, despite the implications that this matter has for the country’s chances of emerging from the crisis, were it not for the fact that he was sure of the solidarity of a great camp next to him, from the House of Representatives, whose blocs did not take the initiative to overcome the obstacles AND the withdrawal of the excuses behind the Central Bank of Lebanon for non-cooperation, to the Ministry of Finance, which carefully formulated the flour contract that was filled with mines that could then be detonated, even the very pact that did not intervene to modify the contract from the beginning. Salameh knew from the beginning that the secrets in the possession of the Central Bank would prompt everyone to ensure that criminal scrutiny was abandoned, without making much effort, just as he knew that the intersection of interests between the owners of the financial system and the pillars of the political system was sufficient to overthrow all other reforms.
In conclusion, the dream of criminal examination has fallen and with it the hopes of depositors to know the destination of their dollars, which have vanished in the corridors of the Central Bank. No one will know the secrets of financial engineering, or the tricks of the extraordinary and expensive operations that have taken place in recent years, and no one will know the identity of those who managed to smuggle dollars at the height of the collapse at the expense of other depositors. There are secrets that will not be revealed. What we will witness in the next period will be nothing more than unproductive and proposed maneuvers, such as sending bills intended to allow criminal scrutiny, before these bills sleep in the drawers of the Finance and Budget Committee, as many projects have grown . Knowing that there are those who began to promote statements that justify the contempt for conducting this entire audit, as is the case of Representative Elie Ferzli, who now considers that the lifting of banking secrecy is enough to question the credibility of the banking system, as if the system banking to live its best days today. Simply put, the forensic project is highly unlikely to come to life, as the perpetrator will not seek to reveal their actions.
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