His proposal is permanent, while the suspension of bank secrecy is temporary … Canaan to Al-Nahar: a signal to achieve reform and restore confidence in Lebanon

Since the House of Representatives passed the Bank Secrecy Act in 1956, identical at the time to Swiss bank secrecy laws, many lawsuits have been filed to cancel or amend it, but the benefits to Lebanon in general and the banking sector in particular protected it from cancellation or modification.

However, when the problem of the ability of the international auditing company “Alvarez & Marsal” to access some accounts of the Banque du Liban was recently raised due to its compliance with the bank secrecy law, and under pressure from opinion public and the inability of Parliament and the political class to evade criminal scrutiny, some blocks rushed to present proposals. Laws to amend it, until the House of Representatives passed a law to lift bank secrecy for one year by merging 4 proposals, the most notable of which were MPs Ibrahim Kanaan and George Adwan.

If some consider that the Lebanese state has paved the way for this to the risk of losing the banking sector, the most important advantage it has enjoyed during the 64 years in which Lebanese banks have survived, expanded, spread and increased their deposits of Arab investments and Lebanese thanks to strict compliance with the provisions of this law and the protection of their depositors, but the bet tinged with doubts remains at the end. Investigation and audit one year before the end of the effects of the suspension of the Banking Secrecy Law. The biggest precaution is that the Lebanese authorities continue to behave populistically as usual, leading to the extension of the effects of this law after one year under the pretext of completing the scrutiny and investigation in departments and ministries other than the Bank of Lebanon, thus achieving the historical rule in Lebanon that all temporary becomes permanent, even at the expense of the state and the economy.

The Chamber of Deputies approved the suspension of the bank secrecy law for one year. However, to address the issue of criminal auditing, or more correctly to call it “focused accounting auditing”, requires placing it within the legal framework, otherwise it will become an unattractive populism, if not misleading, in contradiction with the principle of rule of law and the establishment of an institutional state.

So what does the law say? In the private sector, as in the public sector, the law requires the preservation of professional secrecy, that is, on the information to which an employee or worker of the private sector belongs by virtue of their work, since they may not disclose it unless Your employer allows it (in the private sector), or Your ministry is in the public sector. This prohibition applies to the employee during and after service.

The Banking Secrecy Law issued in 1956 came to regulate one of the branches of professional secrecy, which is the secrecy of bank client accounts. The principle is professional secrecy, and bank secrecy is one of its branches.

In the law, just as there is no punishment without a text, there is also no authority without a text. If the law stipulates the possibility of granting permission to the employee who wishes to publish the information he learned during his service, then it did not stipulate the authority to give him an order from his superiors, regardless of his affairs, to publish this information or assign it to another reference except another employee to take his place on the occasion of the dismissal. Take care of him or transfer him to another workplace.

From these starting points, the approach of the “Strong Lebanon Bloc” on the subject of criminal audit, which the government decided to carry out with the Banque du Liban in accordance with current Lebanese laws, collided with the invocation by of the BDL of the provisions of article 151 of the Currency and Credit Law, which deals with both professional secrecy and banking secrecy. The government should have dealt with this matter even if it is not convinced of it, before signing the contract and reaching the deadlock.

Therefore, the call to modify the provisions that, according to the Banque du Liban, hindered the realization of the criminal audit, which is why the Resurrection took place and not one of the fanatics of populism, while they were silent on the approval of the law to lift secrecy in Parliament to remove obstacles through criminal audit at the Banque du Liban, Parliament’s measure, despite all the skepticism that prevailed in the positions of some for a long time, according to MP Ibrahim Kanaan to Al-Nahar: “A signal to achieve reform and restore international and local confidence in Lebanon and the beginning of the agreed implementation in the body of the internationally supported French initiative. But of course it was the best.” Do not tie the mission to a period of time or suspend only confidentiality, but amend it permanently, not temporarily, so that we do not fall again in the future with the same problems that we face today.

The text of the law approved by parliament follows: “The banking secrecy law promulgated on 03/09/1956 and all the articles that refer to it are suspended for a period of one year from the date of publication of this law in everything related to financial audit and criminal investigation operations decided and decided by the government on bank accounts. The Central Bank, regardless of the nature of these accounts, ministries, departments, public institutions, bodies, councils and funds, as stated in the decision of Parliament, and for the purposes of this audit and exclusively for the interest of those responsible. The effect of the suspension includes all the accounts that enter into audits, while the provisions of the Banking Secrecy Law remain in force in Everything else. ”

Regarding Representative Kanaan’s suggestion for the “Strong Lebanon Block”, it came in a single article: Add to Article Two of the Bank Secrecy Law issued on September 3, 1956, the fifth paragraph that reads:

Fifth Paragraph: Workers of public administrations, public institutions and other public legal entities and joint ventures may not invoke bank secrecy and professional secrecy, in the event that the person with legal jurisdiction decides to carry out an accounting audit focused on the aforementioned administrations , institutions, legal persons or joint ventures, and their managers. The authorities grant permission to interested banks to lift the confidentiality of their accounts, and to competent workers to submit the required documents and information, including information stored electronically.

From the text of the two proposals, it is clear that the approved proposal is temporary and will be enforced for a period of one year from the date of publication of the law in the Official Gazette, based on the proposal of Representative Kanaan, while Representative Kanaan’s proposal is permanent legislation that is in effect at all times from the date of publication of the law.

Although the focus was on the audit at the Banque du Liban, Kanaan’s proposal went on to include public administrations, public institutions and other public legal entities and joint ventures, that is, practically the entire public sector and joint ventures between the public sector and private, including joint ventures that will be established in application of the law of association between the public and private sectors.

It includes both bank secrecy and professional secrecy, so bank secrecy must be removed from accounts and the delivery of the required information and documents is ordered, including those kept electronically.

Considering that the law, which was approved by the Council, was launched to address the issue of the criminal audit that the government decided to carry out at the Banque du Liban by Alvarez & Marsal, which turns the bill into a mere legal arrangement For a specific incident, MP Kanaan justified the need to uncover the areas of rampant waste and corruption in the country and identify those responsible. And hold them accountable, adopting the various means available for this disclosure, especially modern ones such as Forensic Auditing.

Note that compelling reasons are an integral part of the bill and are mentioned in case of ambiguity in the text.

It is striking that the new law is a temporary and transitory text whose effects end with the end of its validity (a period of one year), or with the end of the purpose of its status (the criminal audit with the Banque du Liban de Alvarez & Marsal Company) in case the task is completed before the end of the year. Regarding the Canaán Representative’s proposal, it is a permanent legislation that allows overcoming professional secrecy and bank secrecy every time the competent authority decides to carry out an accounting audit focused on any of the public administrations, public institutions, people with public intent or joint ventures, without the need to modify the current texts by proposing a law similar to the proposal of Congressman George Adwan.