Lebanon hires US firm for central bank probe

Lebanese President Michel Aoun, center, heads the cabinet meeting, at the presidential palace, in Baabda, east of Beirut, Lebanon, Tuesday, July 21, 2020. Lebanon's government agreed Tuesday to hire a New York-based company to conduct a forensic audit of the country's central bank accounts to determine how massive amounts of money were spent in the nation plagued by corruption. (AP)
Short Url
Updated 22 July 2020
Follow

Lebanon hires US firm for central bank probe

  • Alvarez & Marsal forensic audit seeks answers to mounting finance crisis

BEIRUT: The Lebanese government has hired Alvarez & Marsal, a New York-based professional services firm, to carry out a forensic audit of central bank accounts since 2015 amid claims finances have been mismanaged in the corruption-plagued country.

Finance Minister Ghazi Wazni asked for a week to prepare documents to sign the contract for the audit, which could take between three and six months.

Lebanese President Michel Aoun has called for an audit since March, following the country’s first-ever default on a $1.2 billion eurobond payment. The process will attempt to identify the cause of the financial and monetary crisis and the level of foreign exchange reserves.

A Ministry of Finance source told Arab News that the finance minister “submitted a list of six companies so the Cabinet can choose one to conduct the forensic audit, after refusing to contract Kroll because of its alleged links with Israel, with whom Lebanon is at war.”

The source added: “The Cabinet voted for Alvarez & Marsal, although the cost of contracting the firm is higher than the cost of contracting Kroll. It will have a crew in Lebanon consisting of two directors and nine associates at a cost of $2.2 million, while Kroll’s financial offer amounted to only half a million.”

The Shiite political duo of Hezbollah and the Amal movement voted against “any company that will conduct the audit if it has Israeli links or has offices in Lebanon, for fear of sensitive information falling into the hands of hostile parties,” a meeting heard.

Questions have been raised about Alvarez & Marsal’s hiring ahead of Kroll if all six firms under consideration have links with Israel. The issue was put forward by Justice Minister Marie-Claude Najm during the Cabinet meeting. Prime Minister Hassan Diab said Alvarez & Marsal was the “most suitable,” without providing further details.

Alvarez & Marsal, founded in 1983, offers specialized advisory services to companies, investors and government agencies around the world.

Director-General of Administrative and Financial Affairs and tax expert Dr. Ahmed Al-Lakkis said: “If contracted, Alvarez & Marsal will audit the accounts of the central bank since 2015. But the Parliament’s finance and budget committee has asked in a 2017 report about the fate of cutting off calculations for the budgets since 1997. There has been $27 billion spent with no record and if the auditing company wants to go deeper into the matter, it can go back in its audit as far as 1997.”

When asked if the audit would face political and legal obstacles, Al-Lakkis said: “Of course, legal amendments are needed in Parliament, such as the Bank Secrecy Code and the Code of Money and Credit, which require the powers of the governor of the Bank of Lebanon and the Special Investigative Authority of the Bank of Lebanon.”

The possibility of the audit expanding to include all state institutions, administrations and ministries since the Taif Agreement was also voiced in Parliament.

However, Al-Lakkis said: “This can be achieved during the audit process because all payments made by state institutions go through the central bank so there is no need to audit all the institutions.”

Lebanon’s political class fears the forensic audit because it will implicate political parties who have shared power since 1997.

The Ministry of Finance source said: “The central bank’s governor, who is not currently present in Lebanon, can prevent the auditing company from accessing information at the central bank by invoking the Code of Money and Credit, and the Bank Secrecy Code. The amendment of these laws will require an unspecified time in Parliament.”


International aid groups grapple with what Israel’s ban will mean for their work in Gaza

Updated 1 sec ago
Follow

International aid groups grapple with what Israel’s ban will mean for their work in Gaza

TEL AVIV: Israel’s decision to revoke the licenses of more than three dozen humanitarian organizations this week has aid groups scrambling to grapple with what this means for their operations in Gaza and their ability to help tens of thousands of struggling Palestinians.
The 37 groups represent some of the most prominent of the more than 100 independent nongovernmental organizations working in Gaza, alongside United Nations agencies. Those banned include Doctors Without Borders, the Norwegian Refugee Council, Oxfam and Medical Aid for Palestinians.
The groups do everything from providing tents and water to supporting clinics and medical facilities. The overall impact, however, remains unclear.
The most immediate impact of the license revocation is that Israel will no longer allow the groups to bring supplies into the Gaza Strip or send international staffers into the territory. Israel says all suspended groups have to halt their operations by March 1.
Some groups have already been barred from bringing in aid. The Norwegian Refugee Council, for example, said it has not been allowed to bring in supplies in 10 months, leaving it distributing tents and aid brought in by other groups.
Israel says the banned groups make up only a small part of aid operations in Gaza.
But aid officials say they fulfill crucial specific functions. In a joint statement Tuesday, the UN and leading NGOs said the organizations that are still licensed by Israel “are nowhere near the number required just to meet immediate and basic needs” in Gaza.
The ban further strains aid operations even as Gaza’s over 2 million Palestinians still face a humanitarian crisis more than 12 weeks into a ceasefire. The UN says that although famine has been staved off, more than a quarter of families still eat only one meal a day and food prices remain out of reach for many; more than 1 million people need better tents as winter storms lash the territory.
Why were their licenses revoked?
Earlier this year, Israel introduced strict new registration requirements for aid agencies working in Gaza. Most notably, it required groups to provide the names and personal details of local and international staff and said it would ban groups for a long list of criticisms of Israel.
The registration process is overseen by Israel’s Ministry for Diaspora Affairs and Combating Antisemitism, led by a far-right member of the ruling Likud party.
Israel says the rules aim to prevent Hamas and other militants from infiltrating the groups, something it has said was happening throughout the 2-year-old war. The UN, which leads the massive aid program in Gaza, and independent groups deny the allegations and Israeli claims of major diversion of aid supplies by Hamas.
Aid organizations say they did not comply, in part, because they feared that handing over staff information could endanger them. More than 500 aid workers have been killed in Gaza during the war, according to the United Nations.
Israel denies targeting aid workers. But the group say Israel has been vague about how it would use the data.
The groups also said Israel was vague about how it would use the data.
“Demanding staff lists as a condition for access to territory is an outrageous overreach,” Doctors Without Borders, known by its French acronym MSF, said Friday. It said Israeli officials had refused its attempts to find alternatives.
A December report on MSF issued by an Israeli government team recommended rejection of the group’s license. It pointed primarily to statements by the group criticizing Israel, including referring to its campaign in Gaza as genocide and calling its monthslong ban on food entering the territory earlier this year as “a starvation tactic.” It said the statements violated neutrality and constituted “delegitimization of Israel.”
The report also repeated claims that an MSF employee killed in by an Israeli airstrike in 2024 was an operative with the Islamic Jihad militant group. That, it said, suggested MSF “maintains connections with a terrorist group.”
MSF on Friday denied the allegations, saying it would “never knowingly employ anyone involved in military activities.” It said that its statements cited by Israel simply described the destruction its teams witnessed in Gaza.
“The fault lies with those committing these atrocities, not with those who speak of them,” it said.
Aid groups have a week from Dec. 31 to appeal the process.
Medical services could see biggest impact
Independent NGOs play a major role in propping up Gaza’s health sector, devastated by two years of Israeli bombardment and restrictions on supplies.
MSF said Israel’s decision would have a catastrophic impact on its work in Gaza, where it provides funding and international staff for six hospitals as well as running two field hospitals and eight primary health centers, clinics and medical points. It also runs two of Gaza’s five stabilization centers helping children with severe malnutrition.
Its teams treated 100,000 trauma cases, performed surgeries on 10,000 patients and handled a third of Gaza’s births, the group says. It has 60 international staffers in the West Bank and Gaza and more than 1,200 local staff — most medical professionals.
Since the ceasefire began in early October, MSF has brought in about 7 percent of the 2,239 tons (2,032 metric tons) of medical supplies that Israel has allowed into Gaza, according to a UN tracking dashboard. That makes it the largest provider of medical supplies after UN agencies and the Red Cross, according to the dashboard.
Medecins du Monde, another group whose license is being halted, runs another four primary health clinics.
Overburdened Palestinian staff
Aid groups say the most immediate impact will likely be the inability to send international staff into Gaza.
Foreign staff provide key technical expertise and emotional support for their Palestinian colleagues.
“Having international presence in Gaza is a morale booster for our staff who are already feeling isolated,” said Shaina Low, communications adviser for the Norwegian Refugee Council, which is one of the main NGOs providing shelter supplies and fresh water to displaced people.
NRC has roughly 30 international staff who rotate in and out of Gaza working alongside some 70 Palestinians.
While any operations by the 37 groups in the West Bank will likely remain open, those with offices in east Jerusalem, which Israel considers its territory, might have to close.
Halt on supplies
Many of the 37 groups already had been blocked from bringing supplies into Gaza since March, said Bushra Khalidi, Oxfam’s policy lead for Israel and the occupied Palestinian territories.
What changes with the formal license revocation is “that these practices are now formalized, giving Israel full impunity to restrict operations and shut out organizations it disagrees with,” she said.
Some of the groups have turned to buying supplies within Gaza rather than bringing them in, but that is slower and more expensive, she said. Other groups dug into reserve stocks, pared down distribution and had to work with broken or heavily repaired equipment because they couldn’t bring in new ones.
Amed Khan, an American humanitarian philanthropist who has been privately donating medicine and emergency nutrition for children to Gaza, said the impact extends beyond the aid groups.
He relies on NGOs to receive and distribute the supplies, but the fewer groups that Israel approves, the harder it is to find one.
“It’s death by bureaucracy,” he said.