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)
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Updated 22 July 2020
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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.”


Syria moves military reinforcements east of Aleppo after telling Kurds to withdraw

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Syria moves military reinforcements east of Aleppo after telling Kurds to withdraw

ALEPPO: Syria’s army was moving reinforcements east of Aleppo city on Wednesday, a day after it told Kurdish forces to withdraw from the area following deadly clashes last week.
The deployment comes as Syria’s Islamist-led government seeks to extend its authority across the country, but progress has stalled on integrating the Kurds’ de facto autonomous administration and forces into the central government under a deal reached in March.
The United States, which for years has supported Kurdish fighters but also backs Syria’s new authorities, urged all parties to “avoid actions that could further escalate tensions” in a statement by the US military’s Central Command chief Admiral Brad Cooper.
On Tuesday, Syrian state television published an army statement with a map declaring a large area east of Aleppo city a “closed military zone” and said “all armed groups in this area must withdraw to east of the Euphrates” River.
The area, controlled by Kurdish forces, extends from near Deir Hafer, around 50 kilometers (30 miles) from Aleppo, to the Euphrates about 30 kilometers further east, as well as toward the south.
State news agency SANA published images on Wednesday showing military reinforcements en route from the coastal province of Latakia, while a military source on the ground, requesting anonymity, said reinforcements were arriving from both Latakia and the Damascus region.
Both sides reported limited skirmishes overnight.
An AFP correspondent on the outskirts of Deir Hafer reported hearing intermittent artillery shelling on Wednesday, which the military source said was due to government targeting of positions belonging to the US-backed, Kurdish-led Syrian Democratic Forces.

’Declaration of war’

The SDF controls swathes of the country’s oil-rich north and northeast, much of which it captured during Syria’s civil war and the fight against the Daesh group.
On Monday, Syria accused the SDF of sending reinforcements to Deir Hafer and said it would send its own personnel there in response.
Kurdish forces on Tuesday denied any build-up of their personnel and accused the government of attacking the town, while state television said SDF sniper fire there killed one person.
Cooper urged “a durable diplomatic resolution through dialogue.”
Elham Ahmad, a senior official in the Kurdish administration, said that government forces were “preparing themselves for another attack.”
“The real intention is a full-scale attack” against Kurdish-held areas, she told an online press conference, accusing the government of having made a “declaration of war” and breaking the March agreement on integrating Kurdish forces.
Syria’s government took full control of Aleppo city over the weekend after capturing its Kurdish-majority Sheikh Maqsud and Ashrafiyeh neighborhoods and evacuating fighters there to Kurdish-controlled areas in the northeast.
Both sides traded blame over who started the violence last week that killed dozens of people and displaced tens of thousands.

PKK, Turkiye

On Tuesday in Qamishli, the main Kurdish city in the country’s northeast, thousands of people demonstrated against the Aleppo violence, with some burning pictures of Syrian President Ahmed Al-Sharaa, an AFP correspondent said, while shops were shut in a general strike.
Some protesters carried Kurdish flags and banners in support of the SDF.
“Leave, Jolani!” they shouted, referring to President Sharaa by his former nom de guerre, Abu Mohammed Al-Jolani.
“This government has not honored its commitments toward any Syrians,” said cafe owner Joudi Ali.
Other protesters burned portraits of Turkish Foreign Minister Hakan Fidan, whose country has lauded the Syrian government’s Aleppo operation “against terrorist organizations.”
Turkiye has long been hostile to the SDF, seeing it as an extension of the Kurdistan Workers’ Party (PKK) and a major threat along its southern border.
Last year, the PKK announced an end to its long-running armed struggle against the Turkish state and began destroying its weapons, but Ankara has insisted that the move include armed Kurdish groups in Syria.
On Tuesday, the PKK called the “attack on the Kurdish neighborhoods in Aleppo” an attempt to sabotage peace efforts between it and Ankara.
A day earlier, Ankara’s ruling party levelled the same accusation against Kurdish fighters.
The Britain-based Syrian Observatory for Human Rights reported 45 civilians and 60 soldiers and fighters from both sides killed in the Aleppo violence.
Aleppo civil defense official Faysal Mohammad said Tuesday that 50 bodies had been recovered from the Kurdish-majority neighborhoods after the fighting.