Ya Libnan

Lebanon agreed to hire Alvarez & Marsal to audit its central bank

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BEIRUT, July 21 – Lebanon’s government agreed on Tuesday to hire turnaround specialist Alvarez & Marsal to conduct a forensic audit of the central bank as it grapples with a financial meltdown. 

File photo: A Lebanese protester launches a bottle bomb toward the entrance of a bank in the southern Lebanese city of Sidon late on April 29, 2020, as anger over a spiralling economic crisis in the country re-energised a months-old anti-government movement in defiance of a coronavirus lockdown. – Clashes broke out between protesters and the Lebanese army , hours after the under-fire central bank chief blamed a lack of government reforms for a spiralling economic crisis that has sparked demonstrations. A plummeting currency and fast-rising prices have reignited protests that saw one man killed in the northern city of Tripoli after being struck by a bullet fired by a soldier in clashes earlier this week. (Photo by Mahmoud ZAYYAT / AFP) (Photo by MAHMOUD ZAYYAT/AFP via Getty Images)

Prime Minister Hassan Diab told the cabinet the audit would “represent a drastic transformation on the path to uncovering what happened at the financial level in terms of waste and theft”. 

Ministers also agreed on KPMG and Oliver Wyman for a financial audit, the presidential palace said after the cabinet met there. 

The announcement comes as talks between the government and the International Monetary Fund have failed to make progress since they started in mid-May. Two leading members of the Lebanese government team in talks with the IMF resigned in recent weeks over politicians’ attempts to downplay losses at the central bank.

IMF talks have been bogged down by a row over the scale of financial losses that have embroiled the government, the central bank, commercial banks and MPs from the dominant political parties. 

Lebanon’s financial crisis has slashed the value of its currency since late last year and sent inflation soaring as already critical foreign reserves dwindle. Savers have been frozen out of their dollar deposits as the greenback grows ever more scarce. 

Alvarez & Marsal , a New York , USA based firm was hired to conduct a forensic audit of the central bank of Lebanon BDL .

After the state defaulted on its hefty foreign currency debt and launched restructuring talks with creditors in March, Diab said there would be an audit of the central bank’s accounts in a bid to show transparency. 

Central Bank Governor Riad Salameh . Salameh blames the corrupt Lebanese governments for the financial crisis .” I didn’t spend the money” he was quoted as saying

In an attack on central bank governor Riad Salameh’s performance in April, Diab cast him as responsible for the currency crash, mounting losses in the banking sector and lack of transparency. 

Salameh defended the central bank’s practices and said it did not hide information. He has deflected the blame back towards successive Lebanese governments for failing to enact reforms or sort out public finances.

REUTERS

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