President of the Republic, General Michel Aoun, addressed the Parliament in a letter via Parliament Speaker, Nabih Berri, calling on MPs to “cooperate with the executive authority in order to enable the state to conduct a forensic accounting audit of Central Bank accounts, and to withdraw this audit in accordance with all its international standards, to the rest of the state’s public facilities in order to achieve the required reform and aid programs that Lebanon needs in its current suffocating situation, and in order for Lebanon not to become, God forbid, a rogue or failed state in the eyes of the international community, with the serious repercussions resulting from the fall of the Lebanese state into the prohibition of not being able to disclose or seek accountability, after identifying the sources of financial waste and corruption which spent private and public funds”.
The President demanded that this letter be discussed in the Parliament according to rules and regulations, and to take the position, procedure or decision regarding it, pointing to the need for cooperation with the executive authority “Which does not prevent the conduct of business from taking appropriate decisions when it is urgently necessary”.
In the letter, President Aoun also presented the stages that were passed by the approval of forensic accounting audit since last 24th of March, and the decisions taken by the Council of Ministers in this regard, leading to a contract with Alvarez and Marsal company to carry-out the task of forensic audit in implementation of the Cabinet decision. The President also highlighted the obstacles which arose preventing the company from carrying out its tasks, especially the issue of bank secrecy, and the reluctance to deliver the required documents and information despite the legal protection that was available for this delivery, up to the point of the company’s request to terminate the contract on 20/11/2020.
In addition, President Aoun considered what happened a “serious setback to the logic of the state and the interests of the Lebanese, who are suffering from monetary, economic, social and stifling inherited, reproductive and aggravating crises, including the Corona pandemic and Beirut Port explosion”.
The following is the text of President Aoun’s message to the House of Representatives, via Parliament Speaker Nabih Berri:
Letter addressed to Parliament:
Through Speaker of the House of Representatives,
Mr. Nabih Berri, the respected
Topic: Forensic Accounting Auditing of Central Bank accounts
Reference: – Paragraph “E” of the Introduction to the Constitution
– Article 53 (Paragraph 10) of the Constitution.
– Article 145 of the Parliament’s Internal Law.
After salute to the Presidency of the Parliament and its respected members,
And since Paragraph E of the Introduction to the Constitution, stating that the system is based on the principle of separation of authorities, their balance and cooperation, has established a linkage in this principle, literally derived from the National Accord Document, between separation, balance and cooperation,
Pursuant to Article 53 (Paragraph 10) of the Constitution and Article 145 of the Parliament’s Internal Laws,
We address your honorable Council, through its Speaker, with the following message of utmost necessity and importance, in order to take the appropriate position, action or decision regarding its topic:
-On 24/3/2020, the Council of Ministers took the decision to assign the Finance Minister to take the necessary measures with the Central Bank, and relevant authorities, with the aim to carry-out a focused accounting audit process to clarify the actual reasons which led to the financial and monetary situation to its current stage, in addition to indicating the exact figures in the Central Bank’s budget, profit and loss account, and the level of reserves available in foreign currencies, and to submit, resulting from the above, a report to the Cabinet within a month from its date (Resolution No.3 of 26/3/2020).
-On 28/4/2020, and within the framework of implementing Cabinet Decision No.3 on 26/3/2020, the Council of Ministers decided, pursuant to Article 12 of Article 147 of the Public Accounting Law, approving the permission for the Finance Minister to conclude a consensual agreement with Kroll company, to conduct the forensic audit, in addition to KPMG and Oliver Wyman, the first to undertake the financial audit mission and the second to coordinate the course of this audit as well as conduct financial and banking analyses, in principle (Decision No.2 of 28/4/2020).
-On 5/5/2020, I chaired a national financial meeting at the Presidential Palace to present the financial recovery plan. In my introductory speech, I emphasized the need to achieve transparency through financial audit.
-On 21/7/2020, the Council of Ministers decided to approve the proposal of the Finance Minister to seek the assistance of Alvarez &Marsal to carry-out the task of forensic audit, in implementation of Cabinet Resolution No.3 of 26/3/2020 (aforementioned), provided that the Minister submits a draft contract to the Cabinet for final approval of its clauses within a maximum period of one week from its issuance date (Decision No.1 of 21/7/2020).
-On 28/7/2020, the Council of Ministers took a decision approving to authorize the Minister of Finance to do the following:
First: To sign the two contracts with KPMG and Oliver Wyman, after taking into account the comments of the Legislation and Consultation Commission.
Second: To sign the contract with Alvarez & Marsal, according to the conditions presented by the Minister at the session, and after taking into account the comments of the Legislation and Consultation Commission, which it will make and to which the draft should be presented to (Decision No. 2 of 28/7/2020).
-On 13/8/2020, the Legislation and Consultation Commission expressed its justified opinion on the draft contract to be signed between the Lebanese State and Alvarez & Marsal Middle East LTD to carry out a forensic Audit with the Central Bank, where it indicated the opportunity for the Commission to actively participate in the contract implementation phases , where it indicated the opportunity for the Commission to actively participate in the contract implementation phases. It is the independent legal advisor to the state, and within the committee that the Minister of Finance will form and referred to in the contract, that participation will have “Benefit in terms of clarifying the extent to which the Central Bank may legally hand over or withhold information to the company”, according to the aforementioned opinion (The Commission had what it desired in this regard by informing the Minister of Finance, the President of the Commission, in his letter dated 21/9/2020 that it had been appointed as a member of the committee responsible for following up the performance of the team of Alvarez & Marsal and monitoring this performance). The Commission also referred to a series of notes on the draft of the aforementioned contract that have nothing to do with the inadmissibility of conducting a forensic accounting audit of the Central Bank accounts and the relevant authorities, on the contrary, with the emphasis that the current contract does not present a problem in terms of the issue of business conduct, given that the Minister of Finance implements Cabinet Resolution No. 2 dated 28/7/2020 issued before the resignation of the Government and which is required to be implemented even after its resignation (Consultation No. 649/2020 on 8/13/2020).
-On 1/9/2020, the Minister of Finance signed the focused accounting audit contract with Alvarez & Marsal Middle East LTD. The contract included some of the Legislative and Consultation Commission’s notes as a result of negotiating with the company, specific timetables for the audit stages, and placed financial burdens on the state.
– However, the forensic audit company was unable to start its work preventing the commencement date from taking effect, which is considered a firm basis for the obligations that the company mentioned in the contract undertook to carry out its mission according to its terms, and the reason is the failure of the Finance Ministry in providing documents and information required from the audit company according to what is shown in the organized schedule of the aforementioned company and notified by the Minister of Finance. This is based on an explanation given by the Governor of the Central Bank of legal texts in force relating to professional secrecy and banking secrecy.
-On 22/10/2020, and at the request of the Minister of Finance, included in his letter No. 3649 / p.1 on 20/10/2020, with regard to defining the concept of bank secrecy in accordance with the Law of Bank Secrecy issued on September 3, 1956 and the Law of Money and Credit, and the extent of the correlation of the work required to be done (and what is meant by forensic accounting audit of the accounts of the Central Bank and its activities, according to what was stated in the book of the Minister of Finance), the Commission refuted the legal arguments against the scrutiny required by the Council of Ministers, and indicated, with detailed explanation, that this Cabinet decision related to conducting a Forensic audit of the BDL accounts is, based on Article 65 of the Constitution, which entrusted the Council of Ministers with drawing up the general state policy in all areas and taking the necessary decisions to implement them, and in the current case the monetary fiscal policy in the framework of combating corruption and stating the fate of state funds and everything related to the task assigned to the forensic auditing company, what makes it a binding decision for everyone, especially those concerned with its implementation, including “Undoubtedly” the governance of the Central Bank and its affiliated or associated agencies or its facility, and that the detection of any violations, or crimes that harm the economy and cash requires enabling the forensic auditing company, which has contracted with the state to carry out its missions, by handing over the documents and information required of it, with the assurance that banking secrecy does not include bank violations and financial crimes committed in money management by banking institutions including “Undoubtedly” the Central Bank, which is the public sector bank, otherwise the legislator would have intended to protect the ordinary crimes that banks may commit in their practices under the guise of secrecy and not only bank clients, bearing in mind that the obligation to maintain professional secrecy and banking secrecy is a public interest. “Intérêt public du secret professionnel” falls before the duty to report crimes, which is a general public interest, and the Commission based its detailed opinion on previous consultations and legal texts and principles that it referred to with complete accuracy.
-And since the continued reluctance to deliver the documents and data required to perform the task of forensic accounting auditing in the accounts BDL, despite the legal protection that was provided for this handover, but considering it as a duty for those who are responsible for the release of these documents and information, i.e. the Governance of the Central Bank, led to the inability of Alvarez & Marsal to start its contractual mission, and it was previously requested by the Minister of Finance for an additional period of three months to provide it with these documents and information, which prompted it to direct a letter to the Minister of Finance on 20/11/2020 informing of the termination of contract pursuant to Article 3 thereof due to the failure to provide it with the documents and information required to carry out its mission, especially that there is a “lack of certainty” that these documents and information will be available to the company during the additional three-month period referred to.
-On the same date, that is, November 20, 2020, the Minister of Finance sent a clarification letter and inquiry to the forensic audit company, pledging to preserve its contractual financial rights.
-On 23/11/2020, the audit company confirmed, in a letter addressed to the Minister of Finance, its decision to terminate the contract for the reasons stated in its letter on 20/11/2020, and demanded to pay the sum contractual allowance required upon termination of the contract.
And since what happened, with all its details, contents and meaning constitutes a serious setback to the logic of the state and the interests of the Lebanese who are suffering from monetary, economic, social and stifling crises, inherited reproductive and aggravated by the tragic events which afflicted us, especially Corona pandemic, which swept the world and didn’t spare us, and the Beirut Port explosion on August 4, 2020. But more than that, this dangerous setback prevented the Lebanese, who are sovereign and the source of all authorities, from knowing who wasted their money, and eyes were closed on who was responsible for the interests of the people, and we are in the forefront, to identify the sources of waste and perpetrators at all levels, pursue them and recover all looted funds, with the obligation of transparency in managing public funds without any protection or immunity whatsoever,
And since the worst is that the forensic audit at the Central Bank has also become a prerequisite for the Lebanese state’s negotiation with the International Monetary Fund, and one of the most prominent items of international initiatives for rescue and reform in Lebanon, most notably the French initiative, which makes it the key to enter the rest of reform steps and thus aid programs which we urgently need in order to get Lebanon and the Lebanese out of the intensified suffocating crisis,
And since the goal of every criminal, anatomical or focused accounting audit, according to the international definition, is to uncover embezzlement, forgery and plundering public funds, recovering looted or laundered funds and holding perpetrators accountable, relying on conclusive material account evidence which goes beyond ordinary financial or accounting auditing to criminal description, for moving public funds from sources to destinations, and on the basis of the fact that there is a gap which is causes are unknown in Central Bank accounts, so that this forensic audit becomes an urgent need for the Lebanese state to find out the real causes of financial and monetary collapse, so, if it occurs according to the rules, as an approach that is adopted to be generalized to all other state ministries, departments, institutions and bodies, and funds, then this will make forensic audit a pioneering approach in our public life,
And since reform is an indivisible whole, and I have made it the title of my era, synonymous with political and security stability and inseparable with it, I will not be satisfied with succumbing to any known or hidden pressure, to abandon it or reduce its requirements, because this reform is in our time in particular, ensuring that the structure of the state will not fall and that the people will not fall into a state of absolute despair as a result of the loss of their money and a serious decline in their ability to live a decent life, which would overthrow the stability, security and financial position of the state, thus becoming a structural and entity danger, which no one will survive its repercussions.
And since the loss of confidence in the state, its authorities and institutions is not confined to the interior only, but becomes a necessity for the international community, and the signs of this international reaction have begun to loom on our horizons in a visible and non-hidden way.
From all these principles, we address to you, Your Excellency, the Speaker of Parliament, with this letter to discuss it in the honorable Parliament in accordance with the principles and take a position, action or decision regarding it, which calls for cooperation with the executive authority that does not prevent the conduct of business from taking appropriate decisions when urgent need, in order to enable the state to conduct a forensic accounting audit in the accounts of the Central Bank and withdrawing this audit, in accordance with all international standards, to all public facilities of the state, in order to achieve the required reform and aid programs that Lebanon needs in its current and suffocating situation, and so that Lebanon does not, God forbid, become one of the rogue or failed states in the eyes of the international community, with the serious repercussions resulting from the Lebanese state’s fall in the ban on being unable to disclose, after identifying the sources of financial waste and corruption that spent both private and public funds.
General Michel Aoun
President of the Lebanese Republic”.
President Aoun met the Ambassador of the Czech Republic to Lebanon, Michaela Fronkova, today at Baabda Palace, on a farewell visit to mark the end of her diplomatic tasks in Lebanon.
The President thanked Ambassador Fronkova for her efforts during her stay in Lebanon to strengthen bilateral relations between the two countries, wishing her success in her new duties.
The President then received the Chairman of the Lebanese-American University, Dr. Michel Mouawad, and his special advisor, Dr. Christian Aussi, on the occasion of Dr. Mouawad’s assumption of his new duties as Chairman of LAU, succeeding Dr. Joseph Jabra.
In the meeting, LAU affairs were discussed in addition to the future plan that the new Chairman intends to prepare and implement. The research also tackled the status of higher education in Lebanon in light of the current circumstances and the implications of Corona pandemic on university teaching and the future of university students.
The President also received congratulatory telegrams on the 77th anniversary of Lebanese Independence, from Presidents and Leaders, most notably from President of the Maldives, Ibrahim Mohammed Solh, who expressed his confidence in the continued strengthening of friendship and cooperation between Lebanon and the Maldives, wishing President Aoun health and happiness and the Lebanese people further progress and prosperity.
President Aoun also received a congratulatory telegram from the Secretary-General of the Organization of Islamic Cooperation, Youssef Bin Ahmed Al-Uthaimin.– Presidency Press Office
Source: National News Agency