BDL declines Alvarez & Marsal request for documents: official

Ousama Habib- BEIRUT: Lebanon’s Central Bank declined to provide international auditor Alvarez & Marsal with all the required documents and information under the pretext of banking secrecy and money and credit law, a senior government official revealed Tuesday.

“Alvarez officially asked BDL to provide it with nearly 100 documents so it can carry out its preliminary investigation to determine if there were actually any suspicious accounting irregularities. The auditing firm seemed very upset about BDL’s reaction and will study the possibility of ending the contract with the government to conduct the first forensic audit of the Central Bank’s accounts,” the official told The Daily Star on condition of anonymity.

The official stressed that Parliament needs to amend some items in the banking secrecy law to specify what information can be disclosed. He added that these amendments will facilitate the work of the Central Bank.

Alvarez & Marsal is a global professional services firm notable for its work in turnaround management and performance improvement of a number of large, high-profile businesses both in the US and abroad.

The official explained that the company may end its contract in the beginning of November 2020 and will be paid around $200,000 for the work it did since the signing of the contract with the government.

He did not reveal what type of information the company asked BDL for, adding that these matters were up to the two sides only.

The Daily Star tried to obtain a comment from Alvarez & Marsal’s office in Dubai, but one of the employees said that the firm is not authorized to make any comment on this subject.

A source expressed doubt that the new government of Prime Minister Saad Hariri will push for forensic auditing of the Central Bank.

“I don’t think the new finance minister and the new government will pay much attention to the forensic auditing at the moment,” the source told The Daily Star.

On Sept. 6, Caretaker Finance Minister Ghazi Wazni had said that the banking secrecy law will not be an obstacle for Alvarez & Marsal.

“Banking secrecy law does not apply to the assets of the Central Bank, the Eurobonds, foreign currency reserves, gold reserves, financial engineering and the money transferred outside Lebanon. The banking secrecy law only applies to the accounts of depositors. For this reason, Alvarez & Marsal Company will not have any problems in completing its work,” Wazni told The Daily Star at that time.

The minister explained that the only thing he modified in the contract was the clause concerning Egmont Group of Financial Intelligence Units as this would complicate the work of Alvarez & Marsal company. “I wanted to give the company more freedom to do their work without the need to return to the conditions set by Egmont Group."

But some legal experts had expressed concern that the Money and Credit law and banking secrecy may hinder Alvarez's mission.

“How can forensic auditing reach the desired results amid the banking secrecy law which was issued on Sept. 3, 1956? This law prohibits any party from accessing bank accounts. Even the Banking Control Commission is not allowed to obtain this information. How can a private company, even if it was designated by the Cabinet, have access to all these accounts?” said Paul Morcos, a renowned legal expert.

A forensic audit is an examination and evaluation of a firm's or individual's financial records to derive evidence that can be used in a court of law or legal proceeding.