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bankingNovember 21, 2020

Forensic auditor pulls out of Lebanon central bank probe

Alvarez & Marsal tells caretaker government it ‘has not received the information it needs to carry out the task’


BEIRUT: Restructuring consultancy Alvarez & Marsal has pulled out of a forensic audit of Lebanon’s central bank because it did not receive information required to carry out the task, caretaker Finance Minister Ghazi Wazni told Reuters on Friday.

The decision to walk away from the contract is a blow to Lebanon as it attempts to extricate itself from a deep financial crisis that has crashed its currency, paralyzed banks and prompted a sovereign debt default.

The International Monetary Fund has said the audit is a vital step toward securing financial aid.

The presidency issued a statement saying Wazni had informed President Michel Aoun of the consultancy’s decision to quit.

The statement said the firm told Wazni “it was not certain it would receive the information” it sought, even with a three-month extension announced on Nov. 5 for the central bank to provide data it had withheld.

Neither Alvarez & Marsal nor Lebanon’s central bank immediately responded to a Reuters request for comment.

The central bank, which has faced growing scrutiny since the financial crisis came to a head in October 2019, has previously said it provided its own accounts for the audit.

It has called on the government to submit full state accounts to “spare the central bank from violating legally binding bank secrecy laws.”

The caretaker government, whose talks with the IMF had stalled, has urged the central bank to hand over all data for the audit.

A parliamentary bloc this month submitted a proposed law to temporarily lift the bank secrecy law solely for the audit. No date has been set for a session on the proposed law.

The IMF and foreign donors have pressed for the audit to tackle endemic waste and corruption.

Prime Minister-designate Saad Hariri, named last month, has been trying to navigate sectarian politics to form a cabinet to bring in reforms needed to tackle Lebanon’s worst crisis since its 1975-1990 civil war, including spreading poverty.

UN special coordinator for Lebanon Jan Kubis said in a Twitter post that a meeting of the International Support Group for Lebanon on Friday in Beirut discussed “with grave concerns” the country’s deepening crisis.

He said the group, which includes the five permanent members of the UN Security Council, deplored lack of progress on a new government “but also the absence of a more determined action of existing state and financial institutions.”

arabnews