EXCLUSIVE Documents dispute Lebanon central bank chief’s ‘audit’ claim

Lebanon’s Central Financial institution Governor Riad Salameh speaks throughout an interview for Reuters Subsequent convention, in Beirut, Lebanon November 23, 2021. REUTERS/Mohamed Azakir/

BEIRUT, July 14 (Reuters) – A monetary evaluate of Lebanon’s central financial institution which Governor Riad Salameh described as an audit that clears him of corruption allegations was primarily based solely on data he offered and “doesn’t represent an audit”, paperwork seen by Reuters present.

In a letter dated Sept. 9, 2021 addressed to Salameh’s lawyer Marwan Isssa Khoury, accounting agency BDO, Semaan, Gholam & Co lays out the phrases of the monetary evaluate.

The evaluate into whether or not Salameh embezzled central financial institution funds was undertaken by BDO, Semaan, Gholam and Co between September and November 2021 at Salameh’s request, and spanned the interval from 2002 to 2015.

“The procedures that we are going to carry out won’t represent an audit or evaluate made in accordance” with worldwide auditing requirements, the agency says within the letter. “Accordingly, we don’t categorical an opinion or assurance”.

Some observers and monetary specialists stated the conflicting interpretations solid additional doubt on the legacy of Salameh, who has served as Lebanon’s central financial institution governor for 3 a long time. He has confronted elevated scrutiny because the nation descended into monetary destroy during the last three years, together with through a variety of judicial probes in Europe and Lebanon.

Khoury instructed Reuters final Friday that his consumer’s characterization of the evaluate remained correct.

“What Mr. Salameh stated is exact and correct: an audit of transactions and investments had been certainly performed and the Worldwide Commonplace utilized in addition to the procedures adopted had been fully disclosed. There isn’t any manner anyone can argue about this,” he stated in written remarks.

“The conclusions are clear and primarily based on documentary proof.”

In an emailed response to Reuters, Antoine Gholam, Associate at BDO, Semaan, Gholam & Co, stated: “Since you have got obtained a replica of the Engagement letter and of the Report you’re referring to beneath, I consider you may draw your personal conclusions.” He declined to remark additional.

A spokesperson for Lebanon’s Prime Minister designate Najib Mikati didn’t reply to requests for touch upon the discrepancy between the report and Salameh’s assertions about it, nor did a central financial institution spokesperson.

Salameh is being investigated in Lebanon and a minimum of 5 European international locations on suspicion of embezzlement and cash laundering. Swiss prosecutors consider Salameh embezzled some $330 million of central financial institution funds between 2002 and 2015 through a contract he signed with Forry Associates Ltd, a monetary providers firm owned by his youthful brother, Raja Salameh.

A authorized consultant of his youthful brother, who has beforehand denied the allegation, stated on Monday he had no additional touch upon the problem.

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In its letter to Salameh’s lawyer, BDO, Semaan, Gholam & Co states it will perform “an agreed-upon procedures engagement”, which is a evaluate agreed between a consumer and a agency primarily based on data the consumer voluntarily gives.

The letter, accompanied by the finished monetary evaluate, states that it reviewed account statements offered by Salameh and letters issued from Banque du Liban (BDL) departments at Salameh’s request.

These letters say no central financial institution funds entered a BDL clearing account, which is the place Salameh stated solely third events – together with native and international banks – paid commissions to Forry.

Salameh beforehand instructed Reuters Forry’s “solely job was to assemble all these commissions and charges and redistribute in accordance with the directions”, with out specifying what the directions had been.

Primarily based on the descriptions and paperwork offered by Salameh, the report concludes that the clearing accounts included funds from third events however not BDL funds and that Salameh’s private account acquired no funds from BDL.

Salameh has persistently dismissed all expenses in opposition to him as politically motivated, saying in a November 2021 assertion that he had commissioned the “audit” of his accounts as a response to “the continued campaigns in opposition to my individual”.

Requested about Salameh’s declare that the evaluate was an audit, Mike Azar, a number one skilled on Lebanon’s monetary system, instructed Reuters: “It is deceptive.”

“This undermines the status and credibility of the BDL and the Lebanese monetary system at a time after we desperately must regain individuals’s belief within the sector,” he stated.

Authorities have struggled to start a long-awaited forensic audit of the central financial institution by restructuring consultancy Alvarez & Marsal as a consequence of hurdles in fee and transparency by BDL.

Lebanon first signed an audit contract with A&M in 2020 however the firm pulled out months later, citing “inadequate provision of knowledge” by BDL. A 12 months later, a brand new contract was signed however officers stated A&M threatened to withdraw after it had not acquired requested account data.

On July 6, Lebanese President Michel Aoun stated the agency’s head knowledgeable him that the audit had begun.

Reporting by Timour Azhari; Enhancing by Maya Gebeily and Emelia Sithole-Matarise

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