The forensic audit report of the accounts of the Central Bank of Lebanon included "staggering" figures that are being revealed for the first time. Among the highlights is that the cost of financial engineering amounted to $76 billion, according to the "Alvarez & Marsal" audit, but the Central Bank of Lebanon only acknowledged $56 billion, as mentioned on page 88 of the report. The remaining amount was considered recoverable or refundable. Despite the clarification, the auditing company remained unconvinced by the Central Bank of Lebanon's explanations.
This "enormous" figure encompasses all the financial operations described as financial engineering, which includes costs of interests and returns, especially bond and certificate of deposit premiums. Some of these were used in bank recapitalization operations, addressing financial difficulties, covering bank losses, swaps, and currency exchange operations between the Lebanese pound and the dollar, primarily benefiting banks and to a lesser extent, major depositors and financial investors. Ultimately, these costs were borne by depositors, while the Central Bank of Lebanon concealed these losses under its budget's "other assets" category. The bank later claimed that most of these costs were related to maintaining the exchange rate of the Lebanese pound and financing the state. The attached tables in the report reveal preferential treatments given by the Central Bank of Lebanon to several banks. However, it was later revealed that the former governor of the Central Bank of Lebanon, Riad Salameh, his family, and various prominent politicians with direct or indirect interests were beneficiaries of these practices. The report also indicates clear signs of illegal commissions received by the company "Forry." Salameh claims these are private funds, yet they are recorded in the Central Bank of Lebanon's books as public funds. It's worth noting that the banks that paid these commissions were unaware of the company "Forry," considering these payments to be fees collected by the Central Bank of Lebanon. Consequently, the Lebanese judiciary can no longer acquit Salameh, his brother, and others in this case, as the European court has already confirmed embezzlement in this regard. The report further reveals tens of millions registered under various categories of "support," including studies and consultations. Various parties benefited from these funds, notably those whose names appear in the report, who defended Salameh over the years. These transactions appear to be a means of buying favors at the expense of public funds and depositors. On another note, the report confirms that Riad Salameh held significant authority at the Central Bank of Lebanon, using non-standard accounting standards that deviated from international norms. He claimed that the Central Council approved his practices, but it became apparent that the Council members mostly accepted what Salameh presented to them. This raises questions about the adequacy of the parliamentary amendments to the banking secrecy law, as Salameh frequently cited banking secrecy to withhold information. The audit also highlights that the numbers revealed by "Alvarez & Marsal" align with those put forth by consultants and "Lazard" in 2020. However, the Central Bank of Lebanon, the Association of Banks, and the Finance and Budget Committee rejected them, leading to the collapse of the reform plan that year and the failure to negotiate with the International Monetary Fund. This exacerbated the crisis and caused a severe depreciation of the exchange rate, eroding the savings of Lebanese citizens. It's important to note that the audit covers only the years 2015-2020, while Salameh's practices continued in 2021, 2022, and 2023, contradicting the central bank and lending laws, and deviating from international accounting standards, along with accepting the squandering of billions to support goods and the banking platform.