Lebanon central bank forensic audit to begin June 27: two Lebanese sources

A team from US-based auditor Alvarez and Marsal (A&M) will arrive in Lebanon on June 27 and begin a long-delayed forensic audit of the country's central bank, two Lebanese official sources told Reuters.

The forensic audit, to examine the bank's past financial transactions to boost transparency, has been a key demand of donor states that want Lebanon to enact reforms before releasing funds to help address a financial meltdown that began in 2019.

The meltdown, which has sunk the currency by more than 90%, fuelled poverty and left a $70 billion hole in the financial system, is Lebanon's most destablising crisis since the 1975-90 civil war.

After a series of false starts, the full forensic audit would begin in full next week, two Lebanese official sources said. A&M, the central bank and the finance ministry did not respond to requests for comment.

Lebanon first signed a contract with restructuring consultancy A&M in September 2020 but the company pulled out months later, citing "insufficient provision of information" by the central bank, also known as Banque du Liban.

One year later, Lebanon's Finance Minister Youssef Khalil signed a new contract. But Lebanese officials said at the time A&M again complained it had not been provided with information it had requested and threatened to withdraw.

Delays in payment also held up the process.

One of the sources confirmed Lebanon had paid an instalment of $1,056,000, which amounts to 40% of the total fees, according to a copy of the contract seen by Reuters.

The contract says A&M would provide a preliminary forensic audit report within 12 weeks of beginning.

Last year, the central bank responded to accusations that it had not shared information by saying it had provided data and logistical support to A&M.

Another audit of the central bank's foreign exchange position - a condition to unlock IMF relief funding - is set to be carried out by consultancy firm KPMG in the coming weeks, according to the Lebanese government's May 20 financial recovery plan.

(Reuters)