Lebanon judge calls for investigation after ex-finance chief alleges bankers 'smuggled' $6bn out of Lebanon

The request came after the former director general of Lebanon's finance ministry, Alain Bifani, alleged that local banks 'smuggled' close to $6 billion out of the country.

MENA

2 min read

The New Arab Staff

13 July, 2020

Banks have severely restricted dollar withdrawals [Getty]

The foreign bank transfer of $6 billion from Lebanon after national banks enforced capital control measures must be thoroughly investigated, a judge said on Monday, as the country plunges into one of its worst financial crises in decades.

The request came after the former director general of Lebanon's finance ministry, Alain Bifani alleged that local banks "smuggled" close to $6 billion out of the country, despite the capital controls being put in place since October.

Lebanon's The Daily Star reported that Judge Sabouh Suleiman requested that the Special Investigation Commission of Banque du Liban investigates the allegations and looks into all the accounts involved, particularly those holding in excess of $1 million.

Bifani told The Financial Times on Monday that between $5.5 billion to $6 billion was "smuggled outside the country" by "bankers who would (not allow) every other depositor to take $100".

Bifani, who resigned last month after holding the senior ministry post for 20 years, alleged that the transfers were carried out at a time that the banks were closed to the public.

He said the estimates were based on his analysis of bank data and consulatation with the banking control authority.

Bifani was the second member of Lebanon's negotiating team with the International Monetary Fund to quit, blaming "vested interests" for undermining the government's economic rescue plan.

In the FT interview, Bifani accused politicians and bankers of trying to "benefit from the system without taking any loss" and leaving the Lebanese people to take the brunt of the collapse.

Read also: IMF warns Lebanon of high price of delaying reforms

After Lebanon defaulted on its sovereign debt in March, the government pledged a financial rescue plan and in May started talks with the IMF on unlocking billions of dollars in aid.

But sources familiar with the talks say they have hit a wall, with alleged lack of political commitment to reforms and disagreements over the scale of financial losses for the state, central bank and commercial banks.

Lebanon is grappling with its worst economic crisis since the 1975-1990 civil war, with deteriorating living conditions sparking widespread protests since October and plunging almost half the population into poverty.

Banks have severely restricted dollar withdrawals and the Lebanese pound has plummeted to record lows on the black market, sparking rapid price hikes.

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