Details about the $16.5 Billion State debt recorded before Salameh's departure

Eleven banks have submitted a "dispute resolution memorandum” to the Ministry of Finance, considering themselves as creditors to the Central Bank of Lebanon (BDL) and adversely affected by its failure to ask the state to repay the amounts borrowed from it and its failure to demand that the state cover all losses that appear in its budget.

This article was originally published in and translated from Lebanese newspaper Nidaa Al-Watan.

The summoning banks affirmed that the memorandum is "to compel the state to fulfill its legal and contractual obligations toward the Bank of Lebanon by immediately settling the amounts due from it to BDL."

The banks involved in the dispute resolution memorandum are Lebanese Swiss Bank, Libano-Française Bank, Lebanese CreditBank, Bank Med, Byblos Bank, Bank of Beirut, Bank of Beirut and Arab Countries, Audi Bank, Blom Bank, Fransabank, through lawyers Elie Chamoun and Akram Azoury, and Societe Generale Bank through lawyer Fouad Azoury. 

These banks are seeking the repayment of $16.6 billion owed to them by the BDL.

The memorandum relies on Article 276 of the Obligations and Contracts Law, claiming that this article allows them, as creditors to the BDL, to use its name, bring all claims related to it, and directly sue on its behalf.

The memorandum also refers to the interest of the summoning banks in demanding the state to pay the amounts due to the BDL to enable the latter to settle the amounts due to the summoning banks, allowing them to, in turn, pay the deposits of their depositors.

The memorandum specifies an amount of $16.5 billion recorded by the BDL in its budget as borrowed by the state since 2007.

Furthermore, it relies on Article 113 of the Monetary and Credit Law, requiring the state to cover the losses shown in the BDL budget, totaling $51.3 billion until the end of 2020, with additional losses incurred in 2021 and 2022.

The memorandum also refers to Article 85 of the Monetary and Credit Law, defining the BDL as a public sector bank, and Article 90 concerning the conditions for lending to the state.

The summoning banks demand the repayment of their debt, under the threat of administrative judiciary review, to compel the state to fulfill its obligations to the BDL by settling the amount of $16.6 billion (for the 11 banks).

The second demand is applying Article 113 of the Monetary and Credit Law to cover $51.3 billion in losses incurred by the BDL until 2020.

The third demand is correcting the BDL's budget for 2021 and 2022 to determine the additional deficit under the threat of administrative judiciary review to compel the state to do so.

However, in the memorandum, the summoning banks relied on international reports condemning the era when Riad Salameh was the governor of the Bank of Lebanon.

The accusations included engaging in deviations through accounting practices contrary to those adopted by its international counterparts, and the budget did not reflect the actual financial situation of BDL; instead, it was imaginary and artificial.

Moreover, Salameh adopted accounting practices far from the principles and rules adopted by central banks worldwide, creating a profitable budget from which he distributed annual profits to the state while it was losing and in a huge deficit.

Informed sources confirmed, "These accusations drawn from international reports were not something the banks could use or mention during Salameh's days. Now that he has departed, they have taken the opportunity to accuse him after remaining silent for decades."

The sources clarified that the $16.5 billion mentioned in the memorandum was not recorded as a debt to the state in the BDL budget until a few months before Salameh left office. But Salameh claims that this borrowing dates back to 2007.

In contrast, successive finance ministers did not recognize this amount, including Jihad Azour, the late Mohammad Chatah, Raya Al-Hassan, Mohammad Safadi, Ali Hassan Khalil, and Ghazi Wazni.

As for the current minister, Youssef Khalil does not answer when asked if he recognizes the amount, sticking to his habit of silence when faced with the issue, considering himself a friend of Salameh and wanting only the best for him.

The sources concluded, "As for what the banks claim, that the deposits are a debt to the state and that they are not responsible for the loss of people's lifelong earnings, it requires a fair judiciary and politicians and deputies who are not complicit with the banks and Salameh... and this is impossible."