Lebanon selects Alvarez & Marsal for new audit of central bank

France-based consulting firm Alvarez & Marsal will conduct an audit of more than four years of financial transactions at Lebanon's central bank, including the period following ‌the country's financial collapse, the bank said in a written statement on Wednesday.

Lebanon's financial system went into a tailspin in October 2019 after decades of profligate spending by the country's ruling elite. Banks imposed sweeping but informal capital controls, stopped issuing loans and locked ⁠depositors out of their savings.

The statement by the Central Bank of Lebanon said the new audit would cover the period from October 1, 2019 through December 31, 2023 and would examine transactions related to the central bank's foreign assets, including a government subsidy program for basic goods, its financial transfers to the public sector and letters of credit issued for fuel imports.

It said it selected Alvarez & Marsal after a tendering ‌process.

In ⁠2023, Alvarez & Marsal completed a separate audit of the central bank's transactions between 2015 and 2020 that described "misconduct" at the institution under former governor Riad Salameh, who led the bank for 30 years.

Salameh is being investigated in Lebanon and several other ⁠countries over financial crimes including illicit enrichment during his time as governor. He denies any wrongdoing.

Even as its foreign reserves were depleting in the years following ⁠the financial crash, the Lebanese government increased its subsidy program to include items like cocoa and cashew nuts, leading to widespread criticism.

The biggest cost ⁠for the government under that program was fuel, which accounted for around $3 billion annually.

The Lebanese central bank effectively ended its fuel subsidy program in August 2021.

Reuters