A forensic audit into Lebanon’s central bank by a New York-based company has revealed yearslong misconduct by the bank’s former governor and $111 million in “illegitimate commissions,” according to a report by the company.

It’s the latest chapter in the saga of Lebanon’s embattled former central bank governor Riad Salameh, 73, who ended his 30-year career as governor last month under a cloud of investigation and blame for his country’s economic meltdown.

A copy of the 331-page document by Alvarez & Marsal, seen by The Associated Press, was given to parliament on Friday. The audit was among key demands by the international community and the International Monetary Fund, which over the years increasingly lost confidence in crisis-hit Lebanon.

Lebanon’s government and Alvarez & Marsal signed a contract in September 2021, but the audit subsequently stalled. It covers the period between 2015 and 2020; Lebanon’s economic meltdown began in October 2019.

Alvarez & Marsal said the central bank’s “refusal to provide direct access to its systems and to allow work to be conducted” on its premises had “significantly delayed and slowed” the audit.

The report in one section focuses, among other things, on the practice of so-called financial engineering that started in 2015 and was used by the central bank to allow local lenders to attract dollar deposits from abroad and then encourage the banks to deposit the dollars at the central bank. In return, the lenders were given interest rates higher than international market rates.

“Financial engineering was costly,” the report said.

The central bank’s foreign currency shortage grew dramatically from a foreign currency surplus of $7.2 billion at the end of 2015, to a shortage of $50.7 billion at the end of 2020. The report says this was driven by a 119% increase in foreign currency denominated deposits, fueled by the central bank.

On Thursday, the United States, United Kingdom and Canada sanctioned Salameh and a handful of his close relatives and associates over corruption allegations.

Also, France, Germany and Luxembourg are investigating Salameh and several close associates over alleged financial crimes, including illicit enrichment and the laundering of $330 million. Paris and Berlin issued Interpol notices for Salameh in May. Lebanon, however, does not hand over its citizens to foreign countries.

The report also highlights illegitimate commissions during the 2015-2020 period, totaling $111 million, and said they appeared to be a scheme that’s being investigated by Lebanese and international prosecutors — an apparent reference to the former governor’s brother, Raja Salameh.

Reports have circulated that the Lebanese central bank had hired Forry Associates Ltd., a brokerage firm owned by Raja Salameh, to handle government bond sales from which the firm received $330 million in commissions.
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