A&M, KPMG and Oliver Wyman start work at Banque du Liban

19 October 2020 Consultancy-me.com 3 min. read

Two months after announcing the deal, consultants and auditors from Alvarez & Marsal, KPMG and Oliver Wyman have finally hit the ground running in Beirut.

In July, the Lebanese government unveiled that it had hired the three leading global management consulting firms to conduct a forensic audit of the country’s central bank, Banque du Liban (BDL). The audit is key for two reasons. 

First, it will help the government to form an accurate view of the country’s financial woes. The government and the central bank (led by Riad Salameh) have been quarrelling about the size of the financial system’s losses for months, putting a brake on policy development at a time when the country is facing its worst economic crisis since the 20-year war during the 70s and 80s.

Facing starkly different versions of the central bank’s financial position, the International Monetary Fund (IMF) has demanded an independent ‘version of the truth’. Lebanon turned to the global financial institution a few months ago, in a bid to attract much needed funds to prevent the country from eventually collapsing. According to one estimate, Lebanon needs at least $10 billion to keep things running smoothly, while much-needed major reforms are pushed through in the background. 

A&M, KPMG and Oliver Wyman start work at Banque du Liban

With the involvement of Alvarez & MarsalKPMG and Oliver Wyman, all leading players in the professional services industry, Lebanon’s government hopes that it will be able to not just gain in-depth outside view on the state of the matter, but also regain the IMF's credibility.

A second key task of the trio of consulting firms is to uncover potential financial fraud and theft. At a time when Lebanese people were not allowed to cash in their funds from banks, high ranked officials and business leaders allegedly illegally transferred over $6 billion in funds to their personal companies and accounts, most of which are based in Switzerland, France and tax havens.

“The forensic audit will achieve a significant advance towards exposing the size of financial crime,” said Prime Minister Hassan Diab in August. Diab has since resigned as Prime Minister, leaving the country without political leadership yet again. Lebanon has always struggled to install a new Cabinet, largely due to its complex system of secretarian power sharing introduced by the French in the 1940s and a corrupt establishment that has been in power for over three decades. 

The recent devastating blast in the harbour and the resultant political deadlock (President Michel Aoun is currently working on a new government) have delayed the kick off of the Banque du Liban audit, however, caretaker finance minister Ghazi Wazni has now confirmed in a statement that the external consultants have formally started their work. 

Banque du Liban has handed over all the requested documents and information allowed by Lebanese laws. According to a statement by Salameh, the submitted documents are “in line with the stipulations of the contract signed between the Finance Ministry and Alvarez & Marsal,” which is the lead consultant for the project. Oliver Wyman and KPMG are conducting the traditional financial and accounting audits of the central bank’s accounts. 

On paper, the audit is planned to be transparent and leave no loopholes, said Wazni. However, Lebanon’s people have little hope in the outcome, and thousands have taken to social media to express their fear that the state will intervene to hide unlawful activity from the public to protect its politicians, and hence itself.