Foreign Policy magazine says $ 6 billion has been illegally transferred out of Lebanon in recent months , following pressure from politicians on local banking establishments, despite the introduction of informal capital controls in November 2019.
These figures confirm the estimates already present for a few months. Indeed, some observers noted that 12 billion dollars were thus transferred abroad in 2020 while the subsidy program for the purchase of basic necessities is estimated at only 6 billion dollars.
A banker who spoke to Foreign Policy on condition of anonymity admitted that the wealthy used their political connections to transfer their money overseas. “The banks imposed strict capital controls in an attempt to stop the financial collapse,” the banker said. “However, the political and wealthy elite put more pressure on the banks to transfer money overseas. In the absence of a capital control law, these transfers are not illegal, but in many ways they are immoral and wrong. Such incidents have occurred in most banks and generally with intense pressure on the management of the bank. “
According to a source from Foreign Policy, these transfers for the benefit of political figures impose additional pressure on the Lebanese pound and therefore degrades the value of the parity of the Lebanese pound against the dollars to the detriment of small depositors and the middle class while preserving deposits from major depositors.
The authors also note that the Lebanese economy is made up of monopolies enjoying subsidies from the Bank of Lebanon, as one of the speakers who noted that even Viagra is subsidized while part of the fuel, also subsidized, is exported to Syria. Thus the Bank of Lebanon’s subsidy program does not benefit the most vulnerable populations but certain private interests.
An estimate of $ 2 billion in funds transferred to Switzerland alone
As a reminder, the Attorney General of the Republic, Judge Ghassan Oueidat, officially asked the Swiss authorities and their Lebanese counterparts on December 30, 2019 , information concerning the transfer of funds to the Helvetian country. At the time, it was estimated at more than 11 billion dollars the funds transferred abroad after the establishment of a moratorium on transfers abroad by the Association of Banks of Lebanon (ABL) since last October. with the closure of local financial establishments following the demonstrations of October 17, then the introduction of capital controls in November.
Since then the monetary authorities have estimated the sums illegally transferred at $ 5 billion
Still at the time, some sources mention the sum of $ 2 billion, others that of $ 11 billion which would have been transferred to accounts in Switzerland. This money would belong to Lebanese politicians and businessmen who would thus try to cope with a possible downgrade of their accounts in Lebanon or the risk of seeing certain banks go bankrupt.
And the unwillingness of politicians and bankers to transfer
In addition, the Banque du Liban had called on local financial institutions to increase their own funds to 20% of deposits and to repatriate 3% of the sums they hold with their corresponding banks by February 28, 2020 as stipulated by the circular 154.
This same circular asks bank presidents, members of the board of directors, major shareholders and senior executives, as well as clients identified as “politically vulnerable persons” and who have transferred abroad more than $ 500,000 or its equivalent in other foreign currencies since July 2017, to deposit 30% of these funds and block them for five years.
Some sources have indicated that in the face of these refusals, some banks have bought large amounts of dollars in recent weeks on the black market, purchases having unbalanced supply and demand and caused a significant de facto devaluation of the Lebanese pound against the dollar. .
A number of these financial officials finally announced their resignations so as not to be obliged to repatriate their funds.