Bank of Lebanon & Central Bank Ponzis (Patreon)

TLDR

A recent audit of the Bank of Lebanon has revealed that officials are suspected of embezzling more than $300 million to benefit their family members and close associates. Additionally, the audit highlights the implementation of a nationally-regulated Ponzi scheme, contributing to a significant increase in the national debt. Wholesale theft! Not a unique situation. 

DETAILS

• The financial position of the central bank (BdL) "deteriorated rapidly" between 2015 and 2020.
• BdL's balance sheet presented in its annual financial statements was prepared using unconventional accounting policies.
• Those policies allowed the central bank "to overstate assets, equity and profits while understating liabilities".
• In 2015, former governor Salameh launched so-called financial engineering measures aimed at increasing central bank reserves, in measures that some have compared to a Ponzi scheme.
• The preliminary audit report said the central bank's "accounting policy in respect of financial engineering was exceptional in the extent of personal, unscrutinized discretion given to the governor to determine accounting estimates", it said, calling the measures "costly".
• A&M's preliminary audit report said "there is evidence of the payment of illegitimate commissions during the period totaling $111 million".
• "This appears to be a continuation of the commission scheme under investigation by Lebanese and international prosecuting authorities," the report said.
• "We have identified no records to confirm that a service was actually performed to justify the commission payments," it added.