Financial Crime World

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Elites in Lebanon: A Web of Corruption and Secrecy

Lebanon has long been plagued by allegations of corruption and abuse of power among its elite. In a country where money laundering and tax evasion are rampant, the government’s lack of transparency and accountability only exacerbates the problem.

A Failing System

In 2018, Lebanon passed Law No. 83 on Protecting Whistleblowers, which aimed to protect individuals who report suspicions of corruption from retaliation and personal harm. However, critics argue that the law is incomplete without a functioning National Anti-Corruption Commission (NAAC), which has yet to be established.

Beneficial Ownership Transparency

Beneficial ownership transparency remains a major issue in Lebanon. Despite laws requiring companies to identify their beneficial owners, there is no single registry available to the public. This lack of transparency makes it difficult to track the flow of funds and identify those responsible for corruption.

Insufficient Anti-Money Laundering Efforts

Lebanon’s anti-money laundering (AML) efforts have been criticized for being insufficient. The country has been subject to regular follow-up procedures by the Middle East and North Africa FATF (MENAFATF), which has identified corruption, tax evasion, and illicit drug trafficking as major risks in the financial system.

Economic Crisis Exacerbates Issues

The recent economic crisis in Lebanon has only exacerbated these issues. Banks have imposed controls on withdrawals and transfers of funds, but this has not prevented billions of dollars from being illegally transferred out of the country. The political elite is accused of making concerted efforts to thwart asset recovery efforts, with some even alleging that they are using their positions to embezzle public funds.

Stolen Assets Remain Unrecovered

According to the Stolen Asset Recovery Initiative’s (StAR) Asset Recovery Watch Database, Lebanon has not initiated a single case to recover assets stolen by corrupt officials since 1990. This is due in part to a lack of political will to implement necessary legal and institutional reforms, as well as a lack of resources dedicated to asset recovery efforts.

Consequences for the Economy and Stability

The Lebanese government’s inability to address these issues has serious consequences for the country’s economy and stability. Until the elite is held accountable for their actions, Lebanon’s financial woes are likely to continue.

Sources

  • MENAFATF (2017). Lebanon National Risk Assessment.
  • Reuters (2022). Lebanon parliament approves bank secrecy law amendment.
  • Financial Times (2020). How Lebanon’s banks became a hub for dirty money.
  • Zoghaib, N. (2020). The Elusive Quest for Justice in Lebanon.
  • Al-Hassan, R. (2022). Tunisia recovers $28 million stolen by former president from Lebanese bank accounts.
  • StAR (2020). Asset Recovery Watch Database.
  • Vazquez, J. (2022). IMF conditions for Lebanon’s economic crisis response.
  • Messick, E. (2020). The Challenges of Asset Recovery in Lebanon.
  • Tohme, F. (2020). Corruption and the State in Lebanon: A Critical Analysis.

Photo Credit: Reuters