Lebanese Central Bank Allegedly Engages in $8 Billion Financial Fraud Scheme

Leaked financial disclosures have revealed a controversial relationship between Lebanon’s Central Bank, Banque du Liban (BDL), and Lebanese broker Optimum Invest SA. An international forensic audit by Kroll unearthed the following concerns:

Round-Tripping Transactions and Hidden Financial Losses

Between 2015 and 2018, the Central Bank and Optimum Invest SA reportedly engaged in round-tripping transactions, totaling $8 billions. According to financial experts, these transactions were used to mask substantial financial losses from unsustainable monetary policies. The Central Bank allegedly booked future interest payments as current revenue, creating paper gains without economic value.

Sham Transactions

Henri Chaoul, a former Finance Ministry adviser, expressed concerns to The National stating, “This type of transaction would qualify as a sham transaction by any international standards.”

Widespread Implications and Potential Instability

The revelations come at a delicate time, as Lebanon’s financial sector, which collapsed in 2019, remains under increased scrutiny. Previously, Central Bank policies have been criticized for contributing to the economic crisis.

A western diplomat emphasized, “This suggests a systemic pattern of fraud designed to offset losses generated by reckless monetary policies, with a scale significant enough to potentially destabilize an entire country.”

Investigations and Accountability

Lebanese authorities have launched an investigation into Optimum, led by Judge Ghada Aoun, who is confirmed to be inquiring into the brokerage firm. Central Bank officials have also reportedly acknowledged allegations of falsified financial statements.

Responsibility and Oversight

Beyond the Central Bank, other entities, including auditing firms Deloitte and Ernst & Young, which previously provided sign-offs for two decades, have drawn criticisms for not flagging the alleged scheme. Deloitte and Ernst & Young did not respond to The National’s request for comment.

Uncovered Financial Maneuvering

Adding to the complexity, the Kroll report suggests that some of the profits from the transactions might have been diverted as commissions to third parties. The full extent of this financial maneuvering remains to be uncovered.

Optimum issued a statement in response, emphasizing that “there was no evidence of wrongdoing or illegality on Optimum’s part.” The brokerage firm also clarified that all services rendered to the Central Bank were conducted at arm’s length and on agreed terms.

Nonetheless, financial experts and observers have called for accountability and transparency. Chaoul stated, “There is an urgent need for holding them accountable.”