Ziad Chabib - in the system. Criminal audit?

Ziad Chabib - in the system. Criminal audit?


(See Translation in Arabic Section)

Last September, Minister of Finance Youssef Khalil signed a criminal audit contract with the company Alvarez & Marcel after he was notified of the approval by the Court of Accounts for the contract.

Lebanese President Michel Aoun considered this “a qualitative step in the process of adhering to the rules of transparency, combating corruption, reform and accountability, when necessary” but he stressed that “the audit will later include public institutions, administrations, councils, funds and bodies, especially those that have suspected the performance of those responsible for them during the past 30 years.”

Auditing and accountability when necessary, without prejudice or slander, are indeed the real way to rebuild the lost confidence of Lebanese in the state. We must hope and wait for the results. But the experience of fulfilling the contract, in principle, needs to be corrected in order not to negate the desired result, given the flaws in the contract with the audit and reconciliation company conducted with it after unilaterally rescinding the previous contract.

The contract with Alvarez & Marcel is one of compliance, in which the state complied with the company’s conditions that can be described as supernatural.

What is meant by compliance contracts are those that are like contracts with banks, and they are pre-prepared models that include various types of conditions and concessions in favour of the stronger party.

The approval of the Audit Bureau for the draft contract was paired by several observations that were supposed to be taken for the contract to be valid but it seems that the signing took place as soon as the approval was received and without modification.

Among the unfair provisions against the state:

• The contract affirmed the company’s right to receive $150,000 because of the previous contract’s termination;

• Exempting the company from value-added tax and any other taxes required under Lebanese laws and the Lebanese state’s obligation to bear them. The court indicated that the exemption is not permissible;

• Determining a delay interest that the state owes in the event of a delay in paying the amounts to the company, and the interest rate is 2% per day. The Bureau indicated that this is not permissible;

• The contract is free from any clause that includes the right of the state to pay a fine or compensation in case the company delays or refrains from fulfilling its obligations.

• The contract gives the two parties the right to terminate it but the state must pay financial dues to the company if the latter terminates the agreement unilaterally and without justification. The courts indicated that this is not permissible;

• The contract bears the state’s expenses and fees for the company’s legal advisor over the implementation of the contract and in any potential dispute between the parties.

• The most significant clause relates to the restrictions imposed by the agreement on the Ministry of Finance regarding the use of the initial report drawn up by the company, the Audit Bureau emphasised that the ministry should have the right to dispose of the report without obtaining the approval of the company, especially in terms of its use before the courts in its official form and without restrictions.

The audit ends with the preparation of a report that can be referred to the judiciary to carry out criminal prosecutions if criminal acts are found, and the right of the state in this may not be restricted otherwise the scrutiny will lose its feasibility.


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