Suspension of Lebanon's financial watchdog postponed after internal dissent

Lebanon's decision to suspend the Capital Market Authority pushed back to January 31

Many Lebanese people have lost their life savings in the country's financial crisis. AP Photo
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Lebanon's decision to suspend the oversight authority for capital markets, which previously uncovered important financial scandals, has been postponed until January 31 in response to internal dissent over the decision.

Employees at the Capital Market Authority (CMA) were initially given the option to take unpaid leave for at least six months or resign by January 10, while board members are expected to retain their positions.

The deadline was “extended” after a meeting on Tuesday, according to a CMA decision seen by The National.

The CMA is a key institution whose role is to supervise activities within the capital markets and sanction potential wrongdoings by financial institutions.

On December 27, its board, chaired by Wassim Mansouri, the interim governor of the Banque du Liban (BDL), decided to temporarily suspend its work, citing financial reasons.

The move provoked significant opposition.

A CMA board member, Walid Kadri, had labelled the decision a “dangerous turning point” that would leave the financial sector without “a major supervisory authority”.

He maintained that there was enough funding for 2024 from the contributions of licensed financial institutions.

Other sources close to the CMA argued that the current budget would not allow employees' salaries to be re-evaluated amid the devaluation of the currency.

Many employees earn a few hundred dollars and have been pushed to leave, putting the institution's performance at risk.

Mr Kadri presented his argument on Tuesday.

“The positive outcome is that we were able to demonstrate that we have sufficient funding to continue with our work. Now, it will be more challenging to proceed with the suspension in light of these facts,” Nadine Abdelnour, the Secretary-General of CMA, who also opposed the decision, told The National.

But the decision has not been finalised, only postponed.

Another meeting is set to take place next week for a final decision on whether the suspension is maintained or not

Ms Abdelnour said that board members opposing the decision will prepare a more detailed study before next week on budget funding and restructuring the institution, which has around 40 employees.

“If the suspension is not reversed next week, the latest move decided by the interim governor of the BDL might have been only to buy time,” she said.

“If Mr Mansouri does not cancel his initial decision, we would be left with the only option of taking legal recourse.”

Lebanon's severe economic crisis, which erupted after decades of corruption and mismanagement, has left Lebanese depositors unable to access their life savings.

Many Lebanese have called for greater accountability for the crisis. The CMA had played a major role in investigating some of the irregularities in the sector.

But few have been held accountable for the crisis, with financial losses surpassing $70 billion, a banking sector mostly insolvent and a currency which lost 98 per cent of its value.

Despite a series of financial scandals, the Lebanese judiciary has yet to hold any officials or members of the banking sector accountable.

Updated: January 10, 2024, 8:59 PM