°®Âþµº

Independent MPs and Lebanese civil society warned on Thursday that the current version of the capital control law put in front of parliament could be used by banks to evade accountability for their alleged role in the 2019 financial meltdown.

The IMF has long requested the capital control law as part of a package of reforms it says is needed for Lebanon to unlock international aid, including US$3 billion from the IMF itself.

The purpose of the law was to create legal regulation around the freezing of Lebanese bank accounts to protect depositors and prevent the outflow of money from the country.

Lebanese banks froze the accounts of millions of small and medium depositors when the financial crisis started in the fall of 2019. Despite the informal capital controls, many Lebanese elites still managed to send their money outside the country.

However, the proposed law in its current form, "is one of the worst versions of capital control … as it has an article that states that any legal action, whether here or abroad, would be stopped," Dina Abu Zour, a lawyer with the Lebanese Depositors' Union, told °®Âþµº.

Article 12 of the proposed law "suspends the implementation of all enforceable judgements and decisions in Lebanon and abroad" against banks before and after adopting the law.

Zour explained that this article could be interpreted to prevent any lawsuits against banks for confiscating depositors' funds and their role in Lebanon's financial collapse.

A rush to pass new capital controls

Two independent MPs, Ibrahim Mneimne and Halima el-Kaakour, criticised the inclusion of the capital control law on Thursday's parliament agenda.

"This law, in its current form, is not a capital control law … it is a general financial amnesty law for all of the violations that happened in the past three years against depositors," Mneimne said on Wednesday.

The law was put on the docket for Thursday's parliamentary session after a series of revelatory accusations against Lebanon's banking sector.

On 11 August, a copy of an audit of Lebanon's Central Bank (BDL) was released, which alleged gross mismanagement, a lack of financial and political transparency, and over US$111 million of "illegitimate commissions."

On 10 August, the US, UK and Canada all issued sanctions on the ex-governor of BDL, Riad Salameh, whose is facing charges of embezzlement and money laundering in several European countries.

Demonstrators protesting in front of the Lebanese parliament on Thursday claimed that MPs were attempting to pass the capital control law to insulate the banking sector from corruption charges.

"How dare you put forward the capital control project to legislate the continued theft and waste of depositors' money? Every MP who participates in the vote is a traitor to the people and the nation," Khalil Broummana, a member of the depositor's outcry association, said at the protest on Thursday.

The parliamentary session was ultimately not held due to a lack of quorum, as members of the Christian Free Patriotic Movement (FPM) and opposition MPs boycotted the session. The MPs said they would not debate any new legislation until a new president of Lebanon was elected.

The two opposition MPs, Mneimne and el-Kaakour, put forward an alternative version of the capital control law in February, which they said would be more protective of depositors' rights.

On Thursday, the BDL also disclosed the actual number of its foreign reserves in a move designed to show greater transparency.

The bank's foreign reserves stood at US$8.57 billion. Before the financial crisis, BDL was estimated to have more than US$30 billion in foreign currency reserves.