economy crisis
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LEBANON: ‘The main culprits of the current crisis are bank owners and their greed for profit’
CIVICUS speaks about Lebanon’s ongoing financial crisis and the situation of depositors who are unable to access their savings with Alaa Khorchid, head of Depositors’ Outcry Association. Depositors’ Outcry Association is a citizens’ group that formed in 2019 to support depositors’ attempts to withdraw their savings from Lebanese banks after their accounts were frozen in response to the financial crisis.
Who is to blame for the situation Lebanese depositors are currently in?
Lebanese depositors are desperate because their savings have been frozen, so they cannot withdraw them from banks. The way they are being mistreated is outrageous. If a depositor simply complains loudly, bank staff call the police on them. Even if they have a million dollars in the bank, depositors are unable to get medical treatment or pay for their kids’ university fees. Banks are only allowing them to withdraw US$140 a month, and are told if they have an issue with that limit, they can go ahead and file a lawsuit.
The main culprits of the current crisis are bank owners, whose greed for profit got us to this point. What they did was a scam. They sent representatives abroad to convince Lebanese expatriates and foreigners to invest their money in Lebanese banks even though they knew we were heading into a crisis, while they smuggled their own money to France, the USA or the Gulf countries, where their investments amount to billions.
Also responsible are state authorities, starting with Riad Salameh, governor of the Banque du Liban (BdL), Lebanon’s central bank. He should have regulated banks and held them accountable three years ago, but he didn’t.
The government is responsible for not applying the laws on banks owners. They should have forced them to return depositors’ money out of their own pockets, but instead allowed them to smuggle their money abroad.
The courts also have their share of responsibility, as they have thousands of cases pending, years after they’ve been filed. When cases filed by depositors in Lebanon reach a certain point they are shelved, while in France and the UK depositors managed to win their cases and get their money back.
How have people organised to get their money back?
People got together to fight collectively through organisations such asDepositors’ Outcry Association, which formed in 2019. Asan association, we have filed lawsuits against the BdL governor as well as the Association of Banks in Lebanon (ABL) and one bank, the Société Générale de Banque au Liban (SGBL), that smuggled US$1.2 billion out of the country. All these lawsuits have been pending for years because most of the judiciary has been bribed by the banks.
We also support depositors by mediating between them and the banks. For example, we have a list of cancer patients that we shared with the banks to try and convince them to release some of their funds to enable people to pay for treatment. Some banks, but not all, have responded positively.
Some depositors have gone the banks to get their money by whatever means. One of them was Sali Hafiz, whom we supported. Hafiz asked for our help; a lawyer and members of the association went inside the bank with her and over 100 members were outside the bank to cheer for her and ensure her safety. We also helped a retired serviceman in Chtoura retrieve some of his savings from the bank. The association’s lawyer follows up with depositors, and when a depositor enters a bank to try to get some of their money back, we spread the word among our supporters so people gather outside in support and make it harder for others to enter the bank or for security to kick them out.
It is worth noting that not all the organisations out there are supporting depositors. There are several organisations funded by ABL or SGBL, which obviously always side with the banks. The same applies to local media, which continues to accept money from the banks in the form of advertising. Depositors have had their accounts blocked for three years on the grounds that there is no money to give them back, but the banks still find money to pay for advertising.
What needs to change so the situation can be resolved?
We don’t have a functioning governance system. Banks have retained people’s savings for three years and the BdL has allowed this to continue, while the judiciary has protected the banks by withholding thousands of cases without reaching a conclusion. Many judges have a financial incentive to behave this way: they got bank loans worth millions of US dollars, which they are now repaying in Lebanese lira at a ridiculous exchange rate – they will end up paying 10 per cent of the original amount. This is a real scandal.
The first change needed is to replace the BdL governor. He is the one behind the financial policies issued in 2017 and 2018. He brought cash in from correspondent banks and loaned it to the state without any guarantees. He spent US$100 billion without ever being held accountable. He considers himself above the law: he faces multiple lawsuits but he simply refuses to show up in court.
What are the implications of the recently passed Banking Secrecy Law?
Parliament passed an amended Banking Secrecy Law that will lift secrecy on the bank accounts belonging to public officials and major bankers. We find the new law acceptable, although we hoped it would apply retroactively. As we told the head of the Parliament’s Finance and Budget Committee, we want to clarify what happened to the funds the political and financial elite transferred abroad after 17 October 2019, estimated at between US$13 and 15 billion. We want to understand who smuggled them and where to. But the new law won’t solve all the issues as there is no trust in the banking system.
Another bill, the Capital Control Law, is set to be discussed in parliament, but there is still no final draft to comment on. Unfortunately, it is a bit too late to discuss capital controls, once capital has been massively smuggled abroad. Capital controls should have come a week, even a month into the crisis, but not after three years. Banks have smuggled the funds of the elite abroad because there were no legal impediments. The latest update we heard regarding the capital control law is that there will be no separate capital control law and it will be part of a larger recovery roadmap consisting of many changes in addition to capital control. We consider the potential recovery roadmap as a death sentence to depositors.
What do you think about the conditions imposed by the International Monetary Fund (IMF) for approving a US$3 billion loan?
According to the government, one of the IMF’s main conditions is to write off US$70 billion of depositors’ funds. If that is what the IMF wants in exchange for giving the state a US$3 billion loan, then of course we are against it. The IMF can’t ask the state and BdL to write off as much funds to ensure they get repaid for their loan. Some members of parliament promised us they would refuse to pass any legislation to that effect.
But a reform requested by the IMF that is most important to us, and which ABL rejects, is the restructuring of banks. We hope that banks will be restructured and a timeline for repaying depositors will be released.
At the beginning of the crisis, BdL had US$34 billion. Today, it has US$8 billion. Those billions are gone due to governance failures. If the same policies remain in place, nothing will work, regardless of whether the IMF gives the state a loan of US$3 or 10 billion. The first step to get out of this crisis should be to guarantee deposits, because the crisis wasn’t the depositors’ fault.
In the past 15 years banks made over US$35 billion in profit, which was transferred abroad. We demand a forensic audit of each bank to find out which had profits, and how much. There are 40 banks in Lebanon. Why are they being treated as one? We should examine each separately.
Civic space in Lebanon is rated ‘obstructed’ by the CIVICUS Monitor.
Get in touch with Depositors’ Outcry Association through itsFacebook page.
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SIERRA LEONE: ‘Civil society plays a crucial role in ensuring free and fair elections’
CIVICUS speaks about Sierra Leone’s 24 June general election with John Caulker, founder and executive director of Fambul Tok.Founded in 2007, Fambul Tok (‘Family Talk’ in Krio language) is a civil society organisation (CSO) that promotes peace, restorative justice and community building in post-civil war Sierra Leone.
What’s at stake in the 2023 general election?
For many Sierra-Leonean voters, the most pressing concerns revolve around the economy. In his first term in office, President Julius Maada Bio of the Sierra Leone People’s Party, who has just won re-election, allocated 21 per cent of the government budget to support education, positioning himself as a champion of human capital investment. In his second presidential campaign, Bio expressed a commitment to overhaul Sierra Leone’s agricultural sector, believing it will lead to an economic turnaround.
Bio’s supporters believe that the global economic crisis is the main reason for the current financial predicament in Sierra Leone. But Sierra Leone’s economic instability started a lot earlier, with the outbreak of Ebola in 2014, and subsequently deteriorated further with the decline in iron ore mine prices on the global market, the COVID-19 pandemic and the war between Russia and Ukraine. Inflation is in double digits, its highest level in almost two decades.
The main opposition party, All People Congress, nominated the same candidate, Samura Kamara, who previously lost the presidential election in 2018. Kamara, who is an economist, pledged to revive Sierra Leone’s struggling economy and promote national unity.
Both President Bio and Samura Kamara have significant support throughout Sierra Leone, while other candidates hoped that public dissatisfaction with the economy would turn votes against the two major parties.
In addition to selecting a president, voters also elected new lawmakers, mayors and councillors.
What changes have been introduced to the electoral law?
As a result of a 2022 electoral reform, Sierra Leone now uses a proportional system for allocating parliamentary seats. The president decided to adopt this system to avoid by-elections and increase women’s representation, which can be done through legislative quotas when using party lists. The change was judicially challenged, leading to a landmark Supreme Court ruling that upheld the proportional representation system.
Some people believe that by adopting party lists and using multi-member districts, the proportional system takes away their right to choose representatives directly and hands that power over to political parties. Chernor Maju Bah, the leader of the parliamentary opposition, expressed concerns regarding the limited timeframe for educating the public about the intricacies of the new system and argued that more time was necessary to ensure a smooth transition.
Have fundamental civic and democratic freedoms been respected during the election process?
In recent years Sierra Leone has made progress towards safeguarding and upholding freedoms of expression and association in line with its constitution and international human rights standards. However, the situation has varied over time and challenges have arisen in some instances. For example, ahead of the election the Political Parties Regulation Commission imposed a ban on all street rallies organised by political parties. Many viewed this as an infringement of their right to peaceful assembly. However, political parties were still able to gather peacefully in public spaces such as stadiums, large fields and town halls. The use of social media is also subject to limitations and regulations outlined in the Cyber Security and Cyber Crimes Act of 2021. Some arrests have been made for violations of this law.
Sierra Leone has also made significant steps to improve its electoral processes and ensure a transparent, democratic and inclusive political system. Civil society plays a crucial role in ensuring free and fair elections by promoting voter education, monitoring the electoral process and advocating for electoral reforms. Both the government and civil society have made considerable investments to ensure that citizens are well-informed about their rights, the electoral process and the importance of participating in elections, thereby creating a more knowledgeable and engaged electorate.
Sierra Leone has also welcomed international election observers from various organisations and institutions, who provided an impartial assessment and promoted transparency. Moreover, political parties have collectively agreed to abide by a Code of Conduct setting out guidelines for ethical campaigning and peaceful behaviour during elections, encouraging parties to uphold democratic principles and discouraging any form of violence or intimidation.
How has civil society, including Fambul Tok, engaged in the election process?
CSOs have been vigilant and expressed concern over increasing ethnic-based campaigns, hate speech and unrest. These are viewed by civil society as early warning signs of conflict and election-related violence.
Although Sierra Leone has made progress in holding generally peaceful and credible elections, there have been isolated incidents of violence during this election period, including clashes between supporters of different political parties and between opposition supporters and the police, and instances of property destruction such as arson. The opposition also called for public demonstrations following the resignation of the electoral commissioner.
As a peacebuilding organisation, Fambul Tok is focused on promoting nonviolence and voter education through our community structures and is advocating for a culture of political tolerance. Fambul Tok facilitates stakeholders’ meetings to promote peace and national cohesion and avoid malice and violence despite political differences. This has promoted peaceful and inclusive political dialogue, raised awareness about electoral misconduct and ensured that appropriate measures are in place to prevent and address electoral violence, intimidation and any other actions that undermine the integrity of the process.
What international support is Sierra Leone’s civil society receiving, and what other forms of support would you need?
International support plays a crucial role in assisting Sierra Leone’s civil society in both the pre-election and post-election phases. Even though funding support for civil society has diminished during these elections, CSOs continue to collaborate with international institutions to uphold the values and principles of democracy.
International organisations, in partnership with the CSO National Elections Watch, have provided capacity-building training and financial resources to strengthen the skills and knowledge of local CSOs in election monitoring, advocacy, voter education and human rights promotion. This support enhances the effectiveness of civil society in promoting free and fair elections and safeguarding human rights. However, there is also a need for technical resources such as communication tools, data analysis software and logistical support to further enhance the capabilities of civil society.
In 2018 there was post-election violence throughout society. The international community should support CSOs to engage in post-election peace and cohesion campaigns. This involves encouraging communities to accept the outcome of the electoral process and respect the rights of individuals. Diplomatic missions and human rights organisations should remain engaged in the process and keep advocating for a conducive environment for free and fair elections. They can do this by applying diplomatic pressure, issuing public statements and engaging with national authorities to address concerns related to civic space, human rights and electoral integrity.
It is crucial that international support is tailored to the specific needs and priorities of Sierra Leone’s civil society, in close consultation and collaboration with local groups. This approach ensures that support is context-specific, sustainable and responsive to challenges on the ground.
Civic space in Sierra Leone is rated ‘obstructed’ by theCIVICUS Monitor.
Get in touch with Fambul Tok through itswebsite orFacebook page, and follow@fambultok onTwitter.
