Independence of the Judiciary Coalition Statement on the Exclusion of the Cases Authority: The State Is Entitled to Litigation and Defense in the Optimum Case

Independence of the Judiciary Coalition Statement on the Exclusion of the Cases Authority: The State Is Entitled to Litigation and Defense in the Optimum Case

First Investigating Judge in Beirut Bilal Halawi has refused to recognize the Cases Authority’s standing to appear in the case brought against Riad Salameh and his associates for embezzling funds from Banque du Liban. Hence, after prohibiting its president, Judge Helena Iskandar, from attending Salameh’s interrogation, he tasked her with demonstrating two things before he decides whether it may appear in the case.

 

Firstly, he tasked her with demonstrating that the minister of finance has approved Salameh’s prosecution, implying that the Cases Authority may not make the decision to represent the state of its own accord and must instead obtain the approval of the relevant minister in advance. This is not the first time that this issue has been raised against the Cases Authority as Salameh and the Public Prosecution previously raised it before former first investigating judge Charbel Abou Samra in the case concerning the commissions paid to Forry Associates. In that instance, the Cases Authority explained that it had filed the action against Salameh after writing to the Ministry of Finance to inquire about the minister’s position and receiving no response. The matter was resolved when Minister of Finance Youssef Khalil sent a letter to the Cases Authority expressing his surprise that such a request had been directed toward him and authorizing it to do whatever it deems fit to protect the state’s rights. In reality, this issue is not a technical issue but an institutional one related to whether the Cases Authority, when carrying out its responsibilities to represent and defend the state, is sufficiently impartial and independent to take action based not on the will of a given minister but on the law and public interest. The importance of the Cases Authority’s independence is underscored by the fact that it is composed of judges, as well as by internationally recognized best practices in this area. Any talk to the contrary places the state’s interest under the control and ceiling imposed by the ruling authority, thereby reducing the chance that the state will be protected effectively. While the Cases Authority can be credited with insisting on its independence, we await all judges before which it might appear to recognize the importance of this independence based on their allegiance to the people, in whose name they deliver their rulings.

 

Secondly, he asked her to demonstrate the state’s standing and, therefore, its damages, especially as Banque du Liban is appearing in the case as a private plaintiff. In other words, the investigating judge appears to be asking the Cases Authority to demonstrate the specific damage that the Lebanese state has suffered and that is not covered by the central bank’s claim. Banque du Liban is the legal owner of the money that the case concerns, which was embezzled from its coffers. In this regard, we must note three things:

 

Firstly, the present case addresses violations that occurred in the administration of Banque du Liban and contributed in a key manner to the unprecedented financial, economic, and monetary collapse. Because of this collapse, the state lost the actual value of many of its accounts with Banque du Liban and the value of its resources and national currency, not to mention the grave damage done to its public utilities, economy, and banking sector. The fact that the case only concerns USD40 million is no counter argument as this sum represents but a small portion of the transactions conducted with Optimum Invest, which amounted to more than USD8 billion, i.e. approximately three times the state’s annual budget. Moreover, the forensic audit report established that the transaction the case concerns was part of a systematic scheme based on financial engineering that occurred between 2015 and 2019.

 

Secondly, the damage that the state incurred because of the violations attributed to Salameh is virtually the largest damage that any state has suffered as a result of actions by the governor of its central bank. It is also among the largest damages that a Lebanese official has caused to the Lebanese state. Hence, if the state is deemed undamaged by Salameh’s actions, the word “damage” becomes meaningless.

 

Thirdly, we remind everyone concerned that the state is the sole owner of Banque du Liban and that under Article 116 of the Money and Credit Code, it bears the burden of the bank’s losses, within certain conditions. Hence, the state is of course damaged by any misappropriation of the bank’s funds, especially if it leads to actual losses. In this regard, it is worth recalling the plans and proposals aimed at commodifying Lebanon and authorizing the state to sell its assets and utilities in order to plug the gap created by the central bank’s losses (see, for example, the three proposals presented by the Strong Lebanon bloc, the Strong Republic bloc, and the Development and Liberation bloc, which constitute a significant portion of Parliament, and aiming to allocate state funds to remedy the financial gap in the central bank’s accounts). How is it possible to scramble to charge the state with responsibility for most or all of the losses caused by the central bank’s administration, including via financial engineering, without accepting that it has been damaged by this administration’s actions?

 

Based on all these considerations, and following the Cases Authority’s appeal against the decision to exclude it from Salameh’s interrogation, and out of concern that this exclusion will deprive the state of the right to defend and ensure respect for public interest, is part of a plan to contain the case within a certain scope, and sets a dangerous precedent that could paralyze the Cases Authority’s work in all Banque du Liban and corruption cases and subordinate it to the will and interests of the ruling authority, the Independence of the Judiciary Coalition declares the following:

 

  • We insist on the Cases Authority’s independence in representing the state and defending public interest as a safeguard of the state’s impartiality toward political interests and considerations.

 

  • We insist on the state’s right to litigation and defense in cases concerning the administration of Banque du Liban and its funds, especially given the grave damage that the state incurred as a result, which amounts to astronomical sums unprecedented in every sense of the word.

 

  • We insist on the establishment of truth and achievement of full justice with regard to all the transactions between Banque du Liban and Optimum Invest, without any equivocation or curtailment, via a broad judicial effort to identify criminal responsibility for the collapse free of any selectivity, favoritism, or discrimination.

 

  • Intervention is needed to remove the obstacles and landmines that could obstruct the continuation of justice in this and other cases. Most importantly, we need legislative efforts, or else judicial interpretation, to end the absurd application of Article 751 of the Code of Civil Procedure, which has become a tool with which any defendant in any case – however socially important it may be – can obstruct the investigation at its inception. There is no better evidence of this than the suspension of the Indictment Authority’s investigation into the Forry Associates case, as well as the cases and prosecutions brought against many banks, via this article.
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