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Return to sanity now

A call for fiscal accountability

by Executive Editors

After years without a state budget, Parliament met in October and voted the 2017 budget into law. What Parliament should have done is pass the 2018 budget, because the current fiscal year is almost over.

There are also allegations that Parliament broke the law and violated the constitution: To pass a budget an audit must first be performed, and there are both political and technical reasons why Lebanon has not audited its books since the 2005 budget (see overview).

Parliament could have required an audit of all the financial accounts since the 2005 budget, but it did not. The constitution requires an annual audit that must happen before a new budget can be legislated. Parliament worked around this constitutional requirement by inserting a clause in the 2017 budget law that allowed the state to delay the audit for 12 months. This arguably violated the constitution. If the constitution is not upheld we are at risk of losing the identity of the state.

Held to account

Leaders have not yet abandoned the audit but this could still happen at a later date. We must double our vigilance to make sure this audit happens. We want to know whether the $130 billion in public spending between 2006 and 2016 is inflated and whether any of that money was wasted, fraudulently spent, or stolen. We want to know whether any of the $93 billion in collected revenues over the same period were mismanaged. And if there was negligence or criminality in how our public finances were managed, we want to exercise our right as citizens to hold those responsible to account.

Accounting is more than tangentially related to accountability. We don’t need accounting if there is no accountability afterward. The Ministry of Finance has found so many huge anomalies and mistakes that they have spent years trying to trace back to zero, the ministry’s director general told Executive on more than one occasion.

Whenever there is a situation where money is invested there is also an automatic incentive for people to take advantage of that money and, depending on their personal set of convictions, take as much as possible. We need to establish accountability by implementing the accounting process with all its regulatory and legal consequences and repercussions. Auditing, cost control, and cost supervision are at the heart of this process and usually a government would have a two-tier audit, internally and externally.

That’s at the procedural level. The absence of a budget for 12 years certainly interplayed with and possibly strengthened an atmosphere where waste, fraud, and theft could more readily occur.

Past time

According to Georges Corm, who served as Lebanon’s finance minister from 1998 to 2000, there were a lot of problems rebuilding the institutional capacity of the Ministry of Finance after the civil war. The same can be said more broadly of the government and the national economy.

In the years from 1992, Lebanon had a prime minister with practically zero experience in Lebanese politics, but a wealth of knowhow in business. Rafiq Hariri came into government with the assumption of working with anyone still standing, whether warlord or not, and dealing with different groups holding special interests, attempting not to upset anyone, and trying to get the country back on exponential growth trajectories enshrined in the vision 2000 documents. In that situation, Hariri was allocating whatever money there was to mobilize the economy. In the two decades since, Lebanon does not have the same excuse. The infighting of 1997 is not so relevant in 2017.

But the lack of accountability since 2005 was a sustained effort. For a very long time, despite knowing that something was wrong, efforts were never made to rectify and bring the budget process back on track. And this willful non-accountability continues today, despite the obvious that in times of relevant and unassailed peace Lebanon was mandated to have a government and not some type of militia rule living in palaces. The sustained non-accountability in the system for at least the last 12 years, if not the last 25, brings us to a point where we, the people, shall give no pardon.

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Executive Editors

Executive Editors represents the voice of the magazine.

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