20 October 2020, Lebanon, Beirut: Anti-government activists chant slogans during a women-led protest near the home of Lebanese Speaker of the Parliament Nabih Berri demanding an end to corruption, the formation of a new government and early parliamentary elections(Photo by Marwan Naamani/picture alliance via Getty Images)

Lebanon’s New Law on Illicit Enrichment: A Step Forward in Fighting Corruption?

11/03/2020 . By Karim Merhej

On September 30, the Lebanese parliament convened to vote on a series of laws, one of which grabbed immediate headlines: formally titled the “Law on Financial Disclosure, Conflicts of Interest and Illicit Enrichment,” hereafter referred to as the 2020 Law on Illicit Enrichment.

Despite ratifying the United Nations Convention Against Corruption (UNCAC) in 2009, corruption is endemic in Lebanon. Last year, Lebanon obtained a score of 28 out of 100 in Transparency International’s Corruption Perception Index, and the uprising that erupted on October 17 of that year was largely fueled by anger towards a self-serving political establishment widely seen as irredeemably corrupt.

The 2020 Law on Illicit Enrichment comes amid a raft of anti-corruption related laws passed in recent years. Shortly after its passing, this law created much confusion as it was unclear whether its’ provisions apply to the highest offices in the government—namely the President, the Prime Minister, the Cabinet, and members of parliament (MPs). What exactly is the 2020 Law on Illicit Enrichment? Is it truly a step forward in the fight against corruption in Lebanon?

A much-needed new law

The 2020 Law on Illicit Enrichment constitutes a significant improvement over its predecessor, the 1999 Law on Illicit Enrichment.

The definition of “illicit enrichment” in the new law is much more comprehensive and clear, and applies to anyone who does any kind of work for the Lebanese state and engages with public funds. Public sector employees, members of the armed forces, ministerial advisors, temporary workers and firms contracted by the state all fall under the law’s provisions. The only civil servants exempt are faculty members of the Lebanese University, public schools and public vocational and technical institutes, as well as civil servants in ranks 4 and below (i.e. the lowest ranks of the bureaucracy). “llicit enrichment” encompasses any major increase of finances that cannot be justified by the regular salary of the employee. For example, if a civil servant were to start a job with a monthly salary of 10 million Lebanese Liras and three years later, that employee’s financial disclosure showed that he now owned several homes, such a drastic increase in wealth, which cannot be justified by the monthly salary, would be considered a case of illicit enrichment.

The three-year period in the aforementioned hypothetical example is no coincidence. Whereas the 1999 Law stipulated that public sector employees only had to make two financial disclosures during their tenures, one at the start and one upon leaving the job, the new law states that they are now required to make their disclosures once every three years. This makes it far easier to detect any anomalies in an employee’s financial situation. Another improvement regarding the disclosures consists of what precisely should be disclosed. While the previous law was somewhat vague, the new law is far more comprehensive and contains a 14-page financial disclosure form in the annex, which public sector employees must fill out and submit to the yet-to-be-established Anti-Corruption Commission once every three years. The form is divided into several sections and requires employees to provide justification for each revenue stream and assets owned or acquired, as well as the assets owned by spouses and underage children. Declared assets must include all movable and immovable assets in Lebanon and abroad, such as bank accounts, gemstones, jewelry, and cars, among others. Public sector employees must now declare whether they have stakes in or are part of for-profit and nonprofit ventures, and whether they have other sources of revenues, such as debt reimbursements, revenues from renting out real estate, or funds inherited from deceased relatives or received as gifts.

Employees who fail to submit their first financial disclosures within the timespan will be dismissed. The Anti-Corruption Commission is tasked with informing relevant authorities of non-complying employees whose salaries will be frozen until they submit the disclosures, after which they receive their salaries with a 10 percent penalty. Employees who submit false disclosures are punished with prison sentences ranging from six months to a year, along with fines ranging between 10 and 20 times the minimum wage.

The concept of “conflict of interest” is now enshrined in the law, so that companies connected to public officials do not get special treatment or privileges in the public procurement process. For example, a Minister of Public Works must declare whether he or she has any connections with companies that operate in the construction industry. Another example would be that of a Minister of Social Affairs, who would have to declare whether he or she has any connections to nonprofit organizations. Given that part of the ministry’s work involves allocating funds to non-governmental organizations (NGOs) and charities, this would ensure that well-connected NGOs do not obtain preferential treatment.

Lastly, the process of submitting complaints or whistleblowing is now significantly easier. In the previous law, complainants had to submit a bank guarantee of 25 million Lebanese Liras as well as proof of criminal activity carried out by the suspect; should it be determined that the complainant acted in bad faith, a fine of at least 200 million Lebanese Liras and a prison sentence ranging from three months to a year would be imposed. Given the large amounts involved and difficulties in obtaining proof of criminal activities, it was nearly impossible for complaints to be made under the previous law. Judge Issam Sleiman, former Head of the Constitutional Court, even stated the law was designed to not be implemented. To remedy this flawed process, the 2020 Law on Illicit Enrichment stipulates that complaints can be submitted to the Anti-Corruption Commission for free without evidence documenting that a crime has taken place. While this could theoretically lead to complaints being submitted at whim, it is nonetheless an improvement over the previous unimplementable law. During investigations, judicial authorities can demand that the suspect’s bank accounts be frozen for a period of 6 months, subject to renewal. Penalties for employees found guilty of illicit enrichment include prison sentences ranging from three to seven years, and fines ranging from 30 times to 200 times the minimum wage. The illicitly-acquired funds are either returned to the rightful owners or confiscated by the state.

Does the law cover the highest offices of the land?

During the parliamentary session in which the 2020 Law on Illicit Enrichment was passed, several MPs argued that amendments to the Constitution would have to be made for the law to apply to the state’s highest offices. Some local media outlets furthered these claims without any scrutiny, generating much controversy.

However, the issue is not as simple as the media has made it out to be—the law doesn’t explicitly state whether or not presidents, ministers and MPs are immune. A judicial interpretation is required in this case.

Concerning the President, Article 60 of the Constitution states that the President cannot be accused of any crime while in office unless two-thirds of the parliament approve, after which the President is tried by the Supreme Court for the Prosecution of Presidents and Ministers. This renders the President immune from the 2020 Law on Illicit Enrichment.

Concerning the PM and ministers, the situation is not as straightforward. In a webinar hosted by the Lebanese Transparency Association shortly after the law was passed, Judge Rana Akoum makes the case that the PM and ministers, unlike the President, are not immune. While Article 70 of the Constitution stipulates that Parliament can accuse the PM and ministers of committing high treason or for breach of duties, we need to consider two issues:

  1. whether the original drafters of the Constitution intended to have the PM and the ministers above the law, similar to the President
  2. whether the crime of illicit enrichment can be considered a “breach of duties”

Concerning the first issue, given that Article 60 of the Constitution clearly states that the President can only be tried by Parliament and by the Supreme Court, while Article 70 does not make the same reference concerning the PM and ministers, it becomes clear that the original drafters did not intend on giving the latter special immunity as enjoyed by the President. In addition, given that Article 60 specifically references “ordinary crimes” while Article 70 does not, this is a further indication that while the President cannot be tried in front of normal courts, this immunity is not applicable to the PM and ministers.

As for the second issue, according to Akoum, a decision made by the General Board of the Court of Cassation in 2000 clearly explained what “breach of duties” entails, namely duties that only a minister or PM are required to do, such as signing a decree or attending meetings of the Council of Ministers. Thus, an ordinary crime committed by a PM or minister should not be considered “breach of duty.” In addition, Article 11(a) of the 2020 Illicit Enrichment Law clearly stipulates that “llicit enrichment” is not considered a “breach of duty,” and should fall under the specialty of the juridical judiciary. Thus, based on Akoum’s judicial interpretation, the PM and ministers are not immune from being tried for illicit enrichment by judicial courts.

As for MPs, Judge Issam Sleiman stated that MP’s benefit from immunity only during active parliamentary sessions. Outside of such sessions, they can be pursued for illicit enrichment—Judge Akoum agreed with this assessment.

A step forward?

The 2020 Law on Illicit Enrichment is a step in the right direction, especially considering that the 1999 iteration was practically meant to be defective by design. Many of the loopholes that existed in the old law have now been remedied. The definition of “illicit enrichment” is now clear and straightforward. The financial disclosures public sector employees must submit are exhaustive even to the most minute details, and they must be made on a three-year basis rather than just twice during one’s career. The once-draconian process of whistleblowing on potential illicit enrichment has been greatly eased, which should theoretically encourage many honest employees to come forward and denounce the illicit acts of colleagues.

However, certain misgivings persist.

For one, financial disclosures must be made to the aforementioned Anti-Corruption Commission, which is tasked with ensuring that they are not fraudulent and that no red flags are found regarding employees’ wealth increases. This is a positive development in theory, as the Commission has significant powers when it comes to carrying out investigations and ensuring accountability. However, the Anti-Corruption Commission has yet to be established, despite the law’s adoption in April and its stipulation that the body must be formed within three months of its passage. As with any public sector body in Lebanon, there is a real possibility that once the Commission is established, it could fall under influence of the political establishment, or that it could be under-resourced to the point where it won’t be able to carry out any meaningful work.

Another obstacle to implementing the law is the very nature of the judicial branch of government. With a heavily-politicized judiciary, judges in Lebanon are often either at the mercy of the executive branch, or in collusion with them. According to the International Commission of Jurists, the Lebanese judicial system facilitates “improper political influence over virtually every aspect of judges’ careers, including their selection and appointment […] and their discipline, suspension and removal.” A heavily-politicized judicial branch makes the transparent judicial pursuit of illicit enrichment appear farfetched, especially given that jobs in the public sector are often provided not based on merit but on political and sectarian affiliations. In other words, many public sector employees, across various ranks, enjoy undue protections from the political elites.

Lebanon has a poor track record when it comes to the implementation of laws meant to combat corruption and foster transparency. Existing anti-corruption laws, while good on paper, are not properly implemented. The Access to Information Law (ATI), passed in 2017 and widely hailed by many as a significant step towards fighting corruption, is barely abided by. According to Legal Agenda, the ATI Law was passed merely as window dressing for Lebanon in front of the international community.

The President of the Republic is by all accounts immune from the 2020 Law on Illicit Enrichment, while fabricated constitutional disagreements or legal loopholes could effectively shield ministers and MPs from being pursued for engaging in illicit enrichment. Any minister accused of engaging in illicit enrichment would have a sizeable portion of Parliament jumping to their defense, potentially going as far as to claim that the Constitution must be amended before ministers can be tried for this type of crime.

Will the new Illicit Enrichment Law pave the way for a reduction in corruption in the public sector? Or will it suffer from the same fate as other anti-corruption related legislations? We cannot tell yet, but the context is not encouraging.