Beirut, Lebanon – Last week, Maliha Badr Raydan received an unexpected call from the manager of her Bank Audi branch in Lebanon, informing her that her account had been closed.
“He said they [Bank Audi] had left a cheque worth the balance of my account at a notary,” the Lebanese-British national told Al Jazeera. Accepting the cheque would make it difficult for Raydan to take legal action against the bank.
The alternative provided by the bank involves a form, obtained by Al Jazeera, which, if signed, would waive customers’ rights to transfer their funds abroad in foreign currency, or take legal action to force the bank to do so.
Raydan is one of dozens of dual Lebanese-British nationals living outside Lebanon who have received similar calls from Bank Audi, one of the cash-strapped country’s largest banks.
“Over the last four days we’ve received 35 or 37 cases,” Dina Abou Zor, a lawyer and co-founder of the Depositors Union, a group of volunteers providing legal support for people with money trapped in banks, told Al Jazeera.
To make matters worse, the cheques sent by the bank cannot be cashed anywhere, as Lebanon’s insolvent banks are holding back from opening new accounts until they are supplied with hard foreign currency, often referred to locally as “fresh dollars”.
According to Abou Zor, that means the depositors have lost access to the money that was deposited in their bank accounts.
“This cheque is just a paper signed by Bank Audi with no financial or legal value,” she said.
The funds now seemingly locked in the accounts are United States dollars that were deposited before October 17, 2019, when mass protests swept Lebanon directed against the country’s ruling parties and banks. Frustration with the banks had stemmed from the withholding of foreign currency due to cash shortages. Lebanon’s banks have since prevented depositors from accessing these dollars, as the economy continues to spiral, pushing over three-quarters of the population into poverty.
Unofficial capital controls
The Lebanese government has not implemented official capital controls, which would legally limit foreign currency from being transferred outside the country. However, banks have implemented their own withdrawal limits, making life extremely difficult for millions of Lebanese buckling under soaring inflation and rampant unemployment.
The limits imposed by the banks only allow customers to withdraw their US dollars after they have been exchanged to Lebanese pounds. However, the exchange rate is unfavourable and means that the withdrawer loses a significant percentage of the actual value of the dollars.
Raydan, a mother of two young teenagers, lost her husband due to a heart attack in 2019. Her bank account holds funds his former employer provided to pay for her children’s school tuition fees until their graduation.
“I asked why this was happening. She said it’s because I have a British passport,” Raydan said.
The demands from Bank Audi have come soon after a court case in the United Kingdom, where Lebanese-British businessman Vatche Manoukian obtained an order on February 28 for Bank Audi and another large Lebanese bank, Société Générale De Banque Au Liban (SGBL), to transfer $4m in locked savings to Manoukian. The court stipulated that the funds should be released without any restrictions imposed by the banks.
Both banks have agreed to transfer the funds, according to Bryan Cave Leighton Paisner LLP, the law firm representing Manoukian.
Lebanese banks, including Bank Audi, now appear to be restricting withdrawals for people with British citizenship in an attempt to avoid cases like that of Manoukian in the future.
“We have been approached to act for other depositors and will consider acting in relation to appropriate cases,” a spokesperson for the firm told Al Jazeera.
Another depositor who received a call from Bank Audi, an Iraqi-British national who wished to stay anonymous for fear of legal reprisals, believes that the demands from the bank are in response to the Manoukian case.
“I got the call the day before the case was publicised in the media,” they told Al Jazeera, adding that they had refused to sign the form.
“Nobody in the whole world would agree to these terms, in which they would lose all their rights. The money is clean and I presented my papers to the bank to show where it came from.”
A British Embassy spokesperson told Al Jazeera that the situation is “symptomatic of Lebanon’s failing economy”, and urged the government to implement structural reforms.
“We sympathise with depositors who have lost access to their accounts or funds,” the spokesperson said. “We recommend issues are best addressed through the relevant legal channels.”
The Lebanese government has failed to implement economic reforms that would lead to increased transparency and accountability, while power cuts and high inflation continue to paralyse public life. Talks about an International Monetary Fund-approved programme are believed to be far from completion, despite intermittent meetings since May 2020.
Abou Zor and other lawyers from the Depositors Union are now taking legal action in Lebanon against Bank Audi.
“We’re going to be filing lawsuits on behalf of depositors who are willing to go through this process [legal action] in order to reopen their bank accounts, and are refusing to claim the cheques the banks are leaving with the notary,” she explained.
While all the current cases being prepared involve Bank Audi, Abou Zor says that other major Lebanese banks have made similar calls to depositors lately, and that the country’s judiciary must act.
“Our own judiciary has to take action, because what is happening is the theft of the century.”