Crisis-hit Lebanon faces petrol station strike
BEIRUT: An international oil trader is suing a Lebanese bank in the United States over failing to release $1 billion in deposits, court documents showed, charges the banking institution denied yesterday. IMMS has filed a suit against BankMed in the Supreme Court of the State of New York over the “brazen theft of more than $1 billion”, according to court documents dated November 22 and seen by AFP. The lawsuit comes as Lebanon grapples with widespread anti-government protests since October 17, a free-falling economy, and an escalating liquidity crisis.
The oil trader, which is incorporated in Belize, said it asked to withdraw its money on November 8, and received no response for several days, according to the court documents. It said the bank on November 12 informed it was terminating overdraft and letter of credit facilities due to “the prevailing circumstances and to the material adverse change in the economic condition of Lebanon and the Lebanese financial markets”.
BankMed yesterday strongly denied the allegations. “The $1 billion deposit is a blocked deposit by instructions of IMMS maturing in about 2 years from now,” it said. “Between October 30 and November 12, 2019, BankMed discovered material breaches of contract and attempts by IMMS to direct funds due to BankMed overseas,” it said. “BankMed opposed such attempts by IMMS and took appropriate actions.” It said the banking contract was subject to Lebanese law and that it would submit its response to a court hearing in Beirut next month, without giving a specific date.
BankMed is chaired by Mohammed Hariri, a cousin of outgoing Prime Minister Saad Hariri’s late father Rafik. Nazek Hariri, the widow of the embattled premier’s father, sits on the bank’s board of directors-as does the current interior minister, Raya Al-Hassan. Since September, debt-saddled Lebanon has had a liquidity crisis, with banks rationing the withdrawal of dollars. The exchange rate in the parallel market has shot up from the pegged rate of 1,507 pounds to a dollar to more than 2,000.
Petrol station strike
Meanwhile, petrol stations in Lebanon began an open-ended strike yesterday nationwide, a union representative said amid the country’s worst economic crisis in decades. Protests since Oct 17 have pulled Lebanon deeper into economic crisis, worsening a hard currency crunch that has hit importers and raised fears of price hikes and shortages.
In a statement carried on state news agency NNA, the petrol stations union said it was striking because of losses incurred from being forced to purchase dollars on a parallel market, the primary source of hard currency in economic hard times. Petrol stations must collect payments from customers in Lebanese pounds but pay private fuel importers in dollars.
The cost of dollars on the parallel market has surged since the start of protests, hovering currently at about 40% more than the official pegged rate, set at 1507.5 Lebanese pounds since 1997. There were queues at some petrol stations in Beirut late on Wednesday but the situation remained relatively calm. The central bank said last month that it would prioritize foreign currency reserves for fuel, medicine and wheat, but buyers tapping the facility are still required to supply 15% of their own dollar needs. Lebanon’s energy ministry sets guidelines for gasoline price levels. The ministry said it would test a state tender for gasoline next month after fuel distributors threatened to raise prices. – Agencies