Around President Joseph Aoun, the inescapable question of conflicts of interest

Lebanon will not emerge from its crisis only by changing the faces placed at the head of the state. It will also have to transform the rules according to which power is advised, decisions are prepared and private interests are separated from the general interest.

The election of President Joseph Aoun gave rise to hope for a restoration of the state, a return to public responsibility and a break with the practices that accompanied the financial collapse. But this ambition imposes a special requirement: the presidential entourage must be not only competent, but also above any suspicion of conflict of interest.

It is not a question of saying that the president’s advisers allegedly committed illegal acts. There is no basis for such a general conclusion. The question is more fundamental: are certain private functions, professional networks or business relationships compatible with a consultative role with the Head of State, when decisions specifically concern the sectors in which these advisers have exercised their responsibilities?

Since the 1960s, the mechanics of cross compromises

The conflict of interest in Lebanon is neither a recent accident nor an anomaly limited to a few individuals. It is part of an old political culture, gradually established since the 1960s and reinforced by war, power-sharing agreements and post-war reconstruction.

For decades, Lebanese public life has worked too often on the basis of a logic of cross-compromising:

« I vote for your nomination today, you vote for my project tomorrow. I’m protecting your minister, you’re protecting my general manager. I’m closing my eyes on your file, you’re preventing mine from opening. »

This system is not necessarily based on a written agreement. It operates through implicit exchanges of services, protections, appointments, contracts, licences, financing and immunity.

A party accepts the candidate of another party as head of a public institution in return for a position in an administration. A minister authorizes a market favourable to an economic group, while another minister protects the interests of a second group. A political leader supports a judicial appointment in return for future protection. A faction accepts a decision that does not immediately suit it because it knows that it can, in turn, pass its own case.

This practice is often described as a « political compromise ». But the democratic compromise must be distinguished from compromise.

The democratic compromise seeks a balance between several legitimate conceptions of the general interest. Cross-compromise is, on the contrary, the exchange of private benefits at the expense of this general interest.

When several organized groups share public resources, posts, contracts and judicial protections, it is no longer a state operating by compromise. It is a system of agreements between power networks.

In other words, inter-mafia practice.

What distinguishes a mafia from a state

The word « mafia » should not be used as a mere political insult. It designates a precise logic of the organization of power.

A mafia uses a collective structure to protect the private interests of its members. It distributes benefits according to loyalty, organizes reciprocal protections, punishes those who break the discipline of the group and seeks to escape the control of the law.

On the contrary, a State must use its authority to protect the general interest. It must apply the same rules to all, prevent private appropriation of public resources, guarantee competition, control those responsible and punish abuses, including when committed by persons close to the authorities.

The fundamental difference can be summarized as follows:

A mafia privatizes power for the benefit of its members. A State exercises power for the benefit of all citizens.

When a ministry becomes the territory of a party, when an administration becomes the reserved domain of a political family, when a supervisory body protects those whom it should supervise, when a magistrate is chosen to guarantee immunity, or when a public adviser directs a decision in favour of its private interests, the State partially ceases to be a State.

It becomes the instrument of particular coalitions.

The Lebanese problem is therefore not limited to individual corruption. It is a form of organized capture of institutions. The various power centres can publicly oppose each other while protecting each other when their essential interests are threatened.

They argue the state, but agree to prevent the state from controlling them.

The heart of the problem: who will bear the losses?

To understand the importance of this issue, we must return to the central context of the Lebanese crisis: the distribution of financial losses accumulated since 2019.

These losses, which amount to tens of billions of dollars, contrast several groups with deeply divergent interests:

• depositors, who want to recover their savings;
• banks, which seek to limit their recapitalisation and the liability of their shareholders;
• the state, already heavily indebted;
• the Bank of Lebanon;
• taxpayers;
• investors likely to enter the capital of restructured banks.

In this context, each public decision — and each advice given to the President — may favour, voluntarily or not, one category to the detriment of another.

Banks may seek to transfer part of the losses to the State, public assets or depositors. On the contrary, they demand that bank shareholders assume the losses as a matter of priority, in accordance with the normal hierarchy of financial responsibilities. The IMF, for its part, requires credible recognition of losses, bank restructuring and a fair distribution of costs.

It is within this framework that the appointments and advice surrounding the presidency are made.

The emblematic case of Varouj Nerguizian

Varouj Nerguizian’s appointment as financial advisor to the President illustrates these issues in concrete terms.

His experience is undeniable: a former head of the Bank of Sharjah, he is now President and CEO of Emirates Lebanon Bank, an institution directly involved in any restructuring of the Lebanese banking sector.

It is precisely this dual position that raises a major institutional issue.

Can the President be advised on bank restructuring, the distribution of losses, the fate of deposits and relations with the IMF while running a bank that could be directly affected by these decisions?

This question does not affect the intention of the person concerned. It refers to a fundamental principle: in a healthy democracy, a conflict of interest does not necessarily begin with proven corruption.

It therefore appears that an official may be placed in a situation where his judgment is likely to be influenced, or perceived as such, by his professional, financial or relational interests.

The very appearance of the conflict is enough to weaken confidence.

The controversial appointment of Karim Souaid

This problem was heightened when Karim Suaid was appointed Governor of the Bank of Lebanon on 27 March 2025.

This appointment was not merely an administrative decision. It directly concerned arbitration between the diverging interests mentioned above. The Governor plays a key role in defining the financial restructuring strategy.

Suaid obtained the support of a qualified majority of the Council of Ministers, but his candidacy did not reach consensus. Prime Minister Nawaf Salam publicly stated that he had not supported him, particularly because of his concerns regarding the protection of depositor rights, while Joseph Aoun supported this appointment.

In addition, several observers highlighted its links with certain actors in the financial world. In particular, it was reported that Varouj Nerguizian had served on the board of directors of Growthgate, the investment company associated with Suaid. This proximity was cited by critics as an element fuelling doubts about the candidate’s independence.

These elements do not constitute evidence of irregularity. However, they stress a lack of transparency.

Did the President’s financial advisor participate in the discussions on this appointment? Did he recommend the candidate? Was he challenged because of his professional ties? Did he declare his interests and relations?

The lack of precise public responses inevitably feeds suspicions.

Jurisdiction does not eliminate conflict of interest

Faced with these criticisms, one argument often comes up: only those from the banking sector would be able to understand the crisis.

This argument contains some truth. Technical competence is essential. But it does not exempt ethical rules.

In solid democracies, experts from the private sector can contribute to public action provided that their interests are declared, their incompatible functions are suspended and they recuse themselves when necessary.

Therefore, it is not a question of excluding financial professionals, entrepreneurs, lawyers or investors from public action. The aim is to avoid the same person being simultaneously judge, adviser and interested party.

In Lebanon, however, there is no sufficiently transparent mechanism for knowing:

• a complete list of the presidency advisers;
• their legal status;
• their possible remuneration;
• their private functions;
• their financial contributions;
• the files on which they intervene;
• the persons and companies they meet;
• the recommendations they make;
• situations in which they must recuse themselves.

This opacity is all the more problematic since presidential advisers can exercise considerable influence without being subject to parliamentary scrutiny by ministers.

The risk of a presidency captured by networks

Beyond individual cases, the problem is systemic.

In the Lebanese system, power is not exercised solely through formal institutions. It also circulates through family, economic, banking, media and religious networks.

A personality may appear politically independent while being deeply linked to powerful economic interests.

A counsellor can be without partisan affiliation while being integrated into the banking system. Another can be presented as a technocrat while being linked to large economic groups. A third may intervene in cases where its private partners have direct interests.

In these circumstances, the risk is not always that of brutal state capture. Rather, it is a gradual influence through a succession of technical decisions, recommendations, appointments and administrative exceptions.

Each decision may seem defensible in isolation. But the whole ends up producing a system in which the general interest is constantly subordinated to the balance between private groups.

A national procedure against private State capture

It is not enough to ask those responsible to be honest. A procedure must be built that makes state capture difficult, visible, controllable and punitive.

This procedure should apply to the whole public chain: the Presidency, government, ministries, administrations, regulatory authorities, supervisory bodies, justice and political advisers.

1. Prior and public declaration of interests

Before any appointment, each minister, adviser, general manager, member of a regulatory authority, magistrate holding a sensitive office or responsible for a supervisory body shall file a detailed declaration including:

• his current and past professional duties;
• its direct and indirect shares in companies;
• its terms of office as administrator;
• significant business relationships;
• the interests of his spouse and dependent children;
• the important clients he has advised over the last five years;
• gifts, benefits, financing or remuneration received;
• its possible debts to banks or undertakings subject to its authority.

A version accessible to the public must be published, subject to the legitimate protection of certain personal data.

A false or incomplete statement must result in the immediate suspension of the person concerned and the initiation of an investigation.

2. Independent review prior to appointment

The declaration must not remain a formal document stored in a drawer.

An independent High Authority for Public Integrity must examine declared interests before taking office. It must be able to:

• authorize the appointment;
• li authorize under certain conditions;
• require the sale or independent management of certain assets;
• require the suspension of a private function;
• determine the files from which the person should be excluded;
• declare the appointment incompatible with the public interest.

This authority must not depend on the president, government or parties. Its members must be appointed in a pluralistic manner, with long, non-renewable terms and protected against arbitrary dismissal.

3. Incompatibility between certain public and private functions

Some functions cannot be reconciled.

A bank reform adviser should not be able to simultaneously lead a bank affected by the reform. A Minister of Energy should not retain interest in a contractor with his or her department. A telecommunications regulator should not advise a company in the sector. A magistrate should not deal with the case of a company represented by a family member.

The person must choose: to perform the public service or to retain his private activity.

Where incompatibility is temporary, assets may be placed in a truly independent management structure. But a mere fictitious transfer to a close relative or an interposed company must not be accepted.

4. Automatic challenge obligation

Any public official must withdraw from a file where it concerns:

• an undertaking in which it has an interest;
• a recent former employer;
• a business partner or partner;
• a close family member;
• an important customer;
• a person with whom he has a financial relationship;
• an institution of which he is a debtor, creditor or administrator.

The challenge must be written, reasoned, dated and published in a register.

The person in charge shall not attend meetings, preparatory discussions or voting. It must also not transmit indirect instructions through an employee.

5. Full traceability of the public decision

Any major public decision must leave a verifiable trace.

For appointments, contracts, licences, restructuring, privatizations, concessions and important regulations:

• the list of persons involved in the preparation of the decision;
• studies and opinions received;
• meetings with interested parties;
• declared conflicts of interest;
• objections made;
• the criteria used;
• the votes cast;
• the final reasons for the decision.

This traceability would answer an essential question: who advised who, to whom, and on what basis?

6. Public Register of Interest Representatives

Lobbying exists in all societies. The problem is not its existence, but its opacity.

Any bank, company, professional association, law firm, economic group or organisation seeking to influence a public decision must be entered in a register.

The register shall indicate:

• the decision that the actor seeks to influence;
• the names of its representatives;
• public officials met;
• the documents submitted;
• expenditure incurred;
• economic interests defended.

A public official should not be able to meet secretly with an interested party on a major file without official declaration.

7. Actual separation between ministry, control and private operators

The institution that develops a policy must not be alone in carrying out, monitoring and judging its own shortcomings.

It is necessary to separate clearly:

• the political authority setting the guidelines;
• the administration that executes;
• the independent regulator who controls;
• the Court of Auditors which verifies the use of funds;
• justice that punishes offences.

No minister should be able to appoint individuals to control their own department alone. No party should be able to regard an administration as its reserved domain.

Regulatory authorities must have autonomous budgets, transparent appointment procedures and protected mandates.

8. Independent oversight of public procurement

All contracts exceeding a specified threshold must be subject to:

• a public tender;
• a specification published in advance;
• objective evaluation criteria;
• a documented opening of tenders;
• a publication of the beneficial owner of each candidate company;
• prior control of conflicts of interest;
• a right of rapid recourse for competitors;
• an audit after performance of the contract.

OTC contracts must remain exceptional, time-limited and publicly justified.

9. Independent Justice and Specialized Chamber

No procedure against conflicts of interest can work if justice remains subject to political influence.

A specialized judicial chamber must be set up in:

• corruption;
• conflicts of interest;
• influence traffic;
• illicit enrichment;
• fraud in public procurement;
• obstruction of control bodies.

Its judges must be selected on the basis of professional criteria, protected against arbitrary change and have independent financial investigators.

The prosecution must not be able to politically block a sensitive case.

10. Protection of whistleblowers, journalists and experts

Persons who disclose a conflict of interest must be protected from:

• dismissal;
• abusive prosecution;
• intimidation;
• defamation campaigns;
• administrative sanctions;
• disclosure of their identity.

A secure platform should enable officials, journalists, experts or citizens to transmit documented information to the competent authority.

Prosecutions to intimidate whistleblowers must be promptly rejected.

11. Deficiency period before and after the public service

A manager from the private sector must not be able to regulate his former employer immediately. Similarly, a minister or regulator should not join, at the end of his or her duties, a company which he or she has favoured or controlled.

A default period of two to five years, depending on the level of responsibility, must apply:

• prior to the examination of certain files relating to a former employer;
• after exiting, before joining an actor in the supervised sector.

This rule avoids « turning doors » between public and private interests.

12. Personal, financial and political sanctions

A rule without sanction is only a moral recommendation.

Violations shall, depending on their seriousness:

• annulment of the decision concerned;
• the dismissal of the person responsible;
• temporary or permanent eligibility;
• restitution of unfairly obtained benefits;
• fines proportional to the profit sought;
• exclusion from public procurement;
• criminal prosecution;
• confiscation of gains from the offence.

The responsibility must be personal. It must not be absorbed by the institution or transferred to taxpayers.

Special procedure for advice to state leaders

The Councillors of the President, the Prime Minister, ministers and leaders of public bodies hold a particularly sensitive position.

They can influence major decisions without signing the final decree, without participating formally in the vote and without appearing before Parliament.

A specific procedure must therefore be applied:

1. Any person who regularly advises a public official must have an official status.
2. Its area of competence must be defined in writing.
3. Its private interests must be declared prior to any intervention.
4. Each notice concerning an appointment, regulation or significant financial transaction must be archived.
5. Any links with a person or institution concerned should be reported.
6. In the event of conflict, the adviser should be excluded from the entire process, including informal discussions.
7. The political officer receiving the council must confirm in writing that he or she has been informed of the potential conflict.
8. A synthesis of the critical opinions must be accessible to the supervisory bodies.
9. An adviser must not be able to negotiate secretly with a private party on behalf of the State.
10. Any hidden intervention for the benefit of a particular interest must be treated as traffic of influence.

Informal advice should no longer be a space without rights.

What President Aoun should do

Joseph Aoun made the restoration of the state one of the foundations of his mandate. It could give concrete expression to this promise by immediately applying these principles to the President of the Republic.

In particular, it should:

1. publish the full list of its advisers;
2. define their status and areas of intervention;
3. make public their declarations of interest;
4. imposing suspension of incompatible private functions;
5. publish the objections on sensitive files;
6. establish a register of meetings with representatives of banks and major economic groups;
7. ensure traceability of recommendations on important appointments;
8. submit its entourage to an independent ethics committee;
9. publish a presidential charter on conflict of interest prevention;
10. forward to Parliament a draft law generalizing these rules to all institutions.

These measures would not target a particular person. They would protect the presidency, honest advisers and the credibility of the state.

Moving from personal trust to institutional trust

Lebanon has worked too long on personal trust: « Trust me, I am honest. Trust him, he’s competent. Trust us, we represent our community. »

But a State cannot rely solely on the supposed virtue of individuals.

Modern democracy does not require citizens to blindly believe in leaders. It gives them the means to control them.

Even the most competent adviser must accept transparency. Even the most honest official must recuse himself in case of doubt. Even the most intentional president must account for the influences surrounding his decisions.

The real problem is not just to prove the existence of mistakes. It is to ensure that institutions are able to prevent, detect and punish them.

It is this grey zone that must be eliminated.

Since the 1960s, Lebanon has moved from compromises to compromises, from mutual protection services, to making the State a negotiating table between particular interests.

The logic must now be reversed.

Parties, banks, political families, businesses and communities must be submitted to the State. The State must no longer be subject to their arrangements.

Because a mob organizes power to serve its members. A state organizes power to serve society.

The whole reconstruction of Lebanon lies in this difference.