Telecom ministers on trial

Source: Nidaa El Watan

“In the name of the Lebanese people,” the Second Chamber of the Court of Audit, presided over by Judge Abdel-Rida Nasser and composed of Advisors Mohammad al-Hajj and Joseph al-Kasrouani, issued a ruling against former telecom ministers involved in the scandals of the two Touch buildings: “Qasabian” and “Bachoura.”

It is a “precedent-setting” ruling, the first time that “violations” were translated into penalties proportionate to their gravity. After the Court first uncovered their threads in a special report issued by the same chamber in 2023, forming a judicial indictment followed by exhaustive investigations, the process culminated in convicting the ministers of mismanaging the sector, violating applicable laws and procedures, raising suspicions of money laundering, and passing vague and non-transparent contracts.

The first batch

There are 6 ministers who served successively since 2012: Nicolas Sehnaoui, Boutros Harb, Jamal Jarrah, Mohammad Choucair, Talal Hawat, and Johnny Corm. None were cleared of the violations attributed to them, although 2 were exempted from financial penalties due to the absence of proven bad faith. The total financial losses caused by their actions were estimated at around $50 million, spread across rent payments for a building that was unfit and never used, inflated costs for renting and then purchasing an incomplete building, paying for its completion twice, and incurring further losses upon transferring ownership to Touch’s real estate portfolios.

But the boldness of the ruling lies not only in its financial penalties. It represents a turning point that restores the value of financial oversight, in this sector and beyond. Have we truly entered an era where ministers are held accountable for breaches of trust and harming the public interest?

The beginning

The story goes back to 2012, when MIC2 (Touch) sought to expand its office and workspace capacity, an expansion that turned into a channel for wasting public funds, starting with discussions to rent the “Qasabian” building. The result was more than $10 million in wasted rent paid for premises that were never used, while the Court noted that waste continued due to legal disputes that ensnared the state with the property owners.

The plot thickened with additional waste after abandoning the “Qasabian” option and moving to the Bachoura building, a property whose ownership the Court later safeguarded through 2 interim rulings issued in 2023. These decisions documented the massive losses resulting from the leasing and subsequent purchase deals overseen by 4 successive ministers.

But the most important part of the final judicial ruling is that it compelled both the Ministry of Finance - Treasury Directorate and the Ministry of Telecommunications to submit, within 1 month, a report detailing the measures taken to implement the decision, the mechanism to recover state funds, and how penalties will be collected. This is not its only achievement. The decision, resulting from the chamber’s judicial diligence since 2020, solidified the Court of Audit’s authority to prosecute ministers and established beyond interpretation that ministers are subject to the Court’s oversight whenever their decisions cause harm to the state treasury.

Preemptive defenses

Convicted telecom ministers launched a preemptive, albeit belated, campaign to strip the Court of Audit of jurisdiction and “tie its hands.” At least 3 of them, Sehnaoui, Jarrah, and Choucair, attempted to have the entire case dismissed on procedural grounds. They argued that the violations cited were directly related to their ministerial duties and thus should have been referred to the Supreme Council for the Trial of Presidents and Ministers, a body widely known to be nearly paralyzed due to political divisions.

The “convicted ministers” also attempted to benefit from statutes of limitations, claimed that double prosecution was impermissible, and argued that the expenditures involved were not public funds so as to deprive the Court of its jurisdiction. They focused heavily on procedural gaps, cited old political decisions, and relied on dysfunctional administrative habits.

Defenses that attempt to override the law

Among the defenses presented were attempts to shift blame onto Touch’s operators, ignoring the contractual provisions of the management agreement signed in 2012 that placed actual decision-making power over essential operational and investment expenditures in the hands of the minister. The Court demonstrated unequivocally that the Owner Supervisory Committee, whose entire membership is appointed by the minister, essentially represents his will, and any instructions issued by it are considered direct orders from him.

The Court of Audit dismissed the procedural defenses with the full force of the law on which it relied. It rejected them on the merits and proceeded confidently in building its judicial case file. In issuing its decision “in the name of the Lebanese people,” the Court took care to remove all potential obstacles that might hinder its implementation later on, including internal hurdles that were addressed to prevent a repeat of the experience of challenging a decision from within the same institution, as occurred in the PCR testing case issued months ago by the Court’s Fourth Chamber, which had resulted in losses to the Lebanese University.

The Court pursued the matter thoroughly so that no one could evade responsibility for their actions. It exposed the perpetrators judicially and before public opinion, as well as before Parliament, which is expected to build on the Court’s decision to carry out its oversight role. Some of these violations are already under review by the parliamentary investigation committee formed last July, before which Ministers Sehnaoui, Harb, and Jarrah are being summoned.

The decision also serves as motivation for both the financial and civil courts to rule on related lawsuits that have been pending for years. The most prominent of these is the case filed by the former general manager of Touch, Wassim Mansour, who stated that the purchase of the Bachoura building involved crimes such as “influence peddling, money laundering, abuse of power, and professional negligence.” The Court relied on this file to affirm that prosecution before the financial judiciary does not eliminate criminal prosecution, and that both judicial branches complement one another in protecting public funds.

What are the details of these accusations, and the responses to them?

In his defense, Sehnaoui claimed the operator made the decisions and that his role was merely informative.

However, the Court returned to the management contract signed with the operator in 2012, highlighting its explicit provision that the Owner Oversight Committee represents the minister’s own will, and that any instructions it issues are considered his unless he objects in writing. Based on this principle, the decision held Sehnaoui responsible for the building’s high rent, despite his predecessor Minister Charbel Nahas having rejected the contract and despite its flaws being visible to the naked eye.

The decision also held Sehnaoui responsible for the draft of the final contract, which was sent from the personal email of the head of the Oversight Committee, even though the Touch management had already withdrawn from the deal. It further held him responsible for the committee’s final approval of the contract, despite it no longer being needed after two floors were rented in the Beirut Digital District (BDD) in downtown Beirut.

The Court did not accept Sehnaoui’s claim that renting the BDD space was “a temporary solution.” It refuted this by pointing to the contract’s six-year term and the prohibition on termination before the third year.

Engineering reveals the truth

The Dar al-Handasah report showed that the building was indeed suffering from serious structural defects and revealed that it did not meet the required needs, even after maintenance. This was confirmed by Touch, which discovered hidden flaws in the building’s foundations that prevented its use, prompting the company to demand that the owner bear the cost of repairs.

Instead of terminating the contract or seeking compensation, Sehnaoui agreed to an amendment that placed $1.1 million of the reinforcement cost on the company, while the lessor would cover $700,000 of the cost, to be repaid through rent installments. This meant the payment was conditional on the continuation of the contract, so the lessor would owe nothing if the contract were terminated. Sehnaoui did this without consulting the Legislation and Consultation Commission, as is legally required when disputes arise.

Meanwhile, in an attempt to create the impression of a legally autonomous environment, Sehnaoui suggested that the mobile sector operates as a private sector and that its contracts have historically not been subject to the Court’s oversight. He ignored the fact that the state fully owns both networks, and that the companies’ funds, buildings, and expenditures constitute public money in the direct sense. The Court, however, referred to the Public Procurement Law issued in 2023 to explain the best practices that should have been followed even before its implementation, noting that the mobile companies operate in a monopolistic market and are therefore subject to stricter, not lighter, controls.

For all these reasons and more, the Court of Audit imposed a financial penalty on Sehnaoui amounting to $8 million and $146. It held him responsible for paying the amount “from his personal funds” and requested the current Minister of Telecommunications to issue an official collection order accordingly.

Boutros Harb’s charge: prioritizing politics over the public interest

Minister Boutros Harb knew of the wasteful practices but did not stop it. The Court of Audit exempted him from financial penalties because he did not directly commit the waste; however, he was not absolved of responsibility for failing to take the necessary measures to recover public funds and hold the perpetrators accountable during his tenure.

Harb was aware of a “suspicious deal” that resulted in losses exceeding $10 million. Nevertheless, he limited his actions to canceling the lease and submitting a report to the Financial Prosecutor based on journalistic investigations, without pursuing genuine follow-up. The Court held that he should have filed an official lawsuit with the Litigation Department.

The transfer of the file to Harb’s authority was not without “suspicions” regarding the actions of MIC2 (Touch) Chairman Peter Kaliopoulos, as he reversed the lease cancellation decision in clear overreach of the minister’s and the Owner Oversight Committee’s authority. This later led to a property seizure and required the company to post a guarantee of $2.75 million for the 4th year’s rent.

Harb offered no defense regarding his failure to hold the administration accountable for the damages caused by reversing the lease cancellation. Instead, he merely exerted moral pressure on the company to dismiss its director, an action deemed insufficient by the Court, which found that he prioritized political calculations over the public interest. Nevertheless, Harb was exempted from financial penalties because he prevented further losses to the treasury. The Court requested that the current Minister of Telecommunications take the necessary steps to collect compensation for the damages from “Zain,” the operator at the time.

How Jarrah doubled the treasury’s burden

Despite the “Qassabian” scandal, Minister Jamal Jarrah proceeded with a new deal to lease Blocks B and C of the City Development building in Bachoura, bypassing oversight and established criteria for selecting the best bidder. He contracted with a single bidder, without a tender or price survey, ignoring the substantial value of the deal. Although Jarrah insisted in his defense that four bids were evaluated by sworn experts before choosing the building, the Court revealed that three of the bids were formally rejected for not meeting a space requirement, which was not even specified in the request for proposals, and that no proper price survey or tender process was conducted. Worse, instead of seeking alternatives, the minister entered into direct negotiations with the sole remaining owner, restricting competition and driving up costs.

The Court also held Jarrah responsible for approving the building’s classification as a Core & Shell facility, contrary to reality. Documents showed that the building was incomplete and its completion financed by MIC2. Yet the rent was calculated as if the building were fully finished, increasing the cost by approximately 30%, or around $1.92 million. Jarrah claimed he relied on correspondence indicating that the building was partially completed and that the rent price was based on this, justifying the high cost as the result of lengthy negotiations and comparisons with surrounding buildings, but the Court deemed this comparison misleading.

Even more serious was the minister’s approval of a contract to complete and outfit the building with SEG, a company owned by the same Bachoura building owners, without a tender and at above-market prices. The contract was signed by mutual consent for $22.6 million, without soliciting competing offers, granting the owners a double profit and bypassing the Court of Audit entirely.

During the lease negotiations, the owners sold the City Development building to others in a transaction that also appeared suspicious. Yet the minister took no action, not even to register the lease on the property title as required by the contract, despite the sale affecting guarantees and insurance, which increased in value.

For these violations and others, the Court of Audit penalized Jarrah personally, ordering him to pay $11.3 million from his own funds, and requested that the current Minister of Telecommunications issue an official collection order.

Mohammad Choucair: the different path

Minister Mohammad Choucair inherited the substantial financial burdens of the lease contract for the 2 blocks in the Bachoura building, but he chose a different path and proceeded with a purchase deal for them, considering it a “saving” for the state. However, this deal was not presented to any advisory body, particularly the Legislation and Consultation Commission, nor to the Owner Oversight Committee, and it was not subject to review by the Court of Audit.

Choucair personally handled the negotiations and signed the deal, which reproduced the same defects, doubled the costs, and opened a new avenue for confusion and suspicion.

He agreed to purchase the building at an excessively high price without obtaining an appraisal and did not demonstrate that he consulted sworn experts to determine the value. He also failed to account for previous treasury funds spent on completing the building. Despite being aware of the contract’s inequities, he acknowledged in his memorandum that his solution was limited to negotiating based on the legal foundations established by the lease contract.

Although Choucair’s defenses revealed that the rental cost exceeded the Court’s estimates after including VAT, he completely ignored this. According to the Court, he could have used his powers to prevent further harm by withholding clearance certificates from the directors who signed the contract or by terminating the contract and seeking compensation for errors that harmed the public interest.

Choucair’s decision to deduct the first year’s rent from the purchase price further inflated the actual cost. The Ministry purchased the building for $75 million, not $68 million as claimed, excluding the over $22 million spent on preparing the building during the lease period.

The Court also questioned the estimates regarding the building’s space and price, especially when compared to actual market transactions. It cited additional evidence, including the registration of the same building’s sale contract with the Ministry of Finance on 20/07/2018 in favor of AC REALITY GROUP, where the registered sale price was $58.5 million-$16.5 million less than what the treasury paid before accounting for prior fit-out costs. When adding estimates for parking spaces, the actual cost of the deal for a mortgaged property rose further, without protecting the state’s rights by registering the sale on the property title. This represented a serious risk to public funds.

For all these violations and others, the Court of Audit ruled that Choucair must pay $11.3 million, equal to Minister Jamal Jarrah, placing them at the top of the list in terms of penalties imposed.

Hawat “slipped through”

Minister Talal Hawat was exempted from financial penalties, but the Court did not absolve him of negligence in safeguarding MIC2’s rights and the state treasury, and his failure to pay installments on time without justification. This is what exposed the state to losing previously paid amounts. He also neglected legal procedures to secure ownership of the blocks. Hawat was “lucky,” as the later transfer of ownership under Minister Johnny Corm mitigated the damage.

Recover the parking spaces or Corm will pay

Under Minister Johnny Corm, the Bachoura building file should have been closed by recording the purchase lien for the 2 blocks in the property registry. Corm expedited this to avoid penalties under the Court’s indictment; however, the Court found he delayed this measure, recording the lien 7 months into his term, despite being informed of a lawsuit to annul the sale in May 2022.

After receiving the indictment, Corm proposed a settlement using an exchange rate of LBP 3,900 per dollar to complete the purchase payments, without legal basis or agreement with the seller. This made the settlement vulnerable to legal challenge, especially since he bypassed required bodies of oversight.

His “remedial” measures were insufficient to overshadow a more severe violation, relinquishing the state’s rights to office space and especially parking spaces. His actions caused the loss of 123 parking spots, with no contractual justification. This is what rendered the building unsuitable for its main function: accommodating employees and their vehicles.

The Court estimated these losses at $4.92 million and ruled that Corm must pay this amount personally unless the Ministry of Telecommunications succeeds in recovering the parking spaces.

In conclusion, the Court of Audit, with its judicial gavel, affirmed that ministers are not above oversight, that public funds are not abandoned assets, and that the state, no matter how delayed, can pursue those who squander them. But the real test lies in execution. The Court has given the concerned ministries, especially Finance and Telecommunications, 1 month to present clear steps to recover the state’s rights.

This decision may mark the beginning of a new judicial and oversight tradition, or it may join the long list of stalled precedents that repeatedly collide with political obstruction.