There are more than 100 enterprises that can be considered as state-owned enterprises and operate in a wide range of activities
including electricity, water, telecommunications, transport, housing, entertainment, media, agriculture, investment promotion,
education, and health sectors. These SOEs vary greatly in size and scope and are widely perceived by most Lebanese of all parties
and sects as a source of financial drain on the government finances and as entities rampant with corruption and cronyism.
As for the legal, administrative, and regulatory environments, SOEs in Lebanon are established as separate legal entities with legal
personality and financial independence. An SOE shall have a board of directors and would be managed by a general manager.
However, each SOE lies under the custody of a relevant ministry and the minister serves as the custody minister for the respective
SOE. In addition, a number of SOEs are placed under the custody of the presidency of the Council of Ministers.
The Decree no. 4517 enacted in 1972 lays out the provisions governing the formation, operating, and regulating
public enterprises in Lebanon.
With regard to the formation of the board of directors, the Decree outlines the personal and professional requirements of all
board members, their tenure, duties and responsibilities, and termination of membership. The Decree clearly stipulates that
board members and their relatives shall not have a direct or nondirect personal benefit from the operations of the public
enterprise. The Decree prohibits board members to serve on more than one public enterprise. It also stipulates that the
Chairman of the board and the board members shall monitor the execution of the directives of the board and policies and
objectives of the public enterprise.
As for executive management, the Decree also outlines the personal and professional requirements of the general managers of
public enterprises, their tenure, duties, and responsibilities. General managers attend the board meeting in an advisory capacity.
With respect to supervisory role, the minister of custody exercises administrative and financial custody authority. The minister
of custody appoints a government commissioner who participates in the meetings of the board of directors and provides
copies of the minutes of the meetings to the ministry of custody, the Court of Accounts, the central Inspection Board, and the
Civil Service Council.
Concerning the regulatory environment, and as implied earlier, the Decree holds that in addition to the ministry of custody,
public enterprises come under the regulatory authority of one or more of the following government bodies: the Court of
Accounts, the central Inspection Board, and the Civil Service Council.
To strengthen the level of transparency, disclosure, and accountability, the Law no. 326 was enacted in June 2001 to subject
SOEs to auditing requirements. Article 73 of the Law stipulates that, in addition to the supervision of the Ministry of Finance
and the Court of Accounts, the financial accounts of SOEs enjoying financial and administrative independence shall be subject
to internal audit as well as independent external audit. Auditors are appointed jointly by the Minister of Finance and the
ministry of custody.
But in practice, due to the need for more adequate laws and regulatory frameworks to organize the work of these SOEs, in
addition to the sectarian environment, the relationship between SOEs and their respective custodians has not been very
productive.
Lebanon has not enacted privatization laws except for the Telecommunications Sector Law and the Electricity Sectors Law,
both enacted in 2002. These laws refer to the Privatization Framework Law of year 2000 which sets up the general
privatization framework by regulating its operations and defining its terms and fields of implementation and requires
the enactment of a specific law for each sector to be privatized. Although a Telecommunications Regulatory Authority
(TRA) has been set up and a decree was issued to appoint its board in 2007, no such authority has been established yet for
the electricity sector.
Box 1: SOEs in Lebanon.