| 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. |
