The "war of powers" between the Board of Directors of the National Social Security Fund and the General Director of the Fund, Mohammed Karaki, is ongoing, revealing significant financial violations. Yesterday, the Executive Office of the Board held a session after which it issued decision number 881 that nullifies a circular issued by Karaki earlier this month (number 2157), which prohibits employees of the fund, especially directors and heads of departments, from contacting or providing any information to any board member under the threat of strict disciplinary accountability.
The Board indicated that the circular contains a serious error and constitutes a clear violation of Article 1 of Regulation No. 3 (powers of the General Director), asserting that the General Director operates under the supervision of the Board, not the reverse. The Head of the Board is entrusted with overseeing the council and ensuring the enforcement of its decisions according to the law. Consequently, the Board requested the General Director to consider the circular null and void due to its explicit violation of social security law and its regulations.
The issue seems to be related to an employee providing serious information to a board member, which was used to question the General Director. However, the matter is more complex, involving a longstanding dispute between Karaki, representing the executive authority, and some board members representing the decision-making authority over financial violations within the fund and the exchange of accountability between the two under the framework of "the board decides and the director implements." So, did the board decide on something, and the General Director implement something else? Which party bears responsibility in this context?
The conflict between the two parties resurfaces periodically, following a previous disagreement with six members of the board who addressed letters to the presidency of the social security council and several official entities stating there are serious management failures within the fund leading to extensive financial violations. One of these letters outlines that the fund has "failed miserably in fulfilling its duties and achieving the objectives of the social security system, as it lacks the minimal standards of a public institution, with no public budgets, no comprehensive automation since 2006, no administrative structure or job descriptions, no central oversight to evaluate performance, and severe delays in settling and paying due amounts to individuals and institutions related to health benefits for months and years," along with ineffective collection of contributions, rampant fraud and corruption, failure to implement internal and external reform projects, and inefficiency in managing the fund's investments.
In fact, the fund has not completed its financial accounts since 2006, and the administrative budget for social security has not been approved since 2019, noting that previous budgets were submitted to the board late and approved belatedly according to documents from the six members. In a letter dated February 11, 2022, it appears that the deficit in the health and maternity insurance branch began to surface since 2002, exhausting its legal reserves "due to waste in health insurance benefits on one hand, and the state's failure to fulfill its financial commitments to the fund on the other." However, "the administration did not take the initiative to address the situation before it worsened but rather denied the existence of the deficit, claiming it was a liquidity shortfall, and resorted to covering it with funds taken from the end-of-service branch contrary to the law and without a decision from the Board, eventually reducing settlement and payment operations to mitigate deficit numbers, leading to health insurance payments declining gradually from 1200 billion LBP in 2016 to less than 600 billion LBP in 2021, while unpaid transactions and debts associated with them accumulated, reaching thousands of billions."
As for the end-of-service branch, the end-of-service funds "were worth 8 billion dollars, and now they are worth 545 million dollars, in addition to 400 million dollars invested in US currency, totaling 945 million dollars." The letter notes that "the most dangerous practices in managing social security systems are those that resort to borrowing to finance benefits... with the debt to cover the health insurance deficit reaching about 4000 billion LBP, accumulating interest equal to 240 billion LBP annually."
On the administrative level, the letter discusses the "spread of fraud and corruption in both benefits and contributions, in the absence of effective monitoring, raising concerns regarding the sustainability of this system." It estimates that subscription fraud amounts to about "60 billion LBP annually on average according to the results of monitoring and inspection operations in the fund, covering only 10% of the insured, and if this sample is expanded, it could reach 600 billion LBP annually."
