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BDL under spotlight after 'gold bill' fraud claims.

Summary: Disgruntled customers said Wednesday that they had been duped by Lebanon's Central Bank (BDL), claiming that collectible gold Lebanese pound bills they purchased were actually gold plated, and primarily made of plastic and nylon.

BEIRUT: Disgruntled customers said Wednesday that they had been duped by Lebanon's Central Bank (BDL), claiming that collectible gold Lebanese pound bills they purchased were actually gold plated, and primarily made of plastic and nylon. "I understand from the certificate that the bill is made up of pure gold ... when in reality it is not," Hagop Kazazian told The Daily Star.

The Central Bank has dismissed the allegations, arguing that customers simply misunderstood.

Kazazian is among a number of enthusiasts and collectors who purchased golden bills issued by BDL. The bills were marketed as souvenirs and issued in limited editions. Made of pure gold, according to an accompanying certificate, they were sold with an ornate box and display case. Prices ranged from LL225,000 to LL1 million. "The limited edition replica of the Lebanese pound note is created from a sheet of 99.99 percent pure gold," read the certificate.

But collectors alleged that the bill was composed of a gold-plated nylon sheet. "We were manipulated," a collector told The Daily Star.

Enthusiasts queued for long hours in order to purchase the bills, but many were disappointed with its quality. They contended that when crumpled even slightly, the bills lose their golden luster, and when burnt with a lighter, the coating melts away to reveal nylon underneath. Collectors said that if the bills were made of pure gold, as the certificate claimed, the layer would neither fade nor melt.

"Scientifically speaking, if the bill was made of pure gold and maintained the thickness of the original note, it would be much heavier than the one we purchased," a paper manufacturing professional and collector told The Daily Star.

"I do not hold any grudges but I do think we have been misled," he said. "Rather than write 'created from a sheet of 99.99 percent pure gold,' they should have written 'covered by a sheet of 99.99 percent pure gold,' then we would know how to act."

A black market has developed for the bills. A disgruntled purchaser told The Daily Star that some BDL employees received the golden bill as a "gift" and then waited until the supply of the edition is exhausted. "Then they put up all these advertisements on Facebook and eBay, where they sell the same bill at a much greater price."

Others claimed that there is an implicit understanding between BDL and certain collectors. "The collector would send something like 10 of his family members to queue when the bills are released to the public ... each would buy 10 and deliver them to the collector," another purchaser told The Daily Star. "They would then wait till the notes are no longer present in the markets and sell them at an exorbitant price."

In response to the allegations, BDL released a statement of clarification insisting that the bill was made of gold and rejecting the methods used to test its authenticity. The bank contended that the only way to verify the authenticity of the gold was in a laboratory, utilizing energy dispersive X-ray techniques.

The statement asserted that as a souvenir, the price of the bill did not reflect the actual value of the gold it contained, and reminded collectors that the bank would release more bills in the future. BDL also claimed that the bills were not sold for profit, but rather to preserve and celebrate Lebanese history.

"We never said what the actual quantity of the gold is ... just that the sheet is 99.99 percent gold," a BDL employee told The Daily Star. He scoffed at the notion of using a burn test to determine the bill's composition. "Of course it will burn and crumple ... look how thin it is."

The employee reiterated that the bills were sold as souvenirs and not for profit. "Look, we are a bank that grosses between $900 million and $1 billion in profit each year ... Why would we compromise that for some measly golden bills?"

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Publication:The Daily Star (Beirut, Lebanon)
Geographic Code:7LEBA
Date:Nov 5, 2015
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