Liberia watchdog reviewing $8bn of deals

2012-11-13 22:37

Dakar - A Liberian government transparency watchdog is auditing more than $8bn worth of oil, mining, and agriculture contracts in the West African state for possible fraud and mismanagement, officials said.

The review by the Liberian Extractive Industries Transparency Initiative - a government agency that forms part of the global EITI programme - comes amid mounting pressure on President Ellen Johnson Sirleaf to clean up the sector after a rash of complaints about unfair and illegal deals.

LEITI Director Samson Tokpah said the audit was being conducted by UK firm Moores Stephens LLC and that the results - which may guide a government decision on whether to revise the contracts - could be ready as soon as January.

"At this junction, I would not want to pre-empt the findings and/or recommendations from this exercise," he said in an email. "One thing is certain though, the reports will be widely disseminated."

Investment hopes

Liberia is one of the world's poorest and least developed countries after 14 years of civil war left its infrastructure in ruins, and the government is hoping a recent flood of foreign investment will help it rebuild.

Around $14bn worth of mining, forestry, agriculture and oil projects have been announced since the end of fighting in 2003. The review will cover some $8bn worth of those deals signed since 2009, when Liberia joined EITI, a global organisation that seeks to boost transparency in resource industries, particularly in poor nations.

Contracts signed by mining giant BHP, oil companies Chevron and Anadarko, and agricultural firm Golden Veroleum - owned by New York-based private equity firm Verdant Fund - will be included in the audit, according to LEITI documents.

Companies favoured

A review of those contracts showed all of them diverge from Liberia's revenue laws in a way that favours the companies, mostly through lower royalties and taxes.

Patrick Heller, an official at US-based Revenue Watch Institute, said variations between contracts and the revenue code posed a problem for Liberia, and is an issue seen in many other resource-rich countries.

"By legislating consistent rules, a country can ensure that deals with companies conform to big-picture government policy rather than the particularities of individual negotiations, where bargaining power is often unequal," he said.

Officials from Chevron, Anadarko, and BHP did not respond to requests for comment on their Liberian contracts.

Shady payments

Johnson Sirleaf, a Nobel peace laureate and Africa's first freely-elected female head of state, has been widely praised for drawing big foreign investors into the war-scarred country, though criticism has risen since her re-election last year that some of the recent contracts are unfair.

Advocacy group Global Witness said in a 2010 research report that several of Liberia's oil exploration contracts were acquired after shady payments to legislators.

It added in a report in September that many logging deals since 2010, covering more than a quarter of the nation's land, are marred by fraud.

While the LEITI-commissioned audit will include forestry deals, Liberia's Forestry Development Authority (FDA) said it was conducting a separate review of Private Use Permits, or PUPs, which Global Witness said in a report had been abused.

"The process is ongoing and may end at the end of November or early December," said Harrison Karnwea, the interim managing director of the FDA.

Johnson Sirleaf said this week the probe into the timber deals would likely trigger changes to those accords, though she did not comment on the possibility of changes to deals in other sectors.