The Extractive Industry Transparency Industry for Liberia (LEITI) last Wednesday released its 4th report covering the financial year July 1, 2010 to June 30, 2011. Analyzing total payment and differences per sector, LEITI found that within the oil sector, companies paid US$49,911,073.86 but only US$49,681,073.86 was paid into government’s coffers.
A difference of US$230,000 remains unaccounted for in the oil sector, reported by companies as paid to the government but which government agencies did not report receiving, the report reveals.
Also, a difference of US$100,000 arose because, while Liberia’s National Oil Company (NOCAL) recorded a receipt of US$300,000 from African Petroleum, the Ministry of Finance reported that it had received only US$200,000 from NOCAL, according to LEITI report.
When contacted, NOCAL found it extremely difficult to address itself to these issues.
“I can’t tell from where the US$230,000 is coming and the $100,000. I don’t know whether the $100,000 was used for training or was not reported. I will have to talk with our finance department and our lawyers to know what was said before coming with an official position by 10 a.m. tomorrow,” NOCAL’s vice president for public affairs, Israel Akinsanya, told the Daily Observer yesterday.
Also, an additional US $777,949.50 is owed to the National Benefit Sharing Trust Board, which is intended to distribute a proportion of logging revenues to rural communities affected by logging. The Trust is supposed to receive 30% of Land Rental Fees paid by logging companies, which its Board calculates at $777,949.50, and claims it has not received. The Ministry of Finance states that it is unaware of any money owed to the Trust.
Last week, the government of Liberia finally mustered the courage to release both the final report of the LEITI and the final audit report submitted by the London-based Moore Stephens auditing firm on natural resource deals sealed between July 2009 and December 2011. The audit commissioned by the LEITI sought to conduct a post-award audit of the processes involved in awarding material public concessions, contracts, licenses, permits and other rights of exploitation of diamond, gold, oil, timber, and agricultural resources of Liberia from 13 July 2009 to 31 December 2011. Auditors were to ascertain that these processes were in compliance with applicable Liberian Laws at the time of award.
Released just days before the EITI’s global conference in Sydney, Australia this week, the audit shows that the government failed to fully apply its own laws when awarding 60 of 68 contracts for mining, oil and gas, logging and large-scale agriculture.
Other key findings of the two reports include a failure to follow competitive bidding in the allocation of plantations covering nearly 5% of Liberia’s land space to Malaysian palm oil giant Sime Darby and Golden Veroleum, linked to Singapore-listed Golden Agri Resources.
Publication of a full audit of how Liberia awarded its resource concessions between 2009 and 2011 is a global first, Global Witness said yesterday. The audit, which was published last week, reveals significant violations of Liberia's laws that the government now urgently needs to address, it added.
According to Global Witness, the publication of the audit also helps set a new standard for implementation within the Extractive Industries Transparency Initiative (EITI), an international reporting scheme that aims to cut corruption in oil and gas, mining and other natural resource sectors.
“The audit, along with a second report documenting tax and other payments from resource companies to government, was carried out by independent auditors and published by the Liberian chapter of the EITI,” the group said.
“Despite many difficulties in managing its natural resources, Liberia has taken positive first steps towards improving the situation by publishing this information,” said Natalie Ashworth, senior campaigner at Global Witness. “Liberia is leading international efforts by recognizing that genuine transparency doesn’t just mean payments – the public also needs to know how deals are done and what the terms of deals are. EITI now needs to ensure that it follows Liberia’s lead globally and insist that all countries publish resource contracts and information on how they were awarded.”
New international rules for the EITI, which will be adopted at the Initiative’s Global Conference, currently only encourage countries to publish contracts, trailing behind laws and practices in countries such as Liberia where publication of contracts is required. The new rules will also include requirements for companies to disclose the true identity of ultimate company owners by 2016, a move which will be key to stopping corrupt officials from getting control over lucrative shares in extractive projects. Civil society organizations are calling on countries such as Liberia to start implementing this rule as soon as possible.
“The question of owners’ identities has particular relevance for Liberia, where a quarter of the country was signed away under illicit ‘private use permit’ logging deals between 2010 and 2012. The majority of these contracts were awarded to companies backed by notorious international logging giant Samling, which has links to high-ranking Malaysian officials. While the Liberian government promised action on these deals back in January, the deals are yet to be cancelled and those responsible prosecuted,” Global Witness said.
“Liberia has a history of launching corruption investigations and then not acting on the findings. The government must now apply the EITI audit’s recommendations and follow its own laws,” said Ashworth. “It’s not all the government’s fault - companies operating in Liberia should be ashamed of taking advantage of a weak government and not insisting that their deals abide by the law.”
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