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Liberian state watchdog audits $8bn contracts

Richard Valdmanis Dakar

A LIBERIAN government transparency watchdog was auditing more than $8 billion (R69.6bn) worth of oil, mining, and agriculture contracts in the west African state for possible fraud and mismanagement, officials said yesterday.

Liberian President Ellen Johnson Sirleaf is under pressure to act.Photo: AP. Credit: AP

The review by the Liberian Extractive Industries Transparency Initiative (EITI) – 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.

EITI director Samson Tokpah said that the audit was being conducted by UK firm Moores Stephens and that the results – which might guide a government decision on whether to revise the contracts – could be ready by January.

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 that a recent flood of foreign investment will help the nation rebuild.

About $14bn worth of mining, forestry, agriculture and oil projects have been announced since the end of fighting in 2003. The review will cover about $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 group BHP Billiton, oil companies Chevron and Anadarko, and agricultural firm Golden Veroleum – owned by New York-based private equity firm Verdant Fund – would be included in the audit, according to EITI documents.

A Reuters review of those contracts showed all of them diverged from Liberia’s revenue laws in a way that favoured the companies, mostly through lower royalties and taxes.

Patrick Heller, an official at US-based Revenue Watch Institute, said that variations between contracts and the revenue code posed a problem for Liberia, and was 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 Billiton did not respond to requests for comment on their Liberian contracts.

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, although 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.

Johnson Sirleaf said this week that the probe into the timber deals would likely trigger changes to those accords. – Reuters

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