Washington, DC — United Nations experts have accused Liberia of using money earned from its shipping register to avoid UN sanctions and to purchase arms.
A just-released UN report says Liberia's maritime commission and its head, Benoni Urey, "are little more than a cash-extraction operation and a cover from which to fund and organize opaque off-budget expenditures, including for sanction-busting."
But Urey told the BBC's Focus on Africa Program that he could not understand the UN charges and that even government opponents were "comfortable" with the handling of money from shipping operations. He called his agency's activities, "completely transparent".
The UN Security Council imposed sanctions on Liberia last May because it said Liberia's President, Charles Taylor, was engaged in diamond smuggling and gun-running with rebels in neighbouring Sierra Leone.
The UN's investigating panel based its findings on a trail of payments made by the Virginia-based Liberia International Ship and Corporate Registry (LISCR).
LISCR registers foreign vessels to fly a Liberian flag of convenience. It is the second-largest registry in the world, with 1,724 vessels registered under the Liberian flag. Thirty-five percent of all oil tankers fly a Liberian flag, as well as numerous cruise ships and other cargo vessels. Registration gains ship owners cheaper taxes and fees as well as less restrictive maritime regulations.
Liberia, in turn, earns millions from the use of its flag. LISCR last year channeled $18m to Liberia's government - a quarter of the West African nation's revenues.
The UN panel traced two payments totaling $925,000 by LISCR to a company called San Air General Trading in the United Arab Emirates. The money was intended to purchase arms and transportation for Liberia, "in violation of UN sanctions." Two other payments used for arms purchases were found.
The UN panel criticized LISCR, which was appointed by the Liberian government in 1999 as its exclusive agent to manage corporate and maritime registers, for showing "a complete lack of due diligence" in accepting highly irregular orders from Liberia's Bureau of Maritime Affairs to make the payments.
However, the UN report does not accuse LISCR of deliberate wrongdoing. U.S. officials agree: "They were pressured," a State Department official, speaking on background, told allAfrica.com. "There's no malfeasance here."
But in a statement issued in London, Tuesday, the International Transport Workers Federation (ITF) accused LISCR of "gross negligence" and complained: "Sadly, we see no suggestion of remorse or even acceptance that their actions left them with blood on their hands."
For its part, LISCR Chief Executive Officer, Yoram Cohen says payments into the non-governmental accounts were made in June and July 2000. In August, Cohen told allAfrica.com, "an internal audit revealed that we, the company, had made four payments to an entity other than the government of Liberia, at their request." Cohen says he refused to make any more deposits despite pressure from the government. "At that time, we informed the government that all payments must - and in the future would - go to the appropriate government agency."
Cohen says the UN investigated to see if his company had intentionally tried to evade sanctions. "We came out clean."
According to the UN report, after Cohen dug in his heels, the Liberian government just "changed strategy", diverting payments - $548,000 between August and October of 2000 - to San Air only once LISCR funds had arrived in Liberia, via the personal account of a Kenyan arms trafficker traveling on a diplomatic passport as Liberia's Deputy Commissioner of Maritime Affairs. At the same time, the amount arriving into Liberia's Central Bank was declining.
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The report recommends that the Security Council set up an escrow account for LISCR money that would be audited by the Liberian government and the International Monetary Fund. The ITF, however, says it is not persuaded that this will be effective. "This will not stop it being a tempting target for unscrupulous politicians in the future."
The union federation is planing to write UN Secretary General Kofi Annan: "We believe that the gross abuses proved in the report continue to mean that the Liberian flag is not an operation that responsible ship owners would wish to be associated with."
Next month, the Security Council will decide whether to extend sanctions on arms and diamonds. It will also consider whether to impose new sanctions on timber, rubber exports and registered ships. The report recommends additional sanctions, charging that Liberia is still involved in supplying Sierra Leonean rebels with weapons.
