6 May 2013

Liberia: Gov't Clarifies Draft Audit Report

Photo: Greenpeace International
Logging destruction.

The Ministry of Information has confirmed that the government has received the draft audit report from the London-based auditing firm Moore Stephens. The draft audit report identifies various non-compliance issues with current laws and proceduresfor awarding contracts and concessions in the agriculture, mining, oil and forestry sectors of Liberia.

Confirming that the Liberia Extractive Industry Transparency Initiative (LEITI) contracted Moore Stephens in collaboration with Parker and Associates, a Liberian firm, to conduct the process audit and investigation, Liberia's Information Minister Lewis Brown also observed that it is rare for a government watchdog to undertake such audits, pointing out that the continuous desire of the government to self-check is a good thing, which in this case, is also intended to close loopholes and strengthen processes and procedures, in the award of contracts and concessions.

Having reviewed 68 contracts and concessions, the auditors found 2 to be fully compliant with existing laws; 27 to be partially compliant; 37 to be non-compliant and 2 to be without the scope of the audit. The draft report identified the basis of its categorization to be single sourcing or the lack of competitive bidding; the lack of stakeholder participation; lapses in procurement procedures;the lack of documentation which comprised a common challenge across the sectors; and the existence of conflicting legislations.

Speaking at the rescheduled Press Briefing of the Ministry of Information, cultural Affairs and Tourism, on Friday, May 3, the Information Minister explained that in many of the areas, the draft audit report confirmed what the government already knew and had begun to address. This is why, according to the Minister, "the government is taking the audit and investigation seriously, as it will the findings and recommendations of the final report. Already, various line ministries and agencies of the government are forwarding additional information which has been requested by the auditors to inform the final report."

As to the issue of single sourcing, which has been principally linked to the award of concessions to Golden Veroleum and Sime Darby, two Asian-based agricultural concerns, Minister Brown explained that the urgent need to diversify the economy away from dominant miningto agriculture with its increasingpotential for the much-neededemployment of Liberians,coupled with the economic benefits and knowledge transfers that could be gained from the proven success of Asian agric companies, especially in oil palm production, "the government exercised, in these cases, sovereign decisions, intended to preserve the long-term best interests of the country and its people."

According to the Minister, even before thedraft audit report could be inked, President Ellen Johnson-Sirleaf informed Liberians that the government should have reached out to other stakeholders, especially land owners, and in this regard, has instructed all concerned parties to work out just solutions and broaden the base of participation of various stakeholders, so as to ensure that owners of land are benefited and their communities uplifted. The Land Commission and the National Investment Commission are leading this effort in close collaboration with the Ministries of Internal Affairs, Agriculture and labor.

The Information boss linked lapses in procurement procedures and the lack of documentation. Hereferred to the two as being the product of the lack of capacity as opposed to mendacity. In some of the cases involving documentation, the issue came to be that of the proper filing of the documents.

Although the government continues to make progress in building institutional and individual capacities through reforms, training and regular increases in salaries to attract the needed qualifications, there still exists a critical gap in capacity. "Bridging this gap still represents our biggest challenge in the post-conflict development of our country", the Minister stressed.

Minister Brown admitted that especially in the oil sector, there still are conflicting laws. According to the Minister, some of the underlying assumptions of the laws are flawed making them either inadequate or unrealistic. This accounts for variations in the terms of concession agreements in this sector.

Indicating that ongoing reforms to the Petroleum Law of Liberia are in advanced stages of development which now range from concluding the newpolicy validation process to the drafting of the new law to bring the needed harmony to the oil sector, the Chief Spokesman however pointed to the fact that "each concession agreement ratified by the Legislature is a law, and to the extent of its recency, ought to be legally construed as seeking to amend the previous."

The Liberia Information Minister disclosed that the government remains committed to improving transparency in its management of the country's resources and pointed to budgetary support to the LEITI from USD300,000.00 in 2011 to USD850,000.00 in 2012, an increase of 183%. He drew attention to the fact that the country has continued to improve in the Transparency International's Corruption Perception Indexfrom the 137th position out of 158 countries in 2005 to the 97th position out of 180 countries in 2009, and then to the 75th position out of 176 countries in 2012.

Minister Brown also revealed that not only has Liberia continued to be a leader in the EITI implementation, winning the Best Implementing Country Award in 2009, but also, the country's EITI legislation goes beyond the minimum EITI requirements noting that in addition to reconciling payments, payments from the oil, mining, agriculture and forestry sectors.

The Minister disclosed that the Fourth Reconciliation Report of the LEITI - to be released later this month - includes payment reconciliation, amount due and revenue tracking.

"We welcome the draft report, as we will the final, as yet another deliberate effort by this administration to strengthen our capacities, procedures and processes, and a demonstration of our continued commitment to transparency and accountability in the administration of the affairs of our country ", Information Minister Lewis Brown concluded.

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