Liberia: Global Witness Lauds Mittal Steel, Warns Firestone

The Human Rights and Environment advocacy group, Global Witness, has lauded Mittal Steel, the world's largest steel company, for moving one step closer to living up to its corporate social responsibility by committing itself to the renegotiation of its contract with the government.

In a release issued Monday, Global Witness called on the country's other major multinational investor, rubber giant Firestone, to follow suit as it renegotiates its 2005 rubber agreement with the Government of Liberia.

According to the release which has been issued, less than a week after the National Legislature has rectified the Mittal Steel Concession Agreement, Global Witness said the old contract allowed Mittal to set the price of iron ore, thereby giving it control of royalty rates and tax payable, and encouraging transfer pricing, but noted that in the new contract, it is based on market prices.

Outlining what are some of the issues contained in the new agreement, Global Witness said the new contract removes a five-year tax holiday for Mittal Steel, which could have been extended indefinitely under the old contract.

Global Witness said Mittal Steel, loses the right to take control of Liberia 's two major economic public assets, the port of Buchanan and the railway to Yekepa in the new contract.

According to Global Witness, Mittal Steel will no longer be exempted, via a "stabilization clause" from any new human rights or environmental laws passed by Liberia.

However, Global Witness said the agreement still takes precedence over Liberian law on income tax, royalties and other payments due to government.

It said in the release that the capital structure of the concession remains, as before but noted that under the new agreement the parent company is responsible for liabilities incurred by the operating company in Liberia.

Global Witness added that Mittal Steel's right to take over new land for the concession is now more balanced with the rights of existing property holders.

However, the company said despite these improvements, the contract is still covered by a confidentiality clause which will make it very hard for Liberian citizens to monitor revenue flows from Mittal Steel, and ensure that the government uses the money wisely to reduce poverty.

"Predatory and unfair investments in natural resources in developing countries, especially post-conflict countries, set back development. In countries coming out of wars that were fuelled by natural resources, deals like this are playing with fire. It is good that the Liberian government brought Mittal back to the negotiating table, and good that Mittal renegotiated the contract, but it needs to be transparent," said Patrick Alley, Director of Global Witness.

On the Firestone issue, the release said unlike the original Mittal Steel contract, the government does not even have an equity share in the investment, so that taxes and royalties are its only financial benefit.

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