Monrovia — When then-President George Weah announced in May 2019 that Nathaniel Patray, the tough-talking Executive Governor of the Central Bank, was stepping down due to age-related issues, it sent shockwaves through the public and the banking sector. Little did the public know that under Governor Patray's watch, the Central Bank of Liberia disbursed US$730,000 to major government institutions between August 2019.
A recent audit by the General Auditing Commission (GAC) uncovered that the Central Bank of Liberia (CBL) made unapproved disbursements totaling US$730,000 to the Liberia National Police, the National Security Agency, and the Ministry of State for Presidential Affairs without any approved policy.
The audit found that on July 24, 2019, US$150,000 was disbursed to the National Security Agency as the "bank's contribution for the July 26, 2019 celebration to buttress security efforts for international guests, including foreign heads of state." On the same day, US$200,000 was disbursed to the Liberia National Police and US$300,000 to the Ministry of State for the same purpose. Additionally, on August 13, 2019, US$80,000 was disbursed by the Bank to the National Security Agency for "special security operations."
The GAC's audit observed that these amounts were unsolicited by the receiving entities, which could be a recipe for financial malpractice.
"During the audit, we observed that without an approved policy, management made several material unsolicited payments to institutions and individuals in excess of approved amounts," the audit noted.
The General Auditing Commission highlighted that the Bank's management must provide explanations with supporting documentation for making these payments without budgetary allocations. The GAC also recommended that the Bank's management should, in its Corporate Social Responsibility (CSR) policy, describe what payments are allowed under CSR programs and set a threshold for different levels to ensure safeguards against management's override and abuse of the program.
The Clarification and Acknowledgement
Responding to a FrontPage Africa publication that these transactions occurred when the Bank was in transition, with Deputy Governor Nyemadi D. Pearson (Operations) in charge, the Central Bank of Liberia clarified that Madam Pearson did not hold the position of Officer in Charge (OIC) in 2019 but acknowledged the disbursements, saying they were part of the challenges grappling the bank before the International Monetary Fund (IMF) intervention.
"Firstly, the approval and authorization of the payments in question by the then Executive Governor, Nathaniel R. Patray, should be examined further in the context of the broader challenges faced by the institution. Governor Patray's resignation in October 2019, following the former President's request, marked a crucial turning point for the Central Bank of Liberia (CBL)," the bank said.
It further noted that after Governor Patray's departure, Dr. Musa Dukuly assumed the role of Officer in Charge (OIC) until December 2019, overseeing a period of transition and reform within the CBL.
In line with the act establishing it, the CBL has exclusive authority to formulate and implement monetary policy; issue Liberian dollars, banknotes, and coins subject to constitutional requirements; administer currency laws and regulate the supply of Liberian dollars; determine an appropriate foreign exchange regime; formulate and implement exchange rate policy; and act as a fiscal agent for the government, among other functions.
In 2018, the bank was rocked by a missing L$16 billion scandal. Following a request from the Liberian Government, the United States Embassy in Monrovia commissioned investigators to find out what had happened. The investigation, conducted by risk consultancy Kroll, confirmed that no banknotes went missing and that the new banknotes totaling 15.5 billion Liberian dollars ($96 million) were delivered to the Central Bank's vaults.
However, the embassy said the Kroll report raised concerns about the accuracy of the central bank's internal records, identifying systemic weaknesses and longstanding shortcomings in Liberia's fiscal and monetary management processes.
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In its response to FrontPage Africa, the Central Bank stated that the initiation of an IMF program, along with the implementation of recommendations from the Kroll Report, signaled a significant effort to enhance the bank's internal controls, develop new policies and standard operating procedures, and adhere to prior actions specified by the IMF.
These reform measures, which included cost-saving initiatives, strengthening the bank's independence and corporate governance, and staff retrenchment, were essential steps towards improving the efficiency and integrity of the Central Bank of Liberia's operations, the statement said.
The bank further noted that the ongoing support and oversight provided by the IMF have played a vital role in safeguarding the bank's integrity and restoring public trust in its operations. "It is crucial to recognize that the reform efforts and restructuring undertaken by the CBL are integral to addressing past challenges and establishing a more robust and transparent framework for the bank's operations," the bank added.
