House Votes to Halt, Audit ArcelorMittal Liberia’s Operations

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The vote to halt and audit ArcelorMittal Liberia grew out of a complaint filed before the House by the Joint Committee co-chairman, Nimba County District #3 Representative Joseph Sonwabi. But Rep. J. Fonati Koffa, the only one who voted against the endorsement of the recommendations from the Joint Committee, said the move might scare away other foreign direct investment opportunities.

Members of the House of Representatives last Thursday voted to audit ArcelorMittal Liberia (AML) in their Extraordinary Sitting and review the Mineral Development Agreement (MDA), and to further establish whether AML is in compliance with its Corporate Social Responsibility and communities relationships.

This is based on a complaint filed before the House by Nimba County District #3 Representative Joseph Sonwabi, but the motion was proffered by Nimba County District #7 Representative Roger Domah and subsequently seconded and endorsed by other lawmakers.

The Lower House also voted to halt AML’s operations until otherwise; all redundant employees should be unconditionally reinstated to their various existing positions, without any technicality of nomenclature within the period not exceeding four months, and those contractors whose contracts were breached should be appropriately paid within the same period and cases of illegal dismissals in which due diligence was not done as required by due processes, and they should be reinstated immediately.

Also included in the recommendations of the Joint Committees on Lands, Mines, Energy, Natural Resources & Environment, Investment & Concessions and Health, which was endorsed by the House’s Plenary, was a mandate that employees who inherited medical problems as a result of the job and have now been considered physically incapable, based on medical advice, should be appropriately catered for and compensated; and that the term “permanent contractor”, which contradicts the fair labor practices and labor laws of Liberia, should be aborted and citizens considered in said categories should be employed within two months.

The mandate added that all unskilled laborers should be recruited, with first preference given where qualified, to those from the affected communities around the areas of operations; and that there should be a guaranteed agreement between the private landowners, among others.

The House’ Chairman on Judiciary Rep. J. Fonati Koffa was the only one who voted against the endorsement of the recommendations from the Joint Committee.

“While issues raised by the Joint Committee’s report were substantial, I did not think we should endorse the cessation of operations of ArcelorMittal Liberia in order to address the concerns. I am concerned at what such a signal would send to the investment community,” Rep. Koffa said.

The Grand Kru County lawmaker maintained that foreign direct investment is an important growth engine for an economy. It injects capital by creating jobs and helps boosts productivity. He argued that investment by foreign multinationals enhances productivity by bringing new technologies to a country.

A staff at the Legislative Information Service (LIS), who begged for anonymity, said given the very weakness of the country’s productivity growth, the government should be making it a priority to enhance the country’s attractiveness as an investment location, instead of scaring away investors with halting cessations and issuing audits on concessions that may lower interest on their investment threshold.

In 2005, ArcelorMittal Liberia signed the first MDA with the government and has since begun mining operations in Yekepa, Nimba County, and Buchanan, Grand Bassa County. This agreement was then renegotiated and amended in 2006.

The MDA carries stringent conditions regarding sustainable development and economic, social and environmental investment. Its aim is to ensure that, while foreign companies are able to generate a profit from their investment in the extraction of Liberia’s resources, the country and its citizens benefit as well.

Among other things, it stipulates that ArcelorMittal contributes $3 million a year to the county’s social development fund (for Nimba, Bong, and Grand Bassa counties). This money, which will be over the 25-year expected lifespan of the mine, will total $75 million and will be used to drive community development projects that will uplift and improve the lives of local people. The agreement also includes commitments to infrastructure development, environmental protection (the dam above is an example of this) and an overall guiding principle of uplifting Liberia and her people.

The company is also required to establish and maintain medical and education facilities in areas of its operations to serve employees, their families, and the broader community and to prioritize the employment and development of local Liberians.

5 COMMENTS

  1. If the company is not in compliance with the concession agreement, then the government is authorized to enforce the agreement by going to court, or using administrative action, but I’m not sure the Legislature has constitutional authority to make laws specifically targeting the company outside the framework of the concession agreement. Furthermore, it appears the House of Representative is acting like a court, which is not their role. Are they trying to amend the agreement? If that’s the case, then there is a process for doing so through the Executive branch of government.

    Concession agreements generally have provisions for addressing issues of compliance, labor matters and things like that. It looks like the company may be headed to the Supreme Court if this legislation becomes law. The Liberian government must be very careful here because if they don’t handle these issues appropriately, it will seriously undermine their efforts to attract private investment to the country which we really need. Potential investors are watching. My suggestion is let the Liberian government take the company to court to force it to comply with the concession agreement. That’s the right way to handle compliance issues. Why make all this noise that could scare off potential investors?

  2. Phil,
    I do agreed and support your arguments. First, I’m not sure if there is a provision for the Liberian Legislature to take actions such as what has been expressed in the report above. Secondly, there is a serious conflict of interest by Konati Koffa, who’s law firm is legally represent many corporations in Liberia, including ArcelorMittal.

    • Wow, Koffa is doing well in Liberia after his legal problems in America. Conflict of interest is a problem in the country, no doubt.

  3. In as much as I do not agree with the Lawmakers when it comes to halting AML operations until compliance with the MDA that was renegotiated in 2006, I think this would also send a message to FDI already in Liberia and those intending to come on board that you cannot sign an agreement and then renege on that agreement. You cannot hold Liberian workers hostage as “Permanent Contract” employees for life or duration of their employment, without benefits.

    AML is operating in Liberia like Liberia is still in a war. Visit Yekepa, and you would see staff houses, facilities and other community investment areas are still the same. Houses have not been renovated, the company is still using fabricated houses as permanent dwelling structures because they refused to renovate. The former company – LAMCO had their own security, AML is hiring contract security to guard their concession areas. All in the effort to not pay worker benefits and their rightful compensation.

    I say the Lawmakers and the GOL should demand AML to renovate all staff houses, community facilities, schools, hospitals, roads, plants, and train Liberians in positions that foreigners are in at the moment. I know a former LAMCO manager that AML contacted to come back to his old job, but the company wants to pay him $1,500 a month whereas, he was making $4,500.00 a month before the war with all benefits.

    There are qualified Liberians in Liberia that can do most of the jobs at AML, but the company is bringing in boat load of Ghanaians to work in the mines when Liberians can do the same job. The whole of Area F in Yekepa is now covered with thick grass, because AML decided not to rebuild or renovate the concession areas. AML is doing more mining than the previous company did, but Liberians are not benefiting from their own resource.

    I blamed the Government of Gyude Bryant and the Lawmakers in 2005 for giving AML the Concession due to bribes. There were well known International companies that were ready and willing to do more, but the concession was not given to them because they were not willing to pay bribes to the government at the time. Now Liberians are suffering because of their leaders.

    • The government has the tools to enforce the agreement if the company it out of compliance but I’m not sure it has the political will to do so. You know how things work in the country…when no action is taken by the government when there is clear violation then some higher-up is getting bribed. It’s de ja vu all over again for the country, from one administration to another.

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