GAC Vindicates LWSC in Corruption Probe

An audit report from the General Audit Commission has cleared the suspended Managing Director and Deputy Managing Director of the Liberia Water and Sewer Corporation of tampering with US$99,000.00 said to have been paid to Hydroconseil, a French company for a consulting service.

The GAC report, though, mentions some discrepancies during the project payment project; it, however, stated that the actions involving the entity’s Managing Director, Duannah A. Kamara, and the Deputy Managing Director, Sensee J. Morris did not amount to fraud.

The Managing Director and Deputy Managing Director were suspended pending the outcome of the audit. According to the report based on the audit conducted, the GAC was unable to find any significant evidence of fraud amid the issues of non-compliance to the terms of the service contract.

“Our procedures were planned and crafted in a systematic manner to identify the risk of fraud in the implementation of the service contract,” the GAC report under the signature of its Auditor General P. Garswa Jackson noted.

It further states that “Based on the outcome of our audit, no significant evidence of fraud was brought to our attention nor discovered during our performance of the audit. Issues of non-compliance to the terms of the service contract identified, but in our conclusion, those issues did not amount to fraud.”

The report was an audit on the Compliance Audit of the Consulting Service Contract between the Liberia Water and Sewer Corporation and Hydroconseil for the period August 2019 to April 2020.

The investigation covered the following areas: the source of funding, the procurement processes and hiring of the consultant (Hydroconseil), the approval of service contract, the execution of the terms of the contract, the evaluation of the various phases of the contract, and the submission and validation of the deliverables of the service contract. 

The Corruption allegations

Kamara and his Deputy Morris were suspended by President George Weah on June 10, 2021, following reports of disturbances and allegations of corruption at the LWSC.

In an audio, the LWSC’s Managing Director was heard in a heated verbal exchange with his deputy over the withdrawal of some US$99,000, which the latter stopped based on claims that he was not awarded.

Announcing their suspension, President Weah requested the GAC to conduct an investigative audit at the LWSC following speculations of corruption relative to a service contract relating to the expenditure of US$99,000 between the LWSC’s Management and Hydroconseil, a French Company.

The consulting service contract was that Hydroconseil conduct a “Detail Feasibility Studies, Design and Preparation of Tender Documents for the Construction of Civil and Mechanical Work to Improve Water Delivery to Paynesville and Central Monrovia.

The objective of the project is to address low urban access to safe piped water service and strengthen the capacity of the urban utility to sustain and expand these services.

Payment against Contract terms

The GAC report that has vindicated the suspended LWSC authorities, indicates that the requisite procurement processes for the award of the consulting service contract were in compliance with the World Bank’s procurement guidelines in all material respect.

 However, the GAC accused Kamara and his Deputy’s leadership of paying Hydroconseil on the invoices submitted with the same date, which was against the terms of the contract and made payments that did not reflect the actual amount in the contract.

Kamara and his compliance action according to the GAC contravene the contract terms, which stipulate that request for payment should be made at the completion of every stage of the contract by Hydroconseil, upon evaluation of deliverable(s) by LWSC.

The contract also requires that payment should be made by LWSC management after thirty (30) days of evaluation of deliverables. 

But, in response to the GAC accusation, the suspended LWSC authority noted that although the payment terms were stated in the special conditions of the contract as 30%, 30%, and 40% respectively, it should be noted that the payment is made up of remunerations, reimbursable and indirect local taxes on remunerations.

They argued that as it is internationally known that reimbursables are paid on submitted receipts of expenses; therefore, the LWSC paid the consultant their remunerations as well as the reimbursable which were backed by valid receipts or evidence of expenditure.

“The first invoice which was submitted for the Inception Report was received in September of 2019. The reimbursable expense contained in the invoice was however not adequately supported by receipts and after a long period of clarification, the Consultant resubmitted an acceptable invoice,” the LWSC said. “This also coincided with the submission of the second invoice for Preliminary Design as work on the assignment did not halt but continued while the financial issues were being sorted out.”  

However, the GAC in a counterclaim, noted that the assertion from Kamara’s leadership is not supported by the terms and conditions indicated in the service contract for deliverables completed by the contractor.

The GAC argued that the service contract requires the following terms of payment for deliverables completed: “1st payment: 30% within 30 days upon submission of the effectiveness of the inception report, 2nd payment,30% and upon submission and approval of the Preliminary Engineering Feasibility and Design Report” final payment shall be made.

“Management also did not address our observation that the first and second payment requests were made simultaneously, as is indicated in the invoices’ dates. This is evidence that the request for payment by Hydroconseil to LWSC was not consistent with the terms of the service contract,” the report added.

Bank Transfer Not Consistent with Contract Terms  

Meanwhile, the GAC was also alarmed that payments amounting to US$99,820.48 by the LWSC Management were not paid into the account of the contractor as agreed in the service contract.

 The GAC report stated that they also observed that the payment was transferred from the project designated account domiciled at Liberia Bank for Development and Investment (LBDI) to a bank based in France named Caalpes-Provence with account number: FR761130600084481014 instead of Credit Mutuel Villeneuve (FR7610278008650002001800243, as was agreed in the service contract.

“Payments to an account other than the authorized account could lead to diversion of the fund and tax avoidance that may facilitate fraudulent business practice by the contractor,” the report noted. “Corporate taxes could be avoided by Hydroconseil in their country of origin if the funds transferred are not disclosed as part of its corporate earnings. This may facilitate fraudulent business practice by an approved contractor.”

In response, the LWSC management disagreed with the GAC claims and noted that the consultant payments were consistent with the account details as communicated to them as a result of change in the account details.

They added that the payments were  consistent with their request and comply “With project Implementation best practices and the legal requirements of the Contract within the laws of Liberia and that the taxes under its jurisdiction were fully paid.”

However, the GAC report accused the LWSC managements of not adequately addressing the issue raised, as well as not providing any documentary evidence of an addendum to the service contract to justify payments made to a bank account not specified in the contract, consistent with the terms of the contract.