Liberia: Gov’t Waiver of Western Cluster Taxes Backfires

Finance Minister Samuel Tweah at the Senate yesterday, with Senate Pro Tempore Albert Tugbe Chie, a geologist by profession, looking on.

.... As Senate to consult lawyers on whether to request temporary order to halt Western Cluster activities 

Members of the Senate in an unprecedented unity yesterday vented a sustained expression of anger against the seemingly unexplained resumption of Western Cluster Liberia.

Senators were outraged after the Ministers of Justice, Mines, and Energy, Finance and Development Planning, and the Chairman of the National Investment Commission failed to explain why the Western Cluster's US$23.5 million debt was canceled without legislative approval.

Justice Minister Frank Musah Dean, priding himself as a law professor, tried in vain to clarify that the amount of US$13.5 million cannot be described as a tax waiver as argued by most Senators.

The Executive, according to most of the Senate members, has no constitutional power to raise or reduce taxes without the input of the Legislature as in the case of the Western Cluster.

The US$23.5 million debt,  according to the MoU signed between Western Cluster and President George Weah's administration, represented the total amount the company owed the government for nearly 12 years.

However, Vedanta Resources PLC, the parent company of Western Cluster Liberia, then requested the government to cancel the US$23.5 million, saying certain supervising circumstances forced the Company to suspend its operations in 2011 regarding the  Bomi Hills mine.

The government agreed and the debt of US$23.5 million was canceled — paving the way for Western Cluster, whose parent firm is worth billions of dollars, to resume mining operations, which began last year. 

The government, after canceling the debt, settled for US$10 million,  as a final settlement of all of Western Cluster's financial obligations.  The first half of the money has been paid as a result of the government issuance of a class A mining license to the company, through the Ministry of Mines and Energy.

“Due to the significant impact of the supervening circumstances on the Company, the Company is relieved of all financial obligations, of all kinds or nature, owed to the Government, which have not been paid by the Company to the Government and/or which would have accrued to the Government or any other beneficiary under the Agreement pursuant to the terms of the Agreement,”  the MoU reads.

“In lieu of all such pending financial obligations up to the anniversary of the effective date of the agreement, which is till August 3, 2021, the Company shall pay to the Government an amount of US$10 million towards a final settlement for all such pending financial obligations.” 

At the Senate, Finance Minister Samuel Tweah was not also forthcoming with the payment of US$5 million provided by the Western Cluster mining company as social development obligation to Bomi, Grand Cape Mount, and Gbarpolu Counties. 

Tweah, pressed by Montserrado County Senator Abraham Darius Dillon on whether Western Cluster has fulfilled its obligations concerning the MoU social development clause, replied yes, saying the government received the amount (US$5 million) several months ago.

Tweah, however, failed to say exactly in which month and why the money had not been disbursed to the three counties.

Other queries, such as which of the three counties receive the lion's share of the US$5 million was thrown back at the government, amidst speculations that Bomi County would receive US$3.5 million, while Grand Cape Mount Gbarpolu counties share the balance equally. 

Tweah was however unable to respond, forcing the Senate to adjourn with him and the other witnesses remaining under oath for future appearances.

Senate Pro Tempore Albert Tugbe Chie, a geologist by profession, took his colleagues by surprise by raising  more concern, nearly suggesting a temporary halt to the activities of the Western Cluster. 

“With regards to the Western Cluster, I think we have gone twenty percent; we will demand from the Executive through the IMCC (Inter-Ministerial Concessions Committee) the environmental impact report on the movement of the iron ore by trucks and the feasibility studies that should have been done,” Chie remarked. 

He said the Senate wants to know the plans for Western Cluster, which is mining, proposed for three years; “after three years what happens to the hard ore? Will they run away, or [will] the MDA continue to work?” 

Emphasizing that the Senate needs concrete evidence that the Western Cluster owes the government, Senator Chie said that the body also needs a report from the Liberia Revenue Authority that Western Cluster owes the government US$24 million. 

The Grand Kru County Senator intimated that the Senate needs minutes from the Inter-Ministerial Meetings to show how the decision was reached to waive the US$14 million by the IMCC.

 “It's open to debate; you say you didn’t waive it, we say you waived it, we want to know the formula you used to allocate the money to the counties; and the Senate will discuss — whether  to consult our lawyers to request a temporary order [to halt] the activities of Western Cluster from the Minister of Mines.”