Liberia: Impact of Sanctions against McGill & Co.

President George Weah has suspended three members of his inner circle who were sanctioned by the United States Treasury under the administration of President Joe Biden as he tightened the noose around the fight against corruption in Liberia.

The three suspended individuals — the Minister of State,  Nathaniel McGill, the Managing Director of the National Port Authority, Bill Twehway, and Solicitor General Saymah Syrenius Cephus, are accused of corrupt acts that ‘undermine the country’s fragile democracy.’

Suffice it to say that the impact of the sanctions has far-reaching and ripple effects yet to be seen. Regardless, by designating McGill, Twehway, and Cephus — powerful players close to the Liberian president, the Biden administration has sent a signal that its target list for individual sanctions extends beyond elected public officials and now includes presidential appointees as part of a new effort to clamp down hard on rampant public sector corruption in Liberia, in which these three men play a key role.

The impacts of the sanctions extend beyond the normal freezes of all their assets in the US, or in possession or control of a US citizen and the normal visa restriction — but it hobbles their ability to perform their respective functions — inducing pressure on the President to act in the fight against corruption which is rampant within the public sector.

It is also meant to unsettle a very personal element close to the Liberian presidency, one driven by the reality that his inner circle represents an extraordinary consolidation of wealth and power inside the country.

“The ultimate goal of sanctions is not to punish but to bring about a positive change in behavior.  [Any] persons that engage in certain transactions with the individuals and entities designated today may themselves be exposed to sanctions or subject to enforcement action,” the Treasury said.  “Furthermore, unless an exception applies, any foreign financial institution that knowingly facilitates a significant transaction for any of the individuals or entities designated today could be subject to U.S. sanctions.”

Announcing the sanction, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC), said it has designated Liberian government officials McGill Cephus, and Twehway for their involvement in ongoing public corruption in Liberia.

“These officials are designated pursuant to Executive Order (E.O.) 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act and targets perpetrators of serious human rights abuse and corruption around the world

Reacting to such pressure, Weah in a statement today said he views the allegations against the officials contained in the report as grave and with serious concern.

“In view of this, McGill, Twehway, and Cephus have been suspended with immediate effect to enable them to face investigation. The President has also designated the principal deputies of the suspended officials to act in their stead.”

Who saw this coming?

The sanctions come just days following a 2022 Investment Climate report, saying that in Liberia, “many businesses find it easy to operate illegally if the right political interests are being paid, whereas those that try to follow the rules receive little if any assistance from government agencies.”  It is widely known that all foreign direct investment in Liberia must “see the office of the President” through the Minister of State for Presidential Affairs, McGill. 

In February this year, amid the fanfare of bicentennial celebrations, a visiting delegation from the US Government refused to meet Minister McGill and insisted that they would not attend the ceremony with him present. During the duration of the program, at the SKD Sports Complex, McGill was crucially requested to be absent. 

But it seemed as though the bad feelings had cooled down when, a few weeks ago, US Ambassador Michael McCarthy announced an official invitation extended by US President Joe Biden for President Weah to attend the U.S.-Africa Leaders Summit. Scheduled for Dec. 13-15, the Summit aims to build on shared values to better foster new economic engagement; reinforce the U.S.-Africa commitment to democracy and human rights; mitigate the impact of COVID-19 and of future pandemics; work collaboratively to strengthen regional and global health; promote food security; advance peace and security; respond to the climate crisis, and amplify diaspora ties. 

This is the first official invitation from the US Government to Weah, who will be ending his first term as head of state just over 12 months from now.  Yet, it is not clear whether the invitation will include a one-on-one engagement between the two presidents. But a few public statements and engagements by President Weah since then have sought to promote his apparent support for transparency, rule of law and non-violence. 

Too little too late, it seems, as the Daily Observer warned in an editorial, published in February 2022: “Sources within the diplomatic community have spoken on condition of anonymity, that the USA is for the first time preparing to sanction  members of the Executive, with the name of McGill, figuring prominently amongst others, in discussions; as the next person to be named to face international sanctions from the US Government.”  

The sanctioned officials

The three government officials are being designated for engaging in corruption, the misappropriation of state assets, the expropriation of private assets for personal gain and corruption related to the extraction of natural resources.

The Treasury Department noted that McGill “bribed business owners, received bribes from potential investors and accepted kickbacks for steering contracts to companies in which he has an interest.” McGill “manipulated public procurement processes to award multi-million dollar contracts to companies in which he has ownership” and used government funds allocated to other Liberian government institutions to run his own projects.

He also made off-the-books payments in cash to senior government leaders, and organized warlords to threaten political rivals, the Treasury said.

As for Twehway, he is accused of orchestrating the diversion of $1.5m in vessel storage fee funds from the NPA into a private account and formed a private company to which he later unilaterally awarded a contract for loading and unloading cargo at the Port of Buchanan, the Treasury Department said.  Twehway and others used family members to obfuscate their own involvement in the company while still benefiting financially from the company, it added.

While Cephus is accused of receiving bribes from people in exchange for having their court cases dropped and has also shielded money launderers and helped clear them through the court system, the Treasury Department said.  He intimidated prosecutors in an attempt to quash probes and has been accused of tampering with evidence in cases that involved members of opposition political parties, according to the Treasury's statement.

So their suspension and subsequent subjection to investigation are necessary, particularly in the case of McGill and Twehway, whose abilities to effectively run their respective high-profile government institutions as heads were in jeopardy with the sanctions.

It is also hard to serve in such a high-profile position and not interact or do business with US entities operating anywhere around the world, especially when there is a significant investment in the country from US investors.

With the sanction on their head, they can no longer control their respective institutions' US bank accounts — as checks issued with their signatures might face problems and difficulty in clearing since all local banks have standing corresponding relationships with US banks — which are key for the survival of said local banks. 

Also, unless an exception applies, which US Embassy sources here informed the Daily Observer is out of the making, “any foreign financial institution that knowingly facilitates a significant transaction for any of the individuals or entities designated could be subject to US sanctions.”

The extensive and complex nature of the US financial system means non-US international banks would most likely comply with the sanction to safeguard their overseas networks and US dollar-denominated transactions that are ultimately cleared in the US by passing through the US Clearing House Interbank Payments System (Chips).

This means local banks are now at risk in managing accounts and providing loan facilities and other instruments to sanctioned persons since all of them have standing corresponding relationships with US banks.

The US uses sanctions among other things to restrict individuals from using US dollars in international finance so that they are unable to receive payments in it or own US-dollar denominated assets.

Meanwhile, the sanction announced yesterday came as the US government — from both the Trump and Biden administrations — had warned for years that Liberia under Weah was becoming increasingly corrupt, especially in the public sector with leading public officials playing a key role.

During this period, the US has courted the public to convince them of unexpected actions that would demonstrate that Liberia’s most significant bilateral partners remain committed to holding corrupt actors accountable and to the continued support of the Liberian people.”

The sanctions, according to the US, came after a rigorous inter-agency investigation, which determined that these three officials engaged in corrupt acts, and they are “now subject to US financial sanctions and visa restrictions”.

“Through their corruption, these officials have undermined democracy in Liberia for their own personal benefit,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson. “Treasury’s designations today demonstrate that the United States remains committed to holding corrupt actors accountable and to the continued support of the Liberian people.”

“Corruption has long undermined Liberia’s democracy and its economy, robbing the Liberian people of funds for public services, empowering illicit actors, degrading the business environment, and damaging the rule of law and effective governance in the country. Corruption also contributes to diminished confidence in government and public perception of impunity for those with power. These designations reaffirm the commitment of the United States to hold corrupt actors accountable," the US Treasury said.

"The United States is a proud and dedicated partner and friend of Liberia and stands with the people of Liberia in support of democracy and the rule of law and will continue to promote accountability for corrupt actors, regardless of their position or political affiliation. 

“The United States is also committed to working with the people and Government of Liberia to elevate countering corruption as a priority, including by bolstering public sector anti-corruption capacity, and reviewing and re-evaluating criteria for bilateral and multilateral assistance, including around transparency and accountability. Holding corrupt actors accountable and bolstering anti-corruption efforts are both consistent with, and reflects our commitment to implementing, the United States Strategy on Countering Corruption."

Global Magnitsky

Building upon the Global Magnitsky Human Rights Accountability Act, E.O. 13818 was issued on December 20, 2017, in recognition that the prevalence of human rights abuse and corruption that have their source, in whole or in substantial part, outside the United States, had reached such scope and gravity as to threaten the stability of international political and economic systems. 

Human rights abuse and corruption undermine the values that form an essential foundation of stable, secure, and functioning societies; have devastating impacts on individuals; weaken democratic institutions; degrade the rule of law; perpetuate violent conflicts; facilitate the activities of dangerous persons; and undermine economic markets. The United States seeks to impose tangible and significant consequences on those who commit serious human rights abuse or engage in corruption, as well as to protect the financial system of the United States from abuse by these same persons.

The issue of corruption is severe in Liberia. The World Bank in a recent report Worldwide Governance Indicators reflects that corruption is still a severe problem in Liberia.  Liberia’s 2021 Transparency International Corruption Perceptions Index score dropped from 29 to 28. On the Ibrahim Index, Liberia ranks 27 out of 54 countries, scoring 47 for the year 2020.  

In the World Justice Project’s 2021 report on the Rule of Law, Liberia ranked 110 out of 139 with a score of 0.44. In terms of the absence of corruption in government, Liberia ranked 121 out of 139 countries with a score of 0.21.  Corruption and national development are mutually exclusive.