New report on sector discloses
It has been no secret that Liberia’s economy has been solely reliant on the extractive sector, which has also been poorly managed and turned up marred by corruption and shortchanged. What many did not know was the pervasiveness of the menace in the country, especially under the Ellen Johnson Sirleaf led administration, until the damning May 2013 Moore Stephen audit report that opened the lid on the huge corruption that existed in the sector.
The central message of that report, which was ordered by the Liberian Extractive Industry Transparency Initiative (LEITI), was that of the 68 concessions—many of them multinationals—signed with the government, only two met international standard, with the rest marred with flaws and manipulations. That report, while serving as an eyeopener for the public, also gave Liberians an insight into how “Business as usual” had transcended to another level.
A new research report has also highlighted the many irregularities that continue to overwhelm the sector since the release of the report, with no corrective measures being put in place.
According to the research conducted by the Center for Transparency and Accountability in Liberia (CENTAL) as part of Transparency International’s Mining for Sustainable Development (M4SD), there is widespread corruption across the entire mining value chain, especially the licensing and concession granting processes.
Launched yesterday at a local resort in the presence of heads and members of several anti-graft and transparency groups, the research report highlighted that collusion, extortion, facilitation of payments/bribery, manipulation, abuse of power and vested interest are major corruption risks and identified vulnerabilities.
“This is particularly common among public officials and powerful industrial executives who connive to exploit the system for personal gains,” the research consultant, Randall M. Makor, said at the launch.
In spite of the emergence of President Sirleaf, a Harvard trained economist and international civil servant, and the establishment of numerous anti-graft institutions such as the Liberia Anti-Corruption Commission (LACC), LEITI, General Auditing Commission (GAC), the Public Procurement Concession Commission (PPCC) and Internal Audit Agency (IAA), set up to support the process to address the scourge of corruption and other vices in society, corruption in the sector, many believe, has become grossly multiplied—thereby stifling development of the sector and hardly any noteworthy dividend to the country.
Statistics from the LEITI (2012-2013) report shows that the mining sector attracted massive foreign direct investment totalling US$7.6 billion from the extraction of iron ore since the end of the civil unrest in 2003. Also, a study conducted by Agnieszka Paczynska in 2016 states that, “since 2005, FDI flows into Liberia have increased significantly, reaching approximately $16 billion.”
However, on the overall rating, the mining sector has attracted the largest inflow of FDIs from the productive sector, which is primarily driven by contributions from mining of iron ore, diamond and gold. Though this reemphasizes the significance of the mining sector to economic growth and development in Liberia, it is yet to have any substantial impact on the populace.
Makor, while making his presentation on the research, indicated that governance of the sector is wide-ranging with complexities that negatively impinge on effective functioning.
Though there are several major bodies relevant to granting of mining concessions, the Ministry of Lands, Mines and Energy (MLME) is the main entity statutorily mandated to administer all activities related to land, mineral, water and energy resources exploration, and also supervises the mining sector (granting of licenses, contracts and concessions).
The Ministry’s work is supported by the Inter-Ministerial Technical Committee (IMTC) that provides guidance and technical advice regarding concession agreements and mining operations. Members of the IMTC, which is chaired by MLME, include the Ministry of Finance and Development Planning (MFDP), Ministry of Justice (MOJ), National Investment Commission (NIC), Ministry of Labor (MOL), the Council of Economic Advisors to the President and the Central Bank of Liberia (CBL). These also work with the National Legislature.
These institutions collaborate to award various mining rights to investors. But Makor said the award process is characterized by complexities, especially delays in processing contracts and licenses; unclear application procedures; and multiple actors singing onto concessions.
He also indicated that there is limited enforcement of laws and regulations as well as deliberate disregard for key requirements. “Due diligence in reviewing applications and properly scrutinizing draft concession agreements is weak and ineffective,” he noted.
He said the Legislature and Inter Ministerial Concession Committee knowingly failed to properly negotiate better deals and award concessions as well as rectify gaps associated with the licensing process.
In his findings, Makor said of the 13 risks identified, four (4) relate to Process Practice, which indicates actual incidences and practices relating to the award of licenses, contracts and Mineral Development Agreements to investors that incentivize corruption and undermine institutionalization of systems and controls in the mining sector.
Other issues are signifying circumstances that undermine compliance, due diligence and transparency in decision-making processes and governance of the sector. Together, he said, they highlighted vulnerabilities that increase the risks and incidences of corrupt practices — including weak monitoring and due diligence regimes, conflict of interest, collusion between the executive and legislative branches of government, violation of the rights of citizens, and low salaries and benefits of staff of ministries and agencies overseeing mining activities.
He said the remaining risks allude to systemic weaknesses that promote corruption in the sector. They stem from an increasingly enabling environment for bribery and collusion such as an entrenched culture of impunity, weak enforcement regime and limited accountability mechanisms.
The Report was launched by James Thompson, a Board Member of CENTAL, who said corruption is a pandemic in the Liberian society. “We need to make our society a better one and this can only be done when we fight corruption holistically,” he said.
According to CENTAL Executive Director Anderson Miamen, the M4SD program is being implemented in 20 countries worldwide. Generally, it seeks to identify, analyze and proffer recommendations to address corruption risks and vulnerabilities in processes leading to the award of mining licenses, permits and contracts in Liberia, he added.
“This is to ensure transparency and accountability in the licensing process to boost government revenues and address longstanding issues of corruption and bad governance that have undermined effectiveness of the sector,” he said.
The project, which has a lifespan of five years divided into two parts (first two years for Research, and the rest for Advocacy), intends to address felt needs of affected mining communities and improve sustainable economic growth and development in the country.
The study was conducted by a consultant and a representative from CENTAL between February and November 2017 in Montserrado with field visits to mining communities in Bong and Nimba counties.
The research also includes recommendations such as strengthening anti-corruption measures and institutions to combat the entrenched culture of impunity, which has undermined enforcement of laws and integrity building efforts in the country over the years; streamlining and simplifying the application procedure and contracting process to avoid complexities involved with acquiring a license.