Over illicit 450K metric tons scrap metal deal
A lawsuit seeking cancellation and revocation of two agreements for the sale and purchase of 450,000 metric tons of scrap in Nimba County has been filed by a consortium of Civil Society Organizations (CSOs) against the leadership of Nimba County and Sethi Ferro Fabrick Incorporated, which is the company expected to take over the deal.
The lawsuit also named the Ministry of Justice (MOJ), the General Services Agency (GSA) and the Ministry of Finance and Development Planning (MFDP) as collaborators.
The CSOs’ lawsuit includes Nimba Young Professionals, Liberia Scrap Dealers Association and Catholic Justice and Peace Commission, among others.
In the lawsuit, the group alledges that contrary to the law, Superintendent Cooper initiated and encouraged Sethi Ferro Fabrick Inc., to enter and execute two separate agreements called Scrap Metal Sale and Purchase Agreement on July 24, 2017, and on August 23, 2017.
“A major portion of the scrap metal, which is the subject of the lawsuit, has been transferred to Monrovia by the company,” the lawsuit contends. “The two agreements are illegal, defective and are canceled and revoked; the quantity that has already been transferred to Monrovia must be returned or put under the jurisdiction of the court and re-sold in keeping with the proper legal proceedings involving the PPCC,” the group said in the lawsuit.
The lawsuit also argued that the agreements did not follow proper legal steps; therefore, they violated various provisions of the Administrative Regulations and the Public Procurement and Concession Commission (PPCC) law.
Article VI (A) of the Administrative Regulation provides that “operators or dealers of scrap materials and scrap metal shall be limited to only Liberian of legal age, while Article VI (b) also provides that in the case of corporation or business venture, a majority of shares of the company shall be owned by Liberians.”
Also, Article XI (13) of the regulation provides that “All assets of government declared as scrap metal shall be inspected by the Scrap technical Sub-committee and disposal of in keeping with the Public Procurement and Concession Commission (PPCC) Act.”
However, the suit claims that Sethi Ferro Fabrick Inc., with which Cooper executed the agreement, has no majority share owned by Liberians; therefore, the deal was defective and must be canceled and revoked.
The lawsuit contends that one of the two agreements authorized and empowered Sethi Ferro Fabrick Inc. the initial quantity of 250,000 metric tons of scrap metal for use exclusively in Liberia to be recycled for the production of steel rods and other steel-related production valued at US$60 per metric ton.
“Sethi Ferro Fabrick Inc. has no recycling plant in Liberia; therefore, the purchase of the sale as stated in the agreement is false and misleading and for which the agreement must and should be canceled and revoked,” the lawsuit explained.
They also argued that Supt. Cooper intentionally ignored the laws and regulations and subsequently entered into the agreement with Sethi Ferro Fabrick Inc., without the involvement of the PPCC.
Besides, the lawsuit argues that the two agreements are in total violation of the law and a deviation from best practices by grossly understating the price of the scrap metals as US$60 per metric ton.
According to the lawsuit, North Star is currently paying Nimba County US$72 per ton of scrap metal, while some unnamed bidders recently proposed to pay US$82 per metric ton.
“The price of scrap metal in the sub-region ranges between US$75 and US$80 per ton; based on this, and in consideration of the PPCC, the US$60 per ton was not in the best interest of the County,” the suit indicated.
“The defendants did not only violate the law but also intentionally cheated the beneficiaries of the scrap metal by understating the value of an average of US$20 per ton, for which the entire agreement must be canceled and revoked,” the suit stated.
They argued that Supt. Cooper and other signatories to the agreement and the offices they represent were all situated in Montserrado County.
It may be recalled that in 2006, the Government of Liberia (GoL) realized that big business entities and unscrupulous individuals in the country were notoriously looting scrap metals in Liberia and in such a rampant manner that even government institutions were looted with impunity.
Based on that observation, the government set up a committee comprising various stakeholders, opinion leaders, and permanent government agencies called the ‘Intra-Agency Scrap Regulatory Committee,’ to take the necessary action that could avert the massive looting of its property.
The Committee did extensive consultations with all stakeholders around the country and promulgated administrative regulations, to guide the improvement and management of the scrap industry in all the communities in Liberia.
Intra-Agency Scrap Regulatory Committee and stakeholders entered into a Memorandum of Understanding (MOU) and an agreement to work collectively, to implement and enforce the guidelines, regulations, and policies aimed at improving and managing the scrap industry, and proper regulations were reached.
In the MOU, the parties are under duty to ensure that all purchases of scrap metal must be in compliance with the law and administrative regulations guiding the industry, the community, and the Liberian people.
The court has given the defendants up to April 6 to file their answer to the lawsuit.