As if an exorcist has awakened from their slumber, the ghosts of the missing LD16 billion and the US$25 million infusion exercise, the Central Bank of Liberia(CBL), under the leadership of newly appointed Executive Governor, Alloysius Tarlue, has publicly announced via local media, that negotiations for the printing of four billion Liberian dollar banknotes have been concluded with the Crane Currency. No details of the bidding process that awarded Crane the contract were disclosed, leaving pundits to question whether it this an exorcism gone wrong.
The Crane Currency which was, until recently, the subject of a lawsuit for fraudulent conduct is now back in the picture, never mind the fact that the currency (printed LD banknotes) issue is still unresolved. Informed sources have told the Daily Observer that the Crane Currency is an affiliate of the United States Federal Reserve and that the lawsuit against it was withdrawn by state prosecutors primarily due to its link to the US Federal Reserve.
That situation, not withstanding, Crane was selected as the winner of the bid to print 4 billion Liberian dollar banknotes in denominations of 500 LD bills. Also, back in the picture is KROLL, which was hired to probe the missing billions. At this stage it remains unclear whether the Legislature has given its approval to what seems to be a foregone conclusion to print the banknotes.
It is however worth noting that KROLL’s performance during the investigation left much to be desired. It can be recalled that Kroll was hired as an independent audit firm hired to investigate and examine the case of the missing L$16B. Although it remains unclear whether KROLL was indeed aware of the missing billions, its recommendation (following its investigation) that GoL should focus on correcting accounting irregularities and personnel negligence is suspect.
This is because Kroll failed to follow the International Standards on Auditing (ISA) 500, which requires an external auditor to obtain reliable evidence from third parties (in this case, the nine commercial banks of Liberia). KROLL should have written those banks requesting information on banknotes received from the CBL and infused into circulation.
Responding to letters from Kroll, each of the nine commercial banks would have been required to report the values of new banknotes each received and infused into Liberia’s currency circulation and the values of old banknotes each returned to the Central Bank.
That approach would have revealed that no new banknotes were infused into Liberia currency circulation, which would have confirmed the allegation that officials siphoned the L$16 billion. Additionally, KROLL failed to conduct a physical examination of the CBL vaults to ascertain whether or not the printed banknotes were all in the vaults, as was claimed by the CBL.
But the CBL, by its blatant refusal to grant access to its vaults, was not prepared to divulge the hard truth, neither was the GoL (President Weah) prepared to compel the CBL’s compliance and our international partners, particularly the US Embassy and other stakeholders, including KROLL simply played along, looking the other way. It is as if the ghosts of the missing billions and the US$25 million infusion were never laid to rest and may come back with a vengeance to haunt this government.
One thing which appears certain, according to financial experts, is a further depreciation of the Liberian dollar against the United Sates dollar. And this will occasion steep price rises in the cost of everyday commodities on the local market. Also, the prices of locally produced food will likely rise as will the costs of transport. In short, this means Liberians will have to fasten their seatbelts and brace themselves for a roller coaster ride to an uncertain future of sustained economic hardships.
The CBL will have to provide some answers to nagging questions like how the introduction of L$4 billion worth of new banknotes is is going to impact the lives of ordinary Liberians, most of who survive on less than a dollar per day. The National Legislature will also have to explain to Liberians why in the face of the unresolved issue of the missing billions, it has granted the CBL to print an additional L$4 billion worth of banknotes.
More to that, officials of this government especially President Weah, should be aware that the severe economic difficulties that this decision to print new banknotes is likely to impose on the Liberian people, coupled with IMF/World Bank austerity measures, could provoke strikes, riots and general civil unrest.
President Weah needs to tread carefully for the solution to a country’s economic problems, as all sound economists would acknowledge, will never lie in the printing of new currency banknotes. It is a recipe for economic disaster because it could lead to a situation where people would have to use suitcases to carry currency notes to the market to buy ordinary commodities and, of course, this will send inflation spiraling through the roof. And the consequences, God forbid, could prove dastardly.