Liberia’s Sovereignty For Sale? Senator Urges Singapore Loan Scrutiny
Monrovia – An influential member of the Liberian Senate, Senator Sando Johnson(Bomi) is urging President George Manneh Weah and members of the national legislature to think hard before proceeding with plans to secure a US$536 million loan from an Asian Conglomerate.
Speaking exclusively to FrontPageAfrica Thursday, Senator Johnson said he and other members of the Senate are concerned that the Memorandum of Understanding signed between the government and Eton Financial Private Limited was not signed by the Minister of Justice who is the chief legal advisor to the President.
“Firstly, if you look at the agreement, I think the Minister of Justice did not sign it, the Ministry of Justice is the legal person in this country, why didn’t he sign it? So, we have to look at all this thing and ask what’s going on?
‘No Risks’, Says Justice Minister
When contacted Thursday, Minister Frank Musa Dean said he will shortly provide a legal opinion on the legality of the entire transaction, including the Legal capacity of the signatories. “The legal opinion is equivalent to my approbation. The Opinion is already drafted, validating the capacities of the lender and the borrower. The country is at no risk and suffers no injury either way. Will supply the Legislature the Legal Opinion by Monday. Would have done so today or tomorrow, but for the Cabinet Retreat.”
A major cause of concern for the Bomi lawmaker is the issue of the Sovereign Guarantee and what Liberia stands to lose in the event it is unable to pay back the loan to the private firm. Sovereign Guarantee is a promise by a government to discharge the liability of a third person in case of a default. Sovereign Guarantees are contingent liabilities of the Central and State Governments that come into play on the occurrence of an event covered by the guarantee.
It is rare for governments to secure loans through private sourcing but in the case of Liberia, the government may be guaranteeing that an obligation will be satisfied if it defaults on the loan.
This is where Senator Johnson says, his worry lies. “What is the collateral? We have a lot of resources. What are we giving? If you leave it open and in case where – because you know countries have borrowed money and maybe either those monies were misapplied and when those monies are misapplied it makes it difficult. So, assuming those monies were misapplied or something happened and we didn’t even achieve the goals for which we are taking them who is going to pay? If we cannot pay, all of our resources will be at stake, at risk and at the disposal of this company. So, I’m worried about that.”
The Senate is currently deliberating on the loan agreement since voting last Thursday instructing its committees on Judiciary, Lands, Mines, Energy and Natural Resources and Ways, Means and Finance to jointly investigate the loan document and come up with suggestion for the instrument to be passed.
In a motion file by Sinoe County Senator Milton Teahjay, it was moved that the first reading of the document constitute the second reading and that the document be sent to the relevant committees to work with the House’s Committees to recommend suggestions in seven days.
But addressing the issue Thursday, Senator Johnson lamented that seven days is simply not enough time to decipher the document but acknowledged that some Senators are giving the document a closer look. “Seven days will not be enough. Right now, consultations are going on and most of my colleagues are beginning to see the idea. I’m really not sure whether this company has the money. I want to believe that if this thing was ratified then they will go and try to raise the money but, in my mind, will it come? Thirty percent of that money will land in individual pockets at the detriment of the Liberian people.”
The loan, according to the agreement from the Executive, will help finance the coastal corridor connection of counties’ capitals road project, via construction of the Buchanan-Cestos City to Greenville to Barclaryville Road, the Barclayville to Sasstown Road and the Barclayville to Pleebo Road.
Question Marks Over Korean Firm
Other roads to benefit from the loan include; the Medina to Robertsport Road and the Tubmanburg to Bopolu Road. Also to be constructed are ‘rest stops’ and ‘roadside service areas.’
The loan will also include the construction of a vocational training center in Greenville, Sinoe County; construction of a mini soccer stadium in Harper, Maryland County; Barclaville, Grand Kru County; Greenville, Sinoe County, Cestos City, Rivercesss County; Zwedru, Grand Gedeh County, Robertsport, Grand Cape Mount Count and Bopolu County.
The principal amount of the loan is payable in 15 years by level payment at an interest rate of 1.46 percent per annum, with a seven-year interest and principal free grace period.
Some lawmakers are quietly expressing concerns that the loan agreement has already named contractors for the project without going through the Public Procurement Concessions Commission(PPCC).
The JVC or Consortium Comprising, MAEIl Liberia Construction Co., Ltd a Chinese Engineering, procurement and construction company and subcontractor(s) comprising Liberian-owned and operated construction and engineering company(ies) have all been named as contractors to be vetted and confirmed by the Ministry of Public Works in respect of their technical capacities and not the PPCC as regulated by law.
Investigation by FrontPageAfrica found that the MAEII Liberia Construction group is actually being run by two Koreans who have been in Liberia the past five years looking to score a contract for the Cape Mount road project under the terms of what is currently on the table with the Singapore arrangement. But sources say, the pair has been unable to identify the source of funding and encountered problems trying to get anyone in authority to buy into their plan.
Risks Exists, Says Senator
On Thursday, the Bomi lawmaker said Liberia risks not paying the loan and losing its resources. “If we don’t pay all of your resources are finished because that company will seize it. So, I believe we have to look at it carefully and this cause should not just be from lawmakers but from Liberians from all walks of life who have interest in this country. It is not a bad idea to borrow but who are we borrowing from? So, Liberia’s resources will be subjected to a private company just in case we do not pay; but if it is from country to country, those are bilateral arrangements, people can waive debt, Liberia’s debt was waived before. Will this company waive this debt when we don’t pay? No!”
The Bomi lawmaker told FrontPageAfrica that while he and other lawmakers welcome the President’s desire to improve the road networks, government must proceed cautiously. “The idea to do the coastal road is welcoming; to do the road from Bomi to Gbarpolu is welcoming; Madina to Robertsport is welcoming; but we are in dire need and we want our country to be developed so we must put in place an appropriate plan of action so that our future generation don’t suffer as a result of our action. If you borrow $US536 million, in my mind, thirty percent of that money could land in private pockets and we will not achieve what we want to achieve. So, what are we going to be able to show that we paid, and our country would end up – all of our assets, all of our resources would be seized and monitored until this money is paid. If it is a bilateral agreement I would agree because assuming when we borrow from the World Bank or the IMF, if we don’t’ pay, that loan could be restructured and sometimes people waive it but would that private company waive our loan if we defaulted on the payment? No!”
‘I Don’t Agree’
Senator Johnson says he is not certain that the World Bank and international stakeholders gave the government the greenlight to take such a risk. “In my mind the IMF and World Bank did not give us approval to borrow from a private firm. These bodies set the ceiling as to where we can stop in terms of borrowing. So, I hear people saying the World Bank agree that Liberia can go to this company to borrow, but that’s not true. The World Bank and IMF set a ceiling that If you are going to borrow, you will not pass this. So, if you got $US536 million, all of the roads in question are more than 600 kilometers or 600 miles. To do one road pavement is $US1.1 million, so the $US536 million will not do all of the road projects. Yeah, it will jump start but there are underlying factors. If you don’t pay your assets are seized. Liberia’s assets will be seized by a private company. So, we are selling our sovereignty because it is their sovereign guarantee. Liberia will now mortgage her sovereignty to a private company which I don’t agree with.”
A FrontPageAfrica investigation uncovered this week that just seven months after declaring its Annual Return in Singapore, on September 5, 2016, Eton Financial Private Limited, had been dormant since its formation.
Furthermore, our investigation found that Eton with the unanimous consent of all the Directors of the Company and all the shareholders of the company filed an “Application for Striking Off” under its Unique Entity Number 200510984K, essentially delisting and/or dissolving itself as a company. “The reason given by the company in its dissolving is “company has not commenced trading since the date of incorporation”. The company claimed further in its “Application for Strike Off” that the company a) has no outstanding tax liabilities owing to the Inland Revenue Authority of Singapore (IRAS) and is not indebted to any other Government Agency; b) is not involved in legal proceeding within or outside Singapore and c) has no existing assets and liabilities as at the date of application and no contingent assets and liabilities that may arise in the future.”
FPA also gathered that on May 7, 2018, this year several weeks before the Liberia Loan arrangement, Eton Finance Private Limited re-applied to the Accounting and Corporate Regulatory Authority (ACRA) to be reinstated under the same name and Unique Entity Number, 200510984K, and re-naming the same shareholders and directors (Receipt Number ACRA180507174296).
A FrontPageAfrica query of the Singaporean Business Registration Portal (www.bizfile.gov.sg) using the Unique Entity Number obtained from the Eton Finance Private Limited, 200510984K, shows that the company status is still listed as “Struck Off”, raising more questions about their capability to raise the money for the Liberia loan.
Lingering Questions Over Eton
Senator Johnson dismissed suggestions that those calling for thorough vigilance of the loan and due diligence are against the interest of development. “Even if they say we should borrow five billion dollars and we have the resources to pay, fine. But it must be a bilateral borrowing, country to country or Liberia and the World Bank. So, just in case we default, our assets will be secured. But not with a private firm. I don’t even know where this private firm is from or whether it has a credible nature, we don’t know.”
The lawmaker says a lot of his colleagues are buying into the argument and demanding more answers from the Executive. “We are making the case to most of our colleagues and most of them are trying to buy it. We are logical. We are not going to rush because we want coastal road paved or because we want to pave from Gbarpolu to Bomi. I should not mortgage the future of this country then in the end when we don’t pay, the future generation suffer. All of us in this legislature will go, we will not be here forever. So, we must always set the example that those that will come after us will not inherit problem like what we are experiencing now. See what happened with NOCAL; see what we inherited from the Ellen Johnson-Sirleaf’s government. Most of our resources ended in friends and families’ pockets. Today, we are suffering. So, should we go through the same thing? No!”
Senator Johnson said while he embraces President Weah’s vision to see Liberia grow, it must be done the right way. “We must do in a way we do not embarrass the country, we don’t embarrass our future leaders. We should not sell our assets like that.”
Addressing concerns that previous loan arrangements with the World Bank and the IMF have been mired with too many bottlenecks and procedures, the Senator said to the contrary those bottlenecks have actually been helpful. “Those bureaucracies and bottlenecks save the nation. All the monies Liberia borrowed were waived by these institutions because those were bilateral arrangements. If we default on a loan from a private firm, they will not forgive and the interests alone will be costly. If it takes us thirty years, all of our assets will be seized. Is that what we want? So, it’s better we go through all the bureaucratic arrangements and secure a loan that even if we default a waiver can be done.”
The Senator said it is better to get things right now than to put the country back into uncertainty or fall into the same lapses of the past government. “All of us in this legislature will go, we will not be here for ever. So, we must always set the example that those that will come after us will not inherit problem like what we are experiencing now. See what happened with NOCAL; see what we inherited from the Ellen Johnson-Sirleaf’s government. Most of our resources ended in friends and families’ pockets. Today, we are suffering. So, should we go through the same thing? I say No!”