Portion of US$536M Asian Loan Reportedly Paid Out to Liberia; Government Still Mum on Details of MOU


Washington – Concerns are mounting amid speculations that the Coalition for Democratic Change-led government is on the verge of receiving a portion of the US$536 million loan payment resulting from a recently-signed memorandum of Understand with an Asian conglomerate led by the Singaporean-based firm, Eton Finance Private Limited.

Report by Rodney D. Sieh, [email protected]

Days after the signing of the MOU, the government has been unable to inform Liberians and the international community whether the agreement is a non- disclosure or non-circumvention one aimed at having Eton go out and raise the money.

Investigation by FrontPageAfrica has uncovered that Eton, which operates as an investment company in the asset management industry is an unlisted private company with no public information on the total capitalization or its net asset value (NAV).

The company has no website, no Dun & Bradstreet or credit rating which are assigned to businesses that have supplied Dun & Bradstreet with a current financial statement. The Composite Credit Appraisal is a number, 1 through 4, that makes up the second half of the company’s rating and reflects Dun & Bradstreet’s overall assessment of that firm’s creditworthiness. Financial analysts say, typically, investment companies raise monies either through equity or debt for its clients. 

These are the guides most organizations use to compile business credit file, alluding to an organization’s ability to make good on contractual obligations.

A D&B report compiles available business data to measure the creditworthiness of a company. D&B reports are like personal credit reports for businesses and are issued by the credit reporting agency Dun & Bradstreet. Companies typically check a D&B report when negotiating payment terms and lenders will also sometimes check when assessing a business borrower.

Eton has also been marked as a struck off and removed from the financial listing although no reason is given by Bloomberg.

The last time a similar scenario occurred was with Broadway. A FrontPageAfrica 2007 investigation also raised a red flag that Broadway had no history or a website to undertake such a major operation in Liberia.

The previous government headed by Ellen Johnson-Sirleaf endured similar scrutiny over the make-shift Israeli firm, Elenilto and the Western Cluster Belt.

The Western Cluster deposits comprised of the former National Iron Ore Company (NIOC), the Bea Mountains and the Liberia Mining Company (LMC). Iron ore mining activities actually began in the Western Cluster area in the early 1950s specifically at the LMC at Bomi Hills, Bomi County and later in the early 1960s at the NIOC at Kongo (Mano River), Grand Cape Mount County.

“No loans shall be raised by the Government on behalf of the Republic or guarantees given for any public institutions or authority otherwise than by or under the authority of a legislative Enactment.”  – Additionally, Article 34 (iii)of the constitution


The Sirleaf administration, in a bid to attract investments in the Western Cluster Deposits, decided to tender the deposits by sending out a request for proposals (RFP) from qualified concessionaires.   The first bid round ended in controversy in 2007, due to award of the deposits to a South African company, Delta Mining, which was clearly not qualified, when due diligence was conducted on the winner.

The tender was triggered after a FrontPageAfrica 2007 investigation dubbed Knucklesgate Scandal found that Sirleaf’s Minister of State the late Willis Knuckles had promised three companies the cluster in exchange for ten percent interest for himself. The South African firm, Delta Mining which won the bid was disqualified after the FPA investigation although Delta later reinvented itself as Sable Mining, which was once more engulfed in a new controversy triggered by a damning Global Witness report. 

Fast-forward to the Weah-led government, an MOU signed with the Asian conglomerate is said to be valued at US$536 million aimed toward the construction of a coastal highway for southeastern Liberia. But while many are hailing the new government’s initiative, the lack of transparency and accountability over the loan is raising a lot of questions.

One financial analyst told FrontPageAfrica at the weekend that the government’s refusal to make the agreement public could boil down to one things: “That MOU must have some non-disclosure or non-circumvention elements in it. They are probably using the document signed with the conglomerate to go and shop for the money.”

Article 34: No Loan Without Legislative OK

But the question many are asking is who will give such an amount without collateral.

Weighing in on the issue on his popular Darius Dillon Exchange at the weekend, the opposition Liberty Party official averred: “I will appreciate the “Loan” to construct a “Coastal Highway”; but I need to see the MOU first. What are the global acceptability and credibility of the Loaning Institution? What are the terms and conditions? It is my RIGHT to know. Article 15c of our Constitution grants me said RIGHT – and it is FUNDAMENTAL.”

Additionally, Article 34 (iii)of the constitution makes it clear: “No loans shall be raised by the Government on behalf of the Republic or guarantees given for any public institutions or authority otherwise than by or under the authority of a legislative Enactment.”

The governance structure in Liberia is currently dominated by leaders from the southeast – President Weah, Grand Kru, President Pro -Temp Albert Chie, Grand Kru and Speaker Bhophal Chambers, Maryland.

Wologizi or Oil Blocks: What is Liberia Given up?

Currently, all 30 of Liberia’s oil blocks are said to be available as is the Wologizi Mountain range in Lofa.

Once a promising sector for oil, Liberia has been on a dry spell of late with the pull out of both US oil giants Chevron and Exxon.

Liberia signed millions via signatures fees, licensing and geo seismic data information from various multinational oil companies during the previous regime headed by Ellen Johnson-Sirleaf. But the failure of both Exxon, Chevron and the UK-based African Petroleum to find oil has been attributed among the factors why Exxon and Chevron have packed off and left and AP’s indebtedness to Liberia.

Then there is the Wologizi Mountain located in Lofa said to be a landmine for a lot of minerals. A 1973 US-funded report found that the range comprises of a sequence of metamorphosed sedimentary rocks. “In the lower part of the group these are politic and psammitic schists and subordinate mafic volcanic rocks and silicate iron-formations; in the upper part oxide and silicate iron-formation predominate.” The range is underlain by a tightly folded sequence of metamorphosed Precambrian sedimentary and volcanic rocks that is herein referred to as the Wologizi group. The group consists of metamorphosed shale, sandstone, graywacke, conglomerate, chert, oxide-and silicate-facies iron-formation, and mafic volcanic rocks.”

Eyes Circling Over US$536M Loan

In 2013, the Chinese government expressed interest in the range at a time when the Indian company O.P. Jindal Group had similar interest.

Now with a lot of eyes circling around the Weah-led government’s overtures to Asia, keen interest is building up on what Liberia is likely to give up as part of its quest to secure the US$536 million loan

More importantly, many political and economic observers are wondering whether oil blocks and Wologizi are in the cards.

Additionally, questions are also being asked regarding what would the interest be on the loan?

One source told FrontPageAfrica at the weekend that the government is on the verge of receiving at least three percent off the amount as commission to the financing firm Eton who is handling the loan, amounting to some US$15 million.

For now, businessman Emmanuel Shaw is reportedly behind the effort to secure the loan. Shaw, who previously worked in front and behind the scenes in both the Samuel Doe-led government and the Charles Taylor-led government recently stepped down his position on the board of the cellular giant Lonestarcell/MTN to take on a role as advisor in the Weah administration.

Shaw, according to sources has been a key agent behind the negotiations of the Singapore deal. One political observer fears that because the company is a private firm, it is unlikely that the Liberian population will be seeing the details of the loan anytime soon.

Unforgiveable vs. Forgivable Loans

Concerns are also growing over how would Liberia repay such alone in addition to existing loans from the conventional World Bank and International Monetary Fund. What is the debt and what would be the priority of repayment in relations to existing IMF, World Bank and other Loans on Liberia’s Books?

Should the Singapore loan surpass the IMF and World bank priority listing, it could spell trouble for Liberia in the long term as no one knows what the interests are or how the government intends to repay. This could mean any income generated could go directly back to the borrower.

Unlike loans borrowed from the traditional IMF, World Bank and other international stakeholders, the loan from the Asian conglomerate is unforgiveable, meaning those loans must be paid back and come with a lot of risks.

On the contrary, a forgivable or soft second, is a form of loan in which its entirety, or a portion of it, can be forgiven or deferred for a period of time by the lender when certain conditions are met. It is more like a grant with conditions rather than a loan as in most cases the loan is forgiven if all the conditions are met. However, if the conditions are not met the loan has to be repaid usually with interest. It can be seen as an incentive for the borrower to perform or achieve a goal set by the lender.

Some forgiveable loans though come with a catch. In most cases, as has been in Liberia over the past few years, those loans have been forgiven in exchange for Chinese firms to be hired to do construction and other works.

In November 2014, the IMF outlined several guidelines for countries with little/no access to concessional financing. Key among those guidelines was that debt conditionality would be expected to be deployed in cases where countries are judged to have significant debt vulnerabilities, as assessed using the MAC DSA.

Breaching IMF, World Bank Model

To enhance further the flexibility of the policy, both the IMF and the World Bank caution that countries at low or moderate risk of debt distress that have adequate capacity may request ceilings on total external public and publicly guaranteed debt in present value terms. “While more complex to monitor, the ceiling in present value terms removes the differentiation between concessional and non-concessional loans. This option is in addition to the “old approach” of nominal ceilings on non-concessional borrowing or loan-by-loan considerations. Furthermore, countries at high risk of debt distress will continue to be able to borrow non-concessionally based on “loan-by-loan” considerations. Finally, if a deterioration in the risk of debt distress occurs under an IMF arrangement, a justification for IDA’s grant allocation in the following fiscal year will be based on a case-by-case assessment with the goal of promoting equal treatment across IDA clients.”

For the foreseeable future, economists fear that borrowing outside the world bank and the IMF jacket could come back to haunt Liberia. For now, the absence of transparency and accountability regarding the Singapore loan is resurrecting refrains of the past which could see the Weah-led government falling into similar trappings that engulfed previous governments.

Bogus Companies as Construction Companies In addition to the lack of transparency on the loans being negotiated, analysts are concern whether this administration can prudently use such huge amounts to escape the mistakes of the past governments. Does Liberia have the capacity and the systems of integrity to borrow and spend such huge amounts on roads without adequate acquisition and financial management systems? Liberia has a long history, especially in the case of the immediate past governments, for officials and lawmakers of government to establish construction and other related businesses just to obtain government contracts without any intentions of doing the work, leaving Liberians to hold the empty.

The county development fund and the over $500 million spent on roads in the past administration (Jallah Town, Fish Town, Bella Yella, etc as few examples of wasted funds) did not amount to much for Liberians. Another major setback for Liberians have been for past administrations to bring in foreign firms to perform work only for Liberians to find out later that these firms were co-owned by Liberian officials and lawmakers, leaving small and medium size Liberian businesses who do not have political connections or want to connive with officials of government to win contracts to fend for themselves. One single measure of success of any major public works initiative is the number of jobs that such public expenditure investment creates.

US President Franklin D. Roosevelt through his New Deal initiatives invested a lot in public work projects and put millions of Americans back to work. But such jobs cannot be created in Liberia when lawmakers and officials of government create companies just to siphon funds from the coffers of the Government.