NOCAL Saga: Bonuses Not Unique To Liberia State-Owned Enterprises – Rob Sirleaf
Report by Rodney D. Sieh, [email protected]
Monrovia – Mr. Robert A. Sirleaf, the son of former Liberian President Ellen Johnson Sirleaf who is among several former public officials recommended for prosecution on “economic sabotage and misuse of public money” after authorizing $500,000 in irregular payments at the National Oil Company of Liberia says the payment of bonuses is not unique to NOCAL but one practice at all state-owned enterprises (SOEs) of the Government of Liberia.
In a statement Thursday, Mr. Sirleaf said all SOEs pay bonuses including the Liberia Petroleum Refinery Company (LPRC), National Port Authority (NPA), Liberia Maritime Authority (LMA), Liberia Telecommunication Authority (LTA).
Mr. Sirleaf who chaired the National Oil Company of Liberia(NOCAL) oversaw the signing of a revenue-sharing contract with Exxon Mobil.
On April 17, 2018, President George Manneh Weah constituted a committee to investigate accusations by the London-based watchdog group, Global Witness that several state officials received irregular payments after granting Exxon Mobil an offshore oil concession. Fifteen other officials received an additional $365,000 for the deal.
The committee recommended that NOCAL board members who authorized the payment must give back the money within 30 days or be charged and prosecuted for misuse of public money.
The committee also recommended that all the members of the NOCAL board during the period should be barred from ever serving on the board of any public corporation in the republic of Liberia.
But Sirleaf said Thursday that to the best of his recollection, the disbursement of the bonus to each category of people named in the report followed NOCAL’s internal financial disbursement procedure and was drawn on NOCAL’s operating account held with ECOBANK.
Additionally Mr. Sirleaf said, in 2017, the General Auditing Commission (GAC) completed the fiscal audit of NOCAL for the period covering July 1, 2011 to June 30, 2015, a period that included the Exxon-Mobil transaction. “The GAC did not suggest that the payment of the bonuses was improper and did not find any wrongdoing on the part of NOCAL’s officials and the Board of Directors related to the decision to pay bonuses. In fact, neither the bonuses nor any part of the NOCAL-Exxon/COPL transaction were flagged, identified as a matter a matter for further investigation, nor referred to as violation of any law or policy of Liberia.”
Transaction Under my Tenure ‘Transparent’
Mr. Sirleaf explained that the payment of bonuses by state owned corporation did not start with the previous government. “Unlike the original Broadway transaction, where the President’s investigative commission could not recover documents that supported that, the transaction between NOCAL-ExxonMobil/COPL under my chairmanship was appropriately and painstakingly documented, copies retained at NOCAL, and shared with the committee during the investigation. This is a further testament of the openness, transparency, and accountability that characterized NOCAL’s actions in connection with the renegotiation of the Block 13 contract during my chairmanship.”
Mr. Sirleaf dismissed suggestions that the payment of the $US500,000 bonus payments somehow led to the financial crisis that hit NOCAL in 2014.
He averred. “I would like to point out that NOCAL had approximately US$18,000,000 in its accounts at the time I resigned in September 2013, after the payment of the bonuses, and received an additional $8,000,000 in connection with the renegotiation of certain seismic data revenue sharing agreements in late 2013.That’s a total of a documented $25,000,000 it had at its disposal after I left the NOCAL Board.:
Mr. Sirleaf added: “We must all understand how monumental this transaction was not only to the oil and gas program in Liberia, but also the Government of Liberia that in 2013 desperately needed revenue to address the enormous challenges of the country.”
The former President’s son said he is very pleased to have cooperated with the special presidential committee appointed by the President to investigate the Global witness claims. “I answered the questions asked by the committee and provided the necessary information to aid the committees in its investigation.”
Mr. Sirleaf lamented that much of the public commentary in the Liberian press, the Global Witness report that precipitated the current discussion, and the discussion on social media reflects little understanding of the facts underlying the decision of the Government of Liberia to enter into that contract. “The recent focus is all on the bonuses paid by NOCAL to the members of the HTC, NOCAL senior personal and the technical team that negotiated the Block 13 contract. Lost in the debate is the FACT that we replaced an unqualified (technical nor financial) holder of the Block 13 contract, Broadway Peppercoast, with one of the world’s most technically skilled companies, Exxon-Mobil, renegotiated an improved contract, and brought $50 million United States Dollars to Liberia at a time at which our country desperately needed additional revenues.”
Genesis of a Transaction
In late 20110 or early 2011, the then-President of NOCAL informed BroadwayPeppercoast that it had failed to comply with the terms of the contract entered into back in 2005/2006, and that it needed to give up the contract or transfer it to a more-qualified operator.
Mr. Sirleaf said he refered to Broadway Peppercoast because the holder of the Block 13 contract was originally named Broadway Consolidated plc. “In 2011 a new group0 acquired control of Broadway Peppercoast and changed its name to Peppercoast Petroleum plc. There was no transfer of the contract from one company to another, as has been alleged in some reports, and thus under the original Block 13 contract no ability of NOCAL to block this change.”
The former NOCAL board chair explained that in the spring of 2011, Peppercoast informed NOCAL that it proposed to transfer a controlling interest in the Block 13 contract to COPL. “NOCAL informed COPL that it did not believe that COPL had the financial or technical capacity to serve as the operator under the Block 13 contract. “
It was then he said that Peppercoast threatened to seek international arbitration if NOCAL sought to terminate the Block 13 contract. “NOCAL knew that Peppercoast was backed by an English investment fund with deep pockets, and was advised by outside counsel both that a Peppercoast demand for arbitration would probably lead to a multiyear proceeding that could consume several million of dollars in legal fees., and that NOCAL could not be confident that it would succeed in an arbitration — because there was not clear evidence of wrong-doing in the initial award of the contract and because the prior NOCAL administration had treated the contract as valid during the period from its award until the dispute first arose in 2011.”
Mr. Sirleaf went on to say that about the same the same time, COPL proposed that instead of acquiring a controlling interest, it would accept a transaction in which it acquired a minority interest and permitted a recognized major oil company to acquire a controlling interest and proposed that Exxon-Mobil acquire the interest.
NOCAL, according to Mr. Sirleaf was had then put itself in the position of choosing between an expensive arbitration with an uncertain outcome and a transaction that would yield a major windfall (financially & a world class oil/gas operator) to Liberia. NOCAL elected to accept the windfall and avoid the uncertainty and expense of an international arbitration.
Said Mr. Sirleaf: “The NOCAL – ExxonMobil/COPL transaction bought in a record US$50,000,000 signature bonus to the Government of Liberia in 2013. (This payment was stipulated in the Production Sharing Contract that was ratified by the National Legislature and approved by the President of Liberia in April 2013.} This US$50,000,000 signature bonus is the largest signature bonus EVER received by a non-oil producing country in the world. “
‘Carried Interests’ Explained
Furthermore, he added, it was larger than the sum of all signature bonuses received by NOCAL acting on behalf of the Government of Liberia from ALL the previous exploration contracts combined. “Of this total, US$45,000,000 went into the Government of Liberia Consolidated Fund held at the Central Bank of Liberia to support the Government’s annual budget, while US$5,000,000 remained with NOCAL to support its operating activities, as stipulated in the NOCAL ACT.”
Mr. Sirleaf said in spite of the fact that some funds received by COPL may have ultimately gone to persons who may have behaved inappropriately in connection with the original award of the Block 13 contract is unfortunate, the choice before Liberia was to receive US$50,000,000 and watch some funds going to possibly undeserving persons, or to receive absolutely nothing and be faced with a costly arbitration with an uncertain result.
Additionally, he said, during lengthy negotiations with Exxon-Mobil during the second and third quarters of 2012, Exxon-Mobile agreed to a complete revision of the original contract on terms more favorable to Liberia, including a 10% carried interest in favor of the Government of Liberia and an additional 5% carried interest in favor of the state to be used to fund broad citizen benefit programs such as education or healthcare. “The “carried interest” reference means that the Liberia 10% and 5% shares would receive that share of operating revenues, less operating expense, without having to bear any of the costs of exploration or, following a discovery, the immense capital costs required to move a deep-water discovery to commercial production.”
Regarding the bonuses he explained, Mr. Sirleaf said he is aware of no discussion relating to the payment of a “bonus” during the negotiations with Peppercoast, COPL or Exxon-Mobil. “It is my recollection that in late April of 2013, about a month after the completion of the landmark oil and gas exploration agreement between the National Oil Company of Liberia (NOCAL) and ExxonMobil-COPL, the CEO of NOCAL recommended to the NOCAL Board of Directors that members of the Hydrocarbon Technical Committee (“HTC” – the interagency committee established under the then existing Petroleum Law to assist NOCAL in the negotiation of petroleum exploration and development contracts), the technical support team, and NOCAL’s senior officers deserved the payment of a bonus “for the hard work and dedication to ensuring the successful completion of the transaction.” (The negotiations during that time, all led by the HTC, occurred in Washington, Accra, Paris, and London, and involved major commitments of time. I believe the Washington negotiations alone stretched out over six or seven days of continuous discussions.”
Mr. Sirleaf said the board under his chairmanship agreed that the recommendation of a payment of bonus was reasonable. “Though I stressed ONLY so long as all NOCAL employees (i.e. from the President/CEO down to the drivers, janitors, secretaries and clerks) received a bonus.”
US$500K Breakdown explained
Mr. Sirleaf said after the Board of Directors of NOCAL approved the payment of the bonus, NOCAL sought from the Ministry of Justice and received from the Ministry of Justice an opinion that payment to members of the HTC, some of whom were Ministers and Heads of Agencies of Government did not run contrary to the Laws of Liberia. NOCAL was also advised by the President of the Republic of Liberia that other State-Owned Enterprises commonly paid bonuses. “Moreover, the payment of the bonuses was not hidden.”
Mr. Sirleaf said the payment of the bonuses was made from NOCAL’s general corporate funds and was appropriately documented and disbursed consistent with NOCAL’s approved internal financial guidelines and controls. The below steps were followed:
He says the Board deliberated and approved the decision to pay bonus to the members of the HTC, Board of Directors, Senior Officers and Staff of NOCAL. “The decision was documented in the Board Minutes and a Board Resolution was drawn up and approved by the Board of Directors authorizing the transaction.”
Mr. Sirleaf said the total amount approved to be distributed as bonus was US$500,000 and explained that the payment of bonuses to the best of his recollection was broken down as follows:
“HTC Members (i.e. Ministers and Heads of Agencies), US$35,000/person • HTC Support Staff (i.e. HTC technical committee, comprising of technicians from HTC members institutions and outside advisors, US$15,000/person • Members of NOCAL Board of Directors, US$35,000/person • The management of NOCAL was charged with the responsibility to distribute appropriate remaining amount of the bonus to senior officers and staff of NOCAL consistent with a formula to be established by the management.”