Monrovia – US Ambassador Michael McCarthy ruffled a few feathers recently when he took aim at some so-called rich Liberian businesses and individuals, partly responsible for the rapid decline of financial activities at the Liberia Bank for Development and Investment (LBDI).
“Strangely, it is wealthier consumers who have stained Liberia’s reputation,” the Ambassador told journalists at a news conference last week. “In some cases, rich businesspeople with valuable property and ample resources stashed away in other countries, are refusing to pay high dollar debts that they accrued in Liberia. When confronted with this fact, they even resort at times to threats against the bank officials. Let me ask you – how can the Liberia Bank for Development and Investment issue small and medium loans to start new businesses when the loan defaults by wealth borrowers have left them with few funds to lend?”
By: Rodney D. Sieh, [email protected]
The Ambassador’s comments came on the eve of the controversial exit of Deo Delaney, the former President and CEO of the bank, who stepped down unceremoniously last week after allegations that he lied on his credentials presented to the board at the time of his appointment.
Shaw, Saleeby, Dennis Headline List
Prior to stepping down, Delaney, appearing on a local radio station ruffled a few feathers of his own when he raised alarm that some former officials at the bank were indebted to the institution. Delaney named former Chief Executive Officer, Mr. Francis Dennis, Jr. and Mr. Elie Saleeby, the first Executive Governor of the Central Bank of Liberia. FrontPageAfrica has also gathered that while the CBL and the government are open to naming and shaming debtors to the LBDI, some high-profile names including Emmanuel Shaw, an advisor to President George Manneh Weah, who is said to be among those owing the bank, may make it difficult to recoup some of the funds owed. The late John Gbedze is also said to have been indebted to the bank of more than US$1 million dollars at the time of his death.
Besides Ambassador McCarthy, Christoph Klingen, IMF Mission Chief for Liberia has also been vocal on the issue of indebtedness to the LBDI. With the LBDI’s management team depleted, it would be important for the Central Bank of Liberia (CBL) to immediately reinstate a resident supervisor to safeguard LBDI’s balance sheet, Mr. Klingen said in a communication to both Finance and Economic Planning Minister Samuel Tweah and the current Governor of the Central Bank of Liberia (CBL). The prompt recruitment of a new CEO in line with best practices or the reinstatement of the previous one is an obvious priority, but the audit must not be held up over a change in management. The CBL should as soon as possible commission a full and expeditious financial audit of LBDI’s books by an internationally reputable audit firm, with the understanding that further in-depth investigation will follow as warranted.
CBL Decries ‘Misuse of Debtors Funds’
On Tuesday, the Central Bank of Liberia, under pressure from donors and stakeholders came out strongly against debtors, cautioning that it is strongly concerned about the persistent failure of non-compliant delinquent businesses and individuals to settle their loan obligations to the commercial banks, despite having the capacity and ability to do so. “This situation is not only adversely impacting the viability of the banking system, but also amounts to misuse of depositors’ funds and poses a significant risk to public resources in terms of protection of the system,” the CBL said in a statement Tuesday.
Considering the development and considering the ramification of the actions of the non-compliant delinquent borrowers, the CBL issued the following directives, stating that:
All non-compliant delinquent borrowers have up to the end of the first quarter of 2023 to settle or restructure their outstanding obligations to the commercial banks. Those who fail to comply, will be subjected to stringent supervisory actions, including but not limited to restriction from accessing banking services in keeping with CBL’s directive regarding non-compliant delinquent borrowers.
Secondly, the CBL said all commercial banks are required to take appropriate actions and/or measures to reform their internal procedures and processes to improve their loan recovery processes, including administrative measures to hold accountable staff for poor underwriting standards and practices.
The CBL says it is imposing the appropriate penalties against commercial banks that fail to adhere to its directive and the Bank’s Directive # CBL/RSD/DIR/002/2017, which bars commercial banks and other regulated financial institutions from providing financial services to delinquent borrowers that fail to resolve their delinquent status. “In addition, the Regulation and Supervision Department is hereby directed to work with the Liberia Bankers Association (LBA) to develop a comprehensive loan recovery strategy to address the NPL situation in the banking system.”
The latest development comes amid recent suggestions that the IMF’s statement could offer a window of opportunity for Delaney’s return to the LBDI. However, a senior government official confided in FrontPageAfrica that the former LBDI CEO’s return is highly unlikely. “Delaney is done”, the source, speaking on condition of anonymity said Tuesday.
The IMF’s mission chief, Klingen suggested in his communication to the CBL governor and the Minister of Finance last week, that with the LBDI’s management team depleted, it would be important for the Central Bank of Liberia (CBL) to immediately reinstate a resident supervisor to safeguard LBDI’s balance sheet.
Mr. Klingen encouraged both the CBL and the LBDI board to immediately undertake the prompt recruitment of a new CEO in line with best practices or the reinstatement of the previous one is an obvious priority, but the audit must not be held up over a change in management.
Said Klingen: “The CBL should as soon as possible commission a full and expeditious financial audit of LBDI’s books by an internationally reputable audit firm, with the understanding that further in-depth investigation will follow as warranted. An NPL recovery with a focus on largest delinquent borrowers is now more important than ever to dispel the notion that well-connected borrowers are shielded from enforcement. It needs the full baking of LBDI’s board, the publication of key information and updates on progress, and the deployment of the full range of sanctions for non-cooperating delinquents, including their exclusion from access to banking services as provided for under CBL directive.”
The issue of debtors at the LBDI is not new. It can be recalled that shortly after President George Weah assumed office in 2018, his principal deputy, Minister of State, Nathaniel McGill was embroiled in a scandal regarding a loan in the amount of US$200,000 from the bank.
Although Mr. McGill denied owing the bank, then-President John Davies said at the time, it was “well within Mr. McGill’s right to make a request to a financial institution (LBDI) that gives mortgage loans for a period up to 10 years and it is our rights to review that request and base on our assessment determine whether his project is bankable or not.”
Delaney Debunks ‘Misrepresentation of Facts’
Davies said he’s well abreast with McGill’s loan application which, according to him, the “request as is required will go through a (three) 3-phase review process. The credit department, the banks management and since Mr. McGill is a PEP (meaning politically exposed person), it must go to the LBDI full board of directors for final approval.”
Amid the saga over the loan controversy at LBDI, Delaney has also come out swinging, breaking his silence over the saga.
In a statement issued this week, the former LBDI President described the allegations as baseless. “I also believed that the public and the people who know me would realize the mischaracterizations of my work experience were absurd and ridiculous.”
Delaney said it is clear now that those misstatements were part of a broad, organized and well-calibrated attack intended to undermine his credibility and distract him from the job.
Delaney said following his resignation, the allegations morphed into a targeted and sustained smear campaign built on falsehoods that included accusations of fraud, plagiarism and identity theft.
Nevertheless, he said, he takes full ownership for the one error for which he resigned. “The fact that I referred to my Master level diploma from Oxford (See Transcript) in Global Business as a Master’s in Global Business during my recruitment process, and thereafter. For that, I apologize to the Liberian people, my mentors, supporters, my family, friends, former colleagues, and everyone who believes in me. Strangely, that particular misstep was not one of the allegations highlighted in the social media campaign calling for my resignation.”