Corruption In Sierra Leone Spills Over To Liberia: The Saga Of Global Tracking And Maritime Solutions
Monrovia – Global Tracking and Maritime Solutions bulldozed their way through accountability, transparency and vetting cracks at Liberia’s National Port Authority to secure a controversial agreement, which in the description of the Liberia Chamber of Commerce would heap more economic hardship on Liberians.
Report by Rodney D. Sieh, [email protected]
The agreement involves what is known to most businesses and those shipping containers as the Cargo Tracking Note (CTN) or Loading Certificate, an official shipping document that contains information related to the cargo and its movement between ports.
Various shipper councils in different countries require this document for importation. CTN is requested by Customs to importers for clearance of cargo. All documents related to cargo must have CTN number if shipped under CTN. The CTN number must be provided to the ocean carrier at the loading port for addition in the manifest and Bill of landing. Cargo traveling by sea must be issued with a CTN before departure by an approved agent. Basically the (CTN) is a verification and validation system adopted by governments whom do not require pre-shipment inspections. It helps check fraudulent declarations by importers, prevents contra ban, and informs governments ahead of time of all cargo arriving to their ports.
Where it gets murky started with an order from the NPA in January, instructing businesses and those shipping containers to Liberia that the authority was embarking on a new process beginning February that would tax businesses an extra US$175.00 per container for tracking purposes.
Where it gets tricky is that the NPA without vetting the company’s background, signed a container tracking deal with GTMS – a company chased out of Sierra Leone for allegedly defrauding the Sierra Leonean government of more than US$11 million.
Based on the agreement, GMT Solutions would track all containers coming to and passing through all sea ports in the country at an additional fee of US$175.00.
The signing was preceded by a statement from the port management in January which announced that a new Advance Cargo Declaration (CTN/ACD) system would kick off for all shipments to any destination port including transit through Liberia shippers/exporters/forwarders at the various ports of loading around the world. “You are hereby required to obtain a validated CTN number using the online platform and submit the required shipping documents on www.ctn-gtms.com. Each Bill of Laden must be covered by a valid unique CTN number which will also be inserted on the Cargo manifest. Shipments not covered by a valid CTN number will not be unloaded and fines may apply for those in breach.
The NPA’s failure to do proper vetting on the company came at a cost as it failed to discover the company’s checkered record in next-door Sierra Leone.
In November 2014, the company was caught in the middle of a corruption scandal when the Sierra Leonean government signed a contract with Transport and Ports Management Systems, West Africa, Sierra Leone (TPMS, WA-SL), to improve the efficiency and effectiveness of the Sierra Leone Ports Authority (SLPA) in its non-core activities.
Failed to Honor Contract Obligation
An addendum to the agreement tasked TPMS, WA-SL to track and monitor all cargos brought into and leaving the port of Sierra Leone.
As part of the deal, the company was to keep 60% of this and Government was to be given 40%. By this agreement, TPMS should have deposited into Government’s Consolidated Fund US$10,990,216and in 2018 the amount would have been US$4,036,068.
The company was expected to pay penalty charges of 12% on payments to the Government. Since the signing of the agreement, official records showed that TPMS had only paid US$1 million.
The records also indicate that in 2016, the APC Government, without explanation, had this profit-sharing arrangement based on percentage of profit revoked, and pegged Government’s receipts from the ports at US $331,000 – a massive potential loss of US $10 million in just two years to the time that the current Government took office.
Since the contract was signed, TMPS failed to honor its responsibility under the contract to provide Global Tracking & Maritime Reports to the Sierra Leonean government and NRA, amidst reports of under-invoicing of shipping items or goods, resulting in significant loss of revenue by Government.
Findings by the Governance Transition Team of President Julius Maada Bio found that the corrupt arrangement was made to profit Sahr William Ngegba, a major donor of the All People’s Party and Director of the company, at the expense of the Government of Sierra Leone. Mr. Ngegba is also said to have been behind a project to expand the seaport at the extortionate cost of almost US $700 million.
The GTT recommended that Mr. Ngegba be investigated and made to account for the US $10 million that the Sierra Leonean government lost after the fraudulent arrangement was confected.
Ngegba was subject of a major investigation by the Anti-Corruption Commission (ACC), stemming from the ratification of the tracking system in Sierra Leone.
The Anti-Corruption Commission noted in its findings that
when the owner of the company, Mr. Ngegba, was arrested and detained by the
Commission, his defense was: “I did not do it, parliament did it.”
Under the amended agreement with parliament, Sahr Ngegba owes the government $1.3 million. The ACC commissioner promised to continue his investigations into the port corruption saga.
Before his release on bail after spending days in custody at the ACC, plans were at the finishing stages that will order Ngegba return $500,000 into the consolidated fund by August 3rd 2018, and an instalment payment of $100,000 each month for the next eight months.
It is in this backdrop that the Liberia Chamber of Commerce last week, cautioned the government and the NPA against going forward with the agreement.
The LCC, in a statement said suppliers are currently refusing to ship pending cargos until the issue can be sorted out. This means that, the current commodities on the market, when consumed, will create scarcity, since there will be no immediate imports to replace same.
The LCC, representing all businesses and Trade Union Organizations in Liberia, including the Liberia Business Association (LIBA), PATEL, Fula Business Association (FBA), World Lebanese Culture Union, Indian Business Association, Customs Brokers Association, has sent out caution notes to the Government and the wider public about the pending economic hardship if the GTMS service is allowed to hold.
Burden to Businesses
The LCC, in a statement says it believes that the NPA’s decision is not only an additional financial burden to businesses and consumers, but duplicating requirements that are already being complied to by the importers of cargos into the country. It also makes shipping to Liberia more expensive for suppliers outside of Liberia.
The Liberia Chamber of Commerce has also pointed out that this new requirement adds no value to export and import in Liberia. The essence is only to allow one company make money from importers and exporters’ own information generated during their purchases and sales internationally. Up until now, there is no clear indication on how much the fees per container is likely to be, as GTMS, in its own presentation at the LCC indicated it would charge up to 120 Euros per container, whilst Suppliers have stated that they are being charged up to 480 Euros per container.
It should also be noted that GTMS as a company, unlike BIVAC, is fully not prepared to take on this new challenge since they do not have representatives around the world. They will simply rely on importers’ own documents to provide the service they proposed to deliver. Clearly, the online platform that GTMS is keen to introduce cannot guarantee any due diligence in comparison with the existing BIVAC, Commerce and ASSYCUDA systems are offering.
All of these issues raised by member businesses and groups have pushed the LCC to call for meetings with relevant authorities in trying to better present their dissatisfaction with this new measure which will have a trickled down on the already challenged business climate.
At this point, the LCC, in good faith, is still calling on the Government to give them audience to have this issue harmonized before it escalates into something else that could create hard feelings between and amongst stakeholders of the economy.
Liberia is a member of the World Trade Organization (WTO). The WTO Trade Facilitation Agreement’s Article 10.5 establishes that once the agreement is in force Developed Members immediately and Developing Members according to their schedule of commitments shall not require the use of Pre-shipment inspections in relation to tariff classification and customs valuation. And hence, Liberia should not still be using BIVAC since it carries out Pre-Shipment Inspection. The pre-shipment inspection process ensures proper and truthful declaration and valuation. This function falls squarely, in the purview of the Liberia Revenue Authority (LRA). The LRA then delegated that responsibility to BIVAC, through a contract that was signed between the LRA and the BIVAC Team. As part of our civil procedure law, the Ministry of Justice and Ministry of Finance also signed as the fiscal and legal arms of the government. The process went through the Public Procurement and Concession Commission (PPCC). There was a competitive bidding process.
Valid Contract with BIVAC
However, prior to Liberia becoming a member of the WTO, there was still a valid contract with BIVAC which understandably, they could not just cancel. The contract since got expired and they renewed. Now, the contract expired again, and the Government of Liberia gave an extension of 8 months, under the umbrella of not wanting to be without anything at all. And so, there is currently a tender out for a replacement of BIVAC.
One fundamental point to note is that, amidst the concerns that businesses have with BIVAC, they have physical presence in almost all parts of the world. They physically inspect the shipments prior to loading on the vessel. They work for the fees they are being paid. The issue of undervaluation is being dealt with already. In the BIVAC contract with Liberia, there is a provision of underwriting of Liabilities by BIVAC if the government realizes any issue about under-declaration. That is why the Liberia Revenue Authority (LRA) has in place, the Post Audit Clearance process. In cases where BIVAC over-assesses an importer’s imports, there is a process whereby you can challenge their valuation to the LRA and seek redress. This process is very fast that your case is not pending for unreasonable long time.
Now, with the issue of BIVAC still looming and potentially fading off, the NPA, unlike the LRA, who does not have the authority to conduct valuation of importation, entered into a contract with the Global Marine Tracking Solutions (GTMS). They are supposed to implement the Container Tracking Note (CTN). Which means, if you want to import any container, in addition to the Pre-Shipment Inspection that BIVAC is implementing for the LRA, you have to also get the CTN. According to the GTMS and NPA, in their presentation before the Liberia Chamber of Commerce (LCC), the CTN seeks to curb the issues of under-declaration, which is already being taken care of by BIVAC for LRA. According to them, they will also track cargos, which is also currently being taken care of by the Shipping Lines. You can track your container at any point of the shipping process. This is nothing new. In essence, these are all duplication of functions.
Taxing Fears for Businesses
Under the BIVAC, businesses are required to Get Proforma invoice stating items and goods to be ordered; Apply for Import Declaration Permit (IPD) from Commerce along with the Proforma invoice stating goods to be ordered, country of origin, freight, and insurance (this process can take up to 2 weeks).
After receiving approved Import Declaration Permit, businesses are required to apply and pay to BIVAC 1.2% of total shipment value or a minimum of $190.00 and send copy of Import Declaration Permit (IPD) along with BIVAC inspection number to supplier.
With the addition of the CTN, the LCC fears businesses will be taxed with additional Cost to an already tax and fee burdened business environment which would lead to replication and duplication of processes BIVAC is already undertaken, thereby devaluing the CTN.
The LCC says the CTN fails a purported risk management tool because it has no agents or means abroad to validate information fed into it and cannot present a level-playing field to importers or solve the purported under-invoicing and over-invoicing because it only relies on information fed into it.
The added step, according to the LCC, also creates more barriers on trade and additional cost on exports, making businesses in Liberia even more uncompetitive.
The extra tracking is likely to force suppliers to become more reluctant to work with businesses in Liberia because of the cumbersome procedure of filling with two companies BIVAC and CTN operators.
Furthermore, the LCC fears, the award process of the CTN operator in Liberia lacks transparency, PPCC compliance and was not ratified or signed by Justice and Finance Ministries. The LCC also took issue with the fact that GTMS, the company implementing contract lacks credibly as documentaries on their operations in neighboring countries which shows that they defrauded the Sierra Leonean government of millions of dollars for which the CEO had to be imprisoned and banned from travelling.