Liberia: Can J. Aloysius Tarlue’s Experience Remedy Liberia’s Central Bank Control Failures?

Tarlue’s confirmation hearing comes amid massive disenchantment about the CBL’s ability to regulate the country’s monetary policy as cash shortage appears to be hitting commercial banks and leaving the public in angst.

Monrovia – Liberia`s economic woes are tied to a mix of crucial fiscal and monetary failures, but the challenge of the country`s Central Bank to decisively stamp it regulatory authority and effectively enforce compliance of the monetary policies and procedure is the key problem. 

The unauthorized printing of the sixteen billion Liberian dollars and the controversial issuance of the money together with the discrepancies that beclouded the US$25 million mop-up exercise greatly raised questions about the Central Bank’s role as the regulator of the country’s financial sector. 

So, as the Liberian Senate reconvenes to act on key national issues, amongst them, the confirmation of CBL Executive Governor Designate, J. Aloysius Tarlue, many are asking what are the main problems at the Central Bank and what skills are needed to tackle the problems and help salvage the country`s continuing declining economy. 

Tarlue’s confirmation hearing comes amid massive disenchantment about the CBL’s ability to regulate the country’s monetary policy as cash shortage appears to be hitting commercial banks and leaving the public in angst.

System in Shambles 

Commercial banks’ customers requesting withdrawal from are left frustrated. The exchange rate has dropped despite rocketing prices of basic commodities and purchasing power has ghastly diminished due to government’s failure to pay several months of salaries. 

There have been several recommendations from several local and international economists while critics claim the government is lackadaisical in fixing the fiscal and monetary bloopers. 

The International Monetary Fund (IMF), a major development partner, works to foster global monetary cooperation and secure financial stability in countries like Liberia.

In 2019, the IMF held bilateral discussions with Liberian officials. A staff team visited Liberia, collected economic and financial information, and discussed with the economic management team about the country’s economic developments and policies.

The IMF Executive Board in concluding its 2019 Article IV Consultation with Liberia made specific calls as part of the efforts to revamp the country`s economy and stimulate growth. 

“Directors noted that while the financial soundness indicators show that the banking sector appears adequately capitalized, the CBL should enhance its supervisory efforts. They highlighted the need to prioritize strengthening the CBL’s supervisory, regulatory, and resolution frameworks in light of the elevated level of nonperforming loans, focusing on measures that improve loan-underwriting standards,” the IMF stated in its recommendations.

Tarlue’s confirmation hearing comes amid massive disenchantment about the CBL’s ability to regulate the country’s monetary policy as cash shortage appears to be hitting commercial banks and leaving the public in angst.

Kroll, TIP Recommend Controls 

Concerns about the alleged missing L$16 billion sparked massive protest that later prompting the government to sanction two separate investigations. The Presidential Investigative Team (PIT) and the USAID hired Kroll which probed the reported missing LD$ 16 billion raised a range of weak controls at the CBL. 

These problems, according to the separate reports, range from strengthening controls for reserves management, monitoring of foreign exchange inflows to and outflows from the CBL, currency operations, regulatory effectiveness and weak internal audit. 

The PIT, for example, interviewed 78 witnesses including former President Ellen Johnson Sirleaf and submitted 26 “key findings.” 

Twenty of these findings pointed out serious lack of procedure and internal controls and failure to comply with control measures and procedure.  

The Team recommended “a review of the Standard Operating Procedure, banking Supervision and Internal Controls of the CBL to curb the possibility of abuse of the money supply of the nation and as well enhancing the efficiency and productivity of the CBL.” 

At the same time, the USAID hired independent investigating consultants Kroll identified weak controls and “discrepancies at every stage of the process for controlling the movement of banknotes into and out of the CBL during the Independent Review”. 

Specifically, the investigation pointed non-compliance with the “Legislature approval for printing new banknotes; the procurement and contract for new bank notes printing; the shipping of new banknotes to Liberia; the delivery of new banknotes to the CBL, and; the movement of funds within and out of the CBL’s vaults.” 

The problems at the CBL appear not to be the absence of policies missteps, thereby pushing the IMF to suggest that the Bank should tighten monetary policy with the objective of reducing inflation to single digits by 2021. 

What the CBL Act Says

According to the CBL Act of 1999, the Bank power includes, but not limited to supervision of non-bank financial services dealers and brokers; management of  aggregate credit in the economy by indirect means, by loan securitization, purchase and sale of securities, transactions in derivatives, and foreign exchanges and through the establishment of required reserves of commercial banks under jurisdiction.  

The CBL also has the power to formulate and implement monetary policies, determine appropriate foreign exchange regime, formulate and implement foreign exchange policy and manage foreign exchange as well as handle external banking affairs of the country.

The Bank also functions as the fiscal agent for the government, regulate bank and non-bank financial institution, and manage foreign exchange reserves of Liberia.

With these functions and power given the CBL by law, experts say compliance and regulation are at the core aspect of managing the bank.

Does Tarlue Have the Qualification?

The CBL nominee has worked for more than 17 years with quality compliance experience, enforcing standards in a range of global financial institutions, mainly in the United States. 

According to Tarlue’s profile, he worked for J.P. Morgan Chase, the largest bank in the United States and the sixth largest bank in the world with a net asset of $2.2 trillion dollars. He also worked for BNY Mellon NA, Deutsche Bank NA, Merrill Lynch and HSBC Bank NA. 

In these banks, Tarlue supported management in ensuring that the Lines of Business operations were in accordance with all legal and regulatory requirements and all standards relating to anti-money laundering and sanctions to protect and enhance the reputation of the Bank and avoid significant financial loss or reputational damage.

He helped draft and update supervisory policies and procedures and anti-money laundering compliance as well as regulatory developments and enforcement actions to assess potential impact on these banks. 

He identified and helped resolved compliance and control issues, performed targeted reviews to validate controls and ensured they were in place and appropriate. 

Tarlue possess political, social and economic knowledge of countries that are major players in the global economy and has spent years analyzing client risks due to Major Sanctioned Countries.

Prior to his preferment by President Weah for the CBL post, Tarlue was Chairman of the Board of Commissioners of the Liberia Electricity Renewable Commission.

Can Tarlue Fix the Mess?

The CBL nominee will face the Liberian Senate in the coming days. He is expected to be hit with the hardest of questions concerning from the economy. Chief amongst them would be the printing new banknotes and its possible ramifications as well as the scarcity of cash in banks.

His responses will certainly draw public attention, and some sources have already hinted that the IMF and World Bank have called for the institution of several policies actions before new banknotes are minted. 

Meanwhile, there are criticisms aimed at Mr. Tarlue as some have questioned his qualification and experience to handle the CBL. But some say the CBL nominee’s US banking experience in compliance and regulation gives him the leverage to lead the salvaging of the CBL reputation and the adherence to basic policies and regulations.