Liberia: Did GAC Report Vindicate Finance Minister Samuel Tweah In US$25M Mop-Up Saga?
Monrovia – The Governor of the Central Bank of Liberia, Mr. Nathaniel Patray failed to utilize his authority and functional independence regarding the exercise surrounding the disbursement of the controversial US$25 million, according to findings contained in the ‘Agreed-Upon Procedures’ Report of the General Auditing Commission released Thursday.
Report by Rodney D. Sieh, [email protected]
Auditor Yusador Gaye, in her cover letter of the report submitted to Attorney General Frank Musah Dean noted: “The meetings’ minutes of TEMT (The Economic Management Team) showed that TEMT mandated CBL to carry out the Mop-Up Exercise and also authorized the CBL to re-infuse the mopped-up funds into the economy. More importantly, Section 1.1.9 Part II, count 4 of the findings cites the CBL Act as requiring that the CBL to have “functional independence, power and authority to conduct foreign exchange operations.”
Governor Patray, according to the findings, indicated to the GAC through a documented review questionnaire that the Mop-Up Exercise was authorized by The Economic Management Team. However, the Chairman of TEMT, Finance and Economic Planning Minister Samuel D. Tweah indicated to the GAC that the TEMT did not issue the CBL a written instruction for the Mop-UP Exercise; rather, the Mop-UP Strategy was authorized by TEMT. Minister Tweah indicated in his documented interview questionnaire that TEMT authorized the CBL to re-infuse the Mopped-Up Liberian Dollars into the market through the commercial banks. The TEMT and the CBL did not provide evidence of the authorization to re-infuse the mopped-up Liberian dollars into the economy as per the MOU.
US$25M Repaid to GoL Coffers
The report appears to remove much of the blame from Minister Tweah, who has been on the receiving end of criticisms over his handling of the saga. The Minister has maintained that the TEMT is only a policy making or strategy approving body. The GAC audit confirms Tweah’s statement that the TEMT approved the mopped up strategy while squaring off with the Kroll report which stated that the CBL banking division implemented the money operations.
A source at the GAC, speaking to FrontPageAfrica on condition of anonymity Thursday said “the report was based on evidence. It is a report of factual finding.”
Section 1.4.2 of the report, however, points out that there was no corresponding USD account opened to hold the $25M USD to be drawn from the International Foreign Exchange Reserve account for the purpose of the mopped up exercise.”
Governor Patray, per his documented interview, indicated that after TEMT’s authorization, the re-infusion of the mopped-up Liberian dollars started in November 2018 due to complaints from commercial banks and customers during the Christmas Seasons.
In its findings made public Thursday, the GAC concluded that it was able to verify that the Government of Liberia had paid back into the Foreign Reserve the US$25m borrowed for the mopped-up exercise.
Said the report: “The GAC was informed by the CBL through a formal communication dated April 2, 2019 with reference no. CBL/E Gov/NRP/2242/2019 that the Government of Liberia has not refunded the amount used for the mopped-up exercise although the MOU stated that GoL should refund the amount on or before December 31, 2018. The CBL on October 30, 2018 recorded in its books an account receivable of US$25 Million from the Government of Liberia.”
US$15M in Direct Mop-Up; $2M for Total
In March, Deputy Governor Charles E. Sirleaf, former Governor Milton A. Weeks, Dorbor M. Hagba, head of the CBL’s Banking Division, Richard H. Walker and Joseph F. Dennis, where held criminally liable for L$2,645,000,000 brought into the country which could not be accounted for by the defendants.
The Banking division supervises money transactions and operations. Economists say discrepancies between summary and detail report could be more errors but point to quality and capacity issues at the bank.
The GAC said it did not note any transaction with narrative on the International Foreign Exchange Reserve Account held with the Federal Bank of New York relating to the US$25Million Mop-up Exercise. However, a letter dated April 22, 2019 from Executive Governor Nathaniel R. Patray, III revealed that the CBL Operational Fund was used for the US$25Million Mop-up Exercise. “The funds used for the Mop-up, US$15M for direct mop-up and $2M auction to TOTAL Liberia, Inc. were traced to the CBL Operational Vault Account.”
However, the findings noted several discrepancies regarding how the funds were disbursed with some vendors listed as receiving some of the mop-up money either not registered legally or simply did not receive the cash.
According to the GAC’s findings, a total of fifteen entities were listed by the CBL but those entities indicated that they did not participate in the Mop-Up exercise.
The report does raise some eyebrows about the scope of the GAC and the AG’s functions. Most AG’s, forensic experts say, do not do “agreed upon procedures” except when an outsider like USAID pay for them to do a work and both agreed on the procedures to be followed, as was the case of Kroll. In the case of the GAC’s current debacle, it appears the AG is under the direction of the government which is an agreed upon procedure.
The companies are: Mari Empowerment in Brewerville, listed for $US5,000; ND Gobah, a small business in Duala, $US2,500; Siapondo, a FX Bureau on SKD Blvd, $6,000; Nadhel, a business in Paynesville, $18,463.00, Alpha Kilo, an FX Bureau on 3rd Street, Saye Town, $18,500.00; Songhay Travel Agency, a business between Carey and Buchanan Street, $41,400.00; Dickson, an FX Bureau on Johnson Street, 3,000.00; Unitrans, FX Bureau on Newport Street, $2,500.00; Misside Pella, a Provision shop in Rally Town Market, $9,000, Petro One, listed as a major importer on Bushrod Island, $100,000.00; RITCO, a business in Clara Town, $3,250.00; Blue Link, an FX Bureau on Camp Johnson Road, $23,451.00; AbiJaoudi Azar, $253,705.00; National Association/Sabou Cisse FX Bureau, $23, 451.00 and Sure Success at 72nd, $2,500.00. The total amount reportedly disbursed is set at $491,769.00
Additionally, the report found twenty seven entities listed as participating in the Mop-Up exercise per CBL records but were not registered per Liberia Business Registry Records amounting to US$702,680.00.
Another fifty-two entities participated in the Mop-Up exercise per CBL records but did not answer or reply to telephone calls and text messages. That amounts to 1,092,292.00. Eight entities also participated per CBL Records in the Mop-Up Exercise but were not in operation when during the field visit.
According to the GAC, the Banking Department of the CBL disbursed the United States Dollars in the ratios of 51.8% to Fx bureaus and the remaining 48.2% to major importers and small businesses contrary to the approved recommendation. “The Auditors confirm the names, entities, telephone numbers, locations and amount transacted with the beneficiaries to determine the legitimacy and accuracy of the transactions.”
A Variance of LR$17K Uncovered
The GAC documented that it requested documents related to the beneficiaries of the US$25Million MopUp Exercise from the CBL, the Ministry of Commerce and Industry and the Liberia Business Registry to determine the legitimacy of the beneficiaries.
“The GAC also confirmed prior to the field visit the name, location and contact of each beneficiary as per the List submitted to us by the CBL. 2.2.3 For the period July 17 to October 26, 2018, CBL recorded US$15 Million as the amount sold to 281 businesses and foreign exchange bureaus by direct mop-up while US$2,000,000.00 was recorded as the amount sold to TOTAL Liberia Inc., through a special auction.”
The report further documented that there was a variance of LR$17,775,323.78 between the Liberian dollar portion of the summary report and detailed report submitted by the CBL.
Section 3.1.2 of the report states: “There was also a variance of LR$108,928,788.37 between the amounts in the summary Liberian Dollar Report per beneficiary presented by the CBL and the amount confirmed by the beneficiaries.”
In another discrepancy, the GAC said the CBL Special Liberian Dollars Mop-Up Escrow Account showed that the amount of LR$ 2,303,363,898.00 was transferred to the Operational Vault of the CBL whereas the CBL Press Statement dated March 5, 2019 indicated that LR$ 1,300,000,000.00 was transferred from Liberia Dollars Special Escrow Account to the operational vault for re-infusion into the economy.
The CBL issued a memo for the opening of a special Mop-Up Exercise Escrow Account on July 19, 2018 three days after the commencement of the exercise. But an examination of the bank statement of the Special Liberian Dollars Escrow Account showed that the initial deposit into the account occurred on August 17, 2018 a month after the commencement of the exercise.
President George Manneh Weah, on Monday, July 16, 2018, through an address to the Nation announced the immediate infusion of US$25 Million by the CBL into the economy to mop up excess liquidity of Liberian Dollars. The CBL then signed a Memorandum of Understanding with the Government of Liberia to use a portion of the International Foreign Exchange Reserve in the amount of US$ 25 Million to intervene in the foreign exchange market to mitigate the volatility in the exchange The MoU stated that the Government should refund the amount mentioned on or before December 31, 2019.
Governor Nathaniel Patray indicated to the GAC through a documented review questionnaire that the Mop-Up Exercise was authorized by The Economic Management Team. But the Chairman of TEMT, Finance and Economic Planning Minister Samuel D. Tweah indicated to the GAC that the TEMT did not issue the CBL a written instruction for the Mop-up Exercise; rather, the Mop-up Strategy was authorized by TEMT. Minister Tweah indicated in his documented interview questionnaire that TEMT authorized the CBL to re-infuse the Mopped-Up Liberian Dollars into the market through the commercial banks. The TEMT and the CBL did not provide evidence of the authorization to re-infuse the mopped-up Liberian dollars into the economy as per the MOU.
– Excerpts from the Agreed-Upon Procedures’ Report of the General Auditing Commission
‘Agreed-Upon Procedure vs. Forensic
Late Thursday, Attorney General Dean confirmed to FrontPageAfrica that his office has received the completed Auditor General’s Report of Factual Findings in the application on the Agreed-Upon Procedures of the US$25Million Mop-Up Exercise Conducted by the Central Bank of Liberia (CBL) as Mandated by the Technical Economic Management Team (TEMT).
Auditor General Gaye, in her communication to the Attorney General Thursday made note of an Engagement Letter of March 22, 2019 in which it was agreed that the GAC would perform an Agreed-Upon Procedures (AUP) in relation to the US$ 25 Million Mop-up Exercise.
Two reports – the USAID-commissioned Kroll and the Presidential Investigation Technical Team (PITT) recommended forensic audits.
Kroll recommended: “Kroll was unable to reconcile the total value of disbursements for the period January 2016 to December 2018 with the total value of legacy and new banknotes disbursed for the corresponding period. Kroll recommends that a full forensic audit of disbursements from the CBL for the period January 2016 to December 2018 is undertaken, which should include an exercise to verify, that disbursements from the CBL have actually been received in full by the stated recipients (using a risk-based approach).”
The report does raise some eyebrows about the scope of the GAC and the AG’s functions. Most AG’s, forensic experts say, do not do “agreed upon procedures” except when an outsider like USAID pay for them to do a work and both agreed on the procedures to be followed, as was the case of Kroll. In the case of the GAC’s current debacle, it appears the AG is under the direction of the government which is an agreed upon procedure. “Agreed upon procedures mean you only do the procedures are you are told to do. Kroll was agreed upon procedure because USAID paid Kroll and told Kroll what to do,” one expert noted.
No Assurances Provided, GAC Says
In her communication to the Attorney General Thursday, AG Gaye said the integrity body had completed the execution of the Agreed-Upon Procedures Engagement, covering the period July 17, 2018 to March 21, 2019. “Please note that records and documents to which the agreed procedures were applied are the responsibility of the Central Bank of Liberia and the Technical Economic Management Team. Our responsibility is to apply the agreed procedures and report the factual findings. We conducted this engagement in accordance with International Standard on Related Services (ISRS) 4400. Please also note that the CBL provided responses to the draft report of factual findings which were evaluated and considered where necessary. Because this engagement is not an audit or a review of financial statements, we did not provide any assurance be it reasonable or limited.”
With the latest findings from the GAC, political observers are keen to see who will take the fall from a scandal that has dogged the Weah presidency since last year.
Growing out of the Presidential Investigative Team’s report, which calls for a ‘forensic investigation’ of the entire mop-up exercise carried out by the Central Bank of Liberia, and the report by Kroll and commissioned by the United States Aid for International Development(USAID), President Weah in March mandated the GAC to conduct an investigative audit into how the U.S.$25 million earmarked for the mopping exercise was expended.
Last July, President Weah announced an immediate infusion by the Central Bank of Twenty-Five Million United States Dollars into the economy to mop up the excess liquidity of Liberian dollars and mandated the CBL to provide more effective supervision and regulation of money-changers or foreign exchange bureau.
Source: Exit Looms for CBL’s Patray
It can be recalled that in July 2018, the government approved the infusion of U.S. $25 million into the Liberian economy in order to bring about stability on the market.
The CBL said the mop-up exercise was necessary to stabilize the Liberian Dollar against the US Dollar. Finance Minister Tweah had publicly disclosed that he had opted to use money exchangers and other businesses, rather than the commercial banks because, according to him, use of the commercial banks would not have yielded the desired results. The Minister has repeatedly defended his actions, claiming that he did not do anything illegal.
Pressured by a Bring Back Our Money protest and concerns over how the money was distributed, the President set up a Presidential Task Force and also solicited the help of the United States government to get to the bottom of the saga.
In its findings, the Kroll report noted discrepancies in the manner in which the government carried out the US$25 mopping up exercise on the money market. “Kroll was not provided with documentation setting out how the USD MopUp Exercise was structured or implemented, or which organizations were targeted by the CBL,” the report said.
Kroll added: “The approach taken by the CBL to implement the USD Mop-Up Exercise, whereby small teams of bank personnel directly purchased LRD banknotes from local businesses and foreign exchange bureaus in exchange for USD notes, created an enhanced level of risk.”
Separately, the Special Presidential Task Force recommended that given the many discrepancies noted in the manner in which the mop-up exercise was conducted in relation to the infusion of the US$25 Million into the Liberian economy; and the scope, time and financial resource limitations encountered by the PIT-TC, the TEMT and the Central Bank of Liberia put a halt to the exercise, and that a forensic investigation of the entire mop-up exercise be conducted without any delay.
Added PITT: “Given the many discrepancies observed throughout the investigation in relation to the operations of the Central Bank of Liberia in executing its statutory mandate, there is a need to review the Standard Operational Procedures (SOP), banking supervision and internal controls of the Central Bank of Liberia to curb the possibility of abuse of the money supply of the nation; as well as, enhancing efficiency and productivity. 3.7 To further protect currency banknotes in reserve, the Central Bank of Liberia should consider discontinuing the use of the Vault at the erstwhile National Housing and Saving Bank.”
After two major reports, the one from the USAID-commissioned Kroll and the Presidential team, the dust emanating from the controversy over the US$25 million mop-up exercise leaves more questions than answers. With the latest findings from the GAC, political observers are keen to see who will take the fall from a scandal that has dogged the Weah presidency since last year. As this report went to press, one senior administration official, speaking on condition of anonymity, out of respect of the president’s mandate last week, banning officials from making public comment on policy issues, hinted that the presidential ax could wield its way in one direction: “To the extent there are questions and discrepancies raised by the report, the relevant persons at the CBL would have to answer.” Thus, signaling that Governor Patray could soon be shown the exit door.