Liberia: Diverted China Union US$6m Paid to Liberia Vanishes from Questionable Account

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Monrovia – Section 4 of the Public Finance Management Law regarding Public Funds and Money stipulates that in order to ensure the effective and efficient management, accounting and control of the public financial transactions and operations of the Republic of Liberia, a Consolidated Fund is established where monies owed government by foreign companies should be paid into the Central Bank of Liberia, the official depository of the Government of Liberia.

Under the law, resources that become public money upon receipt include, but are not limited to: “(j) Debts due of the State;  (k) Money transfers corresponding to credits taken by the State in accordance with legal provisions regarding the formation of State Debt; and (I) Receipts from the issuance of national and international documents of credit by the State.” 

Source: MoF Did Not OK New UBA Account

A FrontPageAfrica investigation has found that the National Port Authority, an autonomous agency, regarded as the gateway to the Liberian economy was in breach of the PFM law regarding funds owed the government by the Chinese mining Company China Union.

FPA has learned that the money, US$6 million owed Liberia was paid into a makeshift account instead of being paid directly into the government’s Consolidated Account at the Central Bank of Liberia.  

Under the law, autonomous agencies cannot on their own open a separate account without the acquiesce of the Minister of Finance. All prior accounts opened did but the special account opened at the United Bank of Africa Liberia(UBA) did not follow the PFM law, thereby raising several questions including, why did the NPA hire an outside negotiator to facilitate the payment when it has a legal department? And Why would NPA need to open another account when it already has operating accounts at various banks, including Ecobank.

Furthermore, while Section 4 of PFM Law excludes state-owned enterprises from consolidated account, Section 45 and 46 gives the Minister of Finance and the board the authority to approve major decisions such as opening bank accounts and spending money. Minister of Finance is also Board Member and Board will have to approve opening bank accounts.

US$6M Paid into Questionable UBA Account

Out of the US$6 million paid into the UBA account by China Union, FrontPageAfrica has learned that US$1.5 million (one million five hundred thousand United States dollars) was paid to the Land and Housing Development Incorporated (LHDI), owned by E.C.B. Jones in two installments: US$750,000 (seven hundred fifty thousand United States dollars) in each installment. The money was then deposited in the GT Bank account of the LHDI.

Jones, it may be recalled, is a former Deputy Minister of Lands, Mines and Energy, who was among a laundry list of officials named in a Global Witness bombshell report dubbed locally as Big Boy I & Big Boy II. 

China Union was one of the first major investments announced by former President Ellen Johnson-Sirleaf. The company’s investment was said to be worth around US$ 2.6 billion. Over the years, however, the company has found it extremely difficult to maintain its workforce due to economic challenges posed by market factors.

The company has reportedly not exported iron ore since July 2014. A recent tour of the processing plant – the area the ore processing was done – showed the idle machines are becoming rusty.  

As part of a 25-year Mineral Development Agreement (MDA) with the Liberian government, the company was responsible to operate the Bong Mines Hospital, which is the only referral hospital in lower Bong County. The MDA raised the hopes of residents of Bong Mines in an underdeveloped district, especially after President Ellen Johnson Sirleaf during a state of the nation address in 2007 announced that the company would provide over 4,000 jobs for Liberians.

Besides the renovation of the Zaweata School, now Bong Mines Central High, the renovation of the Bong Mines Hospital which provided free medical care to residents of the district and nearby areas, the construction of the 45 km Kakata-Bong Mines road by the company offered residents hope that a new day in their lives had dawned.

The US$1.7 million annual social development fund to Bong County by China Union also gave them hope that life would be better by the end of the concession period. But a decade after, their hopes have been dashed with frustration as many, including Liberian workers; continue to feel the pinch from the crisis facing the company.

Much of the hopes the company came to Liberia fizzled, as it became delinquent in payments of surface rental, the use of the Bong Mines Harbor and its obligations to social corporate development.

The lackluster performance pushed the company over the limits and into a reported more than US$20 million (twenty million United States dollars) debt to Liberia, prompting the National Port Authority to write the management of APM Terminals to disallow China Union from using the Bong Mines Harbor.

Major Blow to China Union

APM Terminals, which commenced operations in February 2011 has a 25-year concession from the Government of Liberia, operating and managing the Port of Monrovia by providing logistical services including handling containerized shipments and handling of cargo such as rice, cement, latex, unitized or palletized cargo, vehicles, frozen products and timber.

When APM began enforcing the request from the NPA and denied use of the Bong Mines Harbor, it dealt a major blow to the company’s operations.

China Union also faced serious repercussions at home due to the People’s Republic of China’s stern laws on Chinese companies operating in foreign countries.

Facing the risk of losing its contract, China Union if the Chinese government learned of its indebtedness to Liberia, China Union sought the intervention of the embassy in Monrovia.

At the China-Africa Summit held in Beijing from September 3—4, 2018, FrontPageAfrica has learned that the Liberian delegation did not mention the debt owed by China Union in exchange that the company would pay some portions of the monies it owed Liberia.

Multiple sources confirmed to FrontPageAfrica that the port management hired the services of Land and Housing Development Incorporated (LHDI), owned by E.C.B. Jones, to negotiate on its behalf with China Union, which has been indebted to the Republic for a little over US$10 million (ten million United States dollars), just for the use of the Bong Mines Harbor.

Looking out for himself, Jones and his LHDI, short-changed Liberia by negotiating for China Union to pay the government US$4 million (four million United States dollars) less.

The government ended up receiving only US$6 million (six million United States dollars), which was placed in a hastily-opened UBA account. The account was opened by the Management of the Freeport of Monrovia for the sole purpose of the transaction, an impeccable source told FrontPageAfrica.

‘Cold-Blooded’ Syndicate

Instead of paying the money directly into the government’s Consolidated Account at the Central Bank, the official depository of the CBL, the money was paid into the UBA Bank and reportedly paid out to a few select members of what one insider described to FPA as a cold-blooded syndicate, thereby denying Liberia of millions.

FPA has learned that out of the US$6 million paid into the UBA account by China Union, US$1.5 million (one million five hundred thousand United States dollars) was paid to LHDI in two installments: US$750,000 (seven hundred fifty thousand United States dollars) in each installment. The money was deposited in the GT Bank account of the LHDI.

The checks were signed by Bill Tweahway, Managing Director, National Port Authority, and Vakuma Dukuly, Comptroller. The US$1.5 million or 25% of the US$6 million reportedly represented the cost of the negotiations with China Union. The US$1.5 million, FPA has learned was later taken from the LHDI account at the GT Bank and transferred to a J2 Investment Corporation account at the International Bank (IB) for distribution to members of the syndicate by a man identified as Gus Jarrett. 

Ironically, the J2 Investment Corporation is owned by ECB Jones and Gus Jarrett. E.C.B. Jones is the Chairman of the Board and Gus Jarrett is the Chief Executive Officer (CEO). 

The China Union saga comes barely a year after two major financial scandals – the missing LD16 billion and the US$25M mop up controversy.

The saga led to the arrest of former CBL Governor Charles Sirleaf, son of former President Ellen Johnson-Sirleaf and Milton Weeks, the former Governor as well as Banking Director Dorbor Hagba. The three have been charged with a string of offences, including criminal conspiracy, economic sabotage and misuse of public money.

Report Cites ‘Poor Management’ of Social Dev. Funds

Last year, two probes were launched by both Liberia and the United States following media reports in September that a container full of newly printed Liberian banknotes, worth more than US$100 million, had gone missing. After months of investigation, business intelligence firm Kroll Associates Inc. released their findings last week, dismissing the suggestion that the banknotes simply went missing. The report found that the Liberian government had approved the printing of new banknotes totaling five billion dollars, but that the central bank printed surplus. 

Nevertheless, Weeks, Sirleaf, Hagba and others remain under investigation and said to be criminally liable for two billion-six hundred forty-five million (L$2,645,000,000) Liberian dollars in banknotes brought into the country which cannot be accounted for by them. According to the charge sheet, Sirleaf admitted during police interrogation to signing the first contract for the consignment of new banknotes in 2016 with Swedish firm, Crane Currency.

The China Union saga comes amid growing concerns regarding the fate of a reported US$1.75 million owed Bong County from the embattled company’s social development fund commitment to the county.

A 2013, report from the Sustainable Development SDI recommended that the Government of Liberia ensure that China Union’s USD$3.5 Million per year ‘social contribution’ results in at least USD$350,000 of expenditures per year in Fuamah District.  “These Social Development Funds were created to offset the impacts of mining operations and bring benefits to communities,” the report said at the time.  “So far we’ve seen nothing but poor management and political manipulation of the funds across Liberia.”

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