LIBERIA: Kickback Suspected in US$180K Taylor-Era Debt Paid to ‘Inactive’ New York Company

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Monrovia – An investigation by FrontPageAfrica has uncovered multiple layers of corruption, fiscal mismanagement, kickbacks and waste resulting in millions of dollars in losses from the Liberian government coffers in just the first year of Coalition for Democratic Change government headed by George Manneh Weah.

Repot by Rodney D. Sieh, [email protected]

In January, the President used his first annual message to announce salary cuts by a quarter as he warned of tough times ahead for a “broke” country.  

Said President Weah: “The state of the economy that my administration inherited leaves a lot to do and to be decided. Our economy is broken; our government is broke. Our currency is in free fall; inflation is rising,” Weah said. “Unemployment is at an unprecedented high and our foreign reserves are at an all-time low”.

While the President has pledged to crackdown on endemic corruption, the multiple vouchers of withdrawals in FPA’s possession point to a government drowning in wealth.

FrontPageAfrica has in its possession dozens of vouchers and memos detailing exorbitant payments toward travel, made-up companies and firms tied to the presidency for road and construction contracts including the National Security Agency, Executive Protection Agency and the never-ending renovation of the seat of the Liberian presidency, the Executive Mansion.

Nearly all of the payment vouchers in FPA’s possession originates from instruction from the Ministry of State headed by Minister Nathaniel McGill, to the Ministry of Finance.

One of the first actions taken by President Weah after his inauguration, was a directive to all Autonomous Agencies and Public Corporations of the Government to authorize and expend a cumulative amount of not more than USD $3,000 for operational expenses. “Any amount above the $3,000 USD threshold must seek approval from the Office of the President,” instructed the directive.

$182K Paid to Inactive Firm

Internal Memo requesting the payment to the non-existent company

Months later, the trail of vouchers appears to be continuing that trend with virtually all payments going through the president’s office. 

In one of those documents being released today by FPA, Finance and Economic Planning Minister, Mr. Samuel Tweah approved a payment of US$182,000.00(One Hundred Eighty-Two Thousand United States Dollars) to a purported US-based construction company which, FPA probe has found, has been inactive since 2003 when the country had just emerged from civil war and led by Charles Taylor.

In the memo approving the payment to Rocktown Tool & Equipment Corporation of New York, USA, dated September 24, 2018, the minister wrote:

“I have the honor most respectfully to present my compliments and wish to inform you that the Department of Economic Management  is requesting an allotment through the Debt Management Unit, in the amount of US$182,000.00(One Hundred Eighty Two Thousand United States Dollars representing  payments in favor of Rock Town Tools & Equipment Corporation of New York, USA as a result of Court Orders for debt owed them by the Ministry of State for the supply of the following: Executive Mansion Tower Light, 80,000.00; Suburban Vehicle, US$14,000.00; Public Works 125KVA Generator, US$33,000.00; Gillette Generator 225 KVA, 84,000.00; Whisper Watt, 150 KVA, 55,000.00, 2.6” Trash Pump @17,000.00, US$34,000.00 and filing of complaint, US$200,00.”

FPA has uncovered that the company was registered in August 1999, at New York’s KINGS County with company number 2406154 and located at the address 576 Third Avenue Brooklyn, New York, 11215. 

Today, the company is unlisted and does not exist. Its only mention is that it has been inactive – dissolution by proclamation / annulment of authority since June 25, 2003.

A Google map showing the location of the address of where Rocktown used to operate

New Company Now Occupies Rocktown’s Space

The office space where Rocktown operated until their closure in 2003 is up for rent in New York

FPA recently paid a visit to the Brooklyn, New York address indicated on the voucher and found a new company, called My Tool Rental & Equipment – Rental, Sales and Repairs, now operating in that address.

Under the state of New York laws, corporations that have been delinquent in filing returns or paying taxes or fees for two consecutive years may be subject to sanctions imposed by the New York Secretary of State. Thus, New York State corporations may be dissolved by proclamation.

Corporations that have been formed under the laws of another state or country (foreign corporations) may have their authority to do business in New York State annulled by proclamation.

A corporation may regain its ability to do business in New York State through the reinstatement process. But our investigation has found that Rocktown did not.

New York Tax Law sets the requirements for reinstatement of New York State corporations (section 203-a) and foreign corporations (section 203-b). Once the corporation is reinstated, it re-acquires the same powers, rights, and obligations it had before it was dissolved by proclamation or had its authority to do business annulled.

The debt, according to court documents in FPA’s possession was amassed in 2002 when former President Charles Taylor was president and Jonathan Reffell was the Minister of State for Presidential Affairs.

In 2016, while defending itself against the company’s claim, the government, in its defense, produced two witnesses to testify. The first witness Mr. Abubakar M.S. Kiawu testified that although the claims of the plaintiff was submitted and demand for payment made, the claim was dishonored and disqualified based on the outcomes of the two audits conducted under the authorization of the Government of Liberia, according to the witness. KPMG Auditing Firm which is an internationally-independent auditing firm based in Ghana, through its vetting process declared the plaintiff’s claim as illegitimate. The testimony was made in the absence of the audit report been put in the evidence by the defendant.

The defendant’s second witness, Mr. D. Caeca Freeman, former employee of the General Services Agency(1997-2012) testified as to the procedures used in acquiring and managing government assets. With respect to the claims of the plaintiff’s, this is what the witness testified: “It was not stated as to which ministry or agency to which they supplied their claim. And if they did not supply a ministry or agency, those assets must and should have gone through the General Services Agency procedure: but if not, I cannot speak to it because they were never brought through the proper procurement system at the GSA to certify an approved payment voucher to the Ministry of Finance.” 

Loopholes Point to High Court Perfection

Based on the loopholes, a senior administration official told FrontPageAfrica Sunday that the current government should have sought an appeal before agreeing to pay a dime.

FPA has also learned that some big-wits within the ministry, particularly in the debt management office were paid kickbacks to ensure payments like these are resuscitated.

Under the Public Financial Management Act of 2009, “wherever practicable all payments of public moneys to persons outside Liberia shall be made by direct payment to such persons’ banks, use of banker’s draft or otherwise through the local banking system. Where direct payment is inappropriate, payment shall be made on the authority of the Minister to the Comptroller-General through agents appointed by him for that purpose.”

FrontPageAfrica has learned that the payment to Rocktown was made in Liberia because the account of the company is no longer active in the state of New York.

More importantly, questions are still lingering over who authenticated the purported delivery slips, bill of lading and other attached documents to determine the legitimacy for a transaction that occurred around 2002? Which agency received the supply? Why is the government paying debt a reputable international firm, KPMG declared illegitimate? What was the original amount of the debt? According to the filling the 300k is reconcile balance. Which agency or person signed the delivery note? Was due diligence done during the trial to establish the legitimacy of the company?

In March 2007, KPMG-Ghana was contracted to vet all claims exceeding US$10,000 for services rendered the Liberian government. If the debt was not vetted, it is only through a court action those debts could be repaid.

One legal observer speaking to FPA Sunday said: “The first question that needs to be addressed is when did the debt accrued? If it accrued in year 2002 or 2003, the lawyers for government should have raised the issue of jurisdiction. The commercial court was established by an Act of the Legislature in the year 2010, and nothing in that Act says that the Commercial Court can hear matters that happened before its establishment. If the commercial court didn’t have jurisdiction to hear a debt that accrued before its establishment, then the referenced judgment would be null and void. Second, if the debt accrued in 2003, the plaintiff should have commenced its lawsuit within seven years. Failing to do so, the government should have raised the affirmative defense of the statute of limitations. Third, the government announced appeal to the supreme court, why didn’t it perfect the appeal? As a condition of perfecting an appeal from the commercial court, the defendant must put the entire amount of the judgment in a bank account approved by the court. If the government had the full amount to pay the judgment, it should have at least perfected its appeal to the supreme court so as to be certain that the payment was legitimate.”

Ironically, previous Finance Ministers  – Lucine Kamara of the Interim government of Gyude Bryant, Dr. Antionette Sayeh, Augustine Ngafuan, Amara Konneh and Boima Kamara – all from the previous government of former President Ellen Johnson-Sirleaf, rejected paying the Taylor era debts.

The most notable case of the Sirleaf era involved Lebanese Businessman George Haddad representing Alliance and Prestige Motors, and German auto dealers in Monrovia. Haddad had sued the Government of Liberia for allegedly refusing to pay for vehicles and spare parts supplied the government in 2003 and up to March 2008. Minister Sayeh, first declined to pay citing discrepancies in the numbers from the interim government period. The action of damage for wrong by businessman Haddad against the Government of Liberia was first filed at the Commercial Court in 2014.

As one political observer pondered Sunday, “was this amount not paid by these ministers prior to the current government, because they knew there were issues surrounding the payment? Did Minister Tweh find out why his predecessors neglected to pay the amount? Besides, there are current government expenditure that the ministry has not paid, raising more questions than answer, why travel back in time to pay a debt entangled in a sea of uncertainty.

Look out for the second in the series!!!

COMING WEDNESDAY: Huge, Unexplained Withdrawals from Security Budget

In the 2018/2019 budget, the National Security Agency (NSA) has a total 9,737,512.00, From that amount, 8,559,993 goes toward security operations, 3.9 million toward intelligence operations, 3.7 million security operations, consultancy 459,993 and 500K for special operations services. Vouchers in FPA’s possession show massive withdrawals from the budget of the National Security Agency under the guise of “Security Operations”. 

In one of the many vouchers in FPA’s possession, Minister Tweah writes: “We present our compliments and wish to acknowledge receipt of a communication from the National Security Agency (NSA) dated August 22, 2018, requesting a transfer in the amount of USD 1,000,000.00(One Million United Sates Dollars) from Security Operations and Intelligence to Special Operations Services. In view of the above, we recommend, if it meets your approval that the amount of USD (500,000.00) from Intelligence Services to the Special Operations Services to enable them carry out its operation.” 

FPA has learned through NSA sources and paid vouchers that the funds in the agency’s account are nearly depleted.  In our next report, we explore the details of how and why the agency, like most government ministries and agencies are struggling to pay staffers and undertake key operations in the wake of a rapidly depleting budget.

VACANCY ANNOUNCEMENT

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