Liberia: Leaked Anti-Corruption Report Says Central Bank Failed to Provide Oversight in US$25 Million Mop-up

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A leaked, unreleased report by the Liberia Anti-Corruption Commission(LACC) reportedly completed nearly a year ago, has concluded that authorities of the Central Bank of Liberia, including former Executive Governor Nathaniel R. Patray and Deputy Governor for Operations, Charles E. Sirleaf did not provide proper oversight and supervision for the Mop-up process to ensure that Massah Sonie, a former Assistant Director in the Banking Department and her teams were in compliance with internal regulatory measures, such as ensuring transactions with legitimate business entities and licensed FX bureaus, thus creating the platform for potential money laundering activities.

Monrovia – A leaked, unreleased report by the Liberia Anti-Corruption Commission(LACC) reportedly completed nearly a year ago, has concluded that authorities of the Central Bank of Liberia, including former Executive Governor Nathaniel R. Patray and Deputy Governor for Operations, Charles E. Sirleaf did not provide proper oversight and supervision for the Mop-up process to ensure that Massah Sonie, a former Assistant Director in the Banking Department and her teams were in compliance with internal regulatory measures, such as ensuring transactions with legitimate business entities and licensed FX bureaus, thus creating the platform for potential money laundering activities.

The report relieves the Ministry of Finance from any responsibilities relating to the US$25 million Mop Up exercise while laying the blame squarely on the head of the CBL.

TEMT vs. CBL: Conflicting Messages

According to the report, on July 16, 2018 all seven of the core members of the TEMT unanimously agreed and approved the use of the Direct Mop-up Method as was recommended by the CBL without establishing the economic practicality, validity and appropriateness of the recommendation and/or proposal made by the CBL to use the Direct Mop-up Strategy and its subsequent impact on the economy.

The report also raises questions as to why Finance and Economic Planning Minister Samuel Tweah was singled out and why several CBL senior executives were paraded in prison jumpsuits and courts over a lengthy legal wrangle.

While blaming the CBL, the report notes that seven  TEMT mebers should have exercised better oversight over CBL.  But this conflicts with the fact that CBL IS OVERSEEN BY an executive BOARD and not by a policy advisory group such as the TEMT OR THE EMT.

Statements from seven members of the Technical Economic Management Team(TEMT) show that no member was involved in mop up operation and members statements are highly consistent. Members also stated that the mop-up idea came from the CBL, and not from the TEMT,  contrary to what some have been led to believe.

The Technical Economic Management Team (TEMT) is comprised of the Ministry of Finance and Development Planning, Liberia Revenue Authority (LRA), Central Bank of Liberia (CBL), Ministry of States without Portfolio (MoS), Ministry of Commerce & Industry (MoCI), National Investment Commission (NIC), and the Economic Advisor to the President the President of Liberia as core members.

The Term of Reference (TOR) of the Technical Economic Management Team (TEMT), among other things includes: serving as Cabinet of Economic Management and does not run the CBL. He said the TEMT functions as a statutory standing team with economic policy advisory mandate which was not set up by the President of Liberia and not specifically for the mop-up exercise. He said the TEMT is not an auditing board but rather, it does analysis of economic decisions or policies on the state of the economy.

The report noted that the US$ 25 million approved for intervention in the foreign exchange market was drawn on CBL Operational USD Account (A/C #:1000101000001) held at the CBL Head office in Monrovia, Liberia; and not from the CBL International Foreign Reserved Account held at the Federal Bank in New York, United States of America.

The report also notes that an Escrow Liberian Dollar Account (A/C #:1000101140001) for the mopped-up Liberian dollars banknotes was opened on July 19, 2018; two days after the commencement of the mop-up exercise and that there was no entry made to this account until August 17, 2018, one month after the account was opened.

Finance and Economic Planning Minister Samuel Tweah told the investigative team that the CBL assured the TEMT that they (CBL) have done this direct mop-up exercise before and yielded great results. He said the CBL further informed the TEMT that it (CBL) had a list of pre-validated businesses in its database with which it has carried out such transaction.He said these methods were discussed, debated and agreed on by unanimous consensus that the direct mop-up method be used. According to him, this decision was never objected to or opposed by anyone at the CBL or any member of the TEMT.

Minister Tweah emphasized that the CBL assured the TEMT that all necessary best practices and safeguards, including the “due diligence of know your customers (KYC)” were used during the implementation of the direct mop-up exercise. He said during the process the TEMT was briefed regularly and advised on the status of progress made.

The Finance Minister further told the investigation that L$1.3 billion was authorized by the TEMT to be brought back into the economy during the Christmas Season in 2018. He said commercial banks complained of lack of Liberian dollars bank notes to meet customers’ demands, and  the pressure was growing on the CBL and if not responded to urgently, this pressure would have subsequently increased to L$9 billion. He said it was on the basis of this increasing pressure on all the banks, including the CBL,L$1.3 billion was authorized by the TEMT to be brought back into the economy through the commercial banks.

The decision to infuse US$ 25 million in the foreign exchange market for the purpose of stabilizing the exchange rate between the Liberian and United States dollars; and that of the decision to use the Direct Mop-up Method and its immediate implementation, simultaneously took place on the same day (July 16, 2018). And commencement of the mop-up started immediately the next day (July 17, 2018), thus leaving little or no time for proper planning on the part of the CBL to undertake such a technical and sensitive economic tasks which has national security implications for the economy of the country.

First Policy Action

Former Governor Nathaniel Patray, a member of the TEMP, according to the report, informed the investigation that a “Matrix of Policy Measures to mitigate the exchange rate pressure” as a policy document was approved by the TEMT. He said the use of the US$ 25 Million is the first policy action in the matrix. Mr. Patray said the idea of the US$ 25 million mop-up exercise was to halt the rapid depreciation of the Liberian dollar, reverse the depreciation, and stabilize the Liberian dollar exchange rate against the United States dollars. He maintains that the CBL occasionally uses the direct mop-up method as a non-conventional monetary policy strategy/tool to reduce currency outside the banking system with the intention of reducing the pressure on the Liberian dollar. 

Commerce Minister Tarpeh told investigators that the 25 million mop-up exercise was a presidential mandate and the objective was to mop-up excess liquidity (Liberian Dollars) from the Liberian Market; hence, a direct mop-up strategy was adopted. He said at first he had some reservation on the use of the Direct Mop-up method and to rather use the commercial banks but authorities of the CBL indicated that they had done this before with good results; and so they (TEMT) unanimously agreed on the use of the Direct Mop-up method.

According to Minister Tarpeh, the TEMT received and reviewed reports from the mop-up exercise and there were no material discrepancy observed to raise any alarm. He said US$ 15million was used directly into the market while US$ 2million was sold to Total Liberia Inc.thus making a total of US$ 17million that has been used for the mop-up exercise.

For his part, Mr. Molewuleh B. Gray, Chairman of the National Investment Commission (NIC), also a member of the TEMT told investigators on July 4, 2019 that the TEMT serves as the Technical team to analyze and advice on policy options required to mitigating or solving economic challenges facing the Liberian economy. He said one of the challenges faced by the economy was the rapid depreciation of the Liberian dollars to the United States dollars.

The NIC boss said to address the rapid depreciation of the Liberian dollars the TEMT as an Economic Policy Body, analyzed the rapid depreciation and recommended to the CBL the need to execute a direct mop-up exercise. He said the Direct Mop-Up Exercise was intended to remove excess Liberian dollars from circulation and aid in the stabilization of the exchange rate between the Liberian dollars and United States dollars.

CBL Used Money-Changers

Mr. Thomas Doe-Nah, head of the Liberia Revenue Authority(LRA) told investigators that it was a mandate given by the President of Liberia to use US$25 million for the mop-up exercise. He said details about the source of the US$25 million would be with the CBL. He said during the conduct of the exercise he attended TEMT meetings where they were briefed and notes/minutes were taken.

Mr. Doe-Nah told the investigation that during the exercise the CBL used money changers that were licensed by the same CBL so as members of the TEMT they could not have queried the CBL as to whom they were giving the mop-up money to. He said during the exercise also, some interventions were made to Total Liberia Inc. and some other businesses. He however confirmed that the entire US$25 million was not used.

Another member of the TEMP, Mr. Charles R.G. Bright, Advisor for Economic Affairs, Ministry of State told the investigative team on July 3, 2019 that he did not know how the amount (US$ 25 million) was derived at or what informed the President’s decision to have announced the said amount (US$ 25 million). He said as far as he is concerned US$ 17 million of the US$ 25 million has been disbursed using the direct mop-up method by the CBL. He said the remaining US$8 million was unutilized or still at the CBL.

Mr. Bright confirmed that US$25 million was the approved amount for the mop-up exercise and that the TEMT recommended the direct mop-up exercise and was implemented by the CBL. He said the recommendation from the TEMT was not written to the CBL but was rather discussed and unanimously agreed upon.

Mr. Bright told the investigation that during the deliberations as to which methods should be use prior to the implementation of the exercise; Hon. Wilson Tarpeh expressed reservation about the direct mop-up method and suggested the use of the Commercial Banks instead. He said besides Hon. Tarpeh, no other member of the TEMT or the CBL raised any reservation. According to him, the decision to use the Direct Mop-up was later agreed upon by unanimous consensus.

Mr. Trokon T. Kpui, Minister of State Without Portfolio, who also served on the TEMT  informed the investigation that the TEMT is a policy body and not an implementing body, and meets at the instruction of the Minister of Finance.

Minister Kpui told the investigation that in relation to the mop-up exercise, the method of direct mopping was recommended by the Central Bank of Liberia to the TEMT which they authorized.He said at the time the CBL recommended the direct mopping process there were no data to show that similar intervention was used in the past.

Mr.  Kpui said based on the advice of the TEMT, the Economic Management Team (EMT) headed by the President of Liberia approved the mop-up process and the infusion of US$25 million so that Liberian Dollars withdrew would be sterilized.

Three months after, Mr. Kpui said Deputy Governor Charles Sirleaf of the CBL told the TEMT that there was shortage of Liberian Dollars on the market due to pressure on the Commercial Banks and therefore, LRD 1 billion of the 2.3 billion mopped-up money should be put back into the Economy which was also authorized by the TEMT.

Mr. Kpui said to date US$17 million of the US$25 million mop-up money has been used and a balance of US$8 million is still unused and should be available at the CBL.

Madam Elsie Dossen Badio, a former member of the Board of Governor, CBL told the investigation that on July 16, 2018 the Board of Governors of the Central Bank of Liberia approved US$25 million through a
Board Resolution as intervention into the foreign exchange market. She said the Resolution was also intended to mitigate the volatility in the exchange rate and maintain broad stability of the Liberian dollars and by extension maintain price stability. According to her, the CBL Board of Governors did not have direct input into the mop-up exercise as it was purely operational. She said the CBL had a standard approach in doing the mop-up with little or no input from the board.

Madam Badio further explained that Dr. Mounir Siaplay, Deputy Governor for Research and Economic Policy who often accompanied the Executive Governor at TEMT meetings, only informed members of the Board of the approach that would be used for the US$25 million mop-up exercise. She said the Board was informed by the Executive Governor that the TEMT wanted the bank to mop-up and that the money was coming from the Federal Reserve. She said it was based on this information the Board acted by signing the resolution for the US$25 million mop-up exercise.

Charges Dropped For Key Suspects in Saga

Madam Badio clarified that the Board did not formulate the mop-up exercise strategy and did not receive report on the process. She said there is currently a balance of US$8 million while US$17 million was being used

Mr. A. Richard Dorley, Sr., another member of the Board of Governors / CBL told the investigation that on the issue of the US$25 million mop-up exercise, the extraordinary depreciation of the Liberian dollars in favor of the United States dollars necessitated the July 2018 Memorandum of Understanding between the government of Liberia and the Central Bank of Liberia. He said the purpose of the MoU was for the CBL to grant the GOL the amount of US$25 million for the purpose of the CBL intervening in the foreign exchange market to withdraw some of the excess Liberian dollar liquidity in order to bring down the rate thereby strengthening the Liberian dollars (broad stability), and maintaining price stability.

The LACC’s report comes just weeks after Criminal Court Judge Yamie Quiqui Gbeisay dropped criminal charges against former Central Bank of Liberia (CBL) Governor Dr. Milton Weeks. The charges included Money laundering, Economic Sabotage, Criminal Conspiracy and Criminal Solicitation. Charges were also dropped against former Deputy Governor of the Central Bank of Liberia, Charles Sirleaf.

State Lawyers also recently dropped charges against three indicted former officials of the Central Bank of Liberia(CBL). The charges were dropped against Richard Walker, Dorbor Hagba and Joseph Dennis through a Nolle Prosequi without prejudice to the State. This means the government can rearrest them when there is a cause or sufficient evidence against them. The submission to Nolle Prosequi the case was filed by Cllr. Jery D. Garlawolo when the court(Criminal Court C) was set to hear the case.

According to the report, the actual mop-up exercise commenced on July 17, 2018 by six (6) teams comprising of staff of the CBL, headed by Massah M. Sonie as the Supervisor and Focus Person.

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