Analysis: Liberia – Presidential Order Mandating Forensic Probe of US$25M Mop-up Shifts Attention to Influential Minister
Monrovia – Just days after the Central Bank of Liberia issued a controversial statement, aiming to clear Finance and Development Planning Minister Samuel Tweah of wrongdoing, President George Manneh Weah took a giant step Thursday, March 7, by giving the General Auditing Commission(GAC) a two-week mandate to report on the findings of the Presidential Investigative Team’s report, which calls for a ‘forensic investigation’ of the entire US$25 million mop-up exercise carried out by the Central Bank of Liberia, and the report done by Kroll – the institution commissioned by the U.S. government to delve into the financial scandal dogging the administration.
Kroll, PIT Spurred GAC Probe
A statement from the Presidency Thursday reads: “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 done by Kroll – an institution of international repute which was commissioned by the U.S. Government – that calls for ‘further understanding’ of how the exercise was conducted, the Ministry of Justice, by directive of President George Manneh Weah, has requested the General Auditing Commission to conduct an investigative audit into how the U.S.$25 million earmarked for the mopping exercise was expended.”
The President, in July 2018, announced that US$25.0 million would be “infused” into the Liberian economy to “mop-up” excess LRD banknotes in an attempt to address the depreciation of the Liberian Dollar.
The President further mandated the Economic Management Team chaired by Minister Tweah, and the CBL to implement the USD Mop-Up Exercise.
Minister Tweah had said last November in an interview on state broadcaster, ELBC/LNTV, that passing the US$25 million through the commercial banks would have made no impact and therefore took it upon himself to distribute the money through money changers.
Said the Minister at the time: “The goal at that point of the President’s mandate was to mop up Liberian dollars directly from the market, not to take Liberian dollars that are in the banks… so if we want to take one billion [Liberian] dollars from Logan Town, New Kru Town or Mamba Point, you don’t go to the bank account and take it from there, it’s on paper; so, you go to someone in New Kru Town who has the money and can sell his Liberian dollars to you. This was the direct mopping that happened, this was why the rate moved from 163 and it came down to 152,” the minister said.
In its recent findings, Kroll reported that the CBL advised Kroll that the USD Mop-Up Exercise involved CBL Banking Department representatives undertaking the physical purchase of LRD banknotes from local businesses and foreign exchange bureaus, with the seller being reimbursed for the value of purchased LRD banknotes with new USD banknotes. Kroll was not provided with documentation setting out how the USD Mop-Up Exercise was structured or implemented, or which organizations were targeted by the CBL.
Kroll reported a wide-range of discrepancies in the process and made the following recommendation: “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 investigation recommends that 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.”
Kroll added: “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.”
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.”
Conflict Numbers Over US$25M
The President’s mandate follows a series of conflict numbers regarding how much money was infused into the economy to curb the rising exchange rate.
In a statement this week, the CBL reported that between July 2018 and October 2018, a total of US$17 million was infused into the economy and that a remaining US$8 million is still with the CBL, according to the CBL’s statement.
The CBL further indicated that US$15 million was mopped up from outside the banking system in exchange for L$2,303,363,898. In addition to that, US$2 million was given to a major petroleum importer in exchange for L$313,141,800.00 through regular banking transaction to facilitate import of petroleum products.
FrontPageAfrica uncovered a noticeable discrepancy which was reported Thursday relating to the figures given by CBL, the PIT and Kroll.
On the one hand, the CBL says it disbursed US$17 of the US$25 million promised by President Weah in the mop-up, the PIT investigative report stated that US$14 million was used instead over the period.
The PIT Report: Analysis of the implementation Report submitted by the TEMT/CBL, shows that Institutions/businesses participated and received from CBL, a total of US$14 million in exchange for a total of L$2,151,363,99.00 from July 17, 2018 to September 18, 2018.
The disbursements of the US$14 million are as follows: (a) A total of US$5.6 million was sold to institutions/businesses to the Major Importers category;(b) A total of US$1.4 million was sold to institutions/businesses in the Small Business Holders category;(c) A total of US$7 million was sold to institutions/businesses in the Major Foreign Exchange Bureaus category.
The PIT concluded that TEMT/CBL deviated from best practice, which calls for the use of legitimate banking institutions and licensed Foreign Exchange Bureaus or SAE AUCTION for said exercise. Instead, the TEMT/CBL carried out DIRECT MOP-UP by engaging Foreign Exchange Bureaus and local businesses other than the Commercial Banks.
The investigative team also established that some businesses/institutions received lesser amounts than what was reported by CBL. For example, the Union Local Forex Bureau located on Carey Street received a total of US$5,500.00 on two separate disbursements (US$3,000 on July 17, 2017 and US$2,300.00 on August 16, 22017). However, the CBL in its report stated that the total amount of US$161,900.00 (US$103,720.00 on July 17, 2018 and US$58,400.00 on August 16, 2018) was received by Union Local Forex Bureau.
The PIT also noted that principle of Know Your Customer (KYC) was not observed throughout the mopped-up exercise thereby creating the platform for illegal business dealers to clean their illegal money.
In its findings, Kroll report showed that on July 10, 2018 the CBL submitted a request to Travelex Global and Financial Services for a drawdown of US$20 million from a bank account held with the Federal Reserve Bank of New York. The request was made prior to the announcement by President Weah on July 16, 2018. The USD banknotes were dispatched by air freight on July 11, 2018.
According to Kroll, the CBL provided a spreadsheet titled ‘USD During Auction’ dated October 26, 2018 which set out the total purchases of legacy and new banknotes as part of the USD Mop-Up Exercise.
The spreadsheet stated that US$15 million of the initial US$20 million drawdown by the CBL had been used to purchase legacy and new banknotes. The Liberian dollar purchased was L$2,303,363,898.
Kroll acknowledged that the data in the spreadsheet titled ‘USD During Auction’ matched the values in the corresponding general ledger account (named ‘CBL Special MOP-UP Exercise Escrow’).
Kroll was informed by the CBL that the remaining US$5 million of the initial US$20 million drawdown was put into circulation as part of normal banking operations, and not retained for continuance of the USD Mop-Up Exercise.
According to Kroll, they were further informed by the CBL Banking Department that the remaining US$5 million of the U$25 million promised by President Weah had not been withdrawn from the Federal Reserve Bank of New York by the CBL.
There also appears to be discrepancies in the date the so-called mop-up exercise ended. The CBL in its Tuesday’s statement indicated that between July 2018 and October 2018, a total of US$17 million was infused into the economy. The remaining US$8 million is still with the CBL. But President Weah in his second Annual Message stated that the US$17 million mop-up exercise covered July 2018 to December 2018.
At the same time, the PIT investigative report says, a total of US$14 million was exchanged for a total of L$2,151,363,99.00 from July 17, 2018 to September 18, 2018.
Kroll, on the other hand, reports that it was advised by the CBL Banking that the USD Mop-Up Exercise involved CBL representatives in six small teams undertaking the physical purchase of legacy banknotes from local businesses and foreign exchange bureaus from August 2018, with the seller being reimbursed for the value of legacy banknotes purchased with new USD banknotes.
The CBL provided Kroll with a spreadsheet titled ‘USD During Auction’ dated October 26, 2018 which set out the total purchases of legacy and new banknotes as part of the USD Mop-Up Exercise. Kroll further indicated in its report that as at December 7, 2018, US$15 million had been expended on the mop-up exercise.
Since the release of both the Kroll and PITT report, several current and former executives have been arrested and currently remanded at the Monrovia Central Prison. They include: Mr. Milton Weeks, former Executive Governor of the CBL, Mr. Charles Sirleaf, Deputy Governor for Operations and son of ex-President Ellen Johnson Sirleaf and Dorbor Hagba, Director for Banking, Richard Walker, Director for Operations and Joseph Dennis, Deputy Director for Internal Audit, all are being held for economic sabotage, fraud, criminal conspiracy. However, many in the opposition have been pressing for more action from the president and encouraging him to go a step further in taking action against his influential finance and development planning minister, Mr. Tweah.
ALP, ANC, LP & UP: Suicidal for President to Ignore
In a joint statement this week, the All Liberian Party (ALP), Alternative National Congress (ANC), Liberty Party (LP) and the former ruling Unity Party recalled that both Minister Tweah and Governor Patray had misled Liberians in 2018 that “no money was missing”. This action by the two officials, the parties said, created confusion last year and might have been a calculated ploy to conceal the fact that billions of Liberian dollars printed and shipped between January 2016 and August 2018 had either disappeared from the CBL or may not have been delivered to the CBL despite having been paid for, printed and shipped to the country by Crane AB. After mounting public pressures, which forced President Weah into commissioning two separate investigations into the money dilemma.
The parties statement averred further: “We appreciate that the same Government that had initially resisted calls from civil society groups by downplaying this grave matter when news about it first broke out last year, has moved to arrest three (3) persons, including former Central Bank Governor Milton Weeks, current Deputy Executive Governor Charles Sirleaf and Director of Banking, Dorbor Hagba. We welcome this move. But because of the gravity of this matter and the extent to which some senior members of this administration were involved in what is undoubtedly the biggest financial scandal in Liberia, this action is still grossly inadequate. President Weah should avoid the temptation to shield officials of his administration mentioned in the reports as having contributed to the messy monetary situation in the country while at the same time pursuing former officials for criminal prosecution.”
The parties also took issue with the President over what it termed as gross misrepresentation and a deliberate attempt to undermine justice and misinform the people of Liberia, when the President declared upon his return from Israel, that his government has been vindicated by the PIT and the Kroll Inc. reports. “The four Collaborating Political Parties demand that in addition to the arrests already made, the government should move quickly to arrest Finance Minister Samuel Tweah and Central Bank Governor Nathaniel Patray. This is in consideration of the investigations’ findings pointing to the conspicuously criminal way the Minister of Finance and Development Planning and the Central Bank Governor managed the US$25m (about LD$4,000,000,000bn) so-called mop-up exercise of 2018.”
The parties noted that both the Kroll and PITT reports are unambiguous about the roles played by the current CBL administration, which, according to the two reports, did not fully cooperate with both Kroll Associates, Inc. and the Government-commissioned PIT. “In other words, the reports indict both past and present CBL administrations. In fact, Kroll Associates, Inc. makes it clear that requests made to the CBL for documentation “remain outstanding” and that information provided by CBL during the review exercise were inaccurate and “incomplete”.
The parties said it would be provocative, and even suicidal, for President Weah and his administration to ignore the fact that US$25m (about LD$4,000,000,000bn) ordered from our national reserve to facilitate a so-called “mop-up” exercise last year was handled in a bizarre manner that warrants further investigations as recommended by both Kroll Associates, Inc. and the Public Investigation Team (PIT). “We remind the president that senior members of his Economic Management Team, as revealed in the reports, must have exploited last year’s monetary situation to commit the crime of money laundering. This is a very grave matter that the administration should not downplay.”
Jewel: Free, Fair, Transparent Process a Must
Adding her voice to the saga Thursday, Vice President Jewel Howard-Taylor, during a visit to the MoreThanMe School, said a fair and transparent investigation is crucial for the government. “It is on us now as a government to ensure that the legal processes go through in a free, fair and transparent manner and that it is holistic because this is money that belongs to the Liberian people and as the President has said whoever responsible will face the full weight of the law,” the VP said.
Justice Minister Frank Musah Dean told FrontPageAfrica Thursday that the President’s action could be a prelude to some major actions on the mop-up money. “Anyone found culpable will confront the full weight of the law,” the minister said.
The President’s mandate has now shifted attention to the fate of Finance and Development Planning Minister Tweah, who has been under increased scrutiny of late since the arrest of former Governor Weeks and Deputy Governor Sirleaf and a host of others.
The minister who acknowledged to the PITT investigative team on October 19, 2018, when he was interviewed that a total of US$14 million had been used to mop up the total of L$2.2 billion from the market, also said that the TEMT chaired by him did not use the conventional auction method by using the commercial banks.
It is the minister’s admission that has landed him into trouble with many comparing his lack of leadership and failure to properly account for the US$25 million in the same vein as those currently in jail at the Central Prison.
For Minister Tweah, the key aim of the exercise was to target monies in the hands of business people and not monies already in the banking system. But nearly a year later, many are unsure the process achieved the desired results with PITT concluding that both Tweah and TEMT had failed to set standard criteria for the participation of businesses in terms of their legitimacy amid questions of duly registered businesses and or tax compliance. More importantly, the PITT report raised concerns that the principle of KNOW YOUR CUSTOMER (KYC) was not observed throughout the mop-up exercise thereby creating the platform for illegal business dealers to clean their illegal money.”
For President Weah, Thursday’s decision marks a sudden twist in his position on an issue that has thrown major criticisms his way over the past few months. But it is one, political observers say could go a long way in turning his political fortunes around and convincing international partners about his sincerity to clamp down on corruption and shore up his good governance credentials.