Liberia’s Suspension from EITI Could Trigger Delisting from Other International Institutions
Monrovia – Liberia could no longer influence policies or have a say in how the Extractive Industries Transparency International(EITI) sets standard for resource governance, after the country under the leadership of George Manneh Weah, was suspended Monday from the global body overseen by a multi-stakeholder group that sets the tone by which information on the oil, gas and mining industries is published.
Analysis by Rodney D. Sieh, [email protected]
The EITI Board took the decision on September 4, 2018 to suspend Liberia for not having published the EITI report for the fiscal period ending June 2016 within the 1 July 2018 deadline. The decision followed a request by the Government of Liberia to extend the reporting deadline, set by the EITI Standard.
The Board found that the request did not meet the criteria for granting an extension. “It is unfortunate that Liberia missed its reporting deadline. We are hoping that this is a temporary setback. We encourage the Government to consult all the relevant stakeholders and ensure that they are adequately represented in Liberia’s EITI multi-stakeholders group, in accordance with the EITI Standard”, said the EITI’s Acting Executive Director Eddie Rich. “The International Secretariat is ready to support”.
Reconstitute MSG Mandate
In taking its decision, the EITI Board noted in its decision to suspend Liberia that the extension requests had not been endorsed by Liberia’s MSG, as the group had not been reconstituted since the end of its term in October 2017. The Board called on the Government of Liberia to reconstitute the MSG and to revitalize the implementation of the EITI, in partnership with industry and civil society organizations.
The EITI Board also declined Liberia’s request for an extension of its second Validation deadline, noting that the request did not meet the criteria for an extension either. In taking its decision, the Board noted that a reconstituted MSG could take stock of progress, publish the outstanding EITI Report and consider whether to submit a request to delay the commencement of Validation.
The Weah administration triggered an international outcry following its decision during the early days of its presidency when the London-based watchdog group, Global Witness strongly condemned the illegal removal of Konah Karmo, Head of Secretariat of the Liberia Extractive Industries Transparency Initiative (LEITI). GW said the firing of Mr. Karmo by President George Weah, who has replaced him with Gabriel Nyenkan, violates Liberian law and severely undermines the independence of Liberia’s critical anti-corruption agency.
The current Minister of Foreign Affairs Gbehzohnga Findley, Negbalee Warner, former Lands, Mines and Energy Minister Roosevelt Jayjay and Alfred Brownell all at some point sat on the EITI Board and are quite aware of the impact of the global body on the international financial markets as well as concessionaires.
President Weah took the decision on March 5, 2018 to replace Mr. Karmo with Mr. Nyenkan as head of the LEITI Secretariat.
A week after the appointment, Mr. Nienke arrived at the LEITI office, accompanied by Liberian police officers to demand that the current Secretariat Head Konah Karmo leave the building, which he did.
At the time, Global Witness described the removal of Mr. Karmo and appointment of Mr. Nyenkan as illegal.
Liberia’s LEITI Act states that only the LEITI Multi-stakeholder Steering Group (MSG) can appoint or remove the Head of Secretariat[i]. This safeguard is critical for the maintenance of LEITI’s independence, ensuring that the agency is not dominated by any of its constituent groups or subject to external interference.
The EITI is a standard by which information on the oil, gas and mining industries is published. While the global body is not a prescription for governance of the extractive sector, it serves as a tool that informs the way the sector is governed.
The EITI is a strong proponent that natural resources, such as oil, gas and minerals should benefit all citizens and implementation of the EITI ensures transparency and better management of the steps along this value chain.
The decision to suspend Liberia, experts say, comes with a lot of implications that could hurt Liberia’s quest to secure loans from international banking institutions.
The decision also means that Liberia is no longer considered an EITI implementing country and some creditors see this as an additional risk factor and lending conditions could tighten.
Furthermore development partners – including the World Bank, the African Development Bank and others will now be less likely to support certain reform initiatives.
Previous Reports Improved Liberia’s Standings
Under previous LEITI managements, reports from the local body proved instrumental to giving international stakeholders a sense of what Liberia was doing to curb waste, graft and abuse.
In 2009 for example when Cllr. Negbalee Warner headed the body, the published reported noted: “Conscious of the role of corruption, mismanagement and distrust in fuelling the war, the Liberian Extractive Industries Transparency Initiative (LEITI) has made a special effort to be inclusive – covering the mining and oil sectors and other main export sectors including rubber and forestry (the first country to do so). There have been extensive efforts to raise awareness of the initiative across the whole country.
Werner’s tenure conducted intense consultations with communities on the results of the country’s first EITI Report, including town hall meetings, radio programmes, newspaper articles, street theatre, and posters of the data in every public building in Liberia. The Report is quite revealing, and has generated quite a contagious interest among many Liberians in and out of Liberia.
The Werner report also revealed various taxes and contributions paid to the Government by mineral and forestry companies and the corresponding revenues the Government receives from the companies. “The amount of the taxes are presented on a company-by-company basis that matches reported payments against reported receipts, thereby showing clearly any discrepancy between what a company reports as paid and what an agency of the Government acknowledges as received. The value of discussions about the Report cannot be overemphasized, especially in the context of Liberia where information of this sort is hardly ever in the public domain.”
During the tenure of Mr. Samson Tokpah Jr. two of LEITI reports (2013 process audit concluded that some 66 agreements were deemed non compliant, and a reconciliation report) triggered to USD12.5m direct budget support from the AfDB.
The Tokpah report also recommended that more work needed to be done on compliance to the submission process. Roughly 60% or 65 out of
111 oil, mining, agriculture, and forestry companies in the fiscal period July 1, 2010 to June 30, 2011 submitted reporting templates required by LEITI. The mining sector had the highest rate of non-submission.
The report also red flagged that the issue of accountability arose upon submission of reporting templates: Eight companies (12%)
submitted reports without an external auditor attestation. “Further, twelve companies’ heads did not attest to their companies’ submissions, non LICPA Certified Auditors attested to six companies templates.
In the Payment Reconciliation section of that report, a negligible 0.24% discrepancy, amounting to US$278,904 out of a total of US$117,802,566.90 received by the Government of Liberia.
The Tokpah report also found that several companies submitted reports using multiple Tax Identification Numbers, obstructing effective scrutiny of their financial records. The Ministry of Finance and Development Planning should ensure that all company tax filings occur under a single TIN.
In the forestry sector, that report found significant discrepancies between the companies’ evaluation of what ought to have been paid, and the government’s evaluation of the same amount. Companies in the extractive sectors have determined owing government US$274,650 compared to US$12,688,636
estimate by the government, and US$14,541,964 estimate by the LEITI’s Reconciler.
In August 2016, under the reign of Karmo, the LEITI report reported that direct government revenue from the extractive industries dropped from US$135.3m in the Fiscal Year 2013/2014 to US$100.7m in Fiscal Year 2014/2015.
It is findings from these reports that help international stakeholders place Liberia in the ranking chains to improve the country’s chances of crediting in the international markets.
Now, experts say, the suspension means that the EITI Secretariat would cease engagement and support to Liberia EITI and Liberia can no longer influence policies and citizens’ confidence in the management of extractive resources is likely to drop.
All Not Lost, but…
Despite the suspension, all is not lost for the Weah administration, if steps are taken to correct the early missteps at LEITI.
According to the EITI’s standards, the EITI Board will lift the suspension once Liberia’s outstanding EITI Report is endorsed by the multi-stakeholder group (MSG) and published within six months of the deadline (i.e. by 31 December 2018).
Liberia was one of the first countries to implement the EITI and the progress it showed over the years was instrumental in the development of the EITI Standard in 2013. In 2016, for example, the EITI says Liberia demonstrated that it was making meaningful progress in implementing the EITI Standard in one of the first EITI Validations of its kind in Africa. Validation is the EITI’s quality-assurance mechanism. Liberia is currently scheduled to undergo its second Validation on 24 November 2018.
As the Weah-led government limps toward the end of its first year, political observers say, re-establishing good standing with key international bodies is key to achieving success down the road.
Already, the administration has been put on notice by the Millennium Challenge Corporation(MCC) that maintaining performance on the MCC scorecard and a good implementation performance will be critical for Liberia to be considered for another grant.
Mr. Jonathan Nash, Chief Operating Officer of MCC. During a recent visit to Liberia averred declared that countries that do relatively well compare to their peers become eligible for the grant. “To obtain a second compact, the board looks at the extent at which a country was able to deliver and have a high-quality implementation of the first compact. The board generally looks for improved performance on the scorecard over time as well,” he said in Monrovia during a press briefing. I’m here to engage with President Weah and his administration to review the progress that has been made to date and to take a look ahead at the challenges and opportunities that lie ahead for the completion of the particular compact.”
In 2016, Liberian received a grant of US$257 million from the United States through the MCC to enhance its electricity and road projects.
How the Weah-led government proceeds from here could prove pivotal for its survival and satisfying the key conditions of stakeholders could hold the key for the foreseeable future.