Let me begin this commentary by stipulating – like countless others – I share the deeply held view that corruption on its own and/or coupled with impunity, is indisputably endemic and has permeated the entire fabric of our society. No less a figure than President Ellen Johnson Sirleaf has spoken strongly about the metastasizing nature of this cancer within the body politic of our country. This is bold and unprecedented; but in many respects, her public actions to date may fall well short of her pronouncements. While Liberia certainly does not have a monopoly on corruption compared to other societies, the practice is nevertheless abhorrent and loathsome. If our leaders – at all levels of government including the presidency – do not move beyond rhetoric by taking clear and concrete steps to act decisively against this scourge, they also will be seen – rightly or wrongly – as corrupt.
Notwithstanding the urgency of tackling this unwholesome act, the purpose of this writing is not to delve into the root causes or recommend policies and strategies to deal with it. That would be for another day. Others, at their choosing, can take it up now – as some are already doing. Rather, the objective is to narrow my thoughts and opinions to the repeated press statements made recently by Mr. John S. Morlu, II – Liberia’s new Auditor General (AG). In essence, he reiterated a wholly unsupportable quantification that the Sirleaf’s administration is at least three times more corrupt than its immediate predecessor. I will also comment on some of the profound negative effects that are caused by his method of approach.
Mr. Morlu proudly describes himself to the public as being “a young man brimming with principles and strong scruples about the nation's fiscal matters”. He says he is “innovative, meticulous and brilliant in his field of study”. Further, he has also racked up quite an impressive array of academic and professional qualifications from top-notched United States institutions – at least ten at the last count.
Mr. Morlu wants us to believe that in spite of immediate family considerations, he reluctantly accepted a well vetted international recruitment initiative for the job of AG. In the process, primary urging came from President Sirleaf. Now that he has accepted this herculean and unenviable opportunity, he needs to work alongside other Liberians of similar persuasion to take on the fight. The abiding hope and prayer for a measurable success is, at the very least, to bring the situation under control and push aggressively for a result of zero tolerance. This is generally considered a shared objective and priority of the Liberian President along with all patriotic Liberians. It is not the job for a “Lone Ranger”, even if it may seem so. The task is onerous and a real drudge; results will not be obtained overnight; however, an ancient Chinese proverb expresses “the longest journey begins with the first step”.
The issues surrounding this controversy may be complex but can be presented simply. At the outset, the AG’s ability to perform effectively seems to be severely hampered by the lack of the barest logistics and resources. Nonetheless, he prepared and submitted to the National Legislature a decent enough budget proposal for his own agency. Subsequently, he was also able to do a preliminary “pre-audit” of the draft 2007/2008 national budget for the benefit of the Legislature. That he was able to perform these tasks despite his limitations, is commendable. Whether it was within his constitutional terms of reference to engage in a pre-audit is another matter. I will address the merits of that debate later in this commentary.
The AG submitted his findings, comments and recommendations in correspondences to the leaders of the legislative and executive branches. Glaringly, there is nowhere in the review where he referred to the budget as being a corrupted document or that the intentions of the budget executives smacked of corruption. Did he later realize that his failure (if indeed it was) to do so may have been a profound mistake? If so, he could have easily prepared and submitted an addendum to his review. Did Mr. Morlu resort to a wholly unsubstantiated media statement because he did not trust that anybody smart enough to peruse his already tough and highly critical analysis, would have been equally smart to realize the seriousness of the issues he raised within the document?
I have wracked my brains and have not been able to find reasonable answers. So, I ask my readers to indulge me while I become a devil’s advocate by submitting several provocative hypotheses and even more questions for the public debate. In so doing, I am in no way attempting to cast aspersions on the actual competence, motives and/or thoughts of the line level government officials engaged in the budget process.
Here goes: There may well be an underlying element of corruption incorporated in the budget process. It is a given that at the center of every chaos, confusion or tornado is a calm. We know from experience, that when a chaotic situation prevails as we have had in our country, there is a center where evil, greedy and unscrupulous individuals opportunistically and maliciously engage in, at any cost, criminal activities for their personal gains at the expense of the people. Many of these individuals are still roaming the corridors of power in Liberia and may as well be currently involved in just this type of scenario.
However, from a less sinister viewpoint, did the AG also give any thought to the assumption that, notwithstanding the best intentions of the officials responsible for assembling a national budget and obvious shortcomings caused by the debilitating and ignominious tragedies of our recent history, most of these people may simply be incompetent, sloppy and not, after all, adequately experienced, knowledgeable and trained to conduct such an exercise?
If so, then what advance work did Mr. Morlu initiate to offset this situation? Did he engage actively in collaborative efforts with the appropriate parties to:
- Alert them about the need to be proactively and constructively involved in the preparatory budget exercises and any other economic and fiscal policies of the government that would have culminated in a more desirable set of results for the nation and the general welfare of the people?
- Suggest and/or attempt to organize participatory workshops, conferences, seminars and other practical training sessions prior to the budget exercise; and had it been required, reach out to external institutions equipped with the wherewithal to provide assistance?
- Begin a process with the Justice Ministry, Liberian Bar Association and relevant private sector, to review and enhance the existing laws and, where necessary, enact new and tougher laws either through executive orders and/or legislation? The goal here would be to provide the necessary tools to effectively fight fraud, waste and abuse, not just in government, but in every sector of the Liberian economy – including the monetary and investment sectors.
On the other hand, has Mr. Morlu considered that part of the approach he seems to have adopted in handling his job may be misguided in the eyes of the executive branch? Has he not realized that possibly in their opinion, he may be over reaching his real authority? By claiming a mandate which may not have yet been fully bestowed upon his agency under Liberian laws, is it possible the executive branch may be viewing him askance – as a usurper of unbridled power?
The AG claims he reports directly to the National Legislature as a result of a June 2005 National Transitional Legislative Assembly amendment to Section 53 of the Executive Law of 1972.
Does this amendment really exist in the form it is claimed? If it does, where can it be found for review? My question is based on the lack of inclusion of supporting documents related thereto in any reports emanating from his office. This is the real source of his authority; hence, it is strange that except for his occasional reference to it, neither his office, nor any other online source – including the media has provided public access to it – as with other documents, statutes and legislative acts he draws upon.
In the AG’s Report to the National Legislature on the draft 2007/2008 budget, he indicated the need for the intervention of Representative Gbenimah B. Slopadoe (Grand Kru, District 1) to receive a copy of the budget for his review, analysis and recommendations to the Legislature. I am at a complete loss figuring out why Mr. Morlu felt it was so important to have a confrontation with the executive branch to pre-audit the national budget. It seems he may have unnecessarily created a “mountain out of a molehill”.
Given the current structure of the Liberian constitution and statutory laws, the budget bureau may have been entirely within its rights to refuse his participation in the preparatory stage, if this is what occurred. However, there are many ways to skin a cat. With thought and foresight, Mr. Morlu would have realized that his opportunity was not lost at all. Since he claims to report directly to the legislature – which branch, in turn, has direct power of the purse strings and full oversight responsibility for final passage of the budget – it seems all he had to do was patiently bide his time, and quietly coordinate with the legislature, so that upon receipt of the draft from the executive branch, he would have had the ability to analyze it during the legislative phase.
He constantly claims that the December 2006 UN Panel of Experts Report “recommended the GAC audit the annual proposed budget of the Administration to ensure accuracy and comprehensiveness”. Using the word “proposed” is a clear code for “pre-audit”. He also stresses this “is consistent with best practices (Open Budget Index) and is in line with the Auditor General’s statutory responsibility…”. Further, he asserts the Open Budget Index is “the international ranking agency of national budgets”.
Unless Mr. Morlu can show otherwise, most of the assertions above are unsupportable. I have not seen anywhere in the Panel of Experts Report referred to above recommending an audit of the “annual proposed budget”. (Note, the emphasis in quotes). He also fails to say that as much as the Open Budget Index is highly useful and desirable, Liberia is not yet a member of, or party to, this initiative. Additionally, he unwittingly or deliberately misleads the Legislature with partial facts which, taken alone, render an impression that Open Budget initiative is a de facto and automatic process. The underlying principle which drives the Open Budget Index is that it is a “bottoms up” initiative requiring the full budgetary participation of civil society, NGOs, villages, clans, townships, districts, municipalities, cities, counties – you name it. Even with this upward interactive chain, a primary pre-condition to ensure the process is successful is the full and unwavering participation of the central government.
I do not know Mr. Morlu personally, nor do I recall ever meeting or speaking to him. Although I have quietly followed his writings – over a period of time – on the internet, and have been generally impressed with his seeming grasp of issues, and depth of knowledge, I have also observed that in spite of his qualifications, he sometimes posits (in not so subtle ways) a sense of immaturity. Indeed, I now wonder if he spent too much time in academia burning the midnight oil and not enough time learning about life in the real world. For now, he seems to be a “diamond in the rough”.
He has been invariably described as being brash, full of braggadocio and a true attention getter (not good). While he seemingly projects a lot of self confidence (good), this needs to be tempered with a healthy dose of humility to ensure it does not cross the line into dangerous overconfidence. In his current position, he needs to measure his words very carefully before uttering them publicly or even privately; nonetheless, I do not suggest he foregoes objectivity and straight talk.
Mr. Morlu has now “talked the talk” and “written the word” with so-called “finesse”. To engage more effectively as a full and successful partner with others in a third world under developed country such as ours, he must now harness the qualities necessary to “walk the walk”. They are not limited to the academic qualifications he already possesses. Instead, they include having great “street smarts and common sense”. Additionally, he needs to realize that other key characteristics in the personality of anybody holding this job in Liberia are the ability to be cajoling and disarming (dare I say, a top notch “salesperson”) – while at the same time, exercising firmness and toughness. During his tenure at the helm of the General Auditing Commission (GAC), he must remember he is no longer campaigning for the opportunity of a lifetime; he now has it. He must channel his tremendous skills to the mission at hand. While he does not need any distractions in the exercise of his responsibilities, he must carefully avoid creating his own. In carrying out his public duties, he needs to be calm and persistent – doing so without fear or favor, irrespective of friend or foe. He does not have to place himself in an antagonistic posture to achieve his goals. He needs to be completely transparent, fair, objective and impartial. He must quickly develop a set of strong people skills.
Did he not realize that even if he did absolutely nothing – other than just showing up for work after being appointed – he would have been viewed (right off the bat) as completely inimical to the personal greed and thriving criminal enterprise of individuals bent on continuing their skullduggery? Did he also overlook that these powerful players prey upon their country and the people using the “law of the jungle” within a vulnerable societal structure and bloated bureaucracy? Did he not know they will stop at nothing to make his job all but impossible? Did he not know he had to prepare the environment on the ground and rethink his personal approach – one step at a time – to pre-empt whatever roadblocks these people may have planned? In short, did he think this would be a cakewalk to be handled with mere bravado and verbosity?
I hope Mr. Morlu has now reflected deeply on his simple, but very damaging assertion that corruption is three times greater under the current administration compared to the preceding one. Does he truly believe this? Can he really support his statement without equivocation? For that matter, while corruption is certainly rampant, is it really greater in any way or form than that which prevailed in the previous administration? If his answer to any of these questions is “Yes”, then why did he not include this adverse opinion – with supporting facts – in his report to the legislature? By not doing so, the omission became a disservice to that body and the Liberian people.
Otherwise, what was he truly hoping to accomplish with this action? Has it furthered his work in any positive manner? Is he now a politician, instead of a technocrat? Did he not consider the negative impact such a declaration would have had on our country utilizing the method he chose?
Domestically, it is vital for the Liberian leaders to earn the trust and confidence of their people. It is also important that the people they serve reap and enjoy all the fruits of their nation equitably. This enhances the overall social and economic wellbeing of the public at large while producing a real sense of security and hope for an even better future. So, after the last horrendous 17+ years in our nation, this first truly democratic government cannot and must not squander the opportunity its people have provided.
Internationally, Liberia is at the mercy of its partners’ largesse. External resources and goodwill are limited and usually go where potential recipients show not just real need, but also the will to utilize such goodwill to the maximum benefit of their people. So-called donors’ fatigue is already evident in the Liberian situation.
How much damage has occurred and will arise from Mr. Morlu’s statement is not yet fully known. But, let us not fool ourselves. It is now done. We know it is much easier to destroy than to build. We need no reminder beyond our recent past. Additionally, we do not need to look any further than the international press – irrespective of the language – to discover the widespread publicity his thoughtless statements have garnered.
The media, while very important and indispensable to our emergent democracy, is not the primary “go to” place for Mr. Morlu at this time. Instead, he needs to know his forum and understand there is an appropriate time and place for his actions. While it is desirable to be available to and savvy with the media, he has more effective avenues and tools at his disposal to make a significant difference. His new job does not qualify him to be a whistleblower; instead it provides him with the constitutional right to openly speak to the public through the legislature. The media can then pick up on his “on the record” remarks and freely disseminate it appropriately. If he continued unsuccessfully engaging the appropriate government bureaucracy to get his office up and running, it would have been perfectly fine, in my estimation, to make media comments on the facts of that matter and elaborate on the extent to which the problems are exacerbating his work. Unfortunately, he unwisely muddied the waters and exposed himself unnecessarily to substantial public and official rebuke not germane to the crux of the issue.
What I think is required now is for the AG to explain for the public’s benefit and good of the nation, how he made the giant leap from reporting serious deficiencies/flaws in the budget process to overtly public media statements making a specific quantification of corruption. We are also to believe this declarative remark emanates from his pre-audit of the draft 2007/2008 national budget. Instead of Mr. Morlu continuing to obfuscate the issues in defending his statement, he must clearly say what substantive factors underlie his claim. With the most limited resources, he has seemingly done a really good job highlighting the budget flaws. Now, what driving force caused him to put his feet into his mouth with such an asinine assertion is beyond me. His statements carry great import for good or ill. In my humble opinion, his credibility is now at stake. He may think that such remark enhances his popularity with the masses; but this may be shortsighted. Due to the very high illiteracy rate in our country, most people do not understand issues – such as the current one – as they ordinarily should; they tend to respond well to sensationalism – even if misguided. Those of us who have been otherwise blessed must always seize the opportunity to engage and educate in a positive way.
It is said that “everyone is entitled to his opinions, but not his own facts”. It seems to me that in this instance, the AG may be consciously playing “fast and loose” with words and the facts by fudging some of his own.
There is clearly a turf battle being waged here; however, it has evolved around the wrong subject. At the end of the day, there will be no clear winners and only one big loser – the Liberian people. So, enough is enough. Let us now get down to the nitty gritty and do the right thing for our country and people!
Over the course of our 160 year history, we have borrowed a few important symbols and practices from the United States of America and the time may be right to unashamedly do it once more. The State of Missouri has a wonderful motto. It is the Latin phrase "Salus populi suprema lex esto” meaning “Let the good (or welfare) of the people be the supreme law”. It would probably be wise to adopt this as our national motto. If this ever happens, we should simultaneously get rid of the existing motto above the emblem of our Great Seal: “The Love of Liberty Brought Us Here”. This phrase has always been highly controversial in our history since it affects the sensibilities of the greater segment of our population and we must stop adding insult to injury. Further, our motto can be considered redundant because the name of our country derives from the Latin word “Liber” meaning, in this instance, “Free”.
17 comments:
John Morlu's Political Hatchet Job
I read John Morlu's letter to the Legislature and was appalled by some of what I read. He came to his job with a political agenda, it seems, not to do the work he is being paid to do. First off, he has not commenced a single audit. Yet, he makes the preposterous assertion that the Sirleaf administration is three times more corrupt than the Bryant administration. As one who worked at the centre of the Bryant administration, I find that assertion laughable. The Bryant administration was corrupt to the core and I can cite many examples to support my claim. Mr. Morlu offers absolutely none to support his. All he has done is to make a bald assertion. What he has done is grave. That assertion is sending shock waves through the international community, a community on whose goodwill much of this government's programs rest. If Mr. Morlu cannot substantiate his assertion, he should be fired in a very public manner. Others would go a step further and suggest that he be tried for treason, especially if it is discovered that his assertion grew out of ulterior motives.
Mr. Morlus claims that the reason he could not do an audit of the budget (and had to resort to a "pre-audit" instead) is that he lacks competent staff and resources. Both claims are untrue. When I served as economic advisor to NTGL Chairman Gyude Bryant, I was intimately involved in the process of restructuring the General Auditing Commission/Office of the Auditor General. When we started the process, the European Commission had a policy of not funding payroll costs. I made an impassioned plea for a change, arguing that a strong, independent GAC could not be built on paying staff the Mickey Mouse wages then the vogue in the government. The EC would have to step up to the plate with budgetary support to top up staff salaries.
Today, Mr. Morlu, reputedly earns US$180,000 per annum as Auditor General, a sum that is many, many multiples of what his predecessor, Professor Francis Johnson, was paid for the same job under the transitional government. I imagine the rest of the GAC staff is also better compensated now than their predecessors. To put Mr. Morlu's salary in perspective, Liberian Cabinet ministers earn US$18,000 p.a. (one-tenth of what Mr. Morlu does). As managing director of the best managed and most profitable state-owned enterprise (with operating cash flow of more than US$7 mn last year, compared with US$2 mn the prior year under Mr. Edwin Snowe), my salary at LPRC is US$60,000 p.a.
Is every single person at the commission (other than Mr. Morlu) incompetent as Mr. Morlu claims? Well, part of the restructuring involved a detailed assessment (by an EC consultant in collaboration with the former AG) of each member of the GAC staff. That assessment resulted in their being placed in 2 categories: those who could be trained and should therefore be retained; and those who were hopeless cases, could not be salvaged by any amount of training, and needed to be let go. My recollection is that the entire GAC staff was not placed into the latter category.
Lastly, to validate Mr. Morlu's claim about the lack of qualified talent available to him (sorry I am an old auditor and cannot help validating whatever I am told rather than just accepting it as gospel), I called the EC, which has been managing this process. I was told that the EC has 3 paid foreign auditing professionals (including the former Auditor General of Zambia) assigned to the GAC. So what is Mr. Morlu talking about?
I also learned that the EC had 350,000 Euros programmed as budget support for the GAC's operating expenses the fiscal year just ended June 30th and a similar amount for the fiscal year that just started on July 1. This is in addition to whatever appropriation the GAC will receive/has received from the Government of Liberia budget. So, what is Mr. Morlu talking about when he says he has no money to commence audits? Unless things have changed since my auditing days, basically what he needs is money to buy paper, computer ribbon, mileage allowances for his staff and some capital equipment like laptops and printers. The GAC is not a factory needing gobs and gobs of money to buy materials and pay for hefty manufacturing overheads.
Now to the substance of Mr. Morlu's submission. As an accontant, I found his recommendation that the FY2007 budget should include "surpluses from the FY2006 budget" a strange formulation. Since when has the operating budget for one year of any entity, whether a government, school, or business enterprise, included carry forward balances from a previous year? Why, then, stop at FY2006? By Mr. Morlu's logic, we would have to go back to the founding of the Republic in 1847 and bring forward all surpluses and deficits from that time to the present (including the US$3.9bn foreign debt accumulated voer the years as a result of past budget deficits) to include in the FY2007 GOL budget. Clearly, that would be nonsense. Where did Mr. Morlu say he got his accounting degree?
Another strange comment of his was that the Executive erred in not including in the budget the revenues of all entities in which the government owns an interest. Mr. Morlu was making a veiled reference to state-owned enterprises or so-called "public corporations" (like LPRC). First of all, if you include their revenues, what of their expenses? Ignore them? But more importantly, Mr. Morlu, as a professional accountant, should know that state-owned enterprises have a legal persona that is separate and distinct from the central government. Even though they may be owned by the government, they are self-accounting and their finances are not part of central government finances. Just take the case of LPRC. We are a limited liability company, just like Mittal Steel or Firestone Plantations Company. We were not set up by statute. It just so happens that the Government of Liberia currently owns all of our shares. But our revenues do not go into the Central Bank. The salaries of our employees are not paid by the government. None of our expenses are paid by the government. And that goes for the NPA, RIA, etc. In fact, not only does the government not pay any of our expenses, but we paid a dividend to the government this year of US$0.5mn!
The distinction between a corporation and its shareholders is something I learned in my first business law class some 30 years ago as I was training to become an accountant. Following Mr. Morlu's logic, when Mittal Steel Liberia starts operating, should the government include all of some of that company's revenue in its annual budget because it owns 30% of the equity of the company? Where did he say he got his accounting degree?
The only thing that the government should reflect in its budget, as far as state-owned enterprises are concerned, is its estimate of the dividends that will accrue to the government during the fiscal year (bearing in mind that most state-owned enterprises have a fiscal year that runs from January 1 to December 31, whereas the government's fiscal year runs from July 1 to June 30). And dividends, as every fledgling accountant knows, are paid out of profits. You should not be declaring dividends if you are operating at a loss. LPRC is the only state-owned enterprise right now with the capacity to pay dividends.
The Sirleaf government is just 18 months old. On the corruption and impunity front, it has accomplished a lot in this short space of time. Officials from the NTGL government who stole in broad daylight in the certain knowledge that they would not be brought to book (can any of us remember the last time a senior government official was taken to court for misappropriation?) are now discovering to their chagrin that times have indeed changed and that the Iron Lady is serious about making them face the consequences of their actions. At LPRC, we have gathered solid evidence to press a civil suit against our former managing director for misappropriation of more than US$1mn. As with the OJ Simpson case, after the government is through with its criminal case (and we hope outcome for the Liberian government will be better than the Federal Government's), we will press forward with our civil suit to recover funds that Mr. Snowe et al absconded with.
Eric,
I feel las if I read your article before writing mine. I probably should have - mine would have been improved. Congrats! Boy. That was amasterpiece. Had I read your article, there would have been no need for mine. You need to make this presentation at an appripriate forum of well meaning Liberians. It seems provocative. I don't think it really is, as it addresses many concerns...
Hi Eric,
It's good to hear from you and to read your blog. I visited the site yesterday, and was impressed to know that your voice is now represented with the multitude of voices on our country. Many of those I've read in the past have been of the same, not as professional as should be, therefore, it is good to visit a blog that has so much promise with fresh ideas. I like the fact that you make it multi-perspective. I also like the professional voice you add to Liberia. Let me know if there is room for any future contribution needed. I wanted to post a comment on the site, but I did not see where I could. I have not yet posted my friends' e-mails, but will do so today.
Enjoy browsing your web page. It is well done.
Lena
Manchester, UK
Eric,
Thanks for sharing this initiative. The commentary is excellently written, analytical and insightful. I hope it will evolve as a premier blog on Liberian related issues. Congratulations! I shall share the site with others.
All the best,
Seward M. Cooper
Chief Counsel, Good Governance
Office of the General Counsel
African Development Bank
Tunis, Tunisia
Eric,
For a Banker, you have done and excellent job on this wirlwind diatribe of the AG. The work that is required in Liberia is enormous and we must get to the task - setting political pesuasion aside. Liberia needs everyone, I mean everyLIBERIAN working together. Time for political grandstanding is past until the next election season. Advancing Liberia should be everyone's agenda and it does not matter who is President.
Experience is the greatest teacher. Something semingly adsent from the AG's CV.
James Jeremy Thompson
COMMON SENSE!!!
Common sense is what is missing in lots of our discussions - thanks for given us common sense.
D. Smith
Salus populi suprema lex esto
Eric has written what seems to be a fine piece, superficially, and may seem to embody his proposed “commonsense.” But a critical look at it suggests that this is simply an unobjective castigation and blame of the Auditor General (AG).
Eric seems to blame the AG for washing Liberia’s dirty linen in front of the international community. If one were to grant him the benefit of this line of thinking, does he believe that the international community is oblivious to the myriad reports produced by the media and other bodies on the thriving of corruption in Liberia? For instance, is the international community oblivious to the widely heralded fact that Mr. Harry Greaves has blatantly refused to account for an oil deal that is estimated in excess of $50 million for which the country has received no benefit? Would he propose that such report be buried as well?
Does Eric believe that the international community is oblivious to the fact that the result of the audit of their panel of experts shows that an additional $7 million at LPRC has gone unaccounted for with impunity? Does he believe that it is the AG’s assertion on corruption that will stymie the largess of the international community in view of all of the public evidence that corruption remains rampant?
My point is that corruption abound in Liberia and it does not take an error on the part of the AG, if one is predisposed to believe it as such, to alert the international community of its continuance. Laying such blame at the feet of the AG is simply not grounded in realism.
Contrary to Eric’s perspective, I believe that the international community may be impressed by the AG’s action, however unorthodox one may see it. At least someone is showing some leadership that seems to be elusive otherwise on the fight against this malignancy.
I will argue that the AG’s action embodies the very sage motto of the State of Missouri that Eric proposes for Liberia, “Salus populi suprema lex esto” meaning “Let the good (or welfare) of the people be the supreme law.” Whatever mistakes the AG has made in the process, the good of the people was paramount.
K. Koiquoe Wilson
oop, these it is
The world body has observe the effort Africa is making to bring about changes.
http://news.bbc.co.uk/2/hi/business/6288400.stm
Gargar
OBJECTIVITY!!!!
Mr. Wilson, you seem to be losing your sense of objectivity on this issue. In Mr. Freeman's article, he pointed out the shortcomings and achievements thus far of the AG. The AG like the government or any entity in Liberia is not above criticism or praise.
I find it very interesting that for the second time you have mentioned the LPRC with the amount of 50 million dollars. I have never hear or saw any 50 million dollars associated with the LPRC oil deal in any UN or other report. Where did you get this 50 million dollars figure from? The whole discounted oil offer from Nigeria was not anywhere near that figure - so where is your number coming from. It is one thing to be concerned about information of the oil deal and another thing to make unsubstantiated claim like the AG 3X corrupt statement.
Will people stop calling the UN assessment report as it relates to the LPRC as an audit report - it is not an audit report - even the UN stated that it did not do auditing of the LPRC. When the AG decides to do the real work he is being paid for, he will first audit the LPRC and lay to rest all the concerns. But in the meantime, the AG is on his publicity stunt.
D. Smith
Clarification For Mr. Smith
D. Smith,
Eric wrote, “How much damage has occurred and will arise from Mr. Morlu’s statement is not yet fully known. But, let us not fool ourselves. It is now done. We know it is much easier to destroy than to build. We need no reminder beyond our recent past. Additionally, we do not need to look any further than the international press – irrespective of the language – to discover the widespread publicity his thoughtless statements have garnered.”
The President of Liberia has declared publicly, on numerous occasions, that her government is fraught with corruption. Does Eric consider this a “thoughtless statement?” The press, on a diurnal basis, avails the world of vivid reports of corruption occurring at the highest levels of government. I think that the damage was evident long before Mr. Morlu’s supposedly “thoughtless statement.”
Morlu is definitely not beyond reproach, but we must level legitimate criticisms and refrain from the contrived “the sky is falling because of Morlu” approach.
Below is an excerpt from Brumskine’s comment on the 2007/2008 proposed Fiscal Budget and the Nigerian oil deal. The government has provided no refutation of this claim.
“It is our understanding that the Nigerian Government agreed to sell crude oil to Liberia at a concessionary rate. The spread between the market price and the concessionary rate was intended by the Government of Nigeria to be used for development purposes in Liberia, and for the benefit of the Liberian people. But even after a year, Liberians have yet to be told what has happened to the funds, and none has found its way into the budgetary process. Some experts have calculated that Liberia could be losing as much as US$50,000,000.00, if the spread between the market price of the oil and the concessionary rate is not accounted for and recovered by the Government.”
What is your number on the oil deal if you dispute the above quoted number? The conundrum exists because neither you nor LPRC is providing any legitimate number that the public has the right to know. Note, during the period of this oil deal, oil companies throughout the world were reporting their highest profits ever, yet LPRC is reporting no profit. How do you propose that we reconcile this discrepancy?
Call it what you might, audit, assessment report, etc., the U.N. panel of experts reported that an estimated $7 million was not accounted for at LPRC. I have no dispute with you about what you wish to call their report. Where is the money?
You and Eric seem to blame the AG for not doing his job. But is it not ironic that the administration is in such an acrimonious public, and some might deem it infantile, dispute with the very person that is suppose to give the administration a clean financial bill-of-health for the international community to see. Where is the leadership here?
K. Koiquoe Wilson
LET THE AG AUDIT!!!!
Mr. Wilson, 10,000 barrels of oil will not amount to 50 million dollars in any market. If you are taking information from opposition political groups with their own agenda to discredit the administration for their political ends, then you have been taking for a ride. This is the job of the AG to go and audit LPRC and tell us what is really going on. But it seems like you and the AG are relying on information from opposition political parties to make unsubstantiated claims. There is a 4.5 million dollars in the bank right now for LPRC, so the claim of no profit is not true.
Annual Message by the President on Jan. 29, 2007
Honorable Members of the Legislature:
Liberia Petroleum Refining Company (LPRC)
The board of directors of the Liberia Petroleum Refining Company appointed by me in late January
2006 determined that the first item on its agenda would be a restructuring of the company to address significant overstaffing that had been identified in reports of an Ernst & Young team that undertaken a systems review in 2004 financed by the European Commission and Monbo & Company, a local accounting firm, commissioned by the Auditor General to conduct an audit of LPRC’s 2004 and 2005 financial statements.
Accordingly, the board and management crafted an ingenious voluntary severance program that was presented to the workforce in April. Over a period of 10 days, 400 employees volunteered to be
severed from the company in exchange for generous severance packages. Many of those former employees have now become self-employed, investing their severance money in their own businesses.
The LPRC board followed this up with a paring of the unwieldy management structure then in
existence, reducing the number of layers by half and the number of departments from 16 to 6. The
net result is a company that is today leaner, more efficient and more cost effective, as demonstrated by its recent financial performance. LPRC’s operating income jumped from US$1.5 million in 2005 to US$6.3 million, an increase of more than 300%. Net income came in at US$4.8 million, after the deduction of a one-time severance payment of US$1.5 million. Today, LPRC’s financial position is a lot stronger than it was 12 months ago. The company’s bank balance has grown from US$50,000 when the new management took over to almost US$2 million as of December 31st, despite settling more than US$1.5 million in inherited debts and paying off a US$1 million bank loan for its severance program more than 1 ½ years ahead of schedule.
Of particular note is the fact that LPRC has taken actions to increase the level of competition in the marketplace such that petroleum supplies are plentiful and at prices 30-40 percent lower than other countries in the region.
At the same time, Liberian importers’ share of the market for gasoline and diesel has increased from 11 percent in 2005 to 40 percent today.
One issue concerning LPRC continues to be the subject of controversy and concern – that is the allocation of oil to Liberia by the Federal Republic of Nigeria. The facts of the matter are clear if we but take the time to examine them professionally. In follow up to request made by the previous government and in keeping with similar assistance given to other ECOWAS countries, we requested an allocation of 30,000 barrels. Only 10,000 barrels was approved to be handled on a commercial basis with a contract between LPRC and the Nigerian National Petroleum Company.
Accordingly, on June 14, 2006, NNPC offered LPRC a one-year contract, effective August 1, 2006, to purchase 10,000 bpd of crude oil on commercial terms. The offer included the requirement that LPRC deposit US$1million with NNPC as security for its commitment to commence lifting the crude oil that would be contracted.
After looking at several options, a decision was made to monetize the crude allocation by selling it to an oil trading company with the resources to make the US$1million deposit on LPRC’s behalf and raise the letter of credit for each shipment. Addax Limited was selected to play that role on account of its strategic position as a significant player in the Nigerian oil industry in addition to being a major oil trader in Africa. All documentation in this transaction which runs into large volumes is available upon request for your scrutiny.
D. Smith
LPRC
Smith is right. People don't seem to understand that LPRC is a BUSINESS whose share are owned in the majority by the Government. Before it was changed to LPRC many Liberian citizens also had shares in the company. The Government was either supposed to pay them for their shares or give them new shares of LPRC...but that is another story. SO AGAIN LPRC is not a Ministry it is just like any other Corporation the only difference is the shares are owned by the Government and if you know anything about business you will understand why all of this hoopla over LPRC is nonsense.
V.R.
Make The Oil Contract Public
D. Smith,
You seem to be criticizing me for giving credence to one statement from the Liberty Party’s official response to the administration’s proposed budget, yet you are simultaneously posting an entire speech from the president to substantiate that the oil contract was done in good standing. Is it that the president is not partisan as the Liberty Party’s head? Is it that the president’s speech is gospel? Shouldn’t we all look to the accounting documents and contracts from LPRC to settle this discrepancy? What is the need for the administration to treat this particular public contract in such clandestine manner?
“However, the U.N. report said in June 2006, LPRC entered into a one-year contract with the Nigerian National Petroleum Corporation to buy 10,000 barrels of crude oil a day.” [FPA]
The above statement seems to contradict your assertion of only 10,000 barrels of oil. Let us grant you the benefit of your skepticism that Liberty Party’s assertion is wrong as you presume. Is the U.N. report also wrong and partisan? Why would you deduce that Harry Greaves will not make available the contract so as to put this protracted issue to rest? Where in the annals of capitalism have you seen a public corporation refusing to make contracts available to the public that it signed on behalf of the public? Not even the Doe, Taylor, or Bryant administrations were accused of such.
K. Koiquoe Wilson
very nice blog, keep up the good work
AG SHOULD AUDIT LPRC!!!
Mr. Wilson, unlike opposition political groups, the President is not looking to score political points on the oil issue and she know what she is talking about - so I will take her word. If you read the last sentence of the speech I posted, she invited the National Legislature to request all documentation of the oil transaction for scrutiny.
If you were fair minded on the issue, you will be calling for the AG who is under the National Legislature to request the documents and investigate. What is the process of making sensitive contacts documents public in Liberia -publish it in the Newspapers.
Mr. Wilson, I consider you to be a thinking person. Are you really serious about the statement that Doe, Taylor and Bryant made all of the contacts they undertook public - please make it clear for me.
D. Smith
The Administration Must Take the Initiative
D. Smith,
What stipulation could possibly be contained in this oil contract that makes it so highly secretive that the administration would allow this issue to bring such disrepute to the administration and the country? For God sake, this is only a business contract. You claim that the President invited the Legislature to request the documents for scrutiny. It is her administration that has been assailed for over a year over this issue. If resolving this issue is so simple, doesn’t leadership dictate that the administration take the initiative to bring closure to this issue rather than this circuitous route that allows it to linger?
This intractable problem that has played out before the entire world body, according to Mr. Greaves, remains extant because the buyer of the oil, Addax, does not want the price at which it purchased the oil from LPRC to be disclosed to Addax’s other customers. If one were to follow this line of logic, Addax may have paid an inflated price for the oil or why else would Addax not want other customers to know how much it paid? Why is it that LPRC is reporting such miniscule revenue, if any, for the oil for which it may have received an inflated price?
Pursuing this line of logic further that Addax does not want its customers to know how much it paid LPRC for the oil, again this can only mean that LPRC received a favorable price from Addax. If Addax performed such an honorable service to a war-torn country, why would it want such a socially responsible act to be concealed? Companies live for such publicity. Is it that Addax’s other customers, which are wealthy companies and countries, will claim war-torn status so as to get a similar price? Is this reasoning minimally defensible?
What is so sensitive, as you posit, about such a pedestrian business transaction? Is Addax so inflexible that given these turns of events, it will not consider relieving LPRC from this insignificant non-disclosure clause that is causing an entire country such international embarrassment? Has LPRC considered making such a request of Addax so as to resolve this issue once and for all? This should be a simple matter in my opinion.
If this issue raises such doubt in the mind of an average Joe like me, imagine how incredulous it may seem to the international body upon whom we are relying to raise Liberia out of its depressed state. Eric speaks of donor fatigue on the part of the international community, between the AG’s statement and this type of bizarre behavior on the part of LPRC, which do you suppose is culpable for the donor fatigue?
K. Koiquoe Wilson
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