Tuesday, May 10, 2011

Liberia: Rip-Off Or Help?

Source: New Democrat News Monrovia


Details have emerged of how the Liberian Government entered into an agreement with the Nigerian Government for the lifting of crude oil as assistance from Abuja worth an estimated US318, 761,591.24 but with the Government getting US553, 000 out of the deal, according to a General Auditing Commission (GAC) audit for the financial years 2006 to 2007.


Auditors said their attempt to get documents from the former Managing Director of the Liberia Petroleum Refining Company (LPRC), Mr. Harry A. Greaves, Jr., on the deal was stalled, and that they had to travel to Nigeria for the full picture of the deal to unfold.

Apart from the US553, 000 the Government earned out of 3, 650,000 barrels of product, auditors discovered that the Nigerian company lifted more than US1m in excess of the agreement.

Responding to this discovery, Mr. Greaves, according to the audit, said he did not know that the Nigerian company had done this, but said the company later apologized. Moreover, according to the audit, there was no formal contract between the Nigerian company and LPRC, freeing the former from legal liabilities.

Discussions for the celebrated Nigerian oil deal, meant for postwar reconstruction assistance, began with the Charles Gyude Bryant interim regime and continued under President Ellen Johnson Sirleaf, with the deal finally consummated. Involved were the Ministries of Finance, Justice, LPRC, Government of Nigeria, Nigeria National Petroleum Company (NNCP) and the Nigerian company Addax.

The audit: "The total quantity of crude oil that the Government of Nigeria through its NPPC agreed to supply to the Government of Liberia through LPRC was 3,650,000 barrels, amounting to 10,000 barrel per day. But through an extended audit procedure, auditors uncovered that Addax continued to lift crude oil in the name of the Government of Liberia/LPRC in excess of the agreed upon quantity. The total quantity that was uncovered as being lifted by Addax was 4,652,796 barrels at a total value of US$318,761,591.24. This means 1,002,796 barrels was lifted in excess of the agreed upon quantity.

There was no contract, much less a contract modification that would provide the legal basis for Addax to lift the excess in the name of the Government of Liberia/LPRC. Although this matter was brought to the attention of MD Greaves, no evidence of any legal action was taken against Addax."

Excerpts outlining the AG's observation: I reviewed the document representing the contract between the Nigerian National Petroleum Corporation (NNPC) and the LPRC for the purchase of specified barrels of crude oil per day to the Government of Liberia (GOL), and also the contract signed between LPRC and Addax Limited for the sale of the said crude oil to Addax Limited. My objective was to assure due accountability and transparency in all aspects of the "Nigerian Oil Deal." I determined that the entire Nigeria Oil Deal was covered with vagueness, meaning it was executed in a manner that lacks transparency and accountability. Managing Director Harry Greaves single-handedly managed the contractual arrangement without much involvement of the Board of Directors. I therefore could not assure whether the deal met the desired benefit for which it was intended.

The Nigerian Government agreed to a request by the Liberian government to provide 30,000 barrels of crude oil per day. However, the bilateral agreement was given to LPRC because the Nigerian National Petroleum Corporation (NNPC) indicated that it does not deal with governments or any sovereign authorities, but with public companies.

Even though the NNPC did not sign the prepared agreement with LPRC for the supply of the agreed 10,000 barrels of crude oil per day, the former went ahead and supplied the oil, a situation unexpected in business dealings.

An auditing was sent to NNPC in Nigeria, but cooperation was limited, as NNPC could not indicate the substantive basis for consummating a contractual agreement in the absence of a valid contract that was duly signed and notarized.

The oil was lifted by Addax, a company contracted by Managing Director Harry Greaves, which was effectuated without applying the provisions of the PPC Act, 2005. The Board's approval was also not evidenced prior to awarding the contract to Addax, and it was therefore a unilateral decision.

Managing Director Greaves indicated that he considered the transaction as a sales contract and not procurement, since the Procurement Act "mentioned disposal of assets only".

I disagreed with the MD since the lifting of the oil constitutes essentially a procurement falling under the International Competitive Bidding process as provided for under the Schedule for Thresholds of the PPC Act, 2005.

This process requires that the company selected to lift the oil be determined through an international competitive bidding process, a procedure that was not followed. The 10,000 barrels of crude oil per day was an asset belonging to LPRC, which was subsequently disposed off in an 'arm length transaction' with Addax.

But Managing Director Greaves tried to confuse the issue when he argued that "LPRC's contract with NNPC was a procurement contract," but "LPRC's contract with Addax was a sales contract." First, the agreement with NNPC was a bilateral agreement. This is evidenced by the Minister of Finance, Antoinette Sayeh's letter dated 31 July 2006 indicating to NNPC that LPRC will represent the Government of Liberia in this transaction, as NNPC indicated that it could only do business with a commercial entity. Second, Managing Director Greaves did not provide evidence that the contract with NNPC was competitively bade since he claimed it was a procurement contract, thus falling under the provisions of the PPC Act, 2005.

He did not provide evidence of competitive bidding for either Addax or NNPC. Either way, he contravened the PPC Act, 2005. Granted that the contracts among LPRC, NNPC and Addax, were even without blemish, the non-adherence to provisions of the PPC Act, 2005 in the selection of Addax, constitutes a major risk, as the fee declared as receivable for the oil lifting may not have reflected a fair deal for the LPRC, and thus the Liberian government.

As indicated, NNPC did not sign the oil supply agreement with LPRC and yet permitted the oil to be lifted by Addax on behalf of LPRC. There was, therefore, no legal basis for Addax to lift the crude oil in the absence of a valid contract that was duly signed and notarized, although NNPC consummated the agreement when it allowed Addax to lift the crude oil.

Auditors noted that the terms of the agreement entered into between the LPRC and NNPC did not specify any preferential price for the oil to be lifted by LPRC, but that the price would be the prevailing price at the time of lifting the crude oil. Also, NNPC demanded US$1,000,000.00 as the initial deposit option cost. The absence of the preferential price in the contract rendered it a nullity.

According to the audit, Managing Director Harry Greaves said he was not aware that Addax lifted the excess barrel until I brought the matter to his attention. Managing Director Greaves wrote:

"As regards the two lifting in October 2007, we were not aware of their occurrence. Addax has since confirmed to us that they were able to negotiate the additional lifting, explaining that their failure to notify us was inadvertent and resulted from some personal changes in their organization. They will settle the net amount owed us."

"When the GAC auditors brought to our attention the fact that an additional cargo was lifted under the contract (of which we were not aware at the time), we contacted Addax who apologized, explaining that this was an oversight resulting from personnel changes within their organization. We reconciled the account and they made the additional payment to LPRC."

But the AG described as "unacceptable justification in international business dealings" Addax's lifting of additional crude oil in the name of the Government of Liberia/LPRC without an implicit approval or knowledge of LPRC's management.

In the absence of GAC auditors uncovering the additional lifting, there was no evidence provided that Addax was making any efforts to remedy the situation.

Management's argument that LPRC has reconciled the account with Addax does not cure the deficiency noted, and this further demonstrated that this "Nigerian Oil Deal" was characterized by a complete lack of transparency, making it difficult to indicate whether value for money was achieved.

Thus the total amount generated from the oil deal was U$553,000.00, auditors were not given the total value of the transactional cost associated with this Nigeria Oil deal.

The Government of Nigeria could have avoided the transactional cost by just giving Liberia the US$553,000.00 that was reported as being the total revenue generated from this transaction. Again, it is doubtful that value for money was achieved and this transaction was done for the sole benefit of the Liberian taxpayers. The Government received US$553,000.00 on a transaction valued at US$318,761,591.24.

LPRC's Articles of Incorporation of 31 August 1978, which provides for a 9-member Board of Directors, is silent on who appoints the Board, the audit observed.

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Drawing the line in Liberia

Crimes sponsored, committed, or masterminded by handful of individuals cannot be blamed upon an entire nationality. In this case, Liberians! The need for post-war justice is a step toward lasting peace, stability and prosperity for Liberia. Liberia needs a war crimes tribunal or some credible legal forum that is capable of dealing with atrocities perpetrated against defenseless men, women and children during the country's brutal war. Without justice, peace shall remain elusive and investment in Liberia will not produce the intended results. - Bernard Gbayee Goah



Men with unhealthy characters should not champion any noble cause

They pretend to advocate the cause of the people when their deeds in the dark mirror nothing else but EVIL!!
When evil and corrupt men try to champion a cause that is so noble … such cause, how noble it may be, becomes meaningless in the eyes of the people - Bernard Gbayee Goah.

If Liberia must move forward ...

If Liberia must move forward in order to claim its place as a civilized nation amongst world community of nations, come 2017 elections, Liberians must critically review the events of the past with honesty and objectivity. They must make a new commitment to seek lasting solutions. The track records of those who are presenting themselves as candidates for the position of "President of the Republic of Liberia" must be well examined. Liberians must be fair to themselves because results from the 2011 elections will determine the future of Liberia’s unborn generations to come - Bernard Gbayee Goah

Liberia's greatest problem!

While it is true that an individual may be held responsible for corruption and mismanagement of funds in government, the lack of proper system to work with may as well impede the process of ethical, managerial, and financial accountability - Bernard Gbayee Goah

What do I think should be done?

The situation in Liberia is Compound Complex and cannot be fixed unless the entire system of government is reinvented.
Liberia needs a workable but uncompromising system that will make the country an asylum free from abuse, and other forms of corruption.
Any attempt to institute the system mentioned above in the absence of rule of law is meaningless, and more detrimental to Liberia as a whole - Bernard Gbayee Goah

Liberia's Natural Resources
Besides land water and few other resources, most of Liberia’s dependable natural resources are not infinite, they are finite and therefore can be depleted.
Liberia’s gold, diamond, and other natural resources will not always be an available source of revenue generation for its people and its government. The need to invent a system in government that focuses on an alternative income generation method cannot be over emphasized at this point - Bernard Gbayee Goah

Liberia needs a proper system
If Liberians refuse to erect a proper system in place that promotes the minimization of corruption and mismanagement of public funds by government institutions, and individuals, there will come a time when the value of the entire country will be seen as a large valueless land suited on the west coast of Africa with some polluted bodies of waters and nothing else. To have no system in place in any country is to have no respect for rule of law. To have no respect for rule of law is to believe in lawlessness. And where there is lawlessness, there is always corruption - Bernard Gbayee Goah

Solving problems in the absence of war talks

As political instability continues to increase in Africa, it has become abundantly clear that military intervention as a primary remedy to peace is not a durable solution. Such intervention only increases insecurity and massive economic hardship. An existing example which could be a valuable lesson for Liberia is Great Britain, and the US war on terror for the purpose of global security. The use of arms whether in peace keeping, occupation, or invasion as a primary means of solving problem has yield only little results. Military intervention by any country as the only solution to problem solving will result into massive military spending, economic hardship, more fear, and animosity as well as increase insecurity. The alternative is learning how to solve problems in the absence of war talks. The objective of such alternative must be to provide real sustainable human security which cannot be achieved through military arm intervention, or aggression. In order to achieve results that will make the peaceful coexistence of all mankind possible, there must be a common ground for the stories of all sides to be heard. I believe there are always three sides to every story: Their side of the story, Our side of the story, and The truthBernard Gbayee Goah

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