Liberia's Missing Millions

 

Photo source: Al Jazeera
By Naveed Qazi | Editor, Globe Upfront

In June 2019, a social movement began in Liberia born out of hapless conditions. It is alarming to a country which already suffered in a fourteen-year civil war that killed over two hundred fifty thousand people.

The flurry of protests escalated in early January 2020 where thousands of protestors in Monrovia demanded the fall of George Weah’s government, a former soccer star. The protest leaders, members of a group called the Council of Patriots, had a long list of demands. One of them said they were demonstrating over issues of corruption, governance, the removal of a supreme court justice, and an increase in domestic violence and rape, as well as economic problems.

Weah had initially tried to block their demonstrations, but then allowed them to be carried forward. When people outside the capitol building had started cooking evening meals, against police orders, the law enforcement began to forcefully clear the area. After that, the police had even fired tear gas, and dozens of protestors were taken to the hospital.

Elizabeth Donnelly, the deputy head of the Africa Program at Chatham House in an interview with WPR described these protests as ‘the most significant protests in Liberia in over a decade.’ Some of these protestors also blame Liberia’s economic woes on the withdrawal of the UN peacekeeping mission, two months after Weah took office in January 2018.

Apart from political difficulties, Weah is also criticised for personal decisions. He has  been spending on private state-of-the-art complex of condominiums and refurbished several of his old homes, while also travelling in a private jet with huge delegations. But the president’s supporters had often rejected these claims of lavish money spending, commenting Weah came to the job with his own money, and his trips have brought back some benefits.

However, Weah’s government in the recent past had put banks into dire straits, as they were unable to pay depositors, and salaries to civil servants are getting delayed. The protestors wanted Weah to fire his entire team of economic advisors because they failed to account the $25 million his administration withdrew in 2018 from Liberia’s Federal Reserve Account in New York. It was meant to jump start the economy. They also wanted details about his personal assets.

Between 2016 and 2017, $104 US million dollars of money printed through Swedish banknote manufacturer Crane AB also disappeared from Monrovia’s port and airport. It was something that also stirred up the public dismay. The central bank of Liberia denied the allegations, and stated that the money was stored in vaults across the city.

The Liberian dollar has been losing value, and is depreciating since July 2017. This has led to higher import costs and inflation, which means that everyday goods have become much more expensive for the average person in the country. To meliorate the crises, the president had done 'mop-up' exercises, as it was dubbed. They took place between July and October in 2018. It intended to reduce the amount of local currency in the economy, to slow further depreciation.

To answer the unanswered questions about alleged lost cash shipments, two reports were commissioned to examine the details. The government's Presidential Investigative Team (PIT) completed one of the investigations, and the risk advisory firm Kroll, conducted the other.
 
Both found major flaws in how government policy was implemented in each case.  Neither the PIT nor Kroll were able to account for all of the newly printed Liberian dollars, or the additional US dollars in Liberia.
 
In an article in BBC by Kanika Saigal, only $5 billion Liberian dollars of the total $15.5 billion Liberian dollars were printed and distributed in line with Liberian law, as per Kroll findings. The central bank did not receive legislative approval for the remainder of the cash, but had agreed for another contract with Crane who proceeded to print and deliver the money to Liberia anyway. Kroll also found an excess of $2.6 billion Liberian dollars were printed in addition to what was initially disclosed. The PIT's report recorded a similar finding.
 
It led to the arrest of the former executive governor of the central bank, Milton Weeks, and his former deputy, Charles Sirleaf, in March 2019 both in charge of the central bank when the notes were ordered. It was done on the PIT’s recommendation. 

There were wider discrepancies concluded afterwards. According to Kroll, the central bank sold $15 million US dollars for $2.3 billion Liberian dollars. This means that US dollars replaced older Liberian notes in the economy. The PIT report, however, stated that in addition to the $15 million US dollars, another $2 million US dollars was sold to oil and gas company Total. 

The PIT also outlined that fifteen of the companies listed by the central bank to have taken part in the "mop-up" exercise denied any involvement. Another eight companies listed by the central bank were not in operation when the PIT made their visit.

As for the $15 million US dollars to $17 million US dollars, part of the 'mop-up' exercise, the actual figure may be even harder to calculate. While some of the money was distributed to a number of companies, proper records were not kept.

This is because the distribution of cash ‘deviated from conventional best practice’, according to the PIT. Many records were written by hand, which could lead to a number of errors.
 
According to Kroll, this exercise has left the country open to ‘potential misappropriation of banknotes, potential opportunities for money laundering and potential execution of transactions with illegal businesses’. In other words, the money may never be accounted for. 
 
The BBC reported that the president received a letter from nine ambassadors, concerned that his government was taking money reserved for programmes funded by foreign donours from the central bank.
 
The World Bank had also complained that millions of dollars were removed from accounts earmarked for providing drinking water, or for projects such as responding to the Ebola crisis. Calculating where all of Liberia's missing money requires another rigorous audit, which the president had requested.
 
The PIT had also recommended a demonetisation exercise, to cut illegal activity and stabilise the economy.
 
For economic recovery, even Weah had also promised some action. The president had said that he would reduce the country’s reliance on the extractive industries by focusing on developing agriculture, and even suggested cutting government salaries to reduce the national spending budget.
 
Despite the promised recovery, the real question arises where the money has actually gone. The most likely answer is that it is in the pockets of "self-interested individuals," says Euler Bropleh, a Liberian national and founder and managing director of Vested World, a private equity firm that invests across Africa. Although, this has not yet been proven and remains speculation at this point.
 
While one of the main aims of Liberia's policy makers was to stop the currency from losing any more value against the dollar, their actions have actually had the opposite effect.
 
Of the newly printed notes, Kroll recorded that more than $10 billion Liberian dollars were fed into the Liberian economy without withdrawing any older notes. Of the 'mop-up' money, $5 million US dollars were also pumped into the economy without any withdrawal of local currency. In fact, Kroll also reported that the old Liberian dollars were reintroduced into the economy within six months of being removed from circulation.