Liberia EITI Report includes the first EITI “should-be-paid” audit

EITI Report shows oil and gas revenue increased fivefold in 2011.

Liberia EITI (LEITI) Report 2010/11 includes a comparison of what was paid with what should have been paid, a tracking of where the money was spent, as well as reconciling payments and revenues.

The “should-be-paid” audit aimed to compare what the companies paid with what they should have paid according to terms stipulated in their contract. This first attempt could only be completed partially. As production information was not available for most of the resources, it was only possible to audit some fees paid in the forestry industry. The limited audit in the forestry sector found significant discrepancies between amounts paid and amounts due.

The report also includes the tracking of US $12 million, about 10% of revenues, from specific contributions by the companies, which are meant to be applied to certain counties or institutions for social development. The audit found only minor discrepancies between the collecting agencies and the beneficiaries.

Liberia’s fiscal income from the extractives industries jumped 70% in 2011. According to the LEITI Report, Liberia received US $117.5 million in the fiscal year 2010/11, a 70% increase from the previous year. All sectors, except forestry, contributed more to the national treasury than previously. Most of this increase was driven by the oil sector from which revenues grew fivefold and now represents 42% of total revenue.

Another innovation in the 2010/11 LEITI report was the inclusion of in-kind contributions. 11 companies estimated their contributions to communities in the form of roads and schools construction, water and sanitation, education, etc., totaling US $13 million on top of the collected taxes.

Post Award Process Audit

LEITI also published the first “Post Award Process” audit, which looked at 68 contracts awarded by the Ministry of Agriculture, NOCAL, the Forestry Development Authority and the Ministry of Land, Mines and Energy between July 2009 and December 2011. The audit found that around 10% of the contracts were awarded in compliance with all applicable norms and the rest were either partially compliant (37%) or did not follow a significant number of applicable regulations – including lack of competitive bidding - or had incomplete documentation (53%). The audit report contains details about the breached norms and lacking documentation and presents recommendations to address the identified deficiencies.

In an article at Boston.com Alfred Brownell, an environmentalist and board member for LEITI estimates “that the hasty and inappropriate awarding of concessions to multinationals covers $8 billion. That’s about half of the direct foreign investment Liberia has attracted since 2009…”.

In the same article Minister of Information Lewis Brown said the government is aware of the issues.

‘We realize the capacity shortfall — it grows out of our conflicts. It is not going to disappear overnight,’’ said Brown to Boston.com. ‘‘We admit to the capacity gap we feel.’’