Oil Company: Spent US $138m In 2012/13; No Report In 2013/14


By J. Yanqui Zaza
jyanqui@aol.com



The Perspective
Atlanta, Georgia
May 5, 2014

                  


Robert Sirleaf

Liberia’s annual budgetary document, like any other budget, should fulfill at least the civil obligation in providing transparent, verifiable information to the public. This practice, used partly to gain public confidence, has been around for centuries. In fact it was the desire for transparency and accountability that gave birth to the idea of capitalism in 1602, according to Jacob Soll, a professor of history and accounting at the University of Southern California.

Mr. Soll stated that, the Dutch, believing that accountability and transparency did sustain stability, required profession-from prostitute to scholars, merchants of Nassau, and Prince of Orange to keep an accurate record of business transaction. Subsequently, having won the trust of the electorate Dutch, for the first time, sold bonds at an interest rate of four percent, an experience that expanded into capitalism. In Renaissance Italy, merchants and property owners relied on accountability and transparency not only for their businesses, but also for the purpose of a moral reckoning with God, their cities, and their families.

To gain public confidence amid other concerns, the Liberian Legislature enacted the 2009 PFM Law in order for the government to provide a comprehensive statement about government’s operations, including state-owned enterprise. Section 8 (4) -STRUCTURE OF THE BUDGET- states, “…The annexes should provide specific details…summary of annual financial plans (budget) and operations for state-owned enterprises…” Complying with the PFM Law, President Sirleaf, in the 2012/2013 Budget, included all of the revenue/expense statements of every entity, but with an eye-popping US $138m         million cash outlay for operating expenses. The US $138m expense, about one-third (1/3) of the US $453m of the total Liberian Budget, was spent by the National Oil Company of Liberia (NOCAL) as per the chart below showing revenue and expense.

What is NOCAL?  The Liberian National Legislature established NOCAL in April 2000, amending the 1972 Executive Law of Liberia, to hold all of the right, title and interest of the Republic of Liberia in the deposits and reserves of liquid and gaseous hydrocarbons within the territorial limits of Liberia. NOCAL is therefore charged with the responsibility to organize, conduct, arrange and supervise all relevant research and exploration for liquid and gaseous hydrocarbons in Liberia.

If NOCAL is performing as a holding entity on behalf of the government, why did it receive US $148m, and subsequently spend US $138m? Okay, even if NOCAL was an income operating entity, why Government did not include any explanation within the Budget about NOCAL revenue/expense (US $148m and US $138m). An explanation was necessary because its budget did jump from about US $2m in 2009 [gacliberia.com/doc/nocal.pdf (General Audit Commission report (www. gacliberia.com/doc/nocal.pdf)] to US $148m in 2012/2013. More so, if the oil companies have not begun selling oil, how did a monitoring agency (NOCAL) generate its revenue? Was the $148 million borrowed from oil companies or generated from non-oil minerals?

Importantly, what did NOCAL spend the US $138m on? Was the amount paid to cover Salary and allowances for chief executives? Did NOCAL invest significant portion of the US $138m on capital projects? Interestingly, NOCAL expended this huge amount during the Board chairmanship of Robert Sirleaf, son of President Sirleaf.

Not providing information about NOCAL US $148 revenue and US $138 expenditure, President Ellen Johnson Sirlraf did not include NOCAL 2013/2014 revenue/expense report within the 2013/14 national budget. The exclusion of NOCAL financial report is in violation of the 2009 PFM law. However, NOCAL is reported to have given US $8m dividend to the government.

For now, let us put aside the issue of where NOCAL got the US $ 8m. Rather, the question is why is President Sirleaf violating the Law? Or what is the motive for including the other thirteen (13) state-owned entities within the 2013/14 budget, but conveniently excluded information about the state-owned entity that reported significant revenue and expenditure. This is especially troubling since Robert Sirleaf, son of President Sirleaf served as both operating executive manager and chairman of the Board of Directors during 2011 and 2012.

Here is a copy of the 2013-2014 National Budget of Liberia

Another troubling issue is the ownership of the US $148m revenue reported in 2012/13 and the revenue not reported within the 2013/14 budget. Was NOCAL a revenue generating entity or a monitoring agency? If it is the latter and not the former, then why are government’s monies deposited into NOCAL’s bank? Or is NOCAL a second-tier treasury department for the Liberian government? If NOCAL is a revenue generating entity, what is it selling? Are the business activities within the Oil Law of Liberia?

If NOCAL was a holding/monitoring entity on behalf of the government, why didn’t the Liberian Legislature approve NOCAL’s expenditure as is required for all of government expenditure? Liberian stakeholders should encourage President Sirleaf to abide by the 2009 PRFM Law and disclose the source of the revenue and the recipients of the US $138m and the comprehensive financial statements of NOCAL. Such information should include explanation about the idea of depositing concessionary loyalties and, or fees in the accounts of NOCAL instead of the bank account of the national government.

 

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