Did Liberia pay $500,000 per consultant?


J. Yanqui Zaza


The Perspective
Atlanta, Georgia
November 18, 2005


Another independent report (i.e., Government Accountability Office audit, an investigating arm of the United States Congress-GAO) completed in July 2005 accuses international experts of inflating prices of projects in Afghanistan. (11/07/05, NY Times). Did Liberia, in the expense of the $520 million, pay an annual fee of $500,000 per consultant to private corporations as Afghanistan did? Or will Liberia award overcharged contracts to Non-governmental agencies (NGOs) in fulfilling the Governance and Economic Management Assistance Program (GEMAP)? The report also states that the cost to improve an accounting and managerial system of few ministries in Afghanistan grew from a miniature amount to about $98 million dollars.

This recent audit report adds to the list of complaints that international experts and NGOs continue to profit immensely from poor countries. The audit report covering Afghanistan indicates that the country paid an annual fee of $500,000 to each of the 22 consultants. By receiving inflated annual fees, the Accounting Firm violated its own mission: to create a managerial system that would curb corruption. It findings also indicate that “a mafia” of foreigners and Afghanistan government officials pocketed $1.5 billion dollars the United States gave for electricity, roads, health, etc. Such a story of donors’ funds being squandered in Afghanistan is just another story in addition to many other developing countries, including Iraq. United States Vice President, Dick Cheney’s former employer (Halliburton) has agreed to pay back to the US government several hundred million dollars for overcharging for construction work in Iraq.

Why are the World Bank and the International Monetary Funds failing to help poor countries sort out good economic programs and contracts? Were they not created in the 1940s to help improve the lives of poor people? In fact independent reports state that they are not only failing, but they are wolves in sheep clothes. On October 1, 2003, the NY Times article, summarizing independent reports, for example, opined that the World Bank’s lending policies have created a debt trap for poor countries. Citing Nigeria as an example, it stated that, from borrowing $5 billion, Nigeria will end up paying $32 billion dollars in interest alone. In another independent report sponsored by Breton Woods, researchers stated that the World Bank, through its created NGO, charged a client $26 million while other NGOs charged less than $1million for the same services.
(9/5/05 the Perspective Web Site).

Liberia did accumulate a significant portion of its 3.5 billion dollar debt while it was under supervision of the World Bank. Since we didn’t learn any lesson, let us analyze the expenditure of the $520 million dollars. On February 19, 2005, Liberians learned with dismay that $359 million of the $520 million dollars pledged in February 2004 has been used without a trace to any projects. However, the citizens were even more surprised to find out those representatives of the World Bank and International Money Funds have been conspicuously silent since they should have more information? The silence was troubling because these representatives helped in generating the funds after they conducted an in-depth evaluation of Liberia's reconstruction needs in December 2003.

Even without knowing the details of how Liberia spent the re-construction funds, one should ask, did Liberia pay such an inflated amount to consultants? Such an inquiry of how the $520 million was spent million might help us in determining our mistakes, if any, and sign better contracts with NGOs. We might also identify and exclude the likes of those NGOs that submitted inflated bids. In addition, one would hope that Liberian analysts do not just focus on dollar amount. They should rather determine why those international experts of the World Bank and International Monetary Funds, etc. didn’t perform their fiduciary responsibilities.

Once again we are hoping to reduce corruption if we allow international experts to supervise contracts awarded to corporations. However, records of the international experts are not promising in fighting corruption. Therefore, Liberians should be analytical as we begin again to award contracts to private corporations. A thorough review might compensate for our weak regulatory system and the absence of many professional watchdog organizations.

As you are aware in September 2005, the Interim Government grudgingly signed an Agreement with the international community due to frequent rumors of rampant corruptions. The signed Governance and Economic Management Assistance Program (GEMAP) gives the rights to the international community to supervise contracts assigned to would-be NGOs to manage certain income generating entities. Those entities are part of the economic pillars of Liberia; hence, our representatives should not focus on good products and services alone, but at what price, and whether rural towns will have access.

Besides the idea of validating the transparency of the numbers, the Liberian government has to make a political choice relating to cost versus benefits. What if all of the NGOs insist on charging $500,000 per consultant, will the government rescind the agreement? Since chief executives’ compensations have leaped from million dollars to billion dollars plus (9/5/05, The Perspective web Site), private corporations and NGOs are tempted to include high salary amount in their bids. However, even though the contracts include excessive amount of compensation for expatriates, most NGOs or international experts either hire local technicians or local subcontractor to perform the services or provide the goods. Why assign contracts to NGOs?

Getting aid is difficult. On the one hand, a poor country can only receive aid or funds if it allows international experts to perform the services. But on the other hand, the cost of hiring the NGOs most times out weights the benefits from the aid. Other countries are figuring out how to cope with the dilemma. Egypt, speaking on behalf Arab countries at the meeting of Muslim Nations in November 2005, insisted that all non-government organizations and NGOs should legally register in each country. In Afghanistan, although NGOs have adopted Ethnical Code of Conducts, the government continues to ask the United States and United Nations to allow the Afghan government to receive and spend the funds under the supervision and monitoring role of NGOs and international experts. Through the influence of NGOs, the US and UN rejected the recommendations of both Egypt and Afghanistan, the audit report stated.

While it is a good idea to review some of the recommendations from other countries, our government should first review the expenditure of the donors’ funds of $520 million dollars. An evaluation of the agencies to be contracted to NGOs and international private corporations should also be performed. These investigations might reveal some information that might be relevant in reducing the cost of awarding contracts to those agencies.