Secretive Deloitte Audit in Liberia Raises Allegations of Irresponsible Corporate Behaviour and Conflict of Interest
(Press Release Issued by Global Witness)
December 18, 2002
28/11/2002- A secretive agreement signed between the government of Liberia and the auditing firm Deloitte & Touche (i) is drawing criticism from Global Witness and other international organisations. Global Witness, the International Transport Workers' Federation (ITF), and the UN Panel of Experts on Liberia are critical of the murky nature of the new agreement, whose draft terms of reference state that all information, including notes and final assessments, are the sole property of the government of Liberia and cannot be shared without direct approval (ii). Such behaviour raises concerns that this is an attempt by the government of Liberia to use the reputation of Deloitte and Touche as a cover for continued illicit activities (iii). Therefore, Global Witness stresses the urgency of the situation and calls upon the international heads of Deloitte Touche Tohmatsu to promptly make public all information regarding the contract in question.
"The United Nations, having called for this audit, must take quick and decisive action to ensure that the audit is carried out in full and by a properly trained, reputable and unbiased team of auditors," says Alice Blondel, Global Witness campaigner. "The use of Ghanaian and Liberian auditors from a small country office, together with the conflict of interest created by hiring a lead auditor's own private Liberian company to perform some of the work, is indicative of the Liberian government's intent to hide behind the veil of respectability without making any real positive changes (vi)."
"The Liberian government is abusing the respectability that the Deloitte name brings," says Ms. Blondel, "and Deloitte should also be more forthcoming with information regarding the audit." Global Witness first contacted the head and regional offices of the parent company, Deloitte Touche Tohmatsu, on 15 October 2002. Following unsatisfactory and inadequate responses from Deloitte representatives, on 22 November Global Witness and the International Transport Workers' Federation (ITF) delivered an Open Letter to Deloitte (v), expressing the concerns and questions that both groups have about the audit. Deloitte contacted Global Witness on 25 November, but was unable to provide any details of their work to date in rectifying the situation.
As documented in an annex to the latest UN Panel of Expert report on Liberia (vi), the terms of reference for a draft contract state that all information, including notes and final assessments, are the sole property of the government of Liberia. Given that this audit is in response to a Security Council demand, Global Witness and the ITF concur with the Panel of Experts and call for the total transparency of all documents and findings of the Deloitte contract, and further call for a full, retrospective, and independently verifiable audit of registry and timber industry revenues by a fully qualified, unbiased and internationally reputable auditor. Mr. David Cockroft, General Secretary of the ITF, noting that Deloitte and Touche have signed up to the United Nations Global Compact (vii), said, "by subscribing to the UN Global Compact, Deloitte and Touche have agreed to meet international standards of corporate responsibility, and giving respectability to the Liberian regime in these circumstances is wholly incompatible with them."
As highlighted in recent letters to the United Nations by numerous international organisations (viii), the timber industry and shipping and corporate registries threaten both global environmental damage, and with regard to many Liberian timber companies, are actively engaged in financing human rights abusing militias and illegal arms transfers. Says Ms. Blondel, "Deloitte should under no circumstances allow the Liberian government to hide behind their respectable name; and the United Nations must act immediately to ensure that Deloitte and the government of Liberia deliver to the international community the full, independent and thorough accounting of these industries required. Release the terms of reference, direct Deloitte to do a proper audit, and set the record straight."