Acting Auditor General Winsley Nanka has submitted to the National Legislature and the President of Liberia the Japanese Petroleum Non-Project Grant, which is the first Investigative Report on the Japanese Petroleum Non-Project Grant extended to the Government of Liberia and the Performance Audit Report
on staffing Regulations at the University of Liberia for the operating period 2008/2009 and 2009/2010.
This brings to 78 the total number of audit reports submitted to the National Legislature and the President of Liberia by the General Auditing Commission. The Government of Japan extended a grant of one billion, one hundred million Japanese Yen (¥1,100,000,000), to the Government of Liberia under a Grant Arrangement, provisions of which are conveyed in an Exchange of Notes dated March 8, 2011 between the Donor (Japan) and the Recipient (Liberia), for the purpose of contributing to the promotion of the economic and social development efforts by the Government of Liberia.
On the basis of information received by my Continuous Audit Team based at the LPRC that there were possible abuses in connection with the Japanese Grant, He directed that an investigation be conducted to determine whether the Japanese Oil delivered had been duly accounted for.
On August 30, 2011, a Memorandum of Understanding was signed by and between the Ministry of Commerce and Industry (MoCI), consignee on behalf of the Government of Liberia and the Liberia Petroleum Refining Company (LPRC), the implementing agent for the monetization of the Japanese donated petroleum products.
At the time of the signing of the MoU, the Petroleum Non-Project Grant was valued at thirteen million United States Dollars (US$13,000,000.00) for the supply of 15,000 Metric Tons (MT) of petroleum products from the Government of Japan for monetization, for which proceeds would be used to support development initiatives in Liberia.
The Acting AG observed that Commerce Minister Miata Beysolow and Aminata & Sons did not pass down to consumers a discount of 21.19 percent at the pump, as stated in the MoU between the MoCI and LPRC. Therefore, GAC used the prevailing wholesale market rate to determine the revenue realized by Aminata & Sons. The Ministry of Commerce maintains the official wholesale market rate statistics.
At the official wholesale rate of US$4.22 and US$4.37 on the 4,196,343 gallons obtained by Aminata & Sons during the transaction, the total revenue derived from the petroleum sales by Aminata and Sons, Inc., the local distributor selected by LPRC to monetize the product was US$17,889,454.11.
He noted that considering the threshold amount deposited, storage fees, port charges, and administrative cost paid as well as the assumed 10 percent commission payable to Aminata & Sons, Inc., these outlays amounted to US$12,101,320.10. Aminata & Sons, Inc. thus earned in total US$5,788,134.01 beyond the reasonable assumed commission.
Mr. Nanka observed that MD Williams of LPRC failed to award the Japanese Oil Grant contract to Aminata & Sons on a commission basis, given that the proceeds of the grant was intended to contribute to Liberia’s economic and social development efforts. A reasonable commission should have been ten percent on the sales of US$17,889,454.11, amounting to US$1,788,945.00 and payable to Aminata & Sons.
Acting AG Nanka further observed that LPRC did not follow the Public Procurement and Concessions Act, 2005 when it contracted Aminata & Sons to sell the donated oil on its behalf. The lack of a competitive bidding process denied assurance that value for money was achieved in the sale of the donated oil.
MD Williams violated Section 48(1) of the Public Procurement and Concessions Act for not subjecting the contract to monetize the Japanese Oil Grant to competitive bidding and also for not seeking No Objection from the PPCC in awarding the contract to Aminata & Sons.
He noted that the products were also sold on the Liberian market at the prevailing market rate without taking into consideration the gift element of 21.19 percent as indicated in MOCI’s Japanese Donated Petroleum Product Cost Benefit Analysis. From his calculation, the gift element amounted to US$2,749,861.87. There was no evidence to indicate that this gift element was reflected at the pump.
His analysis revealed that the Minister of Commerce, Miata Beysolow granted Aminata & Sons a deep discount of 35 percent, amounting to US$4,584,292.90 on the wholesale price.
MD Williams and Commerce Minister Miata Beysolow failed to protect the financial interest of the GoL by not ensuring that the net proceeds of the sale less a reasonable commission was deposited into government’s coffers. Commerce Minister Miata Beysolow did not provide any evidence that MoCI monitored the MoU entered into with LPRC, to ensure that its terms and conditions were enforced by LPRC.
Based on the number of financial irregularities and major control deficiencies noted in the report, Acting AG Nanka recommended the following to the National Legislature and President Sirleaf:
• Aminata & Sons should be made to deposit an additional US$5,788,134.01 into Government Account # 0220630001709 at the Central Bank of Liberia, as the excess income was unjustly accrued to Aminata & Sons as a result of the transaction. This amount includes US$16,000.00 set aside by Aminata and Sons for external audit purposes, as there is no evidence that an audit was conducted, as supported by LPRC’s Final Report. Aminata & Sons, Inc. should be made to deposit the aforesaid amount within thirty (30) days from the date of submission of this report to the National Legislature, and submit a copy of the deposit slip to the Office of the Auditor General for validation. Failure to do so, the Ministry of Justice should institute debt collection action against Aminata & Sons.
• Henceforth, all commodities (oil, rice, etc) grant agreements between the Japanese Government and the Government of Liberia should be on a commission basis payable to the distributor of the product not to exceed ten percent of the wholesale price of the product;
• LPRC’s Managing Director T. Nelson Williams should be censured by the President of Liberia for not protecting the interest of the Government of Liberia by ensuring that proceeds of the sales less a reasonable commission was deposited in the account of the Government;
• The Minister of Commerce and Industry, Miata Beysolow should be censured by the President of Liberia for not monitoring the deal to ensure that the terms and conditions were enforced by LPRC;
• Commerce Minister Miata Beysolow should be censured by the President of Liberia for not ensuring that Aminata & Sons passed down to consumers a discount of 21.19 percent reflected in the pump price of petroleum sold on the Liberian market as stated in MoCI’s cost-benefit analysis;
• Commerce Minister Miata Beysolow should be censured by the President of Liberia for awarding a deep discount of US$4,584,292.90 to Aminata & Sons without any basis;
• LPRC’s Managing Director T. Nelson Williams should be censured for violating Section 48(1) of the Public Procurement and Concessions Act by not subjecting the contract to monetize the Japanese Oil Grant to competitive bidding and also for not seeking No Objection from the PPCC in awarding the contract to Aminata & Sons. The breach of the PPC Act is punishable under Section 138 (1) of the PPC Act.
On the Performance audit of the University of Liberia’s Staffing Regulations, the Acting AG indicated that he commissioned this Performance Audit on 22 September 2010 to assess the quality of service delivery by the instructional staff at the University of Liberia (UL) and to identify major challenges if any, and provide recommendations that may help to enhance the provision of quality teaching services at the nation’s highest institution of learning. Accordingly, the audit focused primarily on staffing regulations relative to the provision of quality teaching services at the UL.
The University of Liberia received government’s subsidy of US$7,685,161.00 for the period 2008/09 and out of this amount US$5,468,000.00 was appropriated for improvement of salaries and benefits for faculty and administrative staff. This amount constitutes 65% of the subsidy received. For the period 2009/10, the UL also received government’s subsidy of US$12,559,987.00, of which US$8,114,407.00 was allotted for salaries and benefits of administrative and instructional staff. This amount constitutes 65% of the subsidy received.
As observed by the Acting Auditor General, the University’s Administration is not adhering to the recruitment policy stipulated in Article IV, Section 1 and 2 of its Handbook. As such, the University is engaged in the recruitment of inexperienced and unqualified instructors who lack the requisite credentials to teach courses at the University of Liberia.
The Acting AG observed that 114 first degree holders were teaching courses above the freshman level. The Vice President for Academic Affairs attributed this to the lack of qualified staff which has constrained the University in hiring unqualified instructors to teach courses. There were also instances where some appointments were made without approval by the UL’s President and the Board of Trustees.
His examination of files of full time instructional staff revealed that the employment of 84 out of 566 instructional staff were made without the approval of the President and the Board of Trustees. The non- adherence to the procedures in the University’s Handbook was wholly responsible for the non-approval of the eighty-four (84) full-time instructional staff, which led to the hiring of full-time instructional staff whose credentials were not properly vetted.
The Acting AG has therefore called President Ellen Johnson- Sirleaf, Speaker Alex Tyler, Senate Pro-Tempore Findley and members of the National Legislature to consider the resolution of the issues raised in the report urgently given their impact on public sector financial management.