On October 14th 2021, Integrity Watch Liberia (IW-L) requested support from USAID Liberia Economic Policy Dialogue Activity (LEPDA) on behalf of the Liberia Bi-partisan Legislative Caucus on Illicit Financial Flows and Progressive Tax to review the Concession Agreement between the Government of Liberia and Bao Chico Resource Liberia Ltd. This request was made against the backdrop that the history of Concession Agreements in Liberia is replete with secrecy, weak capacity of the government to negotiate better deal(s), weak regulatory and institutional framework which undermines optimization of the sector’s contribution to broad-based and sustainable socio-economic outcomes for the citizenry.

The request was granted and subsequently the Columbia Center on Sustainable Investment (CCSI) and the International Institute for Environment and Development (IIED) through the USAID LEPDA support agreed to conduct high-level analysis of the agreement to highlight issues that might warrant the Caucus’s closer inspection, from a public policy and sustainable development perspective. On December 15, 2021 a Momo was issued by the Columbia Center highlighting issues that needed that attention of the Legislature. 

Even though by the time Columbia issued the Memo, the House of Representative had already acted on the Agreement and sent it to the Senate with it recommendations for concurrence.  Integrity Watch Liberia felt that giving the importance of the issues raised in the Momo, there was the need to for the Bi-Partisan Caucus to flag these issues so that the Senate can consider taking remedial actions on many of the issues that were raised in the memo before signing the agreement. A press conference was therefore facilitated by IW-L on January 11, 2021. The press statement read by Hon. Francis S. Dopoh, Chair of the Caucus firstly pointed out that the Memo had come at a time where the House of Representatives had already acted on the Bao Chico Agreement and sent their recommendations to the Liberian Senate, however, giving the importance of the issues raised, the Caucus felt the need to publicly note the issues with a commitment to share the Momo with the Senate and the Speaker of the House of Representatives.  

Key among the issues raised in the statement was the fact that the Concession supplants the laws of Liberia in several instances across the agreement with specific reference to: - S. 4.1(c), 5.7(f), 6.3(c), 13.1, 14.1, 14.4, 20.1(b), 21.1(i), 23.10(d), and 25.5(c). Ideally the agreement, the memo noted should sit within the law of Liberia to ensure uniformity and strengthen the rule of law.  

The memo also pointed out problematic fiscal provisions in – S. 5.7, 6.4, 14–16. It specifically pointed out that withholding tax rates on dividends and interest are low by international standards. The norm is within a range of 10–20%. The withholding tax rate provided seem to differ greatly with those provided for in the Revenue Code. The withholding tax rate in the agreement the memo recommends should be commensurate with the provisions of the Revenue code.

Click here to download or view the Red Flag Memo