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Campaigners warn lack of financial controls in Liberian Ministry of Lands, Mines and Energy threatens post-conflict reconstruction

21st October 2009

Campaign groups Publish What You Pay (PWYP) Liberia and Global Witness today welcomed the Liberian Auditor General's audit of the Ministry of Lands, Mines and Energy and called on the Government to act on its disturbing findings.

The 2006/2007 audit conducted by the Auditor General, John Morlu, is the first to be carried out in 25 years and forms part of the Heavily Indebted Poor Countries (HIPC) initiative. The Auditor General's rigorous investigation of government finances is, in itself, a significant step forward in Liberia's efforts to strengthen governance, for which the government should be congratulated.  However, his findings make for sobering reading.  The audit report identifies a range of serious irregularities, not least the failure of three officials to account for US$862,000 in missing government funds for which they were responsible. The audit also highlights the Ministry's lack of a functional inspectorate unit - a critical component in the government's oversight of the Ministry's management of gold and diamond mining and its implementation of the Kimberley Process.

"The Auditor General's findings reaffirm the need for far reaching policy reform and a renewed commitment aggressively to tackle corruption within the Ministry and the Liberian Government as a whole," said the Federation of Liberian Youth (FLY), a member of the PWYP Liberia Coalition.

Other problems highlighted by the Auditor General include unaccounted for discrepancies in donor funding, a general absence of transparency and accountability and a lack of sound financial management.  The report notes that the Ministry of Lands, Mines and Energy has never produced a financial statement meeting minimum international accounting standards. This lack of appropriate financial reporting makes it extremely difficult, if not impossible, to assess financial performance, quality and efficiency and leaves the Ministry vulnerable to what the Auditor General terms ‘creative accounting'. 

"Before the civil war, mining was the most important sector of the economy, accounting for two thirds of the country's exports. If managed in a sustainable way, Liberia's wealth in natural resources could provide the key to the country's development and economic recovery," said Natalie Ashworth Campaigner at Global Witness.  "Harnessing this potential will only be possible if government bodies institute the financial controls necessary to ensure that much needed revenues are not lost to corruption and mismanagement."

The Auditor General's report recommends that the Liberian government adopt international accounting standards, produce comprehensive and detailed annual financial statements and ensure that ministries comply with Liberian law.  Global Witness and PWYP Liberia are calling for these recommendations to be acted on without delay.

Contacts: Natalie Ashworth +44 207 561 6369 or +44 7968160377; Mike Davis +44 207 561 6393 or +44 7872 600 860; Dana Wilkins (US) +1 202 621 6687; Francis K.Colee (Liberia) +231 77077206

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Notes:

(1) The audit was released on 31 July 2009. It can be downloaded from www.gacliberia.com.

(2) The Kimberley Process is a rough diamond certification scheme, established in 2003.  It brings together governments, industry and civil society, and aims to eradicate the trade in conflict diamonds. Member states are required to pass national legislation and set up an import/export control system.

(3) PWYP Liberia is the Liberian chapter of the Publish What You Pay (PWYP) campaign and comprises 20 leading civil society organisations. PWYP is a global civil society coalition that helps citizens of resource-rich developing countries hold their governments accountable for the management of revenues from the oil, gas and mining industries.  PWYP Liberia successfully lobbied the Liberian Government to join the Extractive Industries Transparency Initiative (EITI) and works to raise public awareness of the importance of transparency in Liberia's extractive industries.