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Tax Justice Network Africa’s fiscal justice work in Liberia led to MP’s rejecting an $800m mining deal with ArcelorMittal. The fiscal regime and the benefits were not advantageous to the people of Liberia.
On 28th March 2022, the Liberian House of Representatives rejected the $800m mining deal the country was set to seal with ArcelorMittal, a global mining and steel company. The mineral development agreement (MDA) between the mining giant and Liberia had already undergone two amendments. Still, its third amendment does not meet the interests of the people of Liberia regarding the fiscal regime, railroad and ports management rights, and monitoring of the actual quantity of minerals exported, among others. Tax Justice Network Africa and its partner Integrity Watch Liberia supported the Liberian members of parliament in the review and analysis of the mining agreement through the African Parliamentary Network on Illicit Financial Flows and Tax.
According to the House of Representatives, the fiscal regime and the benefits were not advantageous to the people of Liberia. Specific gaps within the agreement include the payment of fees and other levies such as port user fees, the compliance with new land rights and laws on the commercial use of water. Other problematic aspects of the deal are the regulation and management of infrastructure on a multi-user basis, the multi-user amendments to the railroad system operating principles, the definition of eligible users and railroad operators, the ambiguity of railroad system operating principles and the monitoring of the actual quantity of minerals exported.
In addition, Liberia would have surrendered control of its infrastructure assets to ArcelorMittal. ArcelorMittal would have had exclusive rights to block other users’ access to these sovereign assets. Indeed, article 3, section 3(f), Section F (2) of the third amendment to the MDA grants ArcelorMittal the exclusive rights to the Yekepa to Buchanan railroad and Port of Buchanan.
It is the first time the Legislative body says no to the Executive body on a significant mining concession in Liberia. Despite the government support for the mineral development agreement citing benefits such as production increase, railway and port expansion, job creation, and $65m in payments from the company, Liberian parliamentarians rejected the deal. For Bhofal Chambers, the speaker of the House of Representatives, rejecting the MDA is a great act of humanity.
Tax Justice Network Africa, in partnership with Integrity Watch Liberia and with the participation of Columbia University, provided support for an independent expert to work with Liberia’s national Caucus of the African Parliamentary Network on Illicit Financial Flows and Tax (APNIFFT) on the review of the deal between the government of Liberia and ArcelorMittal. With this support, members of parliament identified the loopholes in the agreement, which contributed to lawmakers’ arguments against the deal.
‘‘In general, tax breaks should be used carefully. It is best practice to apply existing tax laws and regulations to all projects, which fosters uniformity, certainty, transparency, and accountability in the governance of projects within a country. Where a tax break is given due to the unique nature of a project, the tax breaks should: a) Include a reasonable time limit, i.e., enough for the company to recoup its cost b) Balance between the long-term benefits derived from the project and the tax breaks given. This requires a holistic assessment of the project’’.
Harold Marvin Aidoo, Executive Director of Integrity Watch Liberia.
Tax Justice Network Africa welcomes this agreement rejection as an incredible step towards improved domestic resource mobilisation and fair taxation for Africa. The House of Parliament’s decision rewards efforts invested in strengthening the parliament members of parliament through its APNIFFT. APNIFFT is a network led and piloted by parliamentarians from all over Africa and created by Tax Justice Network Africa. It has established a presence in 36 countries with 258 members working to curb illicit financial flows (IFFs) and promote tax justice.
‘‘APNIFFT members from across the continent have, through knowledge and experiences shared within the network, sought accountability from the executive, raised motions and legislative interventions to tackle Illicit financial flows and tax injustice on the continent.’’
Ishmael Zulu, Policy Officer – Tax and Equity, Tax Justice Network Africa.
In 2021, From 27th to 29th September, in Dakar, Senegal, APNIFFT members convened under the theme “MPs at the frontline: Curbing IFFs on the road to recovery post-COVID-19”. The meeting saw the lawmakers in attendance issue a declaration with a commitment to fight illicit financial flows. Watch the public statement here below.
Liberia is the first country to establish an APNIFFT national caucus. The Caucus was launched on 7th September 2021. Integrity Watch Liberia sat as permanent secretariat to the Caucus, facilitating reports and meetings with national stakeholders (ministry of finance, revenue authorities).
''The goal of the Caucus is to make sure that this new generation of leadership do things differently, by making sure that the natural resources of Liberia benefit Liberians’’.
Sen. Numene T. H. Bartekwa, Chairman, Liberian Senate Committee on Lands Mines and Energy
Tax Justice Network Africa worked in partnership with Integrity Watch Liberia to organise a training of lawmakers on beneficial ownership disclosure in optimising domestic resource utilisation on Thursday, 10th March 2022, closed with the launch of the Stop The Bleeding Campaign at the University of Liberia.
Tax Justice Network Africa and its partner Integrity Watch Liberia will continue to support the Liberian members of parliament in the review and analysis of mining agreements through the African Parliamentary Network on Illicit Financial Flows and Tax.