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AfricaFocus Bulletin
"The roots of the New Liberty Gold project stretch back before 1995,
when a resource extraction license was issued by former warlord
turned president Charles Taylor to a mysterious company called
KAFCO. The permit changed hands a few times and, today, Avesoro holds its
permit via a wholly-owned subsidiary, Bea Mountain Mining Corp – a
company created in 1996 by Keikurah B. Kpoto, one of Taylor's
closest associates. In 1998, foreign interests bought Bea Mountain
Mining. The beneficiaries of the sale were well hidden. According to
a document IRIN procured, three quarters of its capital belonged to
a company incorporated in the British Virgin Islands. The rest was
held by owners of bearer shares." - IRIN investigative report, March
21, 2017
This investigative report on the largest gold mine in Liberia begins
with the mining company's failure to reimburse displaced Liberians,
and the World Bank's failure to hold them to account. But the lack
of accountability extends to basic questions about the ownership of
the company and the use of tax havens. As such, it is one striking
illustration of what seem to be pervasive characteristics of
projects financed by the IFC, the World Bank's arm for working with
private sector companies.
This AfricaFocus Bulletin contains two short articles by journalists
who have been investigating the project, and a short press release
from Oxfam on a study of IFC projects last year.
For previous AfricaFocus Bulletins on Liberia, visit
http://www.africafocus.org/country/liberia.php
For previous AfricaFocus Bulletins on economic development issues,
visit http://www.africafocus.org/econexp.php
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Emmanuel Freudenthal and Alloycious David
Kinjor, Liberia, 21 March 2017
(This investigative report is being jointly published by
100Reporters, IRIN and Le Monde Afrique. 100Reporters is an awardwinning
investigative news organisation based in Washington, DC. Its
objective is to reveal untold stories on corruption, transparency
and accountability. IRIN delivers unique, authoritative and
independent reporting from the front lines of crises to inspire and
produce a more effective humanitarian response. Le Monde Afrique is
a pan-African francophone media for news, reporting, analysis and
debates.)
[Article in French available at http://tinyurl.com/m72pjnd]
The maths was merciless. Siah (name changed) had the equivalent of
$5 in her pocket but needed $15 to treat her youngest son Joseph's
malaria. She had travelled an hour to the nearest clinic only to
discover she couldn't afford the medicine. Joseph died that day, as
she cradled him in her arms.
Siah lives in Kinjor, a small town in the lush forests of western
Liberia. Just a few steps from her home, Liberia's largest
commercial gold mine, New Liberty Gold, plans to dig out a billion
dollars-worth of the precious metal.
The Liberian government and its multilateral funding partners see
commercial mining as a path to development in a country still
recovering from the impact of 11 years of civil war.
Under the law, communities are obliged to give up their land rights
and move, in return for compensation. But IRIN's months-long
investigation can reveal that financial reward isn't always
forthcoming from the foreign mining operations.
To make way for New Liberty Gold, 325 families in two villages,
Kinjor and Larjor, had to abandon their homes, farms, and artisanal
mines that had provided some income. In return for their move to a
new village, also named Kinjor, and carved out of the forest near
the mine, the company promised to make life better: new houses, a
school, hand pumps – and what could have made all the difference to
Joseph – a clinic.
Construction began on the mine in 2014, and the first gold sales
came a year later. Even though the company describes the operation
as a "key asset", the promised better amenities are yet to
materialise years later, and there has already been one major
chemical spill that has polluted the environment.
New Liberty Gold has the backing of the World Bank's International
Finance Corporation, which since 2014 invested $19 million and
became a key shareholder. That support was predicated on a 155-page
Resettlement Action Plan by the company, which listed its planned
$3.9 million investments in the new Kinjor.
During the IFC board meeting that approved the mining project, the
US delegate formally raised "serious concerns" regarding "the
environmental and social risks posed". The US urged the IFC "to work
with the company to ensure that all appropriate funds are set aside
for this [resettlement] plan".
Projects funded by the World Bank have displaced more than three
million people between 2004 and 2013 in 124 countries, according to
data published by the International Consortium of Investigative
Journalists (https://www.icij.org/project/world-bank). Those
shortcomings were acknowledged by Bank president Jim Yong Kim in
2015, after an internal review found "major problems" that caused
him "deep concern".
But the Bank and the IFC do not appear to have held New Liberty Gold
accountable for failing to meet its basic obligations, despite a
commitment made by the IFC on its website to help the company
"implement best practice standards" in Kinjor.
"I'm really disappointed to say that [this case] is one amongst
many," said Jessica Evans, a senior researcher at Human Rights
Watch. "We've seen time after time serious failings by the World
Bank and the IFC when it comes to resettlement."
That is little comfort for Siah. Outside a neighbour's house in
Kinjor, she fought back the tears to speak about her son's death.
Her voice rose in anger when she listed the failings of New Liberty
Gold: "no hospital here, no safe drinking water".
"There are toilets right next to the water pump. It makes us sick,"
she added. "We are suffering."
The owner of the mine, Avesoro Resources Inc. (previously called
Aureus Mining), has built a school and installed some water pumps.
But the rest of the action plan, the compensation due for uprooting
people against their will, remains little more than a wish list.
Controversy at mining projects like New Liberty Gold is not new in
Liberia. For nearly 100 years, natural resource extraction – from
rubber to minerals – has been steeped in violence and corruption.
Opaque investments carry a tremendous risk in the context of such a
fragile state as Liberia.
In one of Kinjor's narrow alleys flanked by mud huts, Yarpawolo
Gblan, an old man in a faded black polo shirt, stepped forward: "Are
you a journalist? Come and see my house!"
We sat on a bench, our backs to the wooden wall of a hut scrawled
with the phone numbers of Gblan's children. Three years ago, Avesoro
had forced him to move from what had been his home for a decade,
into "temporary" accommodation, to make way for the mining project.
The huts the company provided have just two small rooms: not nearly
big enough to house Gblan's family of eight. He extended the
original structure as best he could, using his own resources.
The huts were meant to be a stopgap measure, until the displaced
families could move into 325 "improved houses" promised by the
company. The unfinished shells of those houses stand in ordered
rows, just a few hundred metres away.
But construction stopped longer than a year ago. Weeds now grow
between the brick walls, and slimy bright-green algae thrive in
puddles fed by rain falling through where roofs should be.
Half a day's drive from Kinjor, in a wealthy suburb of Liberia's
capital, Monrovia, a striking white-walled villa serves as the
headquarters of New Liberty Gold.
Debar Allen is the company's general manager, a physically imposing
man who fills his generously appointed office. From behind a large
wooden desk, he explained in a calm baritone that people like Gblan,
who were supposed to have been resettled, "do not want to move from
where they are".
He offered two reasons for the construction delay: the need "to get
going with the mining project because we were running out of funds",
and the desire of those being resettled to build their own permanent
houses where they are now. "Rather than bringing contractors from
Monrovia, we have to team up with them," he said.
The World Bank, via email, offered a different explanation. With
"the Ebola outbreak, the company faced significant construction
delays. As a consequence, the project experienced some significant
challenges that impacted its financial/cash flow position."
The result was that "the full implementation of several aspects of
the project had to be postponed, and some of the permanent houses
have not yet been completed."
But in February 2015, the IFC provided a $5.3 million cash injection
for New Liberty Gold to help the company "cope with additional
costs" as a result of the Ebola outbreak, and to "support the
company's ongoing work in Liberia".
In reality, the company should have finished the resettlement houses
several months before Ebola hit Liberia. Moreover, the outbreak was
brought under control more than 18 months ago, yet the new housing
construction will not be completed any time soon.
Allen explained: "We signed with the [local] leaders a memorandum of
understanding that postpones the completion to the end of next
year". That means December 2017.
Community representatives told IRIN that the company had asked them
to sign numerous times, accepting the new deadline, and that they
eventually gave in. They had reasoned that whether they signed or
not, the houses would not be built any faster.
The World Bank did not reply to IRIN's requests for more details on
the resettlement timeline and the mine's failure to make good on its
promises to the community.
In March 2016, an accident at New Liberty Gold mine released cyanide
and arsenic, byproducts of the mining process, into a nearby river
that serves villages downstream. In Jikando, where people use its
water to fish, bath and wash clothes, they began to see dead fish
floating. Soon, they started developing skin rashes themselves.
A slim teenager lifted his t-shirt to show a rash he has had since
shortly after the spill. He told IRIN it still itched but said: "it
doesn't worry me all the time". Several mothers confirmed their
children were still afflicted by similar rashes. No medical tests
have been conducted on villagers who've reported similar effects.
Avesoro's Allen said the company found out about the leak in April,
after a phone call from the local chief in Jikando. He noted that
the company now regularly delivers frozen fish to replace the
poisoned ones, as the community's "source of protein was from the
creek".
On 14 April, shortly after the leak, the Liberian Environmental
Protection Agency fined the company. On 10 May, Avesoro publicly
disclosed the spill to shareholders, stating that its
"investigations to date indicate no adverse impact on any human
settlement".
It's difficult to pin responsibility for the mine's failures on any
individual because it's hard to identify the successive true owners
of New Liberty Gold. Aureus is part of a long list of shell
companies named in the Panama Papers leak, many of them registered
in opaque jurisdictions.
The latest twist in the ownership trail came at the end of 2016 when
MNG Gold, headquartered in Turkey, took over Aureus and changed its
name to Avesoro Resources Inc.
Investing in companies with complex ownership is not unusual for the
IFC. A recent report by Oxfam found that 84 percent of the IFC's
investments in sub-Saharan Africa in 2015 used "secrecy"
jurisdictions.
But the roots of the New Liberty Gold project stretch back before
1995, when a resource extraction license was issued by former
warlord turned president Charles Taylor to a mysterious company
called KAFCO.
The permit changed hands a few times and, today, Avesoro holds its
permit via a wholly-owned subsidiary, Bea Mountain Mining Corp – a
company created in 1996 by Keikurah B. Kpoto, one of Taylor's
closest associates.
The exploitation of Liberia's gold and diamonds allowed Taylor,
convicted of war crimes and crimes against humanity by the
International Criminal Court in 2012 and now serving a 50-year
prison sentence in the UK, to fund his war effort.
In 1998, foreign interests bought Bea Mountain Mining. The
beneficiaries of the sale were well hidden. According to a document
IRIN procured, three quarters of its capital belonged to a company
incorporated in the British Virgin Islands. The rest was held by
owners of bearer shares.
Bearer shares are the vehicles of choice for the corrupt because
they are owned by whoever holds the paper certificates, just like
cash. There is no trace of their owner in company records and they
can easily become covert payments for pretty much anything.
The World Bank nevertheless wrote that it had undertaken due
diligence on New Liberty Gold, an investigation that included
"desktop reviews, several meetings with Aureus management and a site
visit".
Over the past decade, the IFC has spent more than $200 million on
projects like New Liberty Gold. It has a seemingly unshakable faith
that commercial mining can deliver development that will trickle
down to communities like Kinjor.
As for Siah: Her last-born is now buried. If she once believed the
promises of New Liberty Gold, that is certainly no longer the case.
"The company is doing nothing for us," she told IRIN. "If the
company had built a hospital here, [his death] would not have
happened."
Monrovia - Liberia's first industrial gold mine failed to hold its
promises, dashing the hopes of local residents of Cape Mount County.
Report by Alloycious David and Emmanuel Freudenthal
FrontPage Africa, March 20, 2017
[Emmanuel Freudenthal is a freelance reporter investigating
businesses in Africa, while Alloycious David is an award winning
Liberian investigative journalist]
Contrary to President Ellen Johnson-Sirleaf's assurance that the New
Liberty Gold Mine will positively impact the lives of Liberians, the
325 families displaced by the mine have not yet moved into the
houses they had been promised.
The World Bank injected over US$ 19 million into the project with
the aim of bettering the lives of Liberians.
The houses should have been finished three years ago and now lie in
ruins, overtaken by grass. In the resettled town, called Kinjor,
residents still live in the inadequate structures that were meant to
host them temporarily.
There is no sign that their construction works will resume soon.
The company in charge of the project, Aureus Mining, now renamed
Avesoro, has also failed to construct a health post in Kinjor, as
required in an agreement between local residents and the company,
known as the 'Resettlement Action Plan'.
Residents claimed that the absence of a health center is
contributing to untimely deaths.
Residents also complained that they did not receive adequate
compensation for the crops they lost when their farms were destroyed
to make way for the mine.
Gbaley Dorley, 32, alleged that his farm was completely destroyed by
the company. In exchange, he got less than a hundred United States
dollars in compensation for the cassava, coconut, and pineapple he
cultivated.
Another problem being experienced in Kinjor is safe drinking water.
Residents said the community, has less than five functional hand
pumps and that many of them do not work during the dry season.
The company's operations, according to some residents poses health
hazard. Kulah Dassin, a 36-year-old mother of eight explained that
in March 2015, the company polluted their river with cyanide, which
killed all the fish.
The children, who usually bath and wash in the river, suffered from
rashes, which look like ringworm, she said.
Dassin disclosed that the application of traditional medicine has
helped to cure the rash, but that it is still visible on children.
The Town Chief of Jikandoh, called Pa Jimmy, corroborated that
hundreds of fish died, and related "I immediately placed a call to
the company's management when we noticed that the fish were dying."
Pa Jimmy explained that Debar Allen, the company's manager, and a
team came quickly to collect water samples in the river and took
some of the dead fish back to their office.
Debar Allen, admitted that the company accidentally dumped cyanide
in the river but said the company has taken action to advert the
situation.
The company's General Manager instructed them to stop using the
water.
In restitution for the pollution of their river, Aureus Mining
constructed two hand pumps to provide community members with safe
drinking water.
The company is compensating residents by providing them with cartons
of fish.
Although, the company or the Liberia Ministry of Health has not
provided official statement on the safety of the river, and no one
was examined by a doctor, community members have resumed bathing and
washing their clothes in the river.
The Liberia Environmental Protection Agency attempted to investigate
the leak, but said that the company obstructed its investigation,
which led to a US$ 10,000 fine for the company.
Allen further stated that construction work on the houses were
halted to focus more on the mining, because the company was running
out of funding, but contradicted himself and said individuals
resettled in new Kinjor were satisfied with where they staying and
that the company was thinking about what to do with the units when
they are completed.
The company's ownership remains sealed in secrecy, Aureus Mining is
part of several shell companies registered in secrecy jurisdictions
and named in the Panama Papers.
The NEWS also unearthed that it has links to former President
Charles Taylor, who is currently serving a 50 year jail sentence for
war crimes committed in neighboring Sierra Leone.
Taylor's former associate, the late Senator Keikurah B. Kpoto
created the Liberian subsidiary of Aureus Mining, the Bea Mountain
Mining Corp. This company was given a mining license under Taylor's
government.
The World Bank and Aureus Mining failed to provide information on
inquire whether Taylor's associates or some of his ex-officials
still hold shares in New Liberty Gold Mine and whether they are
aware that the project had link with Taylor.
Aureus Mining has not only failed to meet the aims for which the
World Bank infused over US$ 19 million into New Liberty Gold Mine,
but has created more sufferings, inflict pains and enriched
shareholders at the detriment of Liberia.
Via email, the bank disclosed that it conducted desktop review of
the project and held several meeting with Aureus Mining, but refused
to provide further information, because it entered a confidentiality
agreement with the company that prevents it from providing more
information on the project.
Oxfam International
11th Apr 2016
Fifty-one of the 68 companies that were lent money by the World
Bank's private lending arm in 2015 to finance investments in subSaharan
Africa use tax havens, Oxfam revealed today.
Oxfam's new analysis focused on International Finance Corporation's
(IFC) investments in Sub-Saharan Africa. It shows that together
these 51 companies, whose use of tax havens has no apparent link
with their core business, received 84 percent of IFC investments in
that region in 2015. It also reveals that the IFC has more than
doubled its investments in companies that use tax havens in just
five years - from $1.2billion in 2010 to $2.87billion in 2015.
The findings come ahead of the annual IMF-World Bank Spring meetings
starting on Wednesday in Washington DC, and in the wake of the
Panama Papers scandal which revealed how powerful individuals and
companies are using tax havens to hide wealth and dodge taxes. The
issue of tax havens is also expected to be high on the agenda at the
UK government's Anti-Corruption Summit in London next month.
In Oxfam's study, the most popular haven for IFC's corporate clients
was Mauritius; 40 percent of IFC's clients investing in Sub-Saharan
Africa have links there. Mauritius is known to facilitate "roundtripping."
This is where a company shifts money offshore before
returning it disguised as foreign direct investment, which attracts
tax breaks and other financial incentives.
Sub-Saharan Africa is the poorest region in the world. It
desperately needs corporate tax revenues to invest in public
services and infrastructure. For example, the region lacks money to
provide enough skilled birth attendants, clean water or mosquito
nets, resulting in high rates of child mortality; one child in 12
dies before their fifth birthday.
Oxfam's Head of Inequality, Nick Bryer, said: "It's crazy to be
giving with one hand and taking away with another - the UK
government donates to the World Bank to encourage development, but
by allowing investments in tax havens the World Bank's lending arm
is ultimately depriving poor countries of much-needed revenues to
fight poverty and inequality."
"The World Bank Group should not risk funding companies that are
dodging taxes in Sub-Saharan Africa and across the globe. It needs
to put safeguards in place to ensure that its clients can prove they
are paying their fair share of tax."
The IFC invested more than $86billion of public money in developing
countries between 2010 and 2015; 18.6 percent of it spent in SubSaharan
Africa. The IFC has a significant focus on financial
markets, infrastructure, agribusiness and forestry, among other
sectors.
While the IFC arguably leads the private sector with its disclosure,
environmental and social standards, the public still has no access
to information about where over half of the institution's financing
ends up, because it is done through opaque financial intermediaries.
It also continues to face major challenges in measuring its overall
development impact, and ensuring that the projects it funds do not
harm local communities. This latest Oxfam research shows that the
organisation also has a long way to go in ensuring that its clients
are responsible tax payers.
Oxfam is calling for the IFC to develop new standards to ensure it
only invests in companies that have responsible corporate tax
practices. For example, companies should be transparent about their
economic activities so it is clear if they are paying their fair
share of tax where they do business.
The international agency is also calling on David Cameron to show
strong leadership in tackling tax havens, beginning by intervening
to ensure that the UK's Overseas Territories and Crown Dependencies
publish public registers revealing the true owners of companies
based there, ahead of the Anti-Corruption Summit in May.
Oxfam is urging the World Bank and IMF to work with governments
around the world to further reform the international tax system and
help prevent tax dodging by wealthy individuals and companies,
including action to end the era of tax havens. Tax dodging using tax
havens is estimated to cost poor countries $100billion in lost
revenues every year.
AfricaFocus Bulletin is an independent electronic publication
providing reposted commentary and analysis on African issues, with a
particular focus on U.S. and international policies. AfricaFocus
Bulletin is edited by William Minter.
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