GAC to Audit US$25M Mop Up Exercise -Given Two Weeks to Report Findings

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Growing out of the two investigative reports by the Presidential Investigative Team (PIT) and the USAID sponsored Kroll & Associates, the Ministry of Justice on Thursday, March 7, 2019, requested the General Auditing Commission to conduct an investigative audit into how the U.S. $25 million earmarked for the mopping exercise was expended.

The report by the PIT called for a ‘forensic investigation’ of the entire mop-up exercise carried out by the Central Bank of Liberia, while Kroll  report likewise called for ‘further understanding’ of how the exercise was conducted.

On the basis of both reports, the Ministry of Justice, by directive of President George Manneh Weah, has requested the General Auditing Commission to conduct an investigative audit into how the U.S.$25 million earmarked for the mopping exercise was expended, giving the GAC a two-week mandate to report on their findings, according to a release.

It can be recalled that in July 2018, the government approved the infusion of U.S. $25 million into the Liberian economy in order to bring about stability on the market.

Meanwhile, the Central Bank of Liberia says it is ready to face the audit to provide what it calls “Cursory Account on the Mopping up Exercise”

In its response, a CBL statement on March 5, 2019 bragged that the Central Bank stands ready to stand before any reputable auditing firm to defend how it handled the exercise and to defend the strategy it adopted in executing the exercise, which the bank said was based on three reasons.

The bank indicated that the first reason is that more than 90 percent of the currency in the economy is outside the banking system, and that using the banking system would not have yielded the desired result.

Secondly, the CBL indicated that they adopted the strategy because “the CBL experience shows that using the conventional foreign exchange auction by itself, through the commercial banks, has had limited impact on the exchange rate, while a third reason provided by the CBL was that “Economic research and empirical evidence show that foreign exchange auctions and market interventions (using commercial banks) by central banks have limited impact on exchange rate stability.

The Bank further said based on the approval of the TEMT, the CBL commenced the mobbing up exercise with the objectives to halt the depreciation of the Liberian dollar, reverse the depreciation, and stabilize the exchange rate, adding that  those objectives were met.

Bank said the mopping up exercise targeted three groups: major importers, small businesses and licensed foreign exchange bureaus.

The CBL said all information on the operations that include detailed information of names of the buyers, the types of businesses, their addresses, the transaction volumes and transactions rates were meticulously recorded and the information was provided in full to the TEMT and a detailed report submitted to the National Legislature.

The CBL further clarified that its operations which started July 17, 2018 ended October 20, 2018 and that US$15m was mopped up from outside of the banking system in exchange for L$2,303,363,898.

The Bank said US$2 million of the money was sold to a petroleum importer in exchange for L$313,141,800 through regular banking transaction to facilitate import that ensured a steady supply of fuel to the Liberian market and prevented economic disruption that a fuel shortage would have caused.

CBL therefore notes that US$17m used for the exercise was accounted for and the balance US$8 million is in the custody of the Bank.

The Bank admits that while it was mandated by the TEMT for the mopped up money to be sterilized for the period of one year, it however was authorized by the TEMT to release to commercial banks the sum of L$1.3b of the sterilized L$2,303,363,898 since there were public outcries during the Christmas Season that local banknotes were in short supply.

   The CBL therefore said it is ready to face the audit, strongly asserting that all its transactions during the mopping up exercise were reported and accounted for.

“In conclusion,” the Bank said in its press statement, “all monies herein mentioned are fully accounted for. The CBL avails itself to any further scrutiny either from the Government, external actors, or both.”

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