LPP Rejects AML US$800M Amended Agreement -Calls on Lawmakers to Reject Agreement

The Liberian People’s Party (LPP) of Cllr. Taiwan Gongloe has sternly objected to the latest Mittal Steel US$800 Amended Agreement, saying it supports the position of the citizens of Grand Bassa and Nimba Counties who asked their lawmakers to reject the Mittal Steel Amended Agreement. The LPP has therefore urged the lawmakers to reject the US$800m 2021 Agreement, and encourage the Weah-administration to publish the US$800m Amended Agreement in keeping with best practice and in accordance with Provision# 120 of the LEITI Act.

In a strongly worded position statement issued Thursday, September 30, 2021, the LPP said its reliance to object the Mittal Steel US$800 Amended Agreement is based on the premise that the global steel giant replaced the annual payment of US$3m to Nimba ($1.5m), Bassa ($1m) and Bong (US$0.5m) with US$0.9m, US$300k, noting further that it is a bad amendment if Mittal Steel will not pay the arrears of the annual USD US$3m County Development Funds stipulated within the amended 2010 Mineral Development Agreement.

“Further, the Party urges Legislators to be guided by evidence that Mittal Steel (ArcelorMittal Liberia), Firestone, Liberia Agriculture Company, Salala Rubber Corporation, Aureus Gold, and 13 other companies paid a paltry US$1.5m in taxes.

“Therefore, the steel giant should not demand more favorable concessionary terms from the Government of Liberia given the dismal amount of US$1.5m (US$83,333 on an average) paid in taxes last year. Why then is Mittal Steel, in its 2021 Amended Agreement, demanding more favorable concessionary terms from the Government given its miniscule tax contribution to the economy? The US$800mAmendment is bad particularly where the President George Weah-administration will give away two major public assets of Liberia, a railway, and the Port of Buchanan. Also, it is a bad amendment if Mittal Steel will replace the annual payment of US$3m to Nimba ($1.5m), Bassa ($1m) and Bong (US$0.5m) with US$0.9m, US$300k,” the LPP stated categorically, noting that it is a bad amendment if Mittal Steel will not pay the arrears of the annual USD US$3m County Development Funds stipulated within the amended 2010 Mineral Development Agreement.

“In the face of the above, LPP wonders why the Weah-administration would enter into the US$800m Agreement when ArcelorMittal has not fulfilled many of the provisions stipulated in $1.5bInvestment Agreement signed in 2010, neither has the company produced its anticipated 46m tonnes, according to Global Witness. The 46m tonnes production would amount to 39% of Mittal Steel’s worldwide 119m tonnes. (https://dofasco.arcelormittal.com/who-we-are/arcelormittal-group/about-arcelormittal.aspx.

“Importantly, why not amend the 2010 Agreement and increase Liberia’s 15% ownership to 45% in Mittal Steel?The 45% ownership,at least,might represent the value of Liberia’s 46m tonnes in proportionto its worldwide 119m tonnes. The estimate is reasonable because Mittal Steel will be usingUS$1.5b (1%) of its US$130b worldwide investment to produce the 46m tones,” the LPP averred.

Explaining why it took the decision to put a stop to the Mittal Steel Agreement ratification, the LPP said the total production of iron-ore, like any goods and services, depends on the grade and quantity of the iron-ore and total investment.

“In essence, with good iron-ore, Mittal Steel invested $1.5b. Using assets contributed as the basis for determining the percentage of ownership is a long-standing business practice. In fact, Mitta Steel used this logic and reduced Liberia’s ownership from 30% to 15% when the parties revisited the 2006 Agreement during the 2010 Amendment exercise, which effectively returned the Yekepa-Buchanan railway and the Port of Buchanan to national ownership.

“Mittal Steel reduced Liberia’s 30% ownership to 15% when Liberia took back the ownership of the railway, and the Port of Buchanan, according to Global Witness and the 2017/2018 Report of Liberia Extractive Industries Transparency Initiative (LEITI)  (https://eiti.org/files/documents/10th_and_11th_eiti_report_for_liberia_003.pdf).

“In addition, our history shows that Liberia and investors in iron-ore have used assets to determine ownership. For example, documents available for other mining companies indicate that Liberia held 37% ownership in the Liberian American Swedish Mining Company (LAMCO)and 50% ownership of the Liberian Mining Company, according to sources. (www.archive.unu.edu/unupress/unpbooks/un29me/uu29meOb.htm). It is difficult to find out if LAMCO and others fulfill their responsibilities, including sending the correct export tax withheld from buyers.

“In the case of Mittal Steel, there is limited information on tax on profits or dividends paid. However, there is information on tax withheld on goods sold to buyers as well as payments in fulfilment of its Corporate Social Responsibility obligations,” the LPP position statement noted, indicating that under page 10 of the 2020 Liberia National Budget, all numbers expressed in American dollars showed that buyers in Liberia paid or will pay import tax US$186m, US$195m, US$171m, US$178m, and US$215m in 2017/2018 through 2020 respectively; while on the other hand, buyers outside of Liberia paid or will pay export tax US$6m, US$17m, US$7, US$7, and US$7m for the same period.

While calling for a review of the export tax that Mittal Steel should have withheld from buyers and sent to the taxing authorities in 2016/17 and 2017/18, according to Page# 64 of the Liberia Extractive Industries Transparency Initiative (LEITI), the Liberian People’s Party stated that Mittal Steel produced 1,306,052 tonnes and 3,186,254 tonnes in 2017 and 2018, when prices were US$46 and US$86 in 2016/17 and 2017/18 respectively.

“Mittal Steel received US$54,697,457.00 and US$273,667,356 for the products and should have withheld and sent US$5,469,745.00 and US$27,366,735 to authorities if the tax rate was 10%, and not at zero% for consumable goods, according to the Liberia Revenue Code.

“Mittal Steel, like any seller of goods and services, was not responsible to pay the export taxes, rather it was required to withhold the tax from the buyers just as a US vehicle dealership is required to withhold import tax from a buyer in Liberia and send the tax to the taxing authority.

“The US$27,366,735 calculated for 2017/18 versus the US$17mfor 2017/18 reported on Page# 10 of the 2020 Liberian National Budget indicated that Mittal Steel might have changed the production figure, or the parent dictated the selling price of the iron-ore. Assuming argumentum, if Mittal Steel indeed remitted a lower export tax, did it pay the US$3m per year in accordance with the 2010 Agreement? The answer is no!” LPP stated, indicating that the 2017/18 LEITI report showed that Mittal Steel paid US$220,728 and US$131,930 in 2016/17 and 2017/18 respectively which pales in comparison by far to the US$53m paid by Liberians.

“Interestingly, another extractive company involved in gold mining, called Bea Mountain, paid a paltryUS$487,177 and US$1,651,323 in 2017 and 2018 respectively. Worse, the 19 companies paid US$1.7m on profits and the rest of the US$53m represented withholding taxes, including payroll, etc. This simply means that ordinary Liberian employees are needlessly bearing an unfair tax burden.

President Weah’s administration, the LPP said, has failed to launch an investigation into prior concessionary agreements, for unexplained reasons.

“From all indications, this administration appears to have dismissed the Audit Findings of the Moore Stephens Audit Firm, a foreign-based audit institution. The Firm reported, in 2014, that its investigation and audit findings showed that former President Ellen Johnson Sirleaf awarded 64 fraudulent concessionary agreements. But the former President’s administration has never questioned the audit findings. Unfortunately, the Weah-administration has used the opinion of a non-licensed institution to dismiss the findings of a credible and internationally recognized and licensed audit firm. Page# 11 of the Pro-Poor Agenda for Prosperity and Development stated “…The 2018 APRM review concluded that the process of securing, negotiating, and implementing these concessionary agreements in Liberia met internationally accepted best practices and brought benefits.”(www.emansion.gov.lr/doc/Pro-Poor%20Agenda%20For%20Prosperity%20And%20Development%20book%20for%20Email%20sending%20(1).pdf%20-%20Compressed.pdf).

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