Has Liberia attributed its gold deposit to a bankrupt company?

0
Hummingbird Resources

Let’s take a break from the debate on money laundering or the source of the $ 536 million loan and focus on the concession agreement granted to “Hummingbird… which currently holds 14 exploration licenses for all minerals, covering over 7,000 square kilometers located in a significant proportion of eastern Liberia… ”The Hummingbird Resources concession was one of those proposed deals that was submitted to former President Sirleaf for approval, but did not were not approved before she left office. (Daily observer). In addition, according to reports, the company is expected to mine approximately 14 trillion ounces of gold over the 20-year life of the project. (Daily observer). The World Bank’s subsidiary, International Finance Corporation (IFC), has reportedly invested $ 8 million in the project.

Like his predecessors, President Weah is faced with the task of making a decision between what Professor Nicola Fuchs-Schundeln has called “self-interest versus the common good”. For example, did the government award the concession agreement to Hummingbird Resources because of special interests such as the World Bank, the lender and the economic adviser of Liberia? Or, will the government protect the interests of Monrovia-Landlords against the interests of tenants, will the government differentiate some desired bonus payments from corruption? Will the government prevent concession companies from polluting communities or exploiting Liberia’s natural resources?

Let’s take a look at the 9 year consolidated financial statements including Hummingbird, Liberia where applicable.

AUDITED CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING LIBÉRIA’S HUMMINBIRG

OBJECT

2008

2009

2010

2011

2012

2013

2014

2015

2016

(LOSS)

ASSETS

3M

4M

15M

52M

51M

62M

97M

109M

139M

SPECIES

404K

719K

7M

32M

15M

13M

9M

9M

53M

SOURCE: AUDITED FINANCIAL STATEMENTS 2008-2016. The sign () represents negative amounts, the letter M represents millions of dollars, and k represents thousands of dollars.

The combined income statement for each of the nine years showed no turnover but showed losses. So why did our government award a lucrative gold minefield to a company that generated no income from 2008 to 2015, including the year it got the concession deal? More so, it has no information or history on the labor issue since it had few Liberian employees, if any. Nor is he used to honoring environmental laws or paying taxes to a government on time. Has our government received and reviewed the revenue projections and cash flows from Hummingbird Resources? If not, how did our government determine the economic viability of Hummingbird Resources (Liberia)?
The previous government, which was anti-poor, granted privileged deals and also instituted anti-poor economic arrangements, which did not generate sufficient resources to fund the programs. In fact, Mr. George Will, a conservative New York Times writer, argued that large corporations wanting to reduce the influence of government bureaucrats typically reduce government revenues, depriving them of funding programs. Well guess what, if Liberia were to effectively generate adequate income and invest in agriculture, health care, housing, education, etc., it would not be strapped for cash.

On the other side of the coin, why would a slave plantation type industry like the Liberian rubber plantation Firestone invest in education since it depends on unskilled labor to do more? of profits? In fact, the American Medical Association, to increase its profits, is lobbying Congress to limit the supply of physicians and competition from non-physicians, according to a book called “Free to Choose”, written by Mr. Milton Freidman. , Nobel Prize winner. economist.

Globally, large corporations tend to transfer money from poor citizens to their rich customers, as Ms. Saskia Sassen explained in her book “Expulsion-Brutality and Complexity”. During the 2008 financial crisis, Greek taxpayers bailed out the banking sector and became, for example, a country in debt of $ 3 billion, mainly because of fraudulent financial assets called derivatives, Sassen added. How did Greece go bankrupt? She explained that Goldman Sachs deceptively persuaded Greece to invest in wallets, wallets that Goldman Sachs knew were worthless, forcing Greece to reimburse investors for those worthless.

In the case of Hummingbird Resources, its management may use accounting principles and legal rules to transfer money from Liberia, for example, by increasing the expenses of Hummingbird Resources-Liberia (for example, royalties and management fees ). In another example, this could reduce the taxable income of Hummingbird Resources-Liberia by using a portion of the accumulated net operating loss of $ 24 million (i.e. the combined losses from 2008 to 2016) and part of the stock options of $ 6 million (future salary) offered to its officers.

It is acceptable to deduct royalties, for the goodwill or patent of the parent. However, management should use the industry standard royalty rate. In addition, management fees paid to a foreign parent company for work performed on behalf of a domestic subsidiary may be considered regular business activity. Again, management should be discouraged from overestimating such expenses.

Has our government learned a lesson from the 66 fraudulent concession deals that the government of former President Ellen Johnson Sirleaf signed and awarded to profiteers? Did the World Bank, Liberia’s economic advisor, recuse itself if it was involved in negotiating the Hummingbird Resources concession agreement since its wholly-owned subsidiary (International Finance Company) is one of the owners? Was Hummingbird Resources incorporated for the sole purpose of mining gold in Liberia since a significant portion of its assets have been allocated to intangible exploration and evaluation assets?

Finally, the award of a gold minefield covering 7,000 square kilometers to a company that has no income and has accumulated more than $A net operating loss of $ 24 million from 2008 to 2016 is not a good start for the pro-poor government.



Source link

Share.

Leave A Reply