The opposition Liberian People’s Party (LPP) has concurred with the decision of the citizens of Grand Bassa and Nimba Counties and therefore demanding lawmakers to reject the latest ArfcelorMittal US$800 million amended agreement.
In a strong worded press release issued under the signature of Chairman J. Yanqui Zaza, the LPP is accordingly demanding that ArcelorMittal Liberia should fulfill its obligations in keeping with the law and in accordance with best practice.
Further, the party is urging legislators to be guided by evidence that ArcelorMittal along with Firestone, Liberia Agriculture Company (LAC), Salalah Rubber Corporation, Aureus Gold, and 13 other companies should pay a paltry US$1.5m in taxes.
Therefore, LPP says 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 minuscule tax contribution to the economy?”
According to the LPP, the US$800m amendment agreement is bad, particularly wherein the George Weah-administration will give away two major public assets of Liberia, a railway and the Port of Buchanan.
Also, LPP argues that it is a bad amendment if ArcelorMittal will replace the annual payment of US$3m to Nimba County ($1.5m), Bassa County ($1m), and Bong County (US$0.5m) with US$0.9m and US$300k.
Further, the party insists that it is a bad amendment if ArcelorMittal will not pay the arrears of the annual US$3 million 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 the $1.5b Investment Agreement signed in 2010.
LPP added that neither has the company produced its anticipated 46m tons, according to Global Witness. It noted that the 46m tons production would amount to 39% of ArcelorMittal’s worldwide 119m tons.
“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 tons in proportion to its worldwide 119m tons,” LPP indicated.
The party believes the estimate is reasonable because ArcelorMittal will be using US$1.5b (1%) of its US$130b worldwide investment to produce the 46m tons.
Predictably, LPP stated that 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, LPP says with good iron-ore, ArcelorMittal invested $1.5b and that 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,” LPP mentioned.
LPP declared: “In response, 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).”
In addition, the party quotes history as showing 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,” LPP also stated.
The party thinks it is difficult to find out if LAMCO and others fulfilled their responsibilities, including sending the correct export tax withheld from buyers.
In the case of ArcelorMittal, LPP argues that there is limited information on the tax on profits or dividends paid. However, LPP says there is information on tax withheld on goods sold to buyers as well as payments in fulfillment of its Corporate Social Responsibility obligations.
“Page# 10 of the 2020 Liberia National Budget says 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. 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.”
LPP is calling for a review of the export tax that ArcelorMittal 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).
“Mittal Steel produced 1,306,052 tons and 3,186,254 tons in 2017 and 2018. 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.”
The party says ArcelorMittal, 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.
LPP made it known that the US$27,366,735 calculated for 2017/18 versus the US$17m for 2017/18 reported on Page# 10 of the 2020 Liberian National Budget indicated that ArcelorMittal 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! The 2017/18 LEITI report shows 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, LPP says another extractive company involved in gold mining, called Bea Mountain, paid a paltry US$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.”
LPP feels President Weah’s administration, for unexplained reasons, has failed to launch an investigation into prior concessionary agreements.
From all indications, LPP stated that the 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.”
LPP requests the lawmakers to reject the US$800m 2021 Agreement and that they should encourage the Weah-administration to publish the US$800m Amendment Agreement in keeping with best practice and in accordance with Provision# 120 of the LEITI Act.