A 16-year long investigation conducted by concord Times into how the world largest steel maker, Mittal Steel, acquired the LIMINCO concession in Nimba and Grand Bassa Counties has revealed tales of coercion, threats and unconventional diplomatic maneuvering by then United States Envoy accredited near Monrovia to ensure Mittal was awarded the Nimba concession. As Lyndon J. Ponnie reports, apparently difficult for him to withstand the somehow intolerable pressure from the then US Ambassador, Chairman Charles Gyude Bryant of the Liberian National Transitional Government (LNTG) was left with no option, but to award the franchise of what was left of the former LIMINCO, to Mittal Steel, a company that did not actually win the bid proposal.
A huge archive of documents obtained by Concord Times, as well as statements from some former and present Liberian Government officials who worked closely with Chairman Bryant at the time, revealed the psychological endured by the then Liberian head of State (now deceased) from the former Chief of Mission of the United States Embassy, John W. Blaney, III, to have the Liberian Government overturn an earlier bid and awarded the concession to Mittal.
The investigation revealed how the US Diplomat took advantage of the incineration that had engulfed Liberia as a result of a third round of war launched by a new rebel group, Liberians United for Reconstruction and Development (LURD) against the government of President Charles Taylor which eventually ran him out of power.
Hundreds of Liberians lost their lives in the renewed conflagration in addition to the estimated over two hundred and fifty thousand killed in the invasion of 1990 masterminded by rebel forces of Charles Taylor.
While the nation was recovering from the terror and fragility of a third round of war, investigation says John Blaney allegedly used his diplomatic powers to allegedly bully the Liberian head-of-state to cause him overturn an already approved proposal from one of Mittal’s competitors in favor of it (Mittal).
Our investigation further shows that the real winner had signed a Memorandum of Understanding (MOU) with the Government of Liberia on 28 November 2003 with the primary objectives and purposes of entering into a joint venture in respect to the restart of mining activities at the former LAMCO Concession Area.
The MOU provided that the GIHL, would, among other things, carry out the necessary due diligence and undertake a feasibility study on the Nimba Iron Ore deposits and the industrial infrastructure which includes but not limited to what was left of the housing units, the railroad, workshops, the Buchanan port, amongst other assets.
On 7 October 2004, GOL and GIHL, incorporated Liberia Global Mining Company for the purpose of undertaking mining operations at the former LAMCO Concession Area.
Rio Tinto/WATCO, LNM Holdings, GIHL, BHP Billion and Shandong International Trading Group were the companies that tendered proposals for the concession area.
Our investigation revealed that the Board of Directors of Liberia Mining Corporation (LIMINCO) submitted the proposals to the Minerals Technical Committee of GOL (the Technical Committee) which was chaired by Mulbah Willie (deceased) and had Albert Chie (now Senate Protem pore) and Gersley Murray (now Minister of Mines and Energy) as Secretaries, for evaluation and that after ten (10) days of deliberations, the Technical Committee selected the winner which was not Mittal and accordingly submitted its findings and recommendations to the LIMINCO Board for approval.
At its meeting of Friday, 27 August 2004, the LIMINCO Board adopted the Technical Committee’s recommendations and upon a motion duly made, seconded and carried, was agreed, to commence contract negotiations with GIHL, which was the real winner of the bid proposal.
On 4 October 2004, by letter NTGL/MKW/3/MLM&E/04, the Technical Committee informed the Minister of Finance of the Republic of Liberia Lusene Kamara who was also chairman of the LIMINCO Board that the Technical Committee had entered into and successfully concluded negotiations with GIHL as mandated under the Minerals and Mining Law in respect of finalizing a Mineral Development Agreement.
However, investigation found out that the genuine winner’s bid was overturned allegedly on threats and pressure from the US envoy in favor of Mittal.
People who were close to Chairman Gyude Bryant, narrated to Concord Times that besides letters written by the US Envoy to Chairman Bryant, he made uncounted numbers of telephone calls in which he the US diplomat allegedly threatened the then Liberian head of state that forced him to overturn the technical committee’s decision to award the concession to GIHL.
According to our investigation, Ambassador Blaney’s pressure on chairman Bryant came weeks after he allegedly received a communication from one Dr. Louise Schorsch, who allegedly sought his assistance.
Our investigation found out that long after the Nimba bid was awarded to GIHL, Dr. Louis Schorsch, President & CEO of ISPAT INLAND, INC., addressed a letter dated 16 September 2004 to Ambassador John W Blaney III, Chief of Mission, Embassy of the United States near Monrovia, with copies to Chairman Bryant, Minister Jonathan A. Mason who was minister of Lands, Mines and Energy at the time and Mr. Adilya Mittal, Vice Chairman of LNM Holdings N.V.
In the letter, Dr. Schorsch, amongst other things, solicited Ambassador Blaney’s support and assistance for an investment project in Liberia that Dr. Schorsch believes would be beneficial to both Liberia as well as Ispat Inland, Inc. and it over 6000 US employees.
Dr. Schoesch informed the US Embassy official that in 1998 Inland was acquired by Ispat International, which affiliated with the LNM Group.
The letter also told Mr. Blaney that another part of the LNM Group, LNM Holdings NV, was in the process of preparing their technical and commercial proposal in regard to the rehabilitation and development of the Nimba and Western area deposits and their related infrastructures, pointing out that the proposal would have been submitted to the Liberian Government by the end of September 2004.
The communication informed Mr. Blaney to note that LNM Holdings NV project would not only boosts the Liberian economy “but also help to ensure the full operation of its Chicago area facilities by providing access to Liberian iron ore and helping them address light raw material markets.
Dr. Schorsch in the letter to the US diplomat said that according to widely used rules of thumb, this will help safeguard in excess of 30.000 jobs in the Chicago area through direct and indirect employment.
The letter further sought the Ambassador’s support in facilitating their discussions with the Liberian Government in order to ensure that the interests of the American steel industry in this matter were reflected through a fair and transparent evaluation and negotiation process once their proposal is submitted.
Consequently, Concord Times investigation discovered that upon receipt of Dr. Schorsch’s letter, Ambassador Blaney on 1 November 2004 addressed a letter to Chairman Bryant seeking the Chairman’s assistance in improving the transparency of reports that foreign investors’ proposals do not get fair consideration; and that there are no clear rules which potential investors must know and that the process of awarding concessions is somehow questionable. He requested Chairman Bryant’s intervention.
Our investigation further found out that on receipt of Ambassador Blaney’s letter, Chairman Bryant, on 14 January 2005, wrote to then Lands and Mines Minister Jonathan Mason directing that the mining industry be opened to bids, which according to our probe, was a deviation from the Minerals and Mining Law extant.
The winner of the proposal, GIHL, vehemently protested Chairman Bryant’s attempt to overturn their proposal and wrote a letter to the Interim National Legislature complaining the Liberian leader and seeking its intervention.
GIHL told the lawmakers that it had met the requirement of controlling law but that Chairman Bryant was tailoring a plan allegedly hashed by Ambassador Blaney to have LNM Group which failed in its bid, awarded the contract.
Additionally, GIHL informed the Legislature that it was encouraged to finance the employment of some two hundred fifty men and women, including ex-combatants to preserve what was left of the former LAMCO assets as well as undertaking a complete survey of the railroad.
UK based Global Witness had criticized the $900 Million takeover by Mittal. It said in a report that Mittal took the contract in a controversial faction.
Global Witness said the deal heavily weighted against the interests of war-torn and impoverished Liberia and it should be substantially re-negotiated, according to an in-depth analysis of the contract published in a report, ‘Heavy Mittal?’, released by Global Witness in mid-2000.
The report dissects the mineral development agreement (MDA) signed on 17 August 2005, five months before democratic elections in Liberia, which gives Mittal the right to extract iron ore from Liberia. “The agreement is heavily weighted against the Liberian government, ceding important sovereign and economic rights to Mittal – almost creating a state within a state, said Patrick Alley, Director, Global Witness.
‘Heavy Mittal?’ reveals that while Mittal’s investment in Liberia could bring much-needed jobs and a major economic boost, the combination of both the “Mittal-friendly” and loose wording in the contract means that:
• Mittal Steel has control over the amount of royalties paid to the government because the MDA does not specify the mechanism to set the price of ore and leaves open the basis for intra-company pricing, creating a strong incentive for Mittal to sell the ore below the market value to an affiliate, which would reduce the actual royalties paid to the GOL.
• Mittal Steel enjoys a five-year extendable tax holiday in Liberia and, once this is over, has created an international tax regime that encourages repatriation of profits to low tax regimes in Cyprus and Switzerland, thereby potentially denying Liberia significant tax revenues.
• The company structure created by Mittal protects the parent company from guaranteeing or bearing the risk of the activities and liabilities of its subsidiary.
• Two major public assets of Liberia, a railway and the port of Buchanan, are transferred to Mittal Steel and the GOL will only be allowed to use these facilities if there is spare capacity.
• The stabilization clause freezes the laws in the concession area, and has the potential to undermine Liberia’s right to regulate in important public policy areas such as human rights, the environment and taxation and could severely limit Liberia’s ability to fulfill its current and future obligations under the Liberian Constitution as well as its commitments under international law.
• The Concessionaire has far-reaching authority to possess public and private land without providing adequate compensation or the means to seek effective redress.
• The provisions for the maintenance of a security force by the Concessionaire fail to adequately establish the limits of its authority, which could be particularly harmful in Liberia, in view of the historic involvement of private security forces in human rights abuses.
“This MDA places the hard-won rights of Liberian citizens at risk, with no real guarantees of the economic benefits it can expect in return” says Patrick Alley, Director, Global Witness. “Mittal has a duty as the world’s biggest steel company and a self-professed good corporate citizen to lead by example rather than utilize virtually every opportunity to maximize its profit at the expense of Liberia,” added Patrick Alley.
The contract was renegotiated, following President Sirleaf’s pledge to review all contracts signed by her predecessors in Liberia’s National Transitional Government (NTGL).
Global Witness’ ‘Heavy Mittal’ is also a case study of a well-established pattern of behavior by transnational corporations around the world, to maximize profit by taking advantage of a regulatory void that allows capital flight, aggressive tax avoidance and tax reduction strategies.
The management of Arcelormittal Liberia through its communication manager, Amanda Hill, in response to Concord Times’ email requesting the multination company’s response to its investigation said: “ArcelorMittal Liberia has a valid concession ratified by the Government of Liberia, legally granted. It was last amended and renewed in January 2013.”
In 2013, Mittal was entangled in allegation of bribery, when it donated 100 pickup trucks to members of the Liberian Legislature who were reviewing the Mittal concession.
The Ellen Johnson Sirleaf Government and Mittal found it hard to explain the real motives of the donation at time the concession agreement was under scrutiny by the national legislature. Follow Concordtimes.net for more.