Washington D.C -With help from his lawyers, the head of Liberia’s Maritime Authority Dr. James Kollie responds to the PSDI Loan Scandal. The former Deputy Minister at the Ministry of Finance and Development Planning is trying frantically to clear his name in what seems to be the scandal of the Century. A Loan Scheme meant for struggling Liberian businesses found itself being divided among close aids of the then Deputy Minister according to a draft Audit released to the media and first fully published by LibPolitics. The findings of the audit was first brought to the public glare by the President of Liberia who then requested the minister to return to the country and help with a full investigation. From the unset of the report, Kollie has faced a backlash both in the local Press and on Social media. LibPolitics brings you his 83-Page response here :Common People (1)
You can also read the full audit here:
DR. JAMES KOLLIE’S RESPONSE: A breakdown Below
AUDIT OR WITCH-HUNT?
Some observations that made the audit be a witch-hunt and not a true audit:
- The auditor conducted an audit on a program in which James KolIie was named multiple times without contacting him during the entire audit process. The first contact the auditors made with him was on Friday, June 2, a day after the draft report was issued. However, in the report, the auditors mentioned that they spoke with key stakeholders as they deemed necessary. Was James Kollie not a key stakeholder or didn’t they deem it necessary to talk to him?
- The report uses language and recommends actions that are outside the respected profession of auditing. Auditors would usually be interested in matters relating to accountability and provision of evidence but to recommend restitution and investigation leaves many to wonder whether this was truly an audit or something else. In many reports that we have seen, auditors, especially internal auditors would be looking to identify areas of weaknesses in internal control or identify areas of risk and how to mitigate them. Or still in other cases, the auditors would delve into matters relating to request for sufficient or material evidence to support those transactions but to engage in recommending certain actions is outside the scope of audit.
- Nowhere in the leaked draft report did we see anything relating to LBDI, the bank that was hired to implement the program.
- The claims that the auditors made that the former Deputy Minister approved loans doesn’t seem not to be supported by the MOU that guided the relationship between LBDI and the Ministry of Finance & Development Planning. The MOU has various counts that spell out the role of the MFDP and the role of LBDI.
- The claim on conflict of interest regarding folks who worked at the MFDP but took loan is not well established since:
- Those folks had no control over the loan approval process
- LBDI did review all the proposals using the same method and arrived at a lending decision on those businesses
- CBL prudential regulation on related party lending doesn’t not prohibit same because there several institutions including the CBL that lends to employees
- Even other commercial banks do lending to their own employees once the terms and conditions are the same (arm’s length)
- In consideration of the role that LBDI played, the bank was paid 5% of the amount they loan out.
- Did the auditors really understand the program they were auditing or did they care to understand it?
- Did the auditors talk to LBDI to understand the loan from the bank’s perspective?
- Several loan documents in our possession show that the loan was actually processed by LBDI with the necessary due diligence that govern conventional lending. We see that the regular credit reference check that banks usually undertake with the Central Bank of Liberia (CBL) was done.
- We also see that each beneficiary had an account opened with LBDI where the loan amount was deposited. Did the auditors ask to see those statements to determine the kind of activities on those accounts?
- Some of the loan documents also show that LBDI paid directly to vendors for equipment that the businesses were purchasing. Did the auditors review such situation before claiming that those businesses do not exist?
- A further review of document in our possession show that the bank had a section in the loan agreement whereby the sales proceeds and assets of the business were used as collateral. Besides, there are other legal means of recovery of borrowed assets.
- When the auditors recommend that the former Deputy Minister should be investigated because loans are not performing, did they really read the MOU or talked to the bank? Was it their understanding that the former Deputy Minister was responsible for the collection of the loan? In that case then what would be the role of LBDI?
- Another damaging claim that the auditors make is that the former Deputy Minister took double pay in the months of July, August, and September but shows no evidence except by mentioning that he got paid by the project. The document available shows that the former Deputy Minister was not on the Government payroll for the months mentioned because he had requested that he be removed from payroll when he resigned in May 2014. So even though he was appointed in July 2014 awaiting confirmation by the Liberian Senate, that confirmation took place around October 2, 2014 and that was when he returned to the payroll.
- Regarding the US$1.6 million, the bank statements in our possession shows that the money was withdrawn from the project account and deposited into the Consolidated Account. This action is consistent with the Treasury Single Account regime of the Government whereby idle funds are moved into the Consolidated Account to fund the general operations of the government. So there is no way that a special expenditure report can be made for a fund because it is part of general pool of funds that the Government uses. The report on the fund is part of the Consolidated Fund Statement that is usually audited by the GAC.
- Because these are loans and not grants, they can and should be fully recovered.
- There are more than 46 businesses across the country (as far as Sinoe) benefited from this facility. It is not true that this was a scheme intended to give employees of the Ministry loan. The auditor counted about 4 out of the 46 businesses as having ties to employees of the MFDP.