“The roots of the New Liberty Gold project stretch back before 1995, when a resource extraction license was issued by former warlord turned president Charles Taylor to a mysterious company called KAFCO. The permit changed hands a few times and, today, Avesoro holds its permit via a wholly-owned subsidiary, Bea Mountain Mining Corp – a company created in 1996 by Keikurah B. Kpoto, one of Taylor’s closest associates. In 1998, foreign interests bought Bea Mountain Mining. The beneficiaries of the sale were well hidden. According to a document IRIN procured, three quarters of its capital belonged to a company incorporated in the British Virgin Islands. The rest was held by owners of bearer shares.” – IRIN investigative report, March 21, 2017
This investigative report on the largest gold mine in Liberia begins with the mining company’s failure to reimburse displaced Liberians, and the World Bank’s failure to hold them to account. But the lack of accountability extends to basic questions about the ownership of the company and the use of tax havens. As such, it is one striking illustration of what seem to be pervasive characteristics of projects financed by the IFC, the World Bank’s arm for working with private sector companies.
This AfricaFocus Bulletin contains two short articles by journalists who have been investigating the project, and a short press release from Oxfam on a study of IFC projects last year.
For previous AfricaFocus Bulletins on Liberia, visit http://www.africafocus.org/country/liberia.php
For previous AfricaFocus Bulletins on economic development issues, visit http://www.africafocus.org/econexp.php
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How a gold mine has brought only misery in Liberia
Emmanuel Freudenthal and Alloycious David
Kinjor, Liberia, 21 March 2017
(This investigative report is being jointly published by 100Reporters, IRIN and Le Monde Afrique. 100Reporters is an awardwinning investigative news organisation based in Washington, DC. Its objective is to reveal untold stories on corruption, transparency and accountability. IRIN delivers unique, authoritative and independent reporting from the front lines of crises to inspire and produce a more effective humanitarian response. Le Monde Afrique is a pan-African francophone media for news, reporting, analysis and debates.)
[Article in French available at http://tinyurl.com/m72pjnd%5D
The maths was merciless. Siah (name changed) had the equivalent of $5 in her pocket but needed $15 to treat her youngest son Joseph’s malaria. She had travelled an hour to the nearest clinic only to discover she couldn’t afford the medicine. Joseph died that day, as she cradled him in her arms.
Siah lives in Kinjor, a small town in the lush forests of western Liberia. Just a few steps from her home, Liberia’s largest commercial gold mine, New Liberty Gold, plans to dig out a billion dollars-worth of the precious metal.
The Liberian government and its multilateral funding partners see commercial mining as a path to development in a country still recovering from the impact of 11 years of civil war.
Under the law, communities are obliged to give up their land rights and move, in return for compensation. But IRIN’s months-long investigation can reveal that financial reward isn’t always forthcoming from the foreign mining operations.
To make way for New Liberty Gold, 325 families in two villages, Kinjor and Larjor, had to abandon their homes, farms, and artisanal mines that had provided some income. In return for their move to a new village, also named Kinjor, and carved out of the forest near the mine, the company promised to make life better: new houses, a school, hand pumps – and what could have made all the difference to Joseph – a clinic.
Construction began on the mine in 2014, and the first gold sales came a year later. Even though the company describes the operation as a “key asset”, the promised better amenities are yet to materialise years later, and there has already been one major chemical spill that has polluted the environment.
New Liberty Gold has the backing of the World Bank’s International Finance Corporation, which since 2014 invested $19 million and became a key shareholder. That support was predicated on a 155-page Resettlement Action Plan by the company, which listed its planned $3.9 million investments in the new Kinjor.
During the IFC board meeting that approved the mining project, the US delegate formally raised “serious concerns” regarding “the environmental and social risks posed”. The US urged the IFC “to work with the company to ensure that all appropriate funds are set aside for this [resettlement] plan”.
A history of displacement
Projects funded by the World Bank have displaced more than three million people between 2004 and 2013 in 124 countries, according to data published by the International Consortium of Investigative Journalists (https://www.icij.org/project/world-bank). Those shortcomings were acknowledged by Bank president Jim Yong Kim in 2015, after an internal review found “major problems” that caused him “deep concern”.
But the Bank and the IFC do not appear to have held New Liberty Gold accountable for failing to meet its basic obligations, despite a commitment made by the IFC on its website to help the company “implement best practice standards” in Kinjor.
“I’m really disappointed to say that [this case] is one amongst many,” said Jessica Evans, a senior researcher at Human Rights Watch. “We’ve seen time after time serious failings by the World Bank and the IFC when it comes to resettlement.”
That is little comfort for Siah. Outside a neighbour’s house in Kinjor, she fought back the tears to speak about her son’s death. Her voice rose in anger when she listed the failings of New Liberty Gold: “no hospital here, no safe drinking water”.
“There are toilets right next to the water pump. It makes us sick,” she added. “We are suffering.”
The owner of the mine, Avesoro Resources Inc. (previously called Aureus Mining), has built a school and installed some water pumps. But the rest of the action plan, the compensation due for uprooting people against their will, remains little more than a wish list.
Controversy at mining projects like New Liberty Gold is not new in Liberia. For nearly 100 years, natural resource extraction – from rubber to minerals – has been steeped in violence and corruption. Opaque investments carry a tremendous risk in the context of such a fragile state as Liberia.
In one of Kinjor’s narrow alleys flanked by mud huts, Yarpawolo Gblan, an old man in a faded black polo shirt, stepped forward: “Are you a journalist? Come and see my house!”
We sat on a bench, our backs to the wooden wall of a hut scrawled with the phone numbers of Gblan’s children. Three years ago, Avesoro had forced him to move from what had been his home for a decade, into “temporary” accommodation, to make way for the mining project.
The huts the company provided have just two small rooms: not nearly big enough to house Gblan’s family of eight. He extended the original structure as best he could, using his own resources.
The huts were meant to be a stopgap measure, until the displaced families could move into 325 “improved houses” promised by the company. The unfinished shells of those houses stand in ordered rows, just a few hundred metres away.
But construction stopped longer than a year ago. Weeds now grow between the brick walls, and slimy bright-green algae thrive in puddles fed by rain falling through where roofs should be.
The company man
Half a day’s drive from Kinjor, in a wealthy suburb of Liberia’s capital, Monrovia, a striking white-walled villa serves as the headquarters of New Liberty Gold.
Debar Allen is the company’s general manager, a physically imposing man who fills his generously appointed office. From behind a large wooden desk, he explained in a calm baritone that people like Gblan, who were supposed to have been resettled, “do not want to move from where they are”.
He offered two reasons for the construction delay: the need “to get going with the mining project because we were running out of funds”, and the desire of those being resettled to build their own permanent houses where they are now. “Rather than bringing contractors from Monrovia, we have to team up with them,” he said.
The World Bank, via email, offered a different explanation. With “the Ebola outbreak, the company faced significant construction delays. As a consequence, the project experienced some significant challenges that impacted its financial/cash flow position.”
The result was that “the full implementation of several aspects of the project had to be postponed, and some of the permanent houses have not yet been completed.”
But in February 2015, the IFC provided a $5.3 million cash injection for New Liberty Gold to help the company “cope with additional costs” as a result of the Ebola outbreak, and to “support the company’s ongoing work in Liberia”.
In reality, the company should have finished the resettlement houses several months before Ebola hit Liberia. Moreover, the outbreak was brought under control more than 18 months ago, yet the new housing construction will not be completed any time soon.
Allen explained: “We signed with the [local] leaders a memorandum of understanding that postpones the completion to the end of next year”. That means December 2017.
Community representatives told IRIN that the company had asked them to sign numerous times, accepting the new deadline, and that they eventually gave in. They had reasoned that whether they signed or not, the houses would not be built any faster.
The World Bank did not reply to IRIN’s requests for more details on the resettlement timeline and the mine’s failure to make good on its promises to the community.
Dead fish and rashes
In March 2016, an accident at New Liberty Gold mine released cyanide and arsenic, byproducts of the mining process, into a nearby river that serves villages downstream. In Jikando, where people use its water to fish, bath and wash clothes, they began to see dead fish floating. Soon, they started developing skin rashes themselves.
A slim teenager lifted his t-shirt to show a rash he has had since shortly after the spill. He told IRIN it still itched but said: “it doesn’t worry me all the time”. Several mothers confirmed their children were still afflicted by similar rashes. No medical tests have been conducted on villagers who’ve reported similar effects.
Avesoro’s Allen said the company found out about the leak in April, after a phone call from the local chief in Jikando. He noted that the company now regularly delivers frozen fish to replace the poisoned ones, as the community’s “source of protein was from the creek”.
On 14 April, shortly after the leak, the Liberian Environmental Protection Agency fined the company. On 10 May, Avesoro publicly disclosed the spill to shareholders, stating that its “investigations to date indicate no adverse impact on any human settlement”.
It’s difficult to pin responsibility for the mine’s failures on any individual because it’s hard to identify the successive true owners of New Liberty Gold. Aureus is part of a long list of shell companies named in the Panama Papers leak, many of them registered in opaque jurisdictions.
The latest twist in the ownership trail came at the end of 2016 when MNG Gold, headquartered in Turkey, took over Aureus and changed its name to Avesoro Resources Inc.
Investing in companies with complex ownership is not unusual for the IFC. A recent report by Oxfam found that 84 percent of the IFC’s investments in sub-Saharan Africa in 2015 used “secrecy” jurisdictions.
But the roots of the New Liberty Gold project stretch back before 1995, when a resource extraction license was issued by former warlord turned president Charles Taylor to a mysterious company called KAFCO.
The permit changed hands a few times and, today, Avesoro holds its permit via a wholly-owned subsidiary, Bea Mountain Mining Corp – a company created in 1996 by Keikurah B. Kpoto, one of Taylor’s closest associates.
The exploitation of Liberia’s gold and diamonds allowed Taylor, convicted of war crimes and crimes against humanity by the International Criminal Court in 2012 and now serving a 50-year prison sentence in the UK, to fund his war effort.
In 1998, foreign interests bought Bea Mountain Mining. The beneficiaries of the sale were well hidden. According to a document IRIN procured, three quarters of its capital belonged to a company incorporated in the British Virgin Islands. The rest was held by owners of bearer shares.
Bearer shares are the vehicles of choice for the corrupt because they are owned by whoever holds the paper certificates, just like cash. There is no trace of their owner in company records and they can easily become covert payments for pretty much anything.
The World Bank nevertheless wrote that it had undertaken due diligence on New Liberty Gold, an investigation that included “desktop reviews, several meetings with Aureus management and a site visit”.
Over the past decade, the IFC has spent more than $200 million on projects like New Liberty Gold. It has a seemingly unshakable faith that commercial mining can deliver development that will trickle down to communities like Kinjor.
As for Siah: Her last-born is now buried. If she once believed the promises of New Liberty Gold, that is certainly no longer the case. “The company is doing nothing for us,” she told IRIN. “If the company had built a hospital here, [his death] would not have happened.”
Aureus Mining: A Promise Betrayed; World Bank Funded Project Dashed Hopes
Monrovia – Liberia’s first industrial gold mine failed to hold its promises, dashing the hopes of local residents of Cape Mount County.
Report by Alloycious David and Emmanuel Freudenthal
FrontPage Africa, March 20, 2017
[Emmanuel Freudenthal is a freelance reporter investigating businesses in Africa, while Alloycious David is an award winning Liberian investigative journalist]
Contrary to President Ellen Johnson-Sirleaf’s assurance that the New Liberty Gold Mine will positively impact the lives of Liberians, the 325 families displaced by the mine have not yet moved into the houses they had been promised.
The World Bank injected over US$ 19 million into the project with the aim of bettering the lives of Liberians.
The houses should have been finished three years ago and now lie in ruins, overtaken by grass. In the resettled town, called Kinjor, residents still live in the inadequate structures that were meant to host them temporarily.
There is no sign that their construction works will resume soon.
The company in charge of the project, Aureus Mining, now renamed Avesoro, has also failed to construct a health post in Kinjor, as required in an agreement between local residents and the company, known as the ‘Resettlement Action Plan’.
Residents claimed that the absence of a health center is contributing to untimely deaths.
Residents also complained that they did not receive adequate compensation for the crops they lost when their farms were destroyed to make way for the mine.
Gbaley Dorley, 32, alleged that his farm was completely destroyed by the company. In exchange, he got less than a hundred United States dollars in compensation for the cassava, coconut, and pineapple he cultivated.
Another problem being experienced in Kinjor is safe drinking water.
Residents said the community, has less than five functional hand pumps and that many of them do not work during the dry season.
The company’s operations, according to some residents poses health hazard. Kulah Dassin, a 36-year-old mother of eight explained that in March 2015, the company polluted their river with cyanide, which killed all the fish.
The children, who usually bath and wash in the river, suffered from rashes, which look like ringworm, she said.
Dassin disclosed that the application of traditional medicine has helped to cure the rash, but that it is still visible on children.
The Town Chief of Jikandoh, called Pa Jimmy, corroborated that hundreds of fish died, and related “I immediately placed a call to the company’s management when we noticed that the fish were dying.”
Pa Jimmy explained that Debar Allen, the company’s manager, and a team came quickly to collect water samples in the river and took some of the dead fish back to their office.
Debar Allen, admitted that the company accidentally dumped cyanide in the river but said the company has taken action to advert the situation.
The company’s General Manager instructed them to stop using the water.
In restitution for the pollution of their river, Aureus Mining constructed two hand pumps to provide community members with safe drinking water.
The company is compensating residents by providing them with cartons of fish.
Although, the company or the Liberia Ministry of Health has not provided official statement on the safety of the river, and no one was examined by a doctor, community members have resumed bathing and washing their clothes in the river.
The Liberia Environmental Protection Agency attempted to investigate the leak, but said that the company obstructed its investigation, which led to a US$ 10,000 fine for the company.
Allen further stated that construction work on the houses were halted to focus more on the mining, because the company was running out of funding, but contradicted himself and said individuals resettled in new Kinjor were satisfied with where they staying and that the company was thinking about what to do with the units when they are completed.
The company’s ownership remains sealed in secrecy, Aureus Mining is part of several shell companies registered in secrecy jurisdictions and named in the Panama Papers.
The NEWS also unearthed that it has links to former President Charles Taylor, who is currently serving a 50 year jail sentence for war crimes committed in neighboring Sierra Leone.
Taylor’s former associate, the late Senator Keikurah B. Kpoto created the Liberian subsidiary of Aureus Mining, the Bea Mountain Mining Corp. This company was given a mining license under Taylor’s government.
The World Bank and Aureus Mining failed to provide information on inquire whether Taylor’s associates or some of his ex-officials still hold shares in New Liberty Gold Mine and whether they are aware that the project had link with Taylor.
Aureus Mining has not only failed to meet the aims for which the World Bank infused over US$ 19 million into New Liberty Gold Mine, but has created more sufferings, inflict pains and enriched shareholders at the detriment of Liberia.
Via email, the bank disclosed that it conducted desktop review of the project and held several meeting with Aureus Mining, but refused to provide further information, because it entered a confidentiality agreement with the company that prevents it from providing more information on the project.
84% of World Bank’s private investments in Sub-Saharan Africa go to companies using tax havens
11th Apr 2016
Fifty-one of the 68 companies that were lent money by the World Bank’s private lending arm in 2015 to finance investments in subSaharan Africa use tax havens, Oxfam revealed today.
Oxfam’s new analysis focused on International Finance Corporation’s (IFC) investments in Sub-Saharan Africa. It shows that together these 51 companies, whose use of tax havens has no apparent link with their core business, received 84 percent of IFC investments in that region in 2015. It also reveals that the IFC has more than doubled its investments in companies that use tax havens in just five years – from $1.2billion in 2010 to $2.87billion in 2015.
The findings come ahead of the annual IMF-World Bank Spring meetings starting on Wednesday in Washington DC, and in the wake of the Panama Papers scandal which revealed how powerful individuals and companies are using tax havens to hide wealth and dodge taxes. The issue of tax havens is also expected to be high on the agenda at the UK government’s Anti-Corruption Summit in London next month.
In Oxfam’s study, the most popular haven for IFC’s corporate clients was Mauritius; 40 percent of IFC’s clients investing in Sub-Saharan Africa have links there. Mauritius is known to facilitate “roundtripping.” This is where a company shifts money offshore before returning it disguised as foreign direct investment, which attracts tax breaks and other financial incentives.
Sub-Saharan Africa is the poorest region in the world. It desperately needs corporate tax revenues to invest in public services and infrastructure. For example, the region lacks money to provide enough skilled birth attendants, clean water or mosquito nets, resulting in high rates of child mortality; one child in 12 dies before their fifth birthday.
Oxfam’s Head of Inequality, Nick Bryer, said: “It’s crazy to be giving with one hand and taking away with another – the UK government donates to the World Bank to encourage development, but by allowing investments in tax havens the World Bank’s lending arm is ultimately depriving poor countries of much-needed revenues to fight poverty and inequality.”
“The World Bank Group should not risk funding companies that are dodging taxes in Sub-Saharan Africa and across the globe. It needs to put safeguards in place to ensure that its clients can prove they are paying their fair share of tax.”
The IFC invested more than $86billion of public money in developing countries between 2010 and 2015; 18.6 percent of it spent in SubSaharan Africa. The IFC has a significant focus on financial markets, infrastructure, agribusiness and forestry, among other sectors.
While the IFC arguably leads the private sector with its disclosure, environmental and social standards, the public still has no access to information about where over half of the institution’s financing ends up, because it is done through opaque financial intermediaries. It also continues to face major challenges in measuring its overall development impact, and ensuring that the projects it funds do not harm local communities. This latest Oxfam research shows that the organisation also has a long way to go in ensuring that its clients are responsible tax payers.
Oxfam is calling for the IFC to develop new standards to ensure it only invests in companies that have responsible corporate tax practices. For example, companies should be transparent about their economic activities so it is clear if they are paying their fair share of tax where they do business.
The international agency is also calling on David Cameron to show strong leadership in tackling tax havens, beginning by intervening to ensure that the UK’s Overseas Territories and Crown Dependencies publish public registers revealing the true owners of companies based there, ahead of the Anti-Corruption Summit in May.
Oxfam is urging the World Bank and IMF to work with governments around the world to further reform the international tax system and help prevent tax dodging by wealthy individuals and companies, including action to end the era of tax havens. Tax dodging using tax havens is estimated to cost poor countries $100billion in lost revenues every year.