The Rot at the Central Bank Of Liberia

By Seltue Karwaye

Corruption has long plagued Liberia’s economy, stunting its development and perpetuating widespread poverty. Unfortunately, Liberians are all too familiar with stories of brazen corruption by the ruling elite. However, the recent audit report on the Central Bank of Liberia (CBL) covering fiscal periods 2018-2023 has brought corruption to a new level. The report from the General Auditing Commission (GAC) on the CBL has cast a dark shadow on the nation’s financial integrity and health. The GAC report emphasizes the urgent need for systemic reform to stamp out corruption within vital institutions like the CBL.

For those unaware, the Central Bank of Liberia (CBL)  is the custodian of the country’s financial health. Its integrity should be beyond reproach. The fact that people engaged in improper activities within the CBL is truly distressing. It’s no wonder that Aloysius Tarlue’s CBL could not effectively manage an assignment as simple as not exceeding approved expenditure limits.

According to the  GAC audit report, the CBL  extended unauthorized loans totaling USD 381.44 million to the Government of Liberia (GOL). It failed to provide evidence of US$19.3 million in excess spending. Additionally, the CBL acquired land valued at USD 737,460.52, but the GAC could not confirm its existence. Furthermore, many assets, including 28 vehicles valued at USD 1,743,967.33 and 57 laptops valued at USD 106,902.84, were not accounted for during the audit.

The  GAC audit report also revealed questionable financial transactions, including substantial payments to external legal consultants despite the presence of an in-house legal department and retaining three law firms. Furthermore, the CBL failed to remit USD 1.61 million in withholding taxes to the Liberia Revenue Authority (LRA). It’s important to note that the report also identified irregularities in the CBL lending to the government, indicating over $80 million in apparently unauthorized financing for salary payments. 

On July 30, 2024, President Boakai suspended the Executive Governor of the CBL,  J. Aloysius  Governor Tarlue based on an Auditor General’s report on the GAC’s compliance audit of the CBL  In response, Executive Governor Tarlue and his legal team petitioned the Justice in Chambers, Yussif D. Kaba, to issue a writ of prohibition against President Boakai’s decision to suspend him. They argued that Tarlue, having a definite 5-year term, could not be dismissed by the President of Liberia, except through impeachment by the National Legislature as provided for in Section 13.1 of the Amended and Restated Act establishing the Central Bank of Liberia in 1999.

On July 31, 2024, Nyemadi Pearson, the Deputy Governor for Operations of the Central Bank of Liberia, resigned. She addressed her resignation letter to President Boakai: “I am writing to formally resign from my position as Deputy Governor of Operations of the Central Bank of Liberia. This decision follows discussions with your advisors and mutual agreements regarding the payment of my benefits, which include pension, severance, and compensation for my unexpired tenure.”

Liberia has long been a breeding ground for widespread corruption, exacting a heavy toll on its development. Rampant corruption in Liberia has wrought severe repercussions on the economy, with misappropriation of funds, fraudulent transactions, and manipulation of financial systems exacerbating the country’s economic adversities. The mismanagement of resources, highlighted in the audit report against the CBL, is a glaring betrayal of the Liberian people and a significant impediment to the country’s development.

The irregularities in the Central Bank of Liberia’s lending to the Government of Liberia, including more than US$ 381 million in seemingly unauthorized financing, bring to the forefront the potential misuse of funds for personal or political gain. The wide-ranging allegations of financial misconduct against Tarlue and his deputies underscore a systemic issue within the leadership of the CBL. Also, the purchase of land valued at US$737,460.52 by the CBL, but the CBL couldn’t show where the land is located, served as a stark reminder of the Doe and Taylor eras. Additionally, the procurement of 28 vehicles and 57 laptops valued at US$1.8 million that were unaccounted for in the audit report raises alarming questions about the oversight and accountability within the CBL.

Amidst Liberia’s daunting infrastructure challenges, this huge amount could have catalyzed transformative development. The country grapples with a severe housing shortage, with the National Housing Authority estimating a need for 500,000 homes by 2030. In 2020, the World Bank reported that 64% of the country’s urban population lived without adequate housing or essential services for dignified living.

Imagine the transformation the economy of Liberia could have seen if the US$381.44 million loans Tarlue and his colleagues gave to the GOL were invested in the country’s development.

 Firstly, it could have addressed Liberia’s housing deficit of 500,000, paving the way for affordable and quality housing units, and providing homes for countless needy families. This infusion of funds would mitigate the housing crisis and ignite economic growth and job creation.

Secondly, Liberia has a 13,020 km road network, with only 734 km paved, and needs significant improvements. According to the 2019 Nationwide Road Condition Survey, Liberia’s roads are characterized by potholes, cracks, depressions, and failed road shoulders. The country has 12,476.6 km of bad roads that could be repaired with USD 381.44 million. With the allocation of USD 381.44 million for road rehabilitation, a considerable portion of the 12,476.6 km of bad roads could be rehabilitated, enhancing connectivity, reducing travel time, and fostering safer journeys for citizens.

Liberia’s healthcare infrastructure, particularly maternal centers, demands urgent attention. The country’s maternal mortality ratio (MMR) is alarming, with a recent Demographic and Health Survey reporting an MMR of 742 per 100,000 live births, one of the highest rates in the world. UNICEF has also identified Liberia as having one of the highest rates of death for newborns, with an under-five mortality rate of 76 in 1,000 births. The lifetime risk of a Liberian woman dying during pregnancy, childbirth, postpartum, or post-abortion is 1 in 10, a staggering contrast to the 1 in 5300 estimate in developed countries.

An expenditure of US$1.8 million on 28 vehicles and 57 laptops, rather than improving maternal centers, could have substantially increased the number of well-equipped maternal centers. These centers are essential for providing medical services to women and infants during childbirth and other life-threatening illnesses. Additionally, investing in other critical areas of healthcare, such as building modern rural hospitals or clinics and improving medical facilities, would significantly enhance the overall health sector. The funds must be utilized effectively to address these pressing healthcare needs.

The recently released GAC audit report on the CBL paints a stark picture, highlighting the urgent need for sweeping anti-corruption reforms within the CBL and other critical institutions. We must prioritize transparency, accountability, and ethical standards to rebuild the confidence and trust of our citizens in the nation’s financial systems.

There is a pressing demand to bolster oversight mechanisms at the CBL. The government must swiftly implement robust oversight measures to prevent unauthorized transactions and ensure accountability at every level of our financial institutions.

Enhancing whistleblower protection is crucial to encouraging CBL staff and other public institutions to report corruption within the system. We must establish a formidable whistleblower protection program that empowers individuals to report corrupt practices without fear of reprisals.

The government should introduce measures that promote transparency in financial transactions, including the public disclosure of major financial decisions and transactions, as well as independent audits and investigations. Independent and regular audits of financial institutions are essential to identify irregularities and initiate investigations into alleged corruption. Also, reviewing and strengthening existing legal frameworks to ensure the expeditious prosecution of corruption cases and that perpetrators face significant consequences is more critical than ever.

The GAC audit report on the CBL emphasizes the need for a comprehensive overhaul of Liberia’s financial governance structures. Addressing corruption within the CBL and similar institutions is vital for economic recovery and for rebuilding the Liberian people’s trust. The government must take decisive action to implement meaningful reforms that will usher in a new era of transparency, accountability, and responsible financial management. Most importantly, every penny allegedly siphoned through the CBL that belongs to Liberia must be recovered and judiciously deployed for the country’s development. I rest my pen!