Diamond Revenue: Sierra Leone Gets Less; Can Liberia Get More Diamond Revenue After The 2017 Elections?

 

By J. Yanqui Zaza


The Perspective
Atlanta, Georgia
April 12, 2017

                  



Diamond found by Rev. Emmanuel Momo

Liberians, once again, are hoping that a change in leadership after 2017 their country will address Liberia’s issues: generate adequate revenue, finance electricity to entice good-paying-job investors, finance social programs, fight corruption, etc. Yet, the candidates are focusing on the issue of personality or ethnicity rather than the issue of adequate revenue, for example. Why does Liberia, with significant deposits of natural resources such as diamonds, continue to rely on excise taxes (i.e., money taken away from the pockets of citizens) to finance its budgetary documents?

Well, is it not too late for experts and politicians to research for reasons as to why Liberia continues to receive inadequate diamond revenue or search for an alternative economic policy that can put more diamond money into government coffers? In fact, the $50 million diamond revenue story of Sierra Leone could be a beginning. This is because the NY Times issue dated 3/26/2017 ran an article called “Miners Found a 706-Carat Diamond in Sierra Leone. Who Should Get the Profit” that also describes the diamond operation in Liberia. Public records indicate that Sierra Leone and Liberia, both neighboring countries, have diamonds, but do not receive a fair share of the diamond revenue.

In that same NY times article, Mr. James Yaya Bary explained how the current Sierra Leonean economic arrangement has created a favorable environment for private investors (i.e., predominantly, Lebanese, Guineans, Gambians or Malians) to accumulate huge revenue of the diamond industry at the expense of the government and miners. The Sierra Leonean-government does license miners such as Rev. Emmanuel Momo who discovered the $50 million 706-Carat diamond.

The miners, on the one hand, are not only poor and desperate for money, but also have limited knowledge of the diamond industry. On the other hand, dealers, who have gained vast experience in the diamond industry within Africa and else where, know the inner workings of the Sierra Leonean government. So, the dealers deliberately, but deceptively, encourage the miners to spirit the diamond out of the country, which has porous borders. By spiriting the diamonds out of the country, dealers are not only escaping government offices in order to pay minimal taxes, but are also avoiding independent diamond appraisers; thereby, allowing the dealers to pay very little money to the miners since the dealers’ estimated value of the diamonds (i.e., usually lower estimated value of the diamonds), is at most times used to determine the miners’ share of the diamond revenue.

So, is the spiriting of the diamonds out side of the country part of the reason why Sierra Leone gets 3% to 10% of the diamond revenue? Of course, the answer is yes. Botswana’s diamond revenue provides about 50% of the country’s national budget primarily because Botswana government and private investors, collectively, dictate the diamond policy and share the revenue reasonably. In Sierra Leone, however, private capitalists dictate the operational method, the kind of expenses, the profit margin, and tax avoidance and tax evasion strategies.

Remember, diamond dealers, like other privateers, usually do whatever it takes to make money, according to Miya Tokumitsu. In the NY Times article called “Why Social Justice and Capitalism Don’t Mix,” Tokumitsu stated a profiteer who does not exploit workers, wants to honor moral values, obeys government regulations and, or is not ruthless with his/her competitors, is deluding himself/herself. Alternatively, when a government partners with diamond investors, such an economic arrangement allows the government to build a diamond cutting factory, thereby, not only adding value to diamonds and increasing government revenue, but also providing more good-paying jobs. That is the economic system Botswana has instituted.

So, let us change the debate from the issue of personality (Native or Congo) to the issue of putting more diamond revenue into the Liberian government coffers. This is important because Liberia’s primary source of revenue (i.e., excise taxes) would not be adequate to finance infrastructure, social programs, etc. More so, Liberians are now rejecting any new taxes as evidenced by the recent public demonstrations organized by Liberian entrepreneurs to denounce new taxes. Furthermore, now that Liberia is stable, our International Partners’ assistance, excluding external debts, would not be around $500 million. The “Citizens Guide To The Budget…” stated “… in 2013/14, donors will contribute $649 million in project aid in addition…” to the $476 million UNMIL will spend in 2013/14. Note, donors’ money is different and donors’ money is not included within the Liberian National Budget.

Okay, I understand why indigenous advocates are focusing on ethnicity as a litmus test for the presidency and not focusing on the real issues such as the sharing of diamond revenue. This is because many past presidents, whether Congo origin or coopted Congo candidates continue to support policies that protect influential Liberians, especially real estate owners, diamonds and gold dealers, etc. In addition, influential citizens and private investors have and continue to prevent honest and less corrupt candidates from winning political offices of influence. Further, indigenous advocates believe that candidates of Congo origin are less likely to enforce regulatory policies against their kinsmen even if they were to discuss and provide diamond revenue policies, all because of money, etc.

Indigenous advocates also state that the imperial power of the Liberian presidency coupled with the internal working requirement of the Legislative Branch make it difficult for indigenous lawmakers, who are in large number, currently, to launch policies that the Presidency does not approved. It is true that the presidency in many countries uses arm-twisting, bribes, etc. to coerce lawmakers. However, in Liberia, President Sirleaf did expand the money-culture attitude. She is paying excessive allowances to her advisers and is bribing lawmakers, implying that bribery (i.e., her advisers refer to as lobbying) is good for Liberia. The money culture continues to supersede any real and good issues of development.

Nonetheless, indigenous advocates should focus on issues such as diamond revenue because investors have and will always use portion of the profits of lucrative assets, for example diamond, to coopt or lure candidates of any ethnicity to protect their interest at the expense of society. Let us debate these programs in order to change the practice and belief that “…profit motives and property rights are more important than the people…” as stated by Dr. Martin Luther King, Jr. at the Riverside Church in New York City. More so, the debate exercise might help candidates as well as voters to understand how and why the current economic system usually creates an environment conducive for private investors to accumulate more diamond revenue at the expense of society.


Sylvester Gbayahforh Moses
“So, let us change the debate from the issue of personality (Native or Congo) to the issue of putting more diamond revenue into the Liberian government coffers”.

Merriam Webster’s Collegiate Dictionary says, “Timing is the ability to select for maximum effect of the precise moment for beginning or doing something”. Another dictionary defines it as “the choice, judgment, or control when something should be done”. Without impugning on any motive of Mr. J. Yanqui Zaza, we are afraid that his proposed topic of debate (diamond revenues) lacks “timing”. And for a man of his caliber, and cogent contributions to hot - button Liberian issues, the only conclusion is that his “timing” was deliberate. Which brings us to the question:

How can Liberians relent on debating and finding a resolution to the Congo – Country divide, which created over a century of hatred; stoked the 1980’s invasions and subsequent civil wars; and could condemn our country to another internecine conflict should EJS try to impose Brumskine as president against the will of the vast majority through their votes six months from now? Moreover, as we write, rather than bridging the gulf between angry marginalized members of the populace and the police, she is continuing the militarization of law enforcement, thus widening the gulf further.

The fact of the matter is that proposing a national debate on diamond revenues in a politically unstable environment is fruitless. Mind you, thousands of Liberians are intertwined in the Congo – Country divide, due to kinship on both sides, thus anxiously want resolution to this prime cause of distrust in our country. Most importantly, until there is a responsible dialogue, followed by compromise, cooperation, and, if need be, concessions, the specter of suspicion will stalk the nation forever.

To end, thanks Mr. Zaza for the proposal, but our reservation hinges on the matter of priority. Ironically, while some well – meaning Liberians are being distracted from a topical discussion of such existential significance, those who benefit from the Divide would want others to believe that there are irreconcilable differences that make reconciliation an insurmountable obstacle course. That’s false.

Perhaps, the timing is perfect for a Winston Churchill quote: “Virtuous motives, trammeled by inertia and timidity, are no match for armed and resolute wickedness”. It shouldn’t happen again to our poor powerless people.
Sylvester Gbayahforh Moses at 05:44PM, 2017/04/12.
j. yanqui

Hi Mr. Sylvester Moses,

I thank you for your usual contributions to the burning issues of Liberia. On this issue, I hope that you will revisit your comment. Sir, I am sure that you are not implying that Liberia should give the political offices to the Native-candidates and let the elites (i.e., who are predominantly Congo people) keep control of the country’s lucrative resources. Alternatively, are you indicating that Liberians, after the elections, will amicably discuss and resolve our economic arrangement such as instituting laws to reduce the profits of diamond dealers or Monrovia-landlords? Guess what, diamond dealers do not only pay minimal taxes, but they also promote bribe offering.

If we do not reduce the huge profits of private investors, we might find it difficult to end the practice of bribery as long as there is an environment conducive for private investors to own lucrative assets. I admit that debating such an issue will be difficult. Well, it will even be difficult once elections are over and the elected candidates do not have to face their constituents or diamond dealers offer them bribes in exchange for favors.

I am sure you aware that bribes offering assists in reducing revenue. If I may ask, who initials bribe offering? Do government bureaucrats demand bribes or do private investors initial bribe offering in order to grease the wheels of business? Two studies say that private investors initial bribe offering. The African Union Committee findings on Illicit Financial Flow Outside Africa, headed by the former President of South Africa, Thabo Mbeki, did not only accuse private investors of initiating bribe offering, but it stated that private investors siphon about 95% of the $50 billion out of Africa every year. The study, covering seven (7) countries, including Liberia, also stated that local leaders are responsible for only 3% to 5%. Another study by International Transparency concluded that profit-making entities do usually initiate bribe offering rather than government bureaucrats.

Your argument today against the proposal to discuss issues before election is not new. Prior to President Sirleaf election, some stakeholders did offer similar arguments. Many people, including, but not limited to Jacques Paul Klein, the UN Representative to Liberia, did focus on the idea of removing corrupt officials of the Interim Government headed by Gyude Bryant and replacing them with elected leaders. They stated that Liberia would become efficient and less corrupt once Liberians elected new leaders and also implemented provisions of the “Liberia Governance and Economic Management Assistance Program. Liberia will reduce the ingredients that promote and sustain corruption if we privatize state-owned entities and pay good salaries to presidential advisers who are involved in negotiating concessionary agreements, they argued.

Well, a debate would have informed Liberians that bribes offering is initiated by those who own and manage lucrative resources, rather then government bureaucrats as evidenced by the recent Wologisi corruption saga. Liberians, at a national conference, would have examined why Liberia is one of the poorest countries in the world even though the country has enormous natural resources.

The American people learned that lesson the hard way after the election of President Barack Obama, a poor black President. During the 2008 election, U.S. presidential candidates did not discuss, for example, why was America relying on taxes paid by consumers (i.e., excise tax, real estate tax, corporate tax, payroll tax, personal income, etc.) to fund the budget, and but did not receive reasonable revenue from American natural resources? After the election, President Barack Obama found it difficult to discuss any issues, let alone to think about the idea to fulfill some of his promises.

Yes, the 2008 financial crisis did change the debate. However, had the 2008 Presidential candidates discussed issues of America such as the economic arrangement that has created an environment conducive for groups/corporations to pay minimal taxes, thereby, forcing the government to increase its debt to $17 trillion, residents would have discussed and understood why and how American economic system is rigged, as stated by President Donald Trump, then candidate Trump; Mrs. Hilary Clinton; and Pope Francis. For instance, they would have debated the issue of the economic system, thereby, denying candidate Donald Trump from presenting a false promise that he can bring back to America the manufacturing jobs. Or, they would have discussed how come China, a country that is a state-capitalist, is now financing American budget, even though Americans do perceive government bureaucrats to be inefficient and private-capitalists to be less corrupt and profitable?

Strategically, I think all candidates, especially Native-candidates, would benefit if Liberians were to debate these issues before the elections. This is because the debate process might assist the candidates in appealing to many of the part owners or investors of the diamond industry, gold industry, timber industry, etc. about the responsibility of investors to a community. Showing Liberians the poor economic conditions of the country might encourage them to do the right thing by not, for example, spiriting diamonds and, or gold outside of the country. A good debate might assist candidates to review activities of state-owned entities such as LEC, NPA, NASCORP, LPRC or CBL.

Chief Sylvester Moses, please visit the Liberian revenue position and see the serious financial position of Liberia. Or please visit the Liberian Central Bank 2014 balance sheet and income statement, which is included within an article on this Perspective Web Site. The claim by the authorities of the Central Bank of Liberia and International Monetary Fund that Liberia has hundreds of million as “Net Foreign Reserves” is questionable. I have submitted letters of inquiry to the International Monetary Fund (IMF), the external auditing firm, PriceWaterHouseCooper Accounting Firm (PWC) and the Central Bank of Liberia. In fact, the authority did not include the “Net Foreign Reserves” within the balance sheet and, or include interest income within its income statement as revenue earned from the assets held by non-related third parties.

The 4/12/2017 NY Times article about Liberia stated, “it is estimated that more than 50 percent of Liberian health services are provided by nongovernmental organizations rather than by the Ministry of Health and Social Welfare...” The conent of the NY Times article indicates that the government does not have money.
j. yanqui at 05:26PM, 2017/04/13.
Sylvester Gabayahforh Moses
Thanks, Mr. J. Yanqui, the invite “I hope that you will revisit your comment” is a brilliantly veiled disarming response; in short, very effective. For whereas less experienced essayists equate arguing with quarreling, hence dismissive of contrarian views, that invitation took into consideration the fact that the purpose of the article is to persuade its audience, not alienate them. Coming to think of it, as a concerned citizen who sees the Congua – Country divide through the prism of national security, I was carried away by the suggestion “let us change the debate from the issue of personality (Native or Congo) to the issue of putting more diamond revenue into the Liberian government coffers”. Because, for me, both debates can, and must, be carried out simultaneously.
Sylvester Gabayahforh Moses at 04:07PM, 2017/04/16.

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