A new transparency law signed by President of Liberia Ellen Johnson Sirleaf, covering oil extraction, mining and other natural resource industries, sets an impressive benchmark for global efforts to fight the natural resource curse and should be emulated by other countries, said Global Witness today.

Rich in minerals and timber, Liberia is rebuilding its economy and society after a savage civil war, partly funded by the embezzlement of timber revenues by warlord turned president Charles Taylor. Taylor, now on trial at the International Criminal Court, has pleaded not guilty to eleven charges of war crimes, including pillage, and starts his defence in The Hague today.

The Liberia Extractive Industries Transparency Initiative (1) Act (LEITI Act), passed on 10 July, aims to ensure that the benefits due to the government and people of Liberia from the exploitation of natural resources are “verifiably paid or provided... duly accounted for and prudently used for the benefits of all Liberians.”

"The law is testimony to the reformist spirit of the government, and to Liberian civil society groups who have worked so hard to turn the country's natural resources from a curse to a blessing.” said Gavin Hayman, Campaigns Director of Global Witness (2), a long-time supporter of the EITI.

Liberia's new law stems from the Extractive Industries Transparency Initiative (EITI) (3), a global association of governments, the private sector and civil society groups, which works for the public disclosure of revenue payments to governments by oil, gas and mining companies. Such payments have often been kept secret in the past, making it impossible for citizens of countries rich in natural resources to ensure that the money is used for the public good.

“With this new law, Liberia has gone far beyond the basic requirements of the EITI to produce a strong and comprehensive regulation which can be a model for other countries,” says Hayman. “Now the government needs to show that it can set high standards not only in its legislation, but also in its day to day oversight of the country’s natural resource industries. An early test will be its handling of four 25 year contracts to log Liberia’s forests, due to be awarded later this month.”

The LEITI Act, which covers forests and rubber as well as oil and mining, will ensure that all payments to the state by natural resource companies will be fully disclosed on a company-by-company basis. The Act will also promote the disclosure of the contracts and licences held by natural resource companies and ensure regular reviews to ensure that such contracts have been awarded in accordance with the law. This is particularly important given allegations of corruption surrounding a number of recent natural resource contracts and concerns about the track records of some of the companies in the running to win new logging deals.

The LEITI Act sets a new benchmark for transparency because of its wide scope and clarity about what needs to be disclosed: in most countries that implement the EITI, this process is voluntary, which makes it vulnerable if the government loses interest in the process or is replaced by another. There is a similar EITI law in Nigeria but it does not have such strong and clear provisions about the transparency of contracts or reviews of the way that contracts are awarded.

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