LIBERIA'S CONTROVERSIAL LEGISLATIVE AUTONOMY ACT

C O N F I D E N T I A L SECTION 01 OF 02 MONROVIA 000599 SIPDIS SIPDIS STATE FOR AF/W-PDAVIS, INR/AA-BGRAVES E.O. 12958: DECL: 05/21/2017 TAGS: PGOV KDEM ECON LI SUBJECT: LIBERIA'S CONTROVERSIAL LEGISLATIVE AUTONOMY ACT Classified By: POLITICAL OFFICER SILVIA EIRIZ FOR REASONS 1.4 (B) AND ( D) ¶1. (SBU) The Senate introduced a bill entitled "An Act to Amend Certain Provisions of the Legislative Law to Provide Financial Autonomy to the Legislature," which it passed on April 23, 2007. The House of Representatives passed the bill on April 24, 2007. (See text of Act in paragraph 5). The judiciary has financial autonomy as a result of a similar law and some view the enactment of this law as an attempt by the legislature to exert its independence and equality with the other two branches of government. The Chairperson of the Senate Committee on the Executive, Gloria Scott, was suspended by the Senate on May 8, 2007 for failing to transmit the Act to the President for signature. Scott, who belongs to President Ellen Johnson Sirleaf's Unity Party (UP),presumably failed to take action since she suspected the President would not support the Act. ¶2. (C) The International Monetary Fund (IMF) Resident Representative, Michael Tharkur, sent a May 4 letter to Minister of Finance Antoinette Sayeh laying out IMF concerns regarding the Act. Tharkur wrote that if the Act were to become law it "would pose serious challenges for the government's public financial management reforms" and for the government's "ongoing initiatives to promote fiscal transparency and accountability." Tharkur's letter was accompanied by a note with IMF/World Bank Joint Staff Comments on the Act. The note stated that the following four elements of the Act are of particular concern: 1) that the legislature would determine its own level of appropriation in the budget without the possibility of revision by any other government entity; 2) that expenditures made by the legislature would be made outside of the commitment control system; 3) that allowances and benefits would not be subject to taxation; and 4) that the legislature would only be subject to public audit of its spending at its own request. IMF and World Bank staff expressed concern that "allowing the legislature to independently set its appropriation without it being subject to the budget review process is not common practice." They stated that "absence of oversight of this process by any government entity outside the legislature could compromise the efficient allocation of resources in the 
budget planning process and, in the context of a severely limited budget, undermine the implementation of the poverty reduction strategy." The IMF and World Bank also stated that the financial autonomy provisions of the Act circumvent the commitment control system of the government and undermine the tracking and reporting of the approved budget. IMF and World Bank staff noted that "The Act not only circumvents the safeguards of the commitment control process, but also circumvents the requirements of public auditing under the General Auditing Commission (GAC)", which requires that all government agencies and government organizations shall be subject to a comprehensive audit once a year. The Financial Autonomy Act provides that such audits would only be conducted at the request of the legislature. ¶3. (C) Embassy has obtained a copy of a memo regarding the Act to the President from Minister of Justice Frances Johnson-Morris and Solicitor General Tiawan Gongloe. They advise the President that the Act contravenes the Constitution because: 1) the Act was improperly enacted since financial bills must originate in the House of Representatives; 2) the Act's penalty of contempt for non-compliance with the provisions of the Act is an abuse of this power; 3) officials of the government cannot be removed at the displeasure of the legislative branch; 4)the Minister of Finance cannot legally comply with the provision requiring that funds be deposited in four distinct and separate accounts because appropriations require "legislative enactment" and a "warrant of the President." ¶4. (SBU) Speaker of the House of Representatives Jenekai Alex Tyler and President Pro Temp of the Senate Isaac Nyenabo told Poloff May 21 that the Act was transmitted to the President on May 9. They said that she has 20 days to take action on it and can sign it, veto it in its entirety, or veto portions of it. Tyler and Nyenabo said that if she takes no action on it by May 29, it will become law. Tyler and Nyenabo noted that a vote by two-thirds of both houses of the legislature can override a veto by the President. Nyenabo said he and Tyler have been discussing the Act "behind the scenes" with the President as well as with IMF and World Bank representatives. ¶5. (U) Text of An Act to Amend Certain Provisions of the Legislative Law To Provide Financial Autonomy to the Legislature: Begin Text. MONROVIA 00000599 002 OF 002 It is enacted by the Senate and the House of Representatives of the Republic of Liberia in Legislature Assembled: Section 1: All Allowances and Benefits Fiscal appropriation of Chapter 1 section 11 of the Legislative Law which reads: "The salaries and traveling allowances of members of the Legislature and of its officers and employees shall be provided by annual budgetary appropriation" is hereby amended to read: "The Legislature which consists of two separate Houses shall each submit to the Bureau of the Budget annual estimates of appropriation, expenditure, supplies and services including personnel as well as fund appropriated for retirement benefit necessary for the maintenance and operation of both the Senate and House of Representatives." And such supplement and deficiency estimates as required from time to time for the same purpose according to law and such estimate shall be included in the National Budget estimate without revision, but subject to any recommendation of the Bureau of the Budget which may be included with the transmittal of the National Budget estimate from the President of Liberia to the Legislatures for action thereon. Legislative Accounts Upon the passage into law of the National Budget, all appropriation of funds to be expanded by the Senate and the House of Representatives shall be disbursed by the Ministry of Finance to the Legislature in four equal quarterly installments, the first such installment to be disbursed at the beginning of the first quarter of the fiscal year after the passage of the Budget and quarterly thereafter. In any event, each installment must be disbursed to the Legislature within 15 days as of the beginning of each quarter. All of such funds shall be deposited in four distinct and separate accounts which shall be transparently operated and administered by each House under the supervision of the President Pro-Tempore of the Honorable Liberian Senate and the Speaker of the Honorable House of Representatives as class A signature and in their absence by the designated Presiding Officer as an alternate Class A signature and the Comptroller as class B signature and deputy comptroller as alternate class B signature to the account. Audit These accounts of the Legislature shall be subject to forensic audit: (a) Task (b) Financial (c) System Audit and shall be subject to the General Auditing Commission upon the request of the Legislature (The Senate and the House of Representatives). Section 11b of the Legislature is hereby amended and revised to read as follows: The members of the Senate and the House shall receive salaries subject to taxes required by law provided that they shall not be diminished. Allowances and benefits paid to Senators and Representatives shall not be subjected to taxation but may by law be increased but not diminished except under a national program enacted by the Legislature. Penalty Non compliance with the provision contained in the session above shall be punishable under article 44 of the 1986 Constitution of the Republic of Liberia. And that the Minister of Finance or any other subordinate/responsible officer(s) shall be held in contempt and may be removed from office during the next Legislative Session. Sessions. 2. Effective date of Amendment ¶1. that effective immediately after the passage of the publication in Hand bill of this Act, this Act shall take effect. Any law to the contrary notwithstanding. End Text. Mazel