LIBERIA: PRESIDENT DISMISSES OIL COMPANY HEAD AMID

UNCLAS MONROVIA 000662

SENSITIVE
SIPDIS

E.O.12958: N/A
TAGS: ECON EINV ENGR LI
SUBJECT: LIBERIA: PRESIDENT DISMISSES OIL COMPANY HEAD AMID
CORRUPTION SCANDAL

SENSITIVE BUT UNCLASSIFIED. NOT FOR INTERNET DISTRIBUTION.


1. (SBU) SUMMARY: President Ellen Johnson Sirleaf dismissed the head
of the state-owned Liberia Petroleum Refining Corporation (LPRC) on
September 5, following a Ministry of Justice probe into the alleged
acceptance of bribes in exchange for a USD 24.8 million concession.
Sirleaf's sacking of a long-time advisor and confidant illustrates
the pressure she feels to demonstrate zero-tolerance toward
corruption. The action also signals that the checks and balances
introduced to the concessions process since 2006 do indeed leave
would-be crooks less opportunity to cut side deals for their
personal enrichment. END SUMMARY.


2. (U) In July, LPRC Managing Director Harry Greaves signed a USD
24.8 million contract with Zakhem International Construction, a
British-based, Lebanese-owned construction company, to rehabilitate
and expand the facilities at the LPRC's product storage terminal
(PST). The terminal needs major renovation and overhauling, as its
1950s-era tanks are in very poor condition, and cannot accommodate
Liberia's steadily rising demand for fuel. The LPRC had issued an
international competitive bid, which produced two finalists: Zakhem
estimated the cost of the project at USD 24.8 million, while another
construction company, Mechanical Engineering Group (MEG),submitted
a USD 12 million bid. Despite the wide price discrepancy, Greaves
unilaterally signed a contract with Zakhem, claiming MEG's proposal
lacked the maintenance and improvements that Zakhem would offer.


3. (U) Several weeks after Greaves signed the contract, members of
the House of Representatives sounded the alarm. Representative Zoe
Pennue (Grand Gedeh County),the former LPRC deputy for operations,
warned lawmakers that the contract's value was overstated and
required clarification. He also accused Greaves of contravening
rules of the Public Procurement and Concession Commission, and
failing to communicate with the House Committee on Public Utilities
and Corporations, even though the Public Procurement and Concessions
Act entitles the head of a state-owned enterprise to sign a contract
without further consultations, provided it is not sole-source.


4. (U) When Greaves refused to cooperate with a House committee
formed to investigate the contract, President Sirleaf established a
parallel committee headed by former Chief Justice Henry Reed Cooper.
However, Greaves accused a member of the President's committee,
Deputy Minister of Justice Alousius Jappah, of soliciting a USD
300,000 bribe in exchange for clemency, and proffered a tape
recorded conversation to prove his claim. Following the review of
evidence, the President assembled yet another team to investigate
those allegations.


5. (U) The Zakhem committee, led by Justice Minister Christiana Tah,
determined that both Jappah and Greaves committed bribery, citing a
provision in Liberia's Penal Code that penalizes both the person who
proffers the bribe, and the recipient who verbally accepts the bribe
or fails to reject it outright or report it to the authorities (even
if no money changes hands). The President dismissed Jappah August
27 and Greaves September 5.


6. (U) The Zakhem affair was the second time Greaves unilaterally
concluded contracts of an ambiguous or untransparent nature. In
2007, he announced a deal for Nigeria to supply 10,000 barrels of
oil to Liberia. The Legislature questioned the contract, and the
media cried foul when Greaves refused to disclose the price of the
oil or the terms of the contract. While the GOL ultimately
cancelled the deal, the President did not sanction Greaves.


7. (SBU) COMMENT: Greaves' political descent, after three decades
as a protege, friend and close advisor to the President, is a matter
of some curiosity. While the Governance and Economic Management
Assistance Program (GEMAP) advisor at the LPRC believed that the
Zakhem contract complied with all concessions procedures, and
observed no evidence of corruption, Greaves' reputation had been
tarnished by the questionable Nigerian deal two years earlier. On a
positive note, the National Legislature played a rare role in its
demand for a transparent and fiscally sound contract, even beyond
what the law nominally requires. The Legislature's constructive
role may signal that unrelenting media coverage and GEMAP's efforts
have sensitized Liberians to the need to hold political leaders to a
standard of integrity that exceeds minimal procedural requirements.


ROBINSON