Global Witness welcomes the news that auditing firm Deloitte & Touche Ghana has terminated its contract with the Government of Liberia (i). The secretive draft terms of reference for the agreement, signed in September 2002, outlined an audit of the timber industry and shipping and corporate registries revenue in response to an order by the United Nations Security Council (ii). However, the draft terms of reference have been criticised by Global Witness, the ITF and UN Panel of Experts on Liberia for its murky nature and confidentiality clauses stating that all information, including all notes and final judgments, could not be distributed without the direct permission of the Liberian government (iii). While welcoming the cancellation of such an unsatisfactory contract, due in part to a lack of initial fieldwork investigation by Deloitte & Touche Ghana and the office's questionable ability to meet expectations, Global Witness again appeals to the UN Security Council to act quickly and ensure that a full, transparent and independently verifiable audit of the timber industry and registries’ revenues is completed (iv).
“Global Witness commends Deloitte & Touche for choosing the right course of action and resigning from the contract,” said Ms. Alice Blondel, Campaigner for Global Witness. It is important to note that Deloitte & Touche Ghana signed the agreement, and that each country office is a legally independent entity from the parent company Deloitte & Touche, though the parent company can and does exert its influence. “As originally designed, the agreement was rife with conflicts of interest and could not have been carried out to acceptable international auditing standards. The Liberian government’s hiring of a small country office, and further sub-contracting much of the work to a lead auditor’s own private Liberian accounting company, raised serious and legitimate doubts about the team’s capacity and impartiality, as well as questioning Liberia's intentions to comply with UN demands (v).” Global Witness strongly cautions the head offices of other international auditing firms approached by the Government of Liberia to perform the audit to be vigilant and remain aware of what agreements smaller country offices may be signing.
Global Witness urges the United Nations Security Council to act quickly and decisively to guarantee that a proper revenue audit takes place, in accordance with the Security Council’s own resolutions. The revenues from these industries are often misappropriated, as noted in recent letters to the United Nations by numerous international organizations (vi), and with regard to the Liberian timber industry, many logging companies are actively engaged in illegal arms transfers and the funding of paramilitary forces.
“It is imperative that any accounting firm involved in an audit of Liberian revenue ensure that the audit is complete, transparent and upholds the highest international auditing standards," said Ms. Blondel. "The Liberian government is not making any concrete or positive changes in respects to its timber industry. The timber industry remains a major conduit for illegal arms imports into Liberia, and many logging companies continue to assemble and arm human rights abusing militias. This should serve as yet another alert to the UNSC that the Liberian government will continue to put barriers around the truth regarding the timber industry as long as it remains a main conduit of arms and money for President Taylor's war machine."
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Notes for the Editor:
(i) See also Global Witness’ Open Letter to Deloitte & Touche dated 13 December 2002
(ii) See UN Security Council resolution S/2002/470
(iii) See Annex VII to Report of the Panel of Experts Appointed pursuant to Security Council resolution 1408 (2002), paragraph 26, concerning Liberia, S/2002/1115;
(iv) See Global Witness and the ITF’s “Open Letter, RE: Deloitte’s continued failure to clarify its role in Liberian audit” dated 22 November 2002; and Global Witness Press Release “Secretive Deloitte audit in Liberia raises allegations of irresponsible corporate behaviour and conflict of interest” dated 19 November 2002.
(v) See article from The News, as found at http://allafrica.com/stories/200210010255.html. The Deloitte team was to be led in part by a Liberian, George Fonderson, who works in the Accra office of Deloitte and serves on the company’s African board. It is Fonderson’s privately owned firm, Voscon, which is alleged to have been hired as a co-auditor for the contract.
(vi) See Amnesty International’s “Open Letter to Members of the UN Security Council”, dated 13 November 2002 (AI Index: AFR 34/028/2002), and the letter to Secretary-General Kofi Annan, dated 22 November 2002, by the ITF, Greenpeace and WWF
Press Release / Dec. 16, 2002