Mop-up Exercise Made “Opportunities for Money Laundering”

first_imgFinance Minister Tweah (center) on arrival at RIA on Monday, March 4: “I will never, ever engage into any fraudulent activity against Liberia. Whoever, that is responsible, will face the full weight of the law.”Both Kroll and PIT reports explicit on this, as TEMT Chair, Finance Minister Tweah denies any wrong-doing Circumstances surrounding the “Mop-up exercise” conducted by the Central Bank of Liberia (CBL) and the Economic Management Team, headed by Finance and Development Planning Minister Samuel Tweah, have been described by the Kroll scoping report as “risky” with potential opportunities for “money laundering and execution of transactions with illegal businesses.”It may be recalled that in 2018, when the Liberian dollar was grossly depreciating against the US dollar, President George Weah publicly declared that his government was infusing US$25 million into the economy with the hope to conduct a mop-up exercise that will reduce the outflow of the Liberian dollar from the market.When done properly as was intended, the quantity of Liberian dollar in circulation will reduce thus leading to dropping of the skyrocketing rate between the two currencies in which Liberians transact business.While quoting the CBL, the Kroll report noted that the US dollar mop-up Exercise involved CBL Banking Department representatives undertaking the physical purchase of Liberian banknotes with new US Dollar banknotes.Information by the CBL, according to the Kroll report, could not be accompanied by documentation setting out how the Mop-up exercise was structured or implemented, or which organizations were targeted by authorities at the CBL.Kroll’s documentary review sourced US$20 million for the Mop-up exercise to CBL’s Federal Reserve Bank of New York account and, accordingly, the order was placed on July 10, 2018, prior to the Board of Governors decree on July 16, 2018.The Kroll Report could not establish whether or not the drawing of the US$20 million was made earlier than approval provided by the Board of Governors.According to the CBL analysis, Kroll identified that Liberian Dollar banknotes totaling L$2.3 billion (US$15 million) were purchased for the US Dollar Mop-up exercise between July, 2018, and October, 2018.Kroll said it was informed by the CBL that the remaining US$5 million was put into circulation as part of normal banking operations, and not retained for continuance of the US Dollar Mop-up exercise.The investigators said a CBL Board of Governors decree dated July 16, 2018, noted that the purchase of Liberian Dollar banknotes should have been sorted, and “sterilized” (banknotes assessed by CBL staff as being of sufficient quality for circulation) by the CBL prior to re-circulation for a minimum period of one year; instead, Liberian Dollar banknotes totaling L$1.2 billion (US$7.8 million) of the total banknotes removed from circulation as part of the US Dollar Mop-up exercise have subsequently been reintroduced into circulation within six months.Kroll noted that the CBL did not provided it with evidence that the board of Governors had authorized the banknotes to be introduced back into circulation before the period of one year had elapsed.Amid these discrepancies, Kroll said “the approach taken by the CBL to implement the US Dollar Mop-up Exercise, whereby small teams of bank personnel directly purchased Liberian Dollar banknotes from local businesses and foreign exchange bureaus in exchange for US Dollar notes, created an enhanced level of risk with respect to potential misappropriation of banknotes, potential opportunities for money laundering, and potential execution of transactions with illegal businesses.”It further acknowledged that there is a risk that significant funds were unaccounted for by the CBL, and it therefore recommends that the matter merits further understanding.Meanwhile, discrepancies identified by the Kroll Report have hauled some executives of the CBL, including Charles Sirleaf and former Governor Milton Weeks to the Monrovia Central Prison.Although the Technical Economic Management Team (TEMT) of the government headed by Finance and Development Planning Minister, Samuel D. Tweah, Jr., orchestrated the mop-up exercise that saw well over US$150,000 vanish in to thin air, the government is yet to arrest Tweah or invite him for interrogation since this report was released on Thursday, February 28, 2019.However, Minister Tweah, who returned to Liberia on Monday, March 4 from Egypt, says he “will never engage into any fraudulent activities against Liberia,” denying wrong-doings in the recent mop-up exercise, geared towards stabilizing the Liberian dollar depreciation, against the United States dollars.“I will never, ever engage into any fraudulent activity against Liberia. Whoever, that is responsible, will face the full weight of the law” Minister Tweah stressed.According to the MFDP statement, over US$15 million, out of US$17 million, were infused into the economy by the TEMT, a team set-up by President George Manneh Weah, to address the Liberian dollar rapid fall against the U.S. dollar. Two million United States dollars (US$2 million), were given to Total Liberia, assuring Liberians that technical details of institutions that received the money will be disclosed in the weeks to come.Minister Tweah said about 2.3 billion Liberian dollars were realized from the 15 million United States dollars mop-up, and kept at the Central Bank of Liberia. The monies, he explained came as at December 2018 and were part of the mop-up money.The statement of the minister comes in the wake of two reports, one by the Presidential Investigation Taskforce (PIT) and the other, a USAID sponsored Kroll Associates Inc. audit, into allegation of ‘missing’ sixteen billion Liberian dollars (LD$16 billion).The reports also investigated the mop-up exercise by the Liberian government through the Central Bank of Liberia.The finance minister said the Technical Economic Management Team (TEMT), empowered by the President, came up with a strategy to get the ‘excess’ Liberian dollars from outside the CBL.He explained that in accordance with normal central bank operations, money auctions do not have impact on the exchange rate, and the TEMT trust the integrity of the CBL to do money operation.  He noted that no member of the TEMT outside the CBL saw physical money.He indicated that that the TEMT acted on the experience of the CBL to do money business, because the CBL monitors risks in the financial sector.“We acted on the experience of the CBL to monitor risks in the financial sector because, when managing risks, they go to the local banks to know whether they have secure environment for credit. The CBL also, as part of risk management, will ask whether these of the local banks policies and programs are safe enough for the public. Who am I to tell the CBL we will teach you how to do risks management,” the minister asked.However, the PIT report said the mop-up exercise created the platform for illegal business dealers to clean their illegal money.Minister Tweah told the PIT that “the TEMT, chaired by him, did not use the conventional auction method through the commercial banks. According to him, the aim of the exercise was to target monies in the hands of business people and not monies already in the banking system. He said this was the reason his team targeted business people and major forex bureaus, and not to go through the commercial banks,” the PIT report said.The PIT found in its investigations that reports from the six teams responsible to carry out the mop-up exercise revealed that some foreign exchange bureaus and businesses were not duly registered, while other businesses received cash without proper identification. In some cases, business entities the teams transacted with did not have addresses.“Some businesses received lesser amounts than what was reported by CBL,” the PIT report continued. “For example, the Union Local Forex Bureau located on Carey Street received a total of US$5,500 on two separate occasions (US$3,000 on July 17, 2017 and US$2,500 on August 16, 2017) than what was reported by CBL on its report as the total amount received, which was US$161,900.Share this:Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)last_img