Home Politics No Crime, Diversion of Public Funds! … Sam Jackson Demystifies GAC Audit On CBL

No Crime, Diversion of Public Funds! … Sam Jackson Demystifies GAC Audit On CBL

by News Manager

MONROVIA: A noted Liberian economist, and a product of London School of Economics, Sam P. Jackson, has outlined his professional perspectives on the recent audit conducted on the Central Bank of Liberia (CBL), by the General Auditing Commission, GAC, which by laws, enjoys autonomous state.

In a Writeup, captioned: “GAC Compliance Audit of CBL Compilation of Procedural Errors: No Evidence of Criminal Wrongdoing”, Jackson, a global financial consultant, opined that the July 2024 Compliance Audit of the Central Bank of Liberia (CBL), by the General Auditing Commission (GAC), is “a rehash of classic procedural errors in any large organization but there is no evidence of criminal wrongdoing.”

Jackson reviews what he calls “the inaccuracies, errors, materiality, and lack thereof in the Compliance Audit, and gave a “background on the origin of the Report.”

“The Report covers the period from January 1, 2018, through December 31, 2023,” he explained.

Quoting GAC, Mr. Jackson indicated that the audit was conducted in line with Section 2.1.3 of the General Auditing Commission (GAC) Act of 2014.
Jackson added that GAC did not state “the origins of the authority to audit the CBL.”

According to Mr. Jackson, narration by GAC that “this compliance audit was done strictly in accordance with the legal mandate of the GAC is at first inaccurate and outlandish.”

He characterized the Audit as “a political tool employed by the Boakai Administration in February of this year to find reasons to illegally remove the top management of the Central Bank including the Executive and Deputy governors.”

“Firstly the audit requested by President Boakai did not take into consideration the legal, economic, financial, and managerial autonomy of the Central Bank. The audit surrenders the autonomy of the Central Bank to the Executive Branch of Government,” Jackson asserted.

He maintains that the Act establishing the GAC specifically empowers the Agency to conduct audits of public accounts and funds of the Republic of Liberia.

Jackson: “ However, central banks all over the world enjoy an autonomy to keep their functions from being influenced by bad actors including those in the executive branch of government. A central bank must be run without corrupting influences from the executive so as to protect the integrity of a country’s monetary sector.”

He further explained that “As a result, most experts view the audit as an intrusion into the functions of the Central Bank by the Executive with clear political motives. Today, that intrusion has come full circle with an announcement that the President of Liberia suspended the Executive Governor of the Central Bank and named an acting Executive Governor, Mr. Henry F. Saamoi, former CEO of the International Bank (IB),” Jackson pointed out.

“Firstly, the Executive Branch of Government itself is not clothed with the authority to determine the timing, scope, and types of audits to be conducted. Secondly, the Compliance Audit Report is addressed to the Pro-Temp of the Liberian Senate and the Speaker of the House,” narrated.

Jackson also made it clear in the Writeup that “The GAC is an autonomous agency whose independence was breached by the order of President Boakai to audit the CBL. Clearly the audit has a political motive and subsequent events have proved that to be true.”

“Moreover”, he maintains, that “the CBL is outside of the definition of public funds, which include taxes, user fees, dividends, royalties, grants, etc. Thus, in addition to the timing, scope, and infringement on the autonomy of two government agencies, the Executive has laid bare its plans to use a political tool to effect changes at the Central Bank, an autonomous agency whose strategic positioning in the economy is to protect the value of our currency.”

“Howbeit, the compliance audit is completed, and its findings and recommendations released and, in some cases, leaked to media outlets to sensationalize the outcomes so as to turn public opinion against officials of the CBL.

“ A diabolical scheme to sully the reputation of the bank’s top management including its Non-Executive Board, Executive Governor, and Deputies.

“The CBL is a custodian of public funds but does not spend those funds without request by the appropriate government ministry and agency,” economist Jackson stated.

He indicated that “Disbursement lies within the purview of the Executive. The CBL does not decide who to pay and what amount. It only executes order. The bank has its own operational accounts with clear guidelines, traditions, and the financial culture to protect the independence and maintain prudential guidelines,” Jackson clarified.

According to the popular Liberian economist, “In the massive 220 plus page compliance audit, the CBL was not caught in any financial impropriety bordering on embezzlement or misapplication of funds in its custody.”

He asserted that the 220 plus page compliance audit is too voluminous to conduct a comprehensive analysis in this space but he looked at the key findings and recommendations.

Jackson: “The audit charges budget irregularities, spending outside of the budget, meaning variance or a purported effort to spend monies it was not authorized to.
“ No such misapplication was reported in the report and all funds were fully accounted for, with the only issue being overspending on budget line items.

“Overspending on budget line item is not a criminal activity, but a procedural error or in most causes due to extraordinary circumstances.

“ And in Management response to the issue of budget irregularities, the CBL stated that the auditors compared the budget which is cash based to the financial statements which are based upon accrual, and thus the main reason for the variances. Thus, this invalidates the auditors’ findings,” he declared.

According to Mr. Jackson, the Audit report found encashment of checks over the counter made out to institutions and corporate entities.
“ While the finding is legitimate,” he said, “Management also had a solid response.”

“CBL ended the practice of encashing corporate and institutional checks over the counter in 2019. In the main time, the audit did not trace payees to determine if the names on the checks were the appropriate responsible persons in charge of financial matters for the institutions,” Jackson contended.

“The audit mentioned loans and overdrafts made to the Government of Liberia without legislative approval. While the practice is irregular, but the intent was to pay civil servants’ salaries in a contentious election year, where public peace was guaranteed by the payments and thus the extenuating circumstances should excuse the procedural error.

“No funds were misapplied or stolen. Management cited the low collection of government revenues during the periods under review and indicated that national security concerns in an election year necessitated the overdrafts.

“Salaries were paid. No funds were diverted or misapplied,” he maintained.

Furthermore, Jackson argues that “the management of the bank worked with the Ministry of Finance and Development Planning to ensure compliance by creating loan documents to reflect the payments.

“ These transactions predated the Extended Credit Facility Program from the International Monetary Fund. Loan documents are available for auditors to review.

“The audit made mention of non-performing commercial bank loans in the amount of 412 million United States dollars. This was a huge mistake on the part of the auditors,” he said.

“It cited amounts in US dollars that should have been in Liberian dollars, thus there was a gross overstatement of the actual amount they claimed to be non-performing loans,” asserted.

According to him, “An investigation by the author into the actual amounts by engaging current and former senior commercial bank officials indicate that the amounts were in fact Liberian dollars and meant to stimulate the economy, for example in mortgage schemes, agricultural and construction loans that are part of the bank’s mandate to improve macroeconomic stability under the difficult circumstances of Ebola and COVID-19.

“Management indicated that there are currently no non-performing loans on the books of the commercial banks.

“ Maturities of the loans were revised to help Liberian borrowers. Clearly if the audit report did not ensure quality assurance to properly document the magnitude of non-performing loans, through simple arithmetic processes, what else did the auditors get wrong?”

He also disclosed that “The audit cited amounts paid as part of the bank’s corporate social responsibility posture. But, the auditors did not trace the funds to ensure that the named organizations or their financial authorities received the monies in question. Thus no crime was uncovered, and the monies were destined for social causes that could ensure cohesion among Liberians.”

Concluding his narration, Mr. Jackson said, “the politically- motivated audit of the CBL has not uncovered any crime, misapplication, or diversion of public funds.

“ The only objective achieved so far is the attempt to sully the reputation of consummate professionals who have done extremely well to achieve macroeconomic stability, including improved liquidity within the banking system. That may change now as the named Acting Governor is coming from a banking institution that needs to be closely monitored for possible capital impairment. Whether the conflict of interest presented by this new appointment was not considered by the Boakai Administration is food for thought. And so, it goes.”

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