CRITICAL ISSUES OF NATIONAL CONCERN XII

ON THE IMPROPRIETIES AND INEFFICIENCIES OF THE CENTRAL BANK OF LIBERIA

Ibrahim Al-bakri Nyei

There is nothing more relevant and imperative to ensuring transparency and accountability in any given economy than a strong and credible financial system under the supervisions of a policy driven institution. The current post-crisis economy of Liberia, ruined and poorly managed cannot progressively compete in the global economy in the absence of efficient financial institutions properly controlled by a central bank. In 1999, the National Bank of Liberia became the Central Bank of Liberia with broad functions and new managerial system with its purpose of directing the monetary policies of the Government of Liberia and playing supervisory role over financial institutions in the country.

As our country gradually recovers, the need for a strong economic system need not be overemphasized, and the driving forces behind a strong national economic system are the financial institutions in the private sector and the financial agencies and bureaus in the public sector including the Central Bank, the Ministry of Finance, Ministry of Planning and Ministry of Commerce. The public sector agencies need to be strengthened and efficient in order to be able to control the system. Unfortunately, it seems that the bureaucracies of the agencies of government in both the fiscal and monetary sectors are still weak despite the impressions of experts from abroad.
Amongst all of these institutions, the Central Bank seems to be the most vulnerable and ineffective agency in the public financial domain. The ineffectiveness of the Central Bank of Liberia to respond to burning fiscal and monetary issues and its inability to control and regulate the financial system is deepening the wounds of our fragile economy: the uncontrolled price system spurred by a fluctuating foreign exchange market and a dual currency situation that has made the local currency to depreciate in value; extensively, these conditions are gravely affecting the livelihoods of low income earners and widening the poverty pool in the country, amongst a plethora of problems the Central Bank faces.

Beside its inability to initiate and implement vibrant fiscal and monetary policies that will build hope in customers for commercial banks, the trend the Central Bank has taken and its weak system makes it difficult if not impossible for one to trust the local system for major financial transactions. Corruption cases are routinely reported from the Central Bank. One wonders as to whether the Central Bank top officials including its Governor and his deputy do care to follow the laid down procedures governing the nation’s cardinal banking institution.

The poor services at the regulatory bank coupled with the lack of internal control have exposed the entire country to criminal operatives who regularly infiltrate the system and rob the country of millions of dollars. The situation is so serious that it has the potential to undo whatever measures is being put in place to guard against corruption and by extension defeat the very purpose of President Sirleaf’s anti-corruption crusade.

It is interesting to note that the Central Bank is still performing functions of commercial bank by serving individuals through bank tellers. Civil Servant salaries and other local transactions should be left with commercial banks. It is widely believed that the numerous scandals at the Central Bank sometimes spring from its preoccupation with lot of local transactions which it seems incapable to control. When a civil servant attempts to take thirty minutes of his or her working time to encash a single salary cheque at the Central Bank, he or she is likely to spend not less than two hours in queues, or if unfortunate, spend the whole day without a result.

These and many more are sufficient to tell that the bank needs massive reforms in all of its operations. The recent transfer of over USD 1,000, 000 from the CBL to a local commercial bank, ECOBANK appears to be the tip of the iceberg or signs of maby more things to come, and this scandal based on the mystery associated with it, need to be handled thoroughly if we are to get to the bottom of the crime, the criminals and their networks. Our investigation so far has raised more questions than answers. All reports and analyses suggest that the transfer of that amount from the national treasury to a private account was well organized, calculated, and effectuated with ease, and also suggests that a single criminal with all the wisdoms of an evil-genius cannot singularly succeed in such a high level deal. This must be a big deal with big hands, and the forger of the president’s signature must have just been used as a crime-carrier. However it may be, it remains a mystery and a complicated case. It does not stop remaining a mystery, it shows or exposes the reckless abandon at the CBL management in handling our postwar banking system in a terrain with growing crime rates. It stretches to a length of telling how deep-seated is corruption in the present regime, and the way it will end will tell how effective or serious this regime is in mitigating corruption. The said amount which is over one million US dollars was just about to be distributed among four to five persons, while thousands of people died of hunger, preventable diseases, and at the same time while thousands of children remain out of school.

Three cardinal issues are central to the success of every post-conflict nation, namely, security, respect for human rights and a sound economic management system. Of all the three items mentioned, economic management is of paramount importance since the other two cannot become a reality in the absence of a credible banking control system which does not only ensure the allocation and the use of the state resources, but the one that would ensure that a proper mechanism is put into place to regulate the circulation and transfer of the state fund/resources for whatever purposes. Perhaps the presence of GEMAP and the other control measures put in place by this Administration attest to this.

Regrettably, however, the news emanating from the two principal financial and banking institutions, the CBL and the Ministry of Finance is less than satisfactory. Employees of the two institutions apparently take undue advantages of the recklessness of administrators and go ahead with duplicating and recycling checques, something that cost the country millions of dollars. There must be an established chain in these issues because cheques missing at the Ministry of Finance can be encashed at the Central Bank of Liberia, and checques encashed at the CBL usually come from the MOF. This syndicate has to be uncovered to save the public resources from landing in unauthorized private pockets. In the one million dollars case, had it not been for divine intervention and for professionals at the commercial bank in exposing crime of this magnitude, the issue of that huge sum of money would be left as history to be discussed at public lectures and the criminals left to parade the streets as witnessed here in the past, a situation the current regime claims to be against.

There are more than one hundred more questions to answer around this one million dollar transfer, but we will not delve into listing them. The mystery surrounding it goes beyond the understanding of financial and banking experts, but what is clear and irrefutable is that mass corruption exists at the top level of the CBL and the MOF. All transactions in credible institutions are well documented with all necessary details, and requests are never made without stated purposes. Sadly, the purported letter that ordered the transfer of the money from the CBL did not state the purpose for which the money was requested. What a travesty of banking management procedures. Moreover the failure of the CBL to institute a signature verification system to validate signatures in transactions is unfortunate and speaks of professional limitations and inadequacies at the level of management. The most glaring of all the inadequacies is to ignore the presidential directives which set the financial regulatory framework for the bank in Executive Order Number Three (NO. 3). Whether it was a clever attempt to rob the process by intentionally ignoring this framework is another spider story whose explanations can only be found in traditional African tales.

-In The Cause of Democracy and Social Justice, The Pen Shall Never Run Dry-