Retrospecting on the many missed opportunities of the Private Sector Development Initiative (PSDI)

By: Attorney Wonderr K. Freeman

Attorney Wonderr K. Freeman

The legendary Liberian journalist and writer par excellence, Tom Kamara, frequently summed up his many musings on happenings in Liberia with the quip: this too is Liberia. When I ponder on how the brilliant idea of the Ministry of Finance and Development Planning’s (MFDP) Private Sector Development Initiative (PDSI) went from grace to disgrace, I’m inclined to invoke Tom Kamara’s quip and conclude that so much of the poverty experienced in Liberia is self-inflicted. What is wrong with this country? What can’t we just get it right for once? What kind of people who take so much pleasure in stealing from their own country time and again? How do these our brothers and sisters sleep, knowing that their action is directly contributing to the poverty, illiteracy, malnutrition, disease and heaven knows what else?

The Private Sector Development Initiative (PSDI): how such a scheme is designed to work

Like I said in my opening, the PSDI was an excellent initiative. While the scheme was much more of a pilot project, it seemed to be patterned on the Keynesian economic theory of state-led intervention into the economy, as opposed to the classical laissez-faire approach. This approach in contemporary times has been fully validated by the rise of the Asian Tigers (economies of Singapore, Taiwan, South Korea, Hong Kong); as they were able to elevate their countries from third world status to industrialized nations in only a few decades. Now in 2014, similar state-led development model was introduced to Liberia with the PSDI. Like any one of the Asian Tigers (of the 60s), Liberia has a plethora of economic challenges affecting the private sector [and the economy in general] for which the PSDI fund could have been utilized to address. I can certainly enumerate a few:

  • A Liberian currency in perpetual devaluation (if you transact in LRD, you understand this)
  • An ever-widening trade deficit (year after year of imports value far greater than exports’ )
  • An economy dominated by foreigners and the consequent capital flight
  • A very negligible level of manufacturing contribution to GDP (an average 7% maximum)

Based on some of these economic challenges, one would have expected some of the conditions to be set for participating in such a scheme (PSDI) would include a combination of the below:

  • Applicant/beneficiary business must be Liberian owned – 66-100% equity (Liberian participation)
  • Applicant/beneficiary business must have at least 20-50 Liberians in their employ (Liberian employment – insistence on support for SMEs as opposed to start-ups and microfinance)
  • Applicant/beneficiary business must be exporting at least 20-50% of it’s products (foreign exchange generation/LRD/USD/Euro rate appreciation)
  • Applicant/beneficiary business must be using/sourcing 30-50% of its materials from Liberia (value chains creation) and/or promoting of creativity, innovation and technology.
  • Of course other prudential conditions should include at least 3 years audited financial statements (ie no start-ups), no GOL-official linked business (conflict of interest) and no MFDP involvement in the appraisals and approvals of loans (proper governance structure)

Unfortunately however, such was not the case with the PSDI. The PSDI loan initiative was implemented the “Liberian way”. James Kollie and friends, shared the information by word of mouth, became designers, players and referees all at the same time. Instead of promoting genuine SMEs, we saw loads of fly-by-night “holding companies” selling “mineral water”. Not surprisingly, as the pilot project was being implemented the “Liberian way”, we saw how the MFPD employees, their cronies and their concubines became the primary beneficiaries. Three years later, this very laudable venture has gone bust, because of corruption, self-dealing, insider-dealing, and every other crooked scheme. And the culprits are likely to walk away with impunity as usual. Borrowing from Lib Hipco artists…if you are just coming… then welcome to Liberia!

The PSDI Audit has exposed several missed opportunities, a few of which I have opted to highlight in this piece.

  1. MFDP’s wasted opportunity to improve the economy – as stated earlier, the PSDI was an initiative to achieve some very laudable economic goals, like increasing employment, increasing Liberian participation in their own economy, promoting local manufacturing, promoting agro-processing industries, promoting businesses that generate foreign exchange, and engendering appreciation in the Liberian dollar etc. Instead of pursuing these lofty goals, all we saw was fraud, waste and abuse of public funds, with no one being held accountable as yet. Instead of building up genuine SMEs, we see fraudulent fly-by-night “holding companies” that were holding and are still holding nothing but the Liberian taxpayers’ money.

 

  1. MFDP’s wasted opportunity to combined audit and criminal Investigations – the fact that several of the persons who should be answering questions have absconded to the USA, exposes a serious flaw in the audit process. Whenever, an initial regular audit begins to uncover instances of criminality, that regular audit should be paused, so that it can be coupled with a simultaneous criminal investigation – LACC/LNP etc. In this way, the end of the audit can be synchronized with the conclusion of the criminal investigation, which will immediately be followed by indictments. This approach will then prevent suspects from absconding. This in my mind is one such missed opportunity that we can no longer afford to repeat. It’s not fair that criminal suspects always seem to beat investigators by absconding to Minnesota and Philadelphia, when they are needed in Liberia to answer questions on corruption charges.

 

  1. James Kollie’s wasted opportunity to come clean and plea bargain – the lack of formal criminal investigation and/or indictments up to now has created the situation where the likes of Dr. James Kollie are still pontificating in the press. I once interacted with James Kollie in the course of my work. Back then he came across to me as a consummate professional, smart and articulate, with an uncanny ability to wiggle his way out of tough questions. I now see another Dr. James Kollie, who is accused in the PSDI audit, and who wrote inanities about the PSDI audit – calling this objective piece of work a witch hunt. Will the real James Kollie please stand up, own up to his lapse of judgment and start singing to the investigators, plea bargain, and possibly get off with a lighter sentence? For the record Dr. Kollie, there is a principle in law called the respondeat superior (let the master answer), and via the operation of this principle, you are the number one candidate for indictment. All that jazz you wrote about not being involved in the day-to-day operations and vetting exercises is hogwash. As the principal manager for the government on the PSDI funds, the ultimate responsibility to ensure that the funds were implemented according to the laws of Liberia and according all norms of professional ethics rest forever with you as project lead. There is no way to legally shirk or delegate this responsibility. (That’s free legal advice for you my brother, take it!). It’s similar legal reasoning that got Ghankay 50 years in a cold British cell. God’s willing he’ll be back!
  1. Brumskine’s wasted opportunity to cut Sanvee loose. Cllr. Brumskine is making his third bid for the Presidency. When you are making a third dig at something, there is no time for errors. Keeping Sanvee as Chairman of the Liberty Party is an error that will eventually prove far too costly. Given the UP’s record on corruption, the Liberian people will certainly prefer someone who appreciates and understands that corruption is indeed Liberia’s public enemy no. 1. Moreover, such a person must be willing to take a strong stand against corrupt officials. Cutting Sanvee loose was Brumskine’s litmus test to prove that what he wrote on paper as his anti-corruption policy will be backed up with concrete action, when the moment of truth arises. Cllr. Brumskine’s moment of truth came with the PSDI audit and with Sanvee listed as one of the fraudsters. But surprisingly, the learned counsel has been conspicuously silent. I supposed the learned counsel knows quite well what it means to create a “holding company” overnight to access secret loans in which the MFDP plays referee and player. Worst yet Chairman Sanvee took as much as USD45,000 of Liberian taxpayers’ money, held it for three years and and never pay a dime for three years – until there was a PSDI audit. I stand to be corrected, but this conduct comes complete with an actus reus and a mens rea. It surely looks and smells like fraud to me. To the best of my knowledge fraud is a criminal offense, whether one’s legal studies was done at Yale, Oxford, Fourah Bay or at Louis Arthur Grimes. There is still a possibility that Sanvee could be indicted. The learned counsel’s failure to axe Sanvee’s from his Chairmanship duties is a wasted opportunity for Liberty Party Political Leader to have demonstrated that he’s prepared and is willing to cut loose charlatans and fraudsters from positions of influence.

As an accountant, auditor, investigator and a trade and investment lawyer, what I see in the PSDI audit is fraud, conflict of interest and other offenses under sub-chapter F (economic sabotage of the New Penal Law, Title 26). The problem in Liberia is: everybody wants a clean and accountable government, but nobody wants to see their buddies or cousins going to jail. It’s like wanting omelets but not wanting to break eggs – it’s just not possible my people! Not possible.

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About Cholo Brooks 5094 Articles
Joel Cholo Brooks is a Liberian journalist who previously worked for several international news outlets including the BBC African Service. He is the CEO of the Global News Network which publishes two local weeklies, The Star and The GNN-Liberia Newspapers. He is a member of the Press Union Of Liberia (PUL) since 1986, and several other international organizations of journalists.