2014-08-27

Liberia Governance Stakeholder Survey (LGSS) USAID Report 2013, Part 2

Ver. 1.0.1

Liberia Governance Stakeholder Survey (LGSS) USAID Report 2013, Part 2

See the background here.





b. Economics and Power
This section illustrates how rents and resources are distributed and received in the land sector and what parties have veto power over reform.
Stakeholder Rents/Resources Distributed and Veto Power Over Reform?
Received President Appoints the individuals who ultimater sit i Yes
on the NIC and IMCC.
NlC — Chairs the IMCC, which negotiates
concessions agreements.
- Helps to decide what entities get
concessions agreements and under
what terms.
- May extract payments or other rents
during IMCC prcLss.
IMCC - Negotiates concessions agreements.
- May receive payments or rents during
the process.
No, but some influence
NBOC In theory, should monitor the process of
awarding and managing concessions
No, but some influence


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contract, but do not as a practical matter.
In theory, should ensure that concessions are carried out in accordance with the PPCC act, but do not, as a practical
matter.
No, but some influence
MLME
Helps to decide what entities get concessions agreements and permits and under what terms for iron ore, gold, and diamonds.
May extract illicit payments or rents during IMCC process.
May extract illicit payments or rents during lower-level regulatory processes (e.g., surveying).
No, but some influence
Helps to decide what entities get concessions agreements or permits and under what terms for forests. May extract illicit payments or rents during IMCC process.
May extract illicit payments or rents during lower-level regulatory processes (e.g., permitting for harvesting logs).
No, but some influence
MOA
Helps to decide what entities get concessions agreements or permits and under what terms for palm oil, rubber, and cocoa.
May extract illicit payments or rents during IMCC process.
May extract illicit payments or rents during lower-levei regulatory processes (e.g., estimating palm oil revenues).
No, but some influence
NOCAL
Helps to decide what entities get concessions agreements and permits for oil, and under what terms.
May extract illicit payments or rents during iMCC process.
No, but some influence
MOF
Collects taxes and fees.
Helps to decide what entities get concession agreements and under what terms.
May extract illicit payments or rents during IMCC process.
No, but some influence
Helps to decide what entities get concession agreements and under what terms.
May extract i1iicit payment or rents
No, but some influence


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during IMCC process.
Minister of Internal
Affairs
Controls resources going to chiefs.
No, but some influence
Traditional leaders
May receive payments or other rents from concessionaires looking to do business in a particular geographic area.
No, but some influence
Multinational Receive profits from concessions | No, but some influence Extractive companies extractions. Legislature - Ratifies concession agreements. ' No, but some influence
- May receive payments or rents during
that process.
Judiciary (Courts) May receive rents when concessions cases I No
go to courts. Liberian CSOs Receive donor funding. No internationai NGOs Receive donor funding. N0 Rural communities Receive some benefit from concessions. No
c. History
The present situation in concessions results, in part, from Liberian history.
As discussed in the country analysis section, the civil wars devastated Liberia’s econ tremendous political pressure to improve it, almost by an “leap before it looks” when signing concession agreements. They enter in
concessionaires, for as long as 25 to 50 years, without conducting due diligence on the long-term
environmental, financial, or social impacts of the
concessions, because they are so desperate for the
investment, revenue, and contribution to GDP that comes from a particular agreement.
The war had an impact in other ways, as well.
M. , ,, I 7 For nearly three decades, few investments were made in the information management systems necessary for awarding and overseeing concessions, such as
mapping and cadastral information. Many records were destroyed or not kept at all.
The historical divide between the urban elites and rural indigenous population also contributes to current dynamic in the concessions sector. For the most, pa ' ' '
a concessions agreement rest with urban elites, whereas rura
no say in the process and have to live with the consequences and impact of a particular
agreement.
d. Social
rt decisions about whether or not to enter into I indigenous populations often have littie or
concessions
omy, so there is y means necessary. This often causes GOL to
to long-term agreements with
Several social trends and forces are at play in the concessions sector, including several related to gender, ethnicity, and youth disparities and inequities.
Many interviewees suggested that women have very little say in how concessions awarded and concessions activities are carried out, yet they bear the brunt of the impact. For instance, they are the least likely to be hired by concessionaires. Likewise, if environmental degradation or changes to the landscape caused by concessionaires affects water sources or areas for growing or gathering food and


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firewood, women often are the ones that have to work harder or walk farther to maintain the livelihoods oftheir families.
Other interviewees talked about how particular ethnic groups living in particular areas are significantly impacted by the activities of concessionaires. For example, the Km ethnic group living in Sinoe County has been particularly affected by Golden Veroleum's palm oil concession. It has had to be relocated and occasionally squabbies with management about treatment of workers, despite Golden Veroluem’s genuinely well~meaning efforts to employ 90 percent of able-bodied workers in some communities and protect sacred forests.
Others suggested that youth may be most negatively affected by the concessionaire sector in an indirect way. In particular, they perceive that concessionaires have thousands ofjobs to give away, when, in fact, many concessionaires will need to carry out years of development and investment before they begin large— scale extraction or cultivation. Youth need jobs the most, yet often do not receive them as fast as they think they should. At the same time, they are prone to manipulation by political or traditional leaders and can be easily mobilized into violence or conflict.
Likewise, rural communities at large are negatively affected by the Current practice of not requiring environmental and social impact assessments, feasibility studies, and work plans until after the concession agreements have been ratified by the legislature which undermines their ability to shape the terms of the concessions agreements.
e. Corruption
Interviewees consistently told the LGSS Team that corruption exists at all levels of the process of negotiating, awarding, and regulating concessions. They gave specific examples, as follows:
Corruption exists during the award of concessions. As some Liberians said: “envelopes are passed" during the process of negotiating concessions. Other schemes are more complicated than good old-fashioned bribery, with decision-makers at the highest levels of government receiving ownership stakes or long—term profit-sha ring arrangements in concessionaires. Even without money changing hands, the elite government decision—makers are so influenced by concessionaires and the potential positive economic impact that they bring, that state capture occurs; the elites will, in effect, do whatever necessary to enter into concession agreements with willing international private sector participants.
Other interviewees explained that lower level officials of line ministries and agencies often receive payments in return for favorable treatment of concessionaires during the negotiation/award process, as well as during subsequent regulation, such as conducting analysis slanted in favor of the positions taken by concessionaires or looking away when violations have occurred or deadlines are missed. These problems are greatly exacerbated by the low capacity and resources at most ministries and agencies: It is easier and more profitable to take a bribe, then to develop competencies, since there is little chance of consequence or repercussion.
Concessionaires themselves often have to pay some "small small” to make problems with local communities go away or to be able to Initiate operations in a certain area. Often, these payments go to traditional leaders or chiefs at a small fraction of the market value of the resource being extracted or
cultivated.


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f. Islands of Integrity
There are few potential collaborators who could work with USAID in the sector. Leadership within the NBOC is reform-minded, because it sees the chance to bring about reform and elevate the role of the NBOC within the GOL, but lacks the backing of the President and her inner circle. Leadership within most other ministries, with the possible exception of current interim leadership at FDA, does not want to fundamentally change the way business is done in the concessions sector. USAlD’s best approach is to support marginal and incremental change in the sector until windows of opportunity emerge.
4. Summary and Action Framework
This section summarizes the main patterns of behavior observed by the LGSS Team in the concessions sector as they related to the political economy factors discussed above and proposes a strategy for moving forward. At the end of the section, the LGSS Team provides a matrix illustrating who potentially wins and who loses from the proposed reforms and actions.
a. Patterns of Behavior Relative to the Political Economy
The political economy analysis above reveals several interrelated patterns of behavior:
(1) Because GOL officials at all levels receive personal financial benefit from the current concessions
process, senior leadership in the GOL do not want it to be reformed or appropriately regulated. As a result, basically all ofthe entities that are supposed to oversee it are left intentionally unfunded, understaffed, and under-resourced. For example PPCC has 54 staff, 17 of whom are experts on procurement; not a single one of them has a concessions background or is assigned to a concessions portfolio. Ministries and agencies themselves involved in the regulatory process (e.g., MLME) or revenue collection process (e.g., MOF) lack capacity and frequently collect illicit revenues instead licit ones.
(2) Similarly, even if high-level officials do not receive personal financial gain, they still want to see
Liberia quickly develop with concessions investments and revenue as primary economic drivers. They firmly believe that the concessions process is slowed down by additional consultations with communities or professionals. As a result, there is rush to award concessions without appropriate due diligence, thorough analysis of economic or environmental impact, or design of approaches to mitigate the negative social consequences. Further, the GOL hasn’t held its ground in negotiations with concessionaires, often giving access to more land resources than they need to to make a deal. For example, many interviewees noted that the geographic size of palm oil concession areas far exceed the amount which they can reasonably expect to cultivate and manage. That land could be used for other revenue-generating purposes, but more often than not squatters become further entrenched on it. In the end, the GOL does not receive as much revenue as it could if it had doled out smaller plots to multiple investors.
(3) The focus on concessions as the immediate driver of development has created a situation in which GOL leadership is not creating policies that will use natural resources to diversify the economic base and promote secondary industries related to natural resources over the long term. Firestone is the example that many interviewees referenced when making this point. Firestone has been in Liberia since 1926, yet Liberia has not developed any industries related to refined rubber, even though it is one of the world's largest exporters of raw rubber. There is no tire factory, no condom factory, no rubber glove factory in Liberia, all of which would require very little skilled labor.
SO


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(4) Many interviewees suggested that external organizations, such as foreign governments and
international nongovernmental organizations, can influence government policies more than local organizations, such as CSOs. interviewees told the LGSS Team that the President and senior leadership do not want to be embarrassed on the world stage. The example they cited is the impact that Global Witness had on the PUP issue. The GOL enacted a moratorium on PUPs only after Global Witness drew attention to the practice in the international media.
(5) As grievances of local communities — particularly those of rural indigenous populations who have
been marginalized for decades—- continue to remain unaddressed, conflict is a real possibility in Liberia. Many interviewees noted that large numbers of unemployed youth feel they have not benefited from the current concessions system. Many see violence as the primary means by which differences are settled and power arrangements are organized. Political and traditional leaders can mobilize them and incite violence, as they have in the past in Liberia.
b. Action Framework
Several steps can be taken to improve effectiveness in the concessions sector. Given that there will be significant resistance to reform efforts, because so many individuals benefit personally from the current system or believe that changes will slow down Liberia’s ability to develop quickly, the LGSS Team believes USAID must engage in a policy dialogue with the GOL, before USAlD provides any technical assistance package. The suggestions below focus on developing some checks on the executive branch and improving information management.
> 
Develop a Concessions Codostre and Engage in a Policy Dialogue About its Adoption. At present, USAID is contemplating comprehensive support to develop a concessions cadastre and has conducted initial assessment of its feasibility. Many interviewees agreed that a cadastre could be an important step in beginning to make more informed decisions at the IMCC level. Many interviewees also suggested that simply showing how much land has been granted to concessionaires and the extent of overlapping concessions might focus attention and serve as a catalyst for reform. Many also agreed that there will be a political struggle about who manages the cadastre. The LGSS Team believes that the cadastre should be housed outside the line ministries and agencies, possibly in the NBOC, because it could be used to coordinate and harmonize the activities of GOL actors in the concessions process. However, at present, it does not appear that there is broad-based support for the cadastre or housing it in the NBOC, so USAID could engage in a policy dialogue with the President and her inner circle to build support for those
measures.
Support the NBOC and Engage In a Policy Dialogue About its Future. The NBOC remains Liberia’s best chance at checking the unchecked power of the IMCC and line ministries and agencies involved in the concessions process. USAlD has provided initial support to the NBOC, such as office support and information technology assistance. Although the NBOC may not yet have the high-level backing to carry out its mandate at present, the LGSS Team believes that USAID could engage the President about supporting it. She needs to clarify the role of the NBOC relative to the lMCC. Regardless, even if it takes some time to get that backing, the NBOC does not presently have the capabilities to carry out its duties. It has received some USAID support, but still needs training related to technical skills in minerals, agriculture, forestry, financial modeling, legal compliance, and monitoring and evaluation, as well as information management infrastructure and support. USAID could begin the process of developing those capacities while discussions about NBOC’s future are ongoing.


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Support Legal Measures to Assist Local Communities. Liberia has a legal framework that allows class action lawsuits when rural indigenous communities experience damages from the actions of concessionaires or the government. USAID could provide technical assistance, training, and capacity building support to such efforts to build another check on the executive branch. Although it is possible that the court system in Liberia may not have the strength or will to uphold a decision in favor of rural indigenous populations, the act of filing a lawsuit may draw attention from international actors — who have proven to be influential — and result in executive action to improve conditions for local communities. Also, as the court system is improved, suits also could be filed in courts outside of Liberia when damages occur. For example, a recesht ....,..-.-c., w.-- n." Hi i decision in the Netherlands enabled a farmer in Nigeria to sue Shell Oil in its home country for damages.8 Non-formal methods similar to those discussed in the section on land, such as mediation, also could be used to mitigate disputes that are occurring between concessionaires and representatives of local communities. Some concessionaires have demonstrated that they are willing to adjust their operations.
Civil Society input into the lMCC and Reporting on its Decisions. The IMCC cannot continue to be a "black box" if the concessions process is going to have legitimacy in Liberia. USAiD could engage in a dialogue to push the President to allow involvement of civil society organizations in the IMCC negotiations process. They could serve as a conduit to get communities involved and inject transparency into the process and then monitor implementation after concessions contracts are awarded. USAID could provide technical assistance to the civil society organizations on monitoring and reporting on lMCC’s activities and train journalists to improve investigative reporting. Given the influence of external civil society actors, like international NGOs, USAID should also encourage them to work in collaboration with local CSOs.
Support a Policy Dialogue on Requiring Additional Analysis and Due Diligence Before Negotiating and Signing Concessions Agreements and Economic Diversification. As discussed previously, environmental and social impact assessments, feasibility studies, and work plans generally are not required until after the the concession agreement have been ratified by the legislature, which relegates them to the status of a rubber stamp. USAID could engage in a policy dialogue with the GOL to change the provisions of the PPCC Act and other laws so that that analysis and due diligence occurs before negotiating and signing a concessions agreement, thus making them more meaningful. As part of the policy dialogue, USAID could have discussions with GOL officials and show them examples of other countries where not "looking before they leap" before awarding concessions actually drove conflict and had negative economic consequences. This could be accompanied by discussions about the equally negative impact of reliance on concessions as the sole driver of the economy.
Possible Reform or Action Who Wins? Why? Who Loses? Why? Develop a Concessions Cadastre - Local communities likely will Arguably IMCC, ministerial, and and Engage in a Policy Dialogue see better decisions being agency leadership, managers, about its Adoption I made during the process of and technical experts, because
awarding concessions. transparency and information - Concessionaires, because I systems will (1) help to expose
they will see fewer l bad decision making that is overlapping concessions. l carried out in exchange for illicit - The GOL as a whole, I payments, and (2) take away
because better managed l some of their power in the
concessions could help to | decision-making and regulatory


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improve revenue generation.
processes.
Support the NBOC and Engage In a Policy Dialogue About its Future
- Some concessionaires,
because there will be one entity responsible for concessions oversight.
- The GOL as a whole,
because better managed concessions could improve revenue generation.
lMCC, ministerial, and agency leadership, managers, and technical experts because oversight will take away some of their power in the decisionmaking and regulatory
processes.
Support Legal Measures to Assist Local Communities
- Local communities, because
they will be given some power through the legal system.
- Some concessionaires,
because there will be legal repercussions to poor GOL decision—ma king.
- Some concessionaires,
because there could be legal repercussions to actions that negatively affect local communities.
- Likely, IMCC, ministerial, and
agency leadership, managers, and technical experts, because there will be repercussions to their actions when they negatively affect local communities.
Civil Society input into the IMCC process, Policy Dialogue About Conducting Additional Analysis and Due Diligence Before Concessions Agreements are Signed, and Economic Diversification
C505 and locai communities,
because they will get a seat at the table and concessions agreements will better reflect their interests.
- Some concessionaires,
because it will be more
difficult to enter into an concession agreement if these policies are adopted .
- Likely, iMCC, ministerial, and
agency leadership, managers, and technical experts, because increased transparency will (1) help to expose bad decision making that is carried out in
exchange for illicit payments (2)reduce their almost absolute power in decisionmaking and regulatory
processes.
D. Auditing/Accounting
The auditing and accounting sector is characterized by a general lack of capacity, but, like many sectors in Liberia, it is changing rapidly in ways that could be beneficial, but also detrimental to the country's development. For the purposes ofthis study, the LGSS Team consulted with USAlD and is defining the problem in this section relative to private sector auditing and accounting and government auditing. The


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first section ofthe report on the payroll sector discusses many of the problems associated with government accounting and financial management.
1. Prohiem Statement
The Liberian Independent Certified Public Accountants (LICPA) iaw limits the ability of foreign auditing and accounting firms to operate in Liberia. At the same time, those firms lack the capacity to carry out auditing and accounting in accordance with accepted international standards, hindering the ability of donors to ensure accountability over funds that go the government and other partners. Perhaps of equal concern to international donors who want to provide funding directly to GOL bodies, government audits are poor in quality, and the legislature or the justice sector rarely take action when there is evidence of malfeasance, enabling it to occur on a large scale, depriving the government of resources.
2. Institutional Governance Arrangements and Capacities
Several institutional governance arrangements and capacities exist within the auditing and accounting sector, as described below. These include policies that impact the sector, the institutions that comprise it, and the public administration and policy processes in which the institutions themselves operate.
a. Policies Impacting the Sector
Several policies affect the accounting and auditing sector in Liberia.
Accountancy Act 0f1933. This law provided the statutory framework for the Liberia Institute of Certified Public Accountants (LICPA) but did not provide it with the legal backing to establish itself as a selfregulating body that sets and enforces accounting and auditing standards.
LICPA Act of 2011 (also referred to as the New Accountants Act). The LICPA Act establishes a governance structure for LICPA, including a chief executive officer and a governing council. The LICPA Act also provides admission criteria for acceptance into membership classes. The LICPA Act states that LICPA shall serve the public interests by setting and enforcing accounting and auditing professional standards, licensing accountants to practice in Liberia, and supervising the conduct of all firms and individuals engaged in public accounting and auditing in Liberia. The law restricts the amounting and auditing profession to Liberian residents and states that any foreign firm working in Liberia must share 30 percent of its revenues and fees with a Liberian partner.
The Association Low of1976. The law provides a framework for corporate registration, but does not require companies to prepare and submit audited annual financial statements to shareholders or the Business Registry. It also does not prescribe any national or international accounting standard for financial reporting.
The Executive Law of 1972 (as amended in 2005). The original law empowered a General Auditing Office (GAO) to undertake audits ofall government bodies and state-owned enterprises. In 2005, an amendment to the Act created the General Auditing Commission (GAC), which reports to the Legislature (instead of the President) and established a legal framework that will eventually bring Liberia in compliance with the International Organization of Supreme Audit institutions (INTOSAI). At present, this law is not fully implemented, mainly because the GAC lacks capacity.


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Revenue Code ofLiberia onOOO. The code does not require companies to submit annual financial statements with the annual tax returns. Also, since the Association Law does not require audited financial statements, the Revenue Board accepts unaudited financial statements from companies. Corporations derive corporate income for tax purposes from their general purpose financial statements, as allowed under the Tax Law.
The Central Bank Act of 1999 and the Financial Institutions Act of1999. These two laws empower the Central Bank of Liberia to regulate banks and other financial institutions and require them to prepare financial statements in conformity with established guidelines, but these requirements are not in line with the International Financial Reporting Standards (lFRS) or any national standards. In 2008, the Central Bank adopted lFRS for its own financial reporting, but it lacks the technical capacity to ensure that commercial banks comply with IFRS. IFRS has been prescribed for adoption by commercial banks by December 2012, but has not yet been adopted.
The Public Financial Management Act of 2009. This law governs the public financial management (PFM) system in Liberia and calls for the establishment and operation ofan integrated financial management system. It is not yet implemented, however.
b. Relevant Institutions
Several institutions in Liberia play a roie in the accounting and auditing sector.
LiCPA. LICPA is the body responsible for establishing professional standards for the auditing and accounting profession in Liberia. LICPA does not yet have the capacity to certify individuals as public accountants, but will certify the first set of professionals this fall, in collaboration with Stella Marie Polytechnic University. At present, certification is carried out in collaboration with the Institute of Chartered Accountants in Ghana. LICPA is trying to bring itself in compliance with rules set forth by the international Federation of Accountants (IFAC), which establishes international standards for bodies that self-regulate the auditing and accounting profession.
LICPA has aggressively pursued international firms that violate LICPA Act provisions limiting the accountancy and auditing profession to Liberian residents or those working in collaboration with international firms and receiving 30 percent ofthe revenues and fees from such an arrangement. For instance, LICPA advertises and operates a "whistleblower" hotline, through which ‘Liberians can report foreigners who violate the law. In fact, LICPA has worked with local police to arrest those individuals.
Accounting and Auditing Firms. At present, 10 Liberian-based firms are members of the LICPA. Some of the leading ones include PKF Liberia, Voscom, Parker Associates, and Mombo and Company. As a result ofthe LlCPA law, many ofthese Liberian firms are working in partnership with international firms, such as KMPG, PWC, and Partner AKUS Consult Ghana.
GAC. The GAC is Liberia’s supreme audit institution. Headed by the Auditor General, the GAC conducts audits in the public sector and sends reports to the legislature and copies the President and the executive branch. The GAC has an inefficient, unskilled work force that is not capable of producing quality audit reports, which is one reason why the legislature or other appropriate elements of the executive branch rarely take action on those reports, as discussed below. Political will is another.
Committee on Public Accounts and Audits (CPAA). The CPAA is the committee in the Senate that is constituted at the beginning of each session to examine audited accounts and reports submitted by the


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GAC and compels the executive branch to take remedial action or implement changes through hearings, inquiries, or other legal actions. In reality, CPAA takes no such actions.
Ministry ofJustice. The MO] is supposed to reach independent decisions about prosecuting individuals
involved in potential criminal activities discovered during audits. In reality, the MO] rarely takes action unless there is political pressure from the President. Their caseload far exceeds what their capacity can handle.
President. The President can order ministries or agencies to take remedial actions, enact changes, or issue sanctions, based on audit report findings. In a few instances, she has temporarily suspended personnel. Many interviewees suggested she could take more aggressive action, but is often hindered by the low quality of audit reports.
Liberia Anti-Corruption Commission. The LACC is tasked with investigating and prosecuting acts of corruption. It can prosecute a specific case only after referring it to M0] and then waiting for 90 days. If MOJ does not take action, then the LACC can prosecute it. At present, it has worked to get one successful conviction, that of a former police chief who stole $200,000 that was supposed to be used to purchase uniforms.
lnternalAudit Secretariat. Most ministries and agencies are supposed to have an internal audit function. in reality, most are very weak or nonexistent. The IAS is still in its infancy, but was formed to establish and strengthen the internal audit capacity within each ministry and agency.
Liberian Institute of Public Administration (LIPA). LIPA is the government body tasked with training government officials on public administration and policy issues For example, it is working with the USAID GEMS program to provide training to public officials on financial management techniques. But, Ll PA remains under—resourced, given the vast capacity issues facing the bureaucracy in Liberia.
MOF. The MOF is responsible for implementing the government-wide IFMIS system, which is not fully installed or operational. MOF also influences the amount of money that goes to the GAC, since MOF is responsible for dispersing funds to it. MOF's Revenue department also conducts audits of private companies for tax purposes.
National Integrity Forum. This group is a conglomeration of Liberian C505 and government bodies that often advocate for auditing and accounting reforms, though most interviewees agreed that they have not been as influential as they could be.
c. Public Administration and Policy Processes
The institutions above are involved in several public administration and policy processes.
Complying With LICPA Provisions. Both Liberian and international auditing and accounting firms are adjusting their behavior to comply with the provisions ofthe LiCPA law that restrict the auditing and accounting professions to firms operated by residents of Liberia or require international firms to provide 35 percent of gross revenues and fees to Liberians. The vast majority of international firms lead their business development and project implementation efforts in Liberia from offices in Ghana. Many are forming partnerships with Liberian firms and establishing a presence in Monrovia by opening offices with Liberian firms. KPMG, for instance, is forming partnerships with local firms and having teams composed of foreigners and expatriates carrying out auditing and accounting functions. Some Liberians from the


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diaspora, like Ernest Parker, are returning to Monrovia after decades away to establish or re-establish accounting and auditing operations because of the favorable conditions presented by the new law and the promise of peace and stability.
Some international firms are working in collaboration with local firms and negotiating deals that fall below the 35 percent threshold. However, LICPA does not seem to be taking action against those firms because the arrangements are consistent with the spirit of the law or because the agreements are "flying under the radar,” because it is so difficult to prove whether or not they are paying 35 percent. Some interviewees suggested that some of the Liberian firms do not have the actual capacity to carry out that level of work corresponding to 35 percent. Others argued that some firms could provide that level of support and more would be able to do so in the coming years.
increasing Accounting and Auditing Skills. Interviewees consistently agreed there is a general lack of capacity in the sector, however. Most accountants and auditors are bookkeepers who do not have skills beyond simple math to balance check registers, analyze income statements, or the like. Very few have familiarity or fluency with more complex aspects of the field, such as forensic accounting, value for money audits, performance audits, technology audits, auditing in the oil and gas sector, or detection of waste,
fraud, and abuse. Most do not understand international best practices, such as those prescribed by the International Organizations of Supreme Audit Institutions (INTOSAI) or the US. General Accounting Office (GAO) Yellowbook. LICPA is trying to address this by bringing instructors from Ghana, Gambia, and Nigeria to provide training with support from USAID and the World Bank, but much more needs to be accomplished and the process will take years.
Conducting Government Audits. GAC itself is a microcosm of the larger problem in Liberia. It does not have the skill sets necessary to carry out the number of audits that it should be executing. It hasn’t adopted an appropriate audit methodology, like the GAO Yellow Book, so audits are inconsistent and not standardized. lNTOSAl and AFROSAI have assessed their needs and found them to be profound. More than 50 percent of staff lack degrees that are relevant to auditing our accounting. The quality of the reports is very low. Many are not well written and cannot be understood by a layperson. Many are hundreds of pages in length with no executive summary or summary of findings. Many reports name specific individuals who are accused of wrongdoing, rather than focusing on whether or not a particular office conforms with accepted accounting principles, has internal controls in place or violates them, follows established procedures, or the like. Even though it is supposed to by law, the GAC simply does not audit the judiciary or legislators' activities (per diems, expenditures on staff, etc.), which are highly prone to corruption. GAC outsources audit of certain government agencies to private firms, such as US Slmillion contract to Voscom to audit the payroll of certain government agencies, which helps to improve the quality. GAC gets some EU support and is in discussions with USAlD about conducting an audit of the education sector payroll.
Following Up on GovernmentAudits. Generally speaking, relevant government institutions rarely follow up on audit reports after they are produced. The Ministry ofJustice recently has reviewed more than 150 audit reports and says that there is not enough evidence of wrongdoing to begin to prosecute cases of criminal wrong doing. Likewise, last year, GAC submitted 34 audit reports to the legislature, but CPAA has not taken action on a single one. The legislature has not held hearings, initiated inquiries, or carried out other actions. Many interviewees suggested that this is, in part, because the quality of the reports is so low. Legislators and their staffs, as well as lawyers, generally cannot understand them. Others Suggested that the Ministry ofJustice and the legislature lack the capacity or political will to take action. The reality is that the Ministry ofJustice and the legislature can and will continue to use the poor quality excuse as a


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crutch until the reports improve. 0n the whole, very few Liberians understand what is supposed to happen after an audit report is issued, so there is iittle public or C50 pressure for the process to improve.
3. Political Economy Drivers
Several elements drive political economy in the accounting and auditing sector, as discussed below. This section discusses stakeholder incentive, interests, and influence; examines political economy drivers, such as the rents and resources distributed and who has veto power over reform; looks at the social and historical context ofthe sector; identifies the areas most prone to corruption; discusses islands of integrity that USAID can work with; discusses of how the political economy of the sector leads to specific behaviors; and proposes an action framework, including a discussion of who wins and who loses from the proposed reforms or actions.
a. Stakeholder Incentives, Interests, and Influence
This section describes the incentives and interests of each of the institutions and stakeholders to promote
or hinder reforms in auditing and accounting sector, with specific focus on the LICPA Act and the lack of government auditing capacity in Liberia. it considers their political spheres of influence, relationships, and
alliances.
Stakeholder
interests/Incentives
Exert Influence On? Influenced by?
President - Wants to promote improved - Influences all actors in the sector.
capacity within the accounting - Is influenced by the heads of and auditing sector. LICPA, MOJ, MOF, and GAC. - Is not interested in repealing
the LICPA act at present. LICPA - Wants to restrict the accounting I - influences LICPA member firms
and auditing profession to Liberian residents or international firms working in collaboration with Liberian
firms.
- Wants to improve capacity in
the Liberian auditing/accounting sector.
- Wants to see Liberian firms
receive increased revenue and fees from auditing activities.
and, in turn, also are influenced by them.
- Influence foreign firms to stay out
of the Liberian auditing/ accounting market, often by almost predatory means.
- Has some influence on the
President herself.
Local accounting and auditing firms
Want to make money from carrying out auditing and accounting projects.
Influence LICPA itself to represent
their interests.
General Auditing Commission
Wants to conduct quality external audits of government projects, but is not yet doing so with regularity.
- Has influence on all government
entities because of GAC’s potential for power.
- Influenced by the President;
Committee on Public Accounts and Audits (CPAA) in the Senate
- Has very little incentive to take action audit reports because there is very little
Should influence the entire executive branch into better accounting and auditing practices but, in effect, does


Sensitive But Unclassified (SBU)
and legislature as a I understanding in Liberia about | not. whole I what it are supposed to do or
political pressure to take action
(Le, change laws that provide opportunity for mismanagement, hold executive branch accountable, hold hearings, etc.). — Many receive illicit funds from
government activities, so there is not a desire to create a Culture of accountability or robust investigations and inquiries. MO] | Does not want to take action on | Influenced by the President.
criminal matters in the auditing/accounting sector, even though it is supposed to.
IAS Genuinely wants to strengthen I - Influenced by the President.
internal controls within line | - Influenced by some of the line ministries and agencies. l ministries and agencies in which
they work. MOP - Some elements want to see I - Influenced by the President.
government auditing and | - Influenced by some of the line accounting practices improved I ministries and agencies with so that there is less revenue l which they work. leakage.
— Other elements want to keep
reforms from happening because they benefit personally from weaknesses in the system. National Integrity Genuinely want to see reforms in - Have very little practical influence
Forum and other the auditing and accounting sector. at any level of the GOL.
Liberian C505 l | a May be influenced by
international NGO actors (e.g., Transparency Internation—al).
b. Economics and Power
This section illustrates how rents and resources are distributed and received in the accounting and auditing sectors and what parties have veto power over reform.
Veto Power Over Reform?
S—takeholder l Rents/Resources Distributed
and Received
- Determines resources I Yes
allocated to all government bodies.
- Can force executive branch
President


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to take remedial action on
audit reports.
LICPA
Essentiaily extracts 35 percent of gross revenue and fees from international firms wanting to work in Liberia.
No, but some upward influence on the President and legislature.
Local accounting and auditing firms
Essentially extract 35 percent of gross revenue and fees from international firms wanting to work in Liberia.
General Auditing Commission
Can be the catalyst for enforcement actions against ministry and agency personnel.
No, but some upward influence on the President and legislature.
Committee on Public Accounts and Audits (CPAA) in the Senate and legislature as a whole
- May extract illicit revenues for not acting on particular audit reports.
- Can force the executive
branch to take action on
audit reports.
Yes, it can stop both LICPA and follow up on audit reports.
- May extract illicit revenues for not acting on particular audit reports.
- Can prosecute acts of
malfeasance uncovered in
audit reports.
IAS
Shape internal controls within ministries and agencies.
MOF
Helps to determine resources allocated to all government bodies.
No, but some upward influence on the President and legislature.
National Integrity Forum and other Liberian C505
Attempt to advocate for improvements in the performance of auditing and accounting entities in Liberia.
c. History
Several historical factors have led to the present condition in the auditing and accounting sector, including
previous reform initiatives.
Most interviewees suggested that the wars were the largest contributing factor to the current state of affairs. Brain drain resulted from the conflict and devastated the profession, because many qualified
auditors and accountants fled to the United States or neighboring countries. Weaknesses in the education
system prevented a new generation of accountants and auditors from emerging.
Many interviewees also said they felt that foreign auditing and accounting professionals had been making huge profits in Liberia for decades without taking any steps to improve Liberian capacity. This made


Sensitive But Unclassified (SBU)
Sebastian Muah Deputy Minister of Finance for Budget Government of Liberia
Raymond Muhula
Public Sector Specialist, Public Sector Reform and
Capacity World Bank/Liberia
Emmanuel Munyeneh
Assisting Managing Director for Administration
and Finance Forestry Development Authority Government of Liberia
Mohammed Nasser President/CEO Federation of Liberian Youth
Bla moh Neison
Minister of Internal Affairs
Government of Liberia
Oblayon Blayon Nyemah
Head, Civil Service Reform Directorate Civil Service Agency
Government of Liberia
Emmanuel B. Nyeswa Deputy Executive Director internal Audit Secretariat
Government of Liberia
Marios 0bwona
Senior Economic Advisor USAlD/Liberia GEMS Project
Tammy Palmer Economic Governance Officer USAID/Liberia
Richard Pa nton
Deputy Director—General (Training and Development)
Liberia Institute of Public Administration
Government of Liberia
100
David Parker
British Honorary Consul in Liberia Foreign and Commonwealth Office
The United Kingdom ofGreat Britain and Northern Ireland
Ernest Parker
Partner
Parker & Associates
James Paye
Comptroller
National Center for Documents and Records Agency (CNDRA)
Government of Liberia
MacArthur Pay-Bayee Executive Director
Land Commission
Government of Liberia
Dr. Waiter Phillips
Senior Advisor, Policy Planning and Education Information Management Systems
USAID/Liberia Liberia Teacher Training Program ll
Patricia Rader
Mission Director USAID/ Liberia
Amanda Rawls Access to Justice Program Adviser Carter Center
Steve Reid
Chief of Party USAID/ Liberia PROSPER Project
Peter Roberts
Assistant Minister for Research and Development Planning
Ministry of Internal Affairs Government of Liberia
Mark Richards
Superintendent for Corporate and Commercial Service
BHP Billiton


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passage of the LICPA Act palatable or even desirable, because they wanted to stop the auditors and accountants who work out of suitcases on a temporary basis.
More recent events have shown that change comes slowly to the sector. For example, John Morlu, the former Auditor General, was very independent, strong, and forceful. But some interviewees noted that he promoted too much rapid change and aggressively sought to unearth financial malfeasance too aggressively. Nearly every action he took or audit report that he issued was questioned harshly by his critics. As a result, even though his appointment term is four years and renewable, but the President decided not to renew his contract.
d. Social
Several social trends and forces are at play in the auditing and accounting sector. Women are underrepresented in the sector as a whole. Youth are not being trained in auditing and accounting practices so that they can become the next generation of professionals. As is the case with many laws in Liberia, most accountants and auditors who benefit from the provisions of LlCPA come from the urban elite, including many from the diaspora or their immediate families.
e. Corruption
Both the LICPA Act and general weaknesses in the auditing and accounting sector mean that corruption is more likely to occur at all levels. Without effective auditing and accounting, then both government officials and private sector actors are more likely to engage in fraud, waste, abuse, and malfeasance. Sectors involving high levels of individual discretion, dispersed actors, significant personal interaction, and little oversight are the most prone to corruption. Examples would include procurement, concessions/natural resources, licensing, permitting, and payroll, some of which are discussed earlier in the report.
f. islands of Integrity
There are few islands of integrity in the sector in Liberia. The current Auditor General, Minister of Finance, and the IAS are among those reform-minded elements that USAID could work with. Engagement with LICPA over the long term could be useful; however, it does not appear that the two organizations share common ground at present. As discussed below, USAlD may want to focus its efforts with international partners that can improve the sector in the years to come.
4. Summary and Action Framework
This section summarizes the main patterns of behavior that the LGSS Team observed in the auditing and accounting sector as they relate to the political economy factors discussed above and proposes a strategy for moving forward. At the end of the section, the LGSS Team provides a matrix illustrating potential winners and losers from these proposed reforms and actions.
a. Patterns of Behavior Reiative to the Political Economy
The political economy analysis of the sector from above reveals the following key patterns of behavior.
(1) LICPA pursues violators of the act aggressively, making it one of the few laws in Liberia that is
actually enforced with vigor.


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(2) There is little or no appetite for changing the LICPA Act, because so many elite and influential
Liberians are benefiting from it.
(3) Because political will for follow up on auditing reports and because skills in the government
auditing sector are so weak resulting in low-quality reports, most government officials are able to act with impunity. There is little chance for sanctions to occur or changes in processes that allow for corruption to take place. Those shortcomings, combined with weak government financial management systems and accounting practices (as discussed in the payroll section) create conditions that make it far too risky for international donors to use host-country systems for management of funds.
b. Action Framework
Several steps can be taken to improve effectiveness in the sector.
Work Around the LICPA Act. The LGSS Team believes that there is no political will or appetite to amend the LICPA Act. As a result, USAlD will need to find ways to accomplish its immediate goal of having skilled auditors and accountants working on donor projects that involve U.S. taxpayer funds. USAID can accomplish this in two ways:
1) USAID can work with or through GAC to contract out to non—local firms, because, by law, they are exempt from having to follow the provisions of LICPA. GAC already contracts out some audits and can do so with whatever firms it chooses — international or Liberian.
2) Another option is for USAID to issue RFPs that strongly encourage partnerships between local and
international firms. LICPA takes no issue with joint ventures or contractor/subcontractor relationships between international and Liberian firms. The quality of auditing and accounting will be greatly improved, at present, if an international firm is involved.
Building Skills in the Auditing/Accounting Sector. At the same time, the sector will not improve over the long run without sustained deveiopment of auditing and accounting skills, both for students coming out of school and for professionals already working in government and the private sector. Training courses should cover not only basic skills but some of the more advanced topics described above. Some interviewees suggested that LIPA could be an appropriate venue for these, as could LICPA itself, if relations between USAID and LICPA were to improve. Others suggested that off-the-shelf courses could be a costeffective approach.
improve Audit Follow Up. To build public pressure for more action on audit reports and follow up, USAID could support efforts to educate the citizenry, C505, and public officials about what roles each actor plays in the process (e.g., MO] takes action on criminal matters, President ensures that executive processes are changed, Senate can call hearings, etc.). Perhaps more important, USAID can engage in a policy dialogue with the GOL to encourage the legislature, the MO], and the President to take action on at least a handful of audit reports to begin to whittle away at the culture of impunity that exists in Liberia.
Possible Reform or Action | Who Wins? Why? I Who Loses? Why?
Work around the LICPA Law | - USAlD and other donors, l - Local firms and LICPA,
who will receive higher I because not as much quality auditing and | revenue will go to Liberian accounting services. i firms.


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- lndividuais who receive illicit income from malfeasance in
- Some international auditing
and accounting firms,
because they still will be able to function in Liberia.
- Local firms and LICPA will
still win, because they will
receive some revenue.
donor funding.
Build Skills in the
Auditing/Accounting Sector
- Reformers at the highest
levels of GAC, 1A5, and the MOF, who want reforms to happen and see better oversight and appropriate spending of government monies.
- The few Liberians who pay taxes will see that better and more appropriate use of
government resources
- Auditors and accOuntants
themselves, who will have better, more marketable skills.
- Local firms and LlCPA,
because it means more
future revenues, if the Liberian auditing and accounting sector is stronger.
Individuals who receive illicit
enrichment from malfeasance in
public sector spending.
Improve Audit Follow Up
~ The GAC, IAS, the MOF, and the few Liberians who pay taxes, since monies will be spent in a more efficient and appropriate manner.
- USAID and other donors, who eventually will have more reliable host-country systems to use for development efforts.
Individuals who receive illicit
enrichment from malfeasance In
public sector spending.


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Attachment A: Desk Study Bibliography
Bruce, J. and Kanneh, B. (2011). "Reform of Liberia’s Civil Law Concerning Land: A Proposed Strategy: A
Report to the Land Commission.”
Center for International Conflict Resolution, Columbia University - School of International and Public
Affairs. (2012). "Smell-No-Taste: The Social Impact of Foreign Direct Investment in Liberia.”
European Commission (2011). “Using Political Economy Analysis to improve EU Development
Effectiveness (Draft)."
FHI360. (undated). "Liberia Teacher Education Program.” Unpublished presentation prepared for the
Republic of Liberia.
Fried man, Jonathan. (2011). "Cleaning the Civil Service Payroll: Post-Conflict Liberia 2008-2011."
(Princeton University Innovations for Successful Societies series).
International Monetary Fund and Republic of Liberia. (2012). “Public Expenditure and Financial
Accountability (PEFA) Assessment.”
isser, D., Lubkemann, 5., and N'Tow, S. (2009). “Looking ForJustice: Liberian Experiences and Perceptions
of Local Justice Options.” United States Institute for Peace.
Liberian Institute of Certified Public Accountants. (2011). “IFAC Action Plan.”
Moore, C. (2011). "A Study on Alternative Dispute Resolution Systems in the Republic of Liberia: Strategies
for Coordination and Operationalization of Systems to Enhance Their Effectiveness.” Unpublished draft for comment.
Norwegian Refugee Council. (2010). “Confusion and Palava: The Logic of Land Encroachment In Lofa
County, Liberia.”
Republic of Liberia. (undated). "Agenda for Transformation: Steps Toward Liberia RISING 2030 Liberia’s
Medium—Term Economic Growth and Development Strategy - 2012 to 2017.”
Republic of Liberia. (2010). “Amend ment and Restatement of the Public Procurement and Concessions
Act, 2005."
Republic of Liberia, Senate and House of Representatives. (1972). “An Act Repealing the Public
Employment Law and Amending the Executive Law to Create a Civil Service Agency.”
Republic of Liberia, Land Commission. (2012). "Draft Land Rights Policy Statement.” Draft document dated
9.7.12.
Republic of Liberia. (2012). "Executive Order No. 38, Establishing an Administrative Code of Conduct for
Members of the Executive Branch of Government.”
Repubiic of Liberia. (2013). "Executive Order No.44, Protecting Liberian Forests by a Temporary
Moratorium on Private Use Permits.”


Sensitive But Unclassified (SBU)
Republic of Liberia, Civil Service Agency. (2011). "Independent Evaluation of the Phase Transfer of
Knowledge through Expatriate Nationals (TOKTEN) Project.”
Republic of Liberia, Land Commission and De Wit, Paul. (2012). “Land Rights, Private Use Permits and
Forest Comm unities.”
Republic of Liberia. (2008). "Liberia Poverty Reduction Strategy.”
Republic of Liberia. {2009). "Medium-Term Pay Strategy: Final Report."
Republic of Liberia. (2010). "Mid-Term Independent Review of the Senior Executive Service Program."
Republic of Liberia, Ministry of Education. (2011). “Poiicies for Reform; Liberian Education Administrative
and Management Poiicies.” (Liberian Education Administrative Guides, Volume Five).
Republic of Liberia, Public Procurement and Concessions Commission. (2009). “Public Procurement and
Concessions Act 2005: implementation Manual”
Republic of Liberia, General Auditing Commission. (2010). “Report of the Auditor General on the Ministry
of Education Payrolls Verification and Enumeration."
Republic of Liberia, General Auditing Commission. (2011). "Report of the Auditor General on the National
Oil Company of Liberia for the Financial Periods, July 1, 2006 to June 30, 2008.”
Republic of Liberia. (2011). “Report on the Observance of Standards and Codes (ROSC): Accounting and
Auditing.”
Republic of Liberia. (2008). "Smaller Government, Better Service: Civil Service Reform Strategy (2008—
2011).”
Sirleaf, Ellen Johnson. (2013). "A Time for Transformation: Annual Message to the Second Session of the
53rd National Legislature of the Republic of Liberia.”
Special Independent Investigating Body (SIIB). (2012). "Report on the Issuance of Private Use Permits
(PUPS).”
United Kingdom Department for International Development. (2009). “Political Economy Analysis How To
Note."
USAID. (2012}. “Leadership in Public Financial Management: Summary Report on the Ministry of
Education.” (Contract No. EEM—l—OO-O7-00005—OO, Task Order 11). Unpublished draft for discussion.
USAiD. (2012). “Leadership in Public Financial Management: Summary Report on the Ministry of Health
and Social Welfa re.” (Contract No. EEM-l-OO-O7-OOOOS—DO, Task Order 11).
USAID. (2012). "Leadership in Public Financial Management: Summary Report on the National Drug
Service." (Contract No. EEM-l-OO-OY-OOOOS-OO, Task Order 11). Draft.


Sensitive But Unciassified (SBU)
USAID. (2012). "Liberia Democracy, Human Rights and Governance Assessment.” (Contract No. AlD-OAA-l
10-00003, Task Order AID—669~TO-12-00002).
USAlD/Liberia. (2012). “An Assessment of Decentralization and Local Governance in Liberia: A Strategic
Review with Recommendations for USAiD/Liberia’s Cross-Cutting Decentralization Strategy.” (Contract No. AlD-OAA-l-lO—OOOOS, Task Order AID-669104200002).
USAiD/Liberia. (2012). "Country Development Cooperation Strategy Liberia: 2013—2017.”
USAlD/Liberia. (2012). “Heaith Sector FARA: An Assessment of Operational Lessons Learned in Design and
Early Implementation."
USAlD/Liberia, Governance and Economic Management Support Project. (2012). "National Bureau of
Concessions: Institutional Assessment Report and Capacity Development Plan." Unpublished draft for
discussion.
Vinck, P., Pham, P., and Kreutzer, T. (2011). “Talking Peace: A Population-Based Survey on Attitudes about
Security, Dispute Resolution, and Post-Conflict Reconstruction in Liberia” (Human Rights Center, University of California, Berkeley — School of Law).
World Bank. (2011). "How-To Notes: Political Economy Assessments at Sector and Project Levels."
World Bank. (2008}. “Liberia insecurity of Land Tenure, Land Law and Land Registration in Liberia." (Report
No. 46134-LR).
World Bank. (2011). "Report on Observance of Standards and Codes, Accounting and Auditing (ROSC
in Liberia."


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Attachment B: Interviewees
Felix Addo
Country Senior Partner PWC Ghana
William Allen
Director General
Civil Service Agency Government of Liberia
Samuel Asiedu—Asase
Senior Manager KPMG Ghana
Frances Johnson Allison
Executive Chairperson
Liberia Anti-Corruption Commission Government of Liberia
Christian de Angelis Political/Economic Counselor U.S. Embassy Monrovia
Laura ArntSOn
Performance Management and Environmental Compliance Adviser
USAID/Liberia
Kingsford Arthur Manager, Adviser Services PWC Ghana
Shadi Baki
Director, Human Resources Information Management System
Civil Service Agency
Government of Liberia
Alexander E. Bassey Database Specialist Civil Service Agency Government of Liberia
Nat Barnes
Former Minister of Finance and former Liberian
Ambassador to the United States
97
Nathan Bengu
Director of Communications
Public Procurement and Concessions
Commission
Government of Liberia
Jessica Bimba
Manager Heritage Partners & Associates, Inc.
Nathaniel Bracewell
Technical Advisor to the Director General
National Bureau of Concessions
Government of Liberia
Othello Brandy Chairman
Land Commission
Government of Liberia
Prosper Brown
Head of Internal Audit
Minister of Internal Affairs
Government of Liberia
Alfred Browneil
Senior Campaigner Green Advocates
Emmanuel Bruce—Attah
Partner AKUS Consult Ghana
Michael Bundell Chief of Party USAlD/Liberia Liberia Teacher Training Program ||
Monie Captan President
Liberia Chamber of Commerce
Victoria Cole
Law Enforcement Manager Forestry Development Authority Government of Liberia
Victoria Cooper-Enchia Chief of Party USAlD/Liberia GEMS Project


Sensitive But Unclassified (SBU)
Tuagben Darlington NRM Specialist USAID/Liberia
Maxwell Dapaah Financial Management Specialist World Bank/Liberia
Albert Darb
Manager ofChain of Custody Forestry Development Authority Government of Liberia
Felicia Doe-Sumah
Assistant Minister of Basic and Secondary Education
Ministry of Education
Government of Liberia
John Ellis Supervisory Program Officer USAlD/Liberia
Sam Fahnbullah
Director of Personnel
National Center for Documents and Records Agency (CNDRA)
Government of Liberia
Monica Gadarki
Country Representative, Liberia Women’s Campaign International
Edward Gbeinter
Manager
Forestry Development Authority Government of Liberia
Herron Gbidi
Policy Analyst for Public Sector Reform Governance Commission
Government of Liberia
Michael Gibson
Internal Auditor
National Center for Documents and Records Agency (CNDRA)
Government of Liberia
Weedor Gray
Manager for Community Extension Services Forestry Development Authority Government of Liberia
Richie Gariey Grear
Public Relations Consuitant Forestry Development Authority Government of Liberia
Drayton Hinneh
National Concessions Adviser
National Bureau of Concessions
Government of Liberia
David Hoskings Concessions Advisor USAlD/Liberia GEMS Project
James Deborlallah
Executive Director
Liberia Institute of Certified Public Accountants
Simon James Chief of Party USAlD/Liberia Advancing Youth Project
Bernard Jappah
Public Financial Management Refurm Coordinator and Project Manager Ministry of Finance
Government of Liberia
Myer K.Jargbah
Strategic Planning Unit Manager Forestry Development Authority Government of Liberia
Gladys K. Johnson
Commissioner of Administration Liberia Anti-Corruption Commission Government of Liberia
Kederick Johnson
Assistant Managing Director/Operations Forestry Development Authority Government of Liberia


Sensitive But Unclassified (SBU)
Edward Dillon
Special Assistant to the Minister ofJustice Government of Liberia
M.A. Karinen
Director
Golden Veroleum Liberia Inc
Edward Kamarg
Manager for Marketing and Research Forestry Development Authority Government of Liberia
Harrison Karnwea
Interim Managing Director Forestry Development Authority Government of Liberia
Othello Karr
Officer in Charge of Concessions Development and Pubiic Private Partnerships Inter-Ministerial Concessions Committee
National Investment Commission
Government of Liberia
Robert Kilby Auditor General
Government of Liberia
Gregory Kitt Project Manager Norwegian Refugee Council
Sam Kofa
Community Forestry Advisor USAlD/Liberia PROSPER Project
Ansu Konneh
Communications and Media Relations Officer
Western Cluster Limited
Joseph Koon
Technical Manager for Research and Development
Forestry Development Authority Government of Liberia
Aaron Kota
Manager
Forestry Development Authority Government of Liberia
Lamii Kpargoi Executive Director
Liberia Media Center
Mitchell Kumbday
Community Empowerment Manager Forestry Development Authority Government of Liberia
Alexander Lane Program Officer USAlD/Liberia
Mark Marquardt Chief of Party USAID/Liberia LPIS Project
Mark Mattner
Project Manager, Regional Resource Governance in West Africa
GIZ
Tarnue Mawolo
Director General
National Bureau of Concessions
Government of Liberia
Anthony McCritty
Assistant Director General for Information, Communications, and Technology Services National Bureau of Concessions Government of Liberia
Sam Mitchell
Former Director
Liberia Business Association Current Proprietor of Corina Hotel
Nim’ne Mombo
President
Liberia Institute of Certified Public Accountants


Sensitive But Unclassified (SBU)
Sam Russ
Deputy Minister for Operations Ministry of Land, Mines, and Energy Government of Liberia
Sebastian Sahla
Assistant Adviser, Resource Governance
GIZ
Bernard Sannoh Deputy Minister of Justice for Economic Affairs Government of Liberia
P. Bloh Sayeh
Director General
Center for National Documents and Records
Agency
Government of Liberia
Sally Schlegel
International Narcotics and Law Enforcement
Adviser
U.S. Embassy Monrovia
Gun Eriksson Skoog Research and Policy Analyst The Nordic Africa Institute
Patrick Sendolo Minister of Lands, Mines, and Energy Government of Liberia
Melvin Sheriff
Head of SecretariaI/Inter—Ministerial Concessions
Committee
National Investment Commission
Government of Liberia
Ahmed Sirleaf
Collaborating, Learning, and Adapting (CLA) Advisor
USAID/ Liberia
Herbert Soper
Financial Management Specialist Public Financial Management Reforms Coordination Unit
Ministry of Finance
Government of Liberia
Caleb Stevens
Legal Advisor to the Land Commission of the Government of Liberia
john Snow Institute Liberia Fellow
Joseph Sula
Comptroller
Public Procurement and Concessions
Commission
Government of Liberia
Christina Tah
Minister ofJustice
Government of Liberia
Jennifer Talbot Forestry Advisor USAlD/Liberia
Joseph Tally
Technical Manager for Professional Forestry Forestry Development Authority Government of Liberia
Anthony Tarbah
Acting Director, Compliance Monitoring Public Procurement and Concessions
Commission
Government of Liberia
Dominic Tarpeh
Senior Policy Analyst/Senior Program Manager Governance Commission
Government of Liberia
Daniel Terrell
Senior Rule of Law Advisor USAID/Liberia
Augustine Toe
Commissionerfor Education and Prevention Liberia Anti-Corruption Commission Government of Liberia
Samson Tokpah
Executive Director
Liberia Extractive Industries Transparency
Initiative


Sensitive But Unclassified (SBU)
Edward Tolbert
Government Funds Auditor
General Auditing Commission Government of Liberia
Emmanuel Tulay
Legal Counsel and Director, Compliance and Reporting Division
Public Procurement and Concessions
Commission
Government of Liberia
Amos Tweh
Assistant Minister of Internal Affairs
Government of Liberia
Jenkins Vangehn Political Specialist U.S. Embassy Monrovia
Retta Vincent
Head, Employment Services Directorate Civil Service Agency
Government of Liberia
Peter de Waard
Leader, Livelihood and Enterprise Development Advisor
USAID/Liberia PROSPER Project
T. Negbalee Warner Managing Partner Heritage Partners & Associates, Inc.
Patrick Weah
Management Services Speciaiist, Civil Service Reform Directorate
Civil Service Agency
Government of Liberia
Elizabeth Wewerka Political/Economic Counselor US. Embassy Monrovia
102
Mustapha Westrick
Registrar for Deeds and Titles
National Center for Documents and Records Agency (CNDRA)
Government of Liberia
George Wilson
Management Services Specialist Civil Service Reform Directorate
Civil Service Agency Government of Liberia
Henrique Wilson
Deputy Minister for Administration Ministry of Education
Government of Liberia
Lysander Wokpeh
Director, Human Resources
Public Procurement and Concessions
Commission
Government of Liberia
Keith Wright Chief of Party and Access to Justice Lead Carter Center
juliana Weymann Technical Advisor, Resource Governance
GIZ
Moses Zinnah
Deputy Minister for Planning and Development Ministry of Agricuiture
Government of Liberia
Carolyn Meyers Zoduah
Program Manager
Actions for Genuine Democratic Alternatives (AGENDA)


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Attachment C: Sample Interview Questions
Provided below are the questions that were posed to interviewees.
PAYROLL (POLITICAL ECONOMY DRIVERS)
What technical weaknesses allow vulnerabilities to corruption, fraud, and mismanagement in the payroll system? What political factors enable these weaknesses to exist?
How are GOL employees compensated (e.g., salaries versus allowances) and how does that process lack fairness and transparency?
PAYROLL (ACT ION FRAMEWORK)
What political factors have undermined the technical solutions and reforms proposed to help to reduce vulnerabilities to corruption, fraud, and mismanagement?
Taking into account stakeholders‘ underlying interests and incentives, what are the potential weaknesses of the technical solutions and what is the probability that they may be defeated? What steps would comprise an action plan to overcome political obstacles to payroll reform?
PAYROLL (OTHER QUESTIONS)
Please describe the specific role that your organization role plays within the realm of payroll reform? What has worked well? What are your challenges? Strengths? Weaknesses?
Who do you feel will win and lose if overarching payroll reform is implemented? How do historical factors play into this equation? What politics are at work? Note: question will need to be catered toward the activities of the specific interviewee.
How do government employees feel about payroll reform leg, they view it as meaning better benefits and pay for individuals and more government employees)? How do those views contrast with those of the donor community (e.g., they want overall standardized pay and benefits and fewer government employees)?
Do government employees really want a modern merit-based system? What are their expectations? What has impeded payroil reform efforts in the past?
Once payrolls are “cleaned,” how can Liberia keep them from becoming “dirty” again? In other words, when ghost workers or those outside the merit-based system are added, what measures can be enacted to prevent government offices from putting them (or others) back on?
Who are the key civil society organizations working on the issue of payroll reform? What activities have they carried out? Are unions active? Do they push for better salary and benefits only or actual payroll reforms?
Within the payroll system, ministers can give discretionary allowances, which many studies have noted as a problem, including the medium-term expenditure framework which calls for them to be eliminated. At present, what comprise typical allowance packages in line ministries? What particular aspect of law, policy, or process do you feel would have to change to address the issue? Who will oppose or favor those? What is the status of the effort at present?
What role does the Wage Bill Task Force play in determining civil service salaries? Who is the head, and what type of influence does this person hold? Where do they stand politically? What is role of donors on the Task Force?
Why are Government Accounting Payroll System (GAPS) and the Civil Service Agency (CSA) personnel database systems not linked?
103


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How are GAPS and the CSA personnel database integrated with the Human Resource Management Information System (HRMIS) and how far along is HRMIS in the roll out/implementation process? Why?
What aspects of the GOL Pay Strategy have been implemented? Which have not? Why?
What is the relationship, if any, between the county development funds, social development funds, and paying government wages? What is the relationship between the funds and payroll reform in general?
We understand that current Integrated Financial Management and Information System (lFMlS) reforms call for a biometric marker tracking system to be linked to the IFIVIIS. Who is driving this technologically advanced intervention? Why? How will they overcome obvious obstacles (e.g., lack of electricity, costs)?
What interaction have you had with donors supporting payroll reforms? How are they supporting the sector? What is the quality ofthat support?
How are GOL employees compensated (e.g., salaries versus allowances) and how does that process lack fairness and transparency? What is 1the civil servant compensation process? How does transfer of money work from agency to agency and then from agency to individuai?
How are irregularities investigated? Who follows up and how?
Why do payroll issues seem to be more severe at certain ministries (e.g., Education)?
LAND TENURE (POLITICAL ECONOMY DRIVERS)
How does lack of access to information impede progress toward reforms?
What underlying interests, incentives, and institutions are likely to oppose the recognition ofcustomary land rights delineated in the draft land rights policy (e.g., urban elites)? Why? What roadblocks are likely to prevent or impede its adoption?
How is the GOL proposing to reconcile electoral, administrative, chiefdom and land use boundaries? What are the potential flashpoints around this issue and how could they be mitigated?
What is the relationship between gender disparities and land tenure issues?
LAND TENURE (ACTION FRAMEWORK)
What technical and institutional solutions may help reduce or eliminate vulnerabilities to fraud and corruption as the GOL moves to the deconcentration of land tenure services?
Given the extensive support by USAID and others for the Land Commission to explore ways to harmonize the formal and traditional legal systems through the use of ADR methods, particularly with respect to land tenure disputes, what interventions at the Ministry ofiustice (MOJ),'the Judiciary, the Law Reform Commission and the legislature will be necessary to actualize the policy recommendation the LC will make regarding this issue?
Flashpoints could occur if and when the GOL proposes to reconcile electoral, administrative, chiefdom and land use boundaries. How can they be mitigated?
lfa separate land agency focused on national land policy and land information is established, what land tenure mechanisms should be located at that agency (e.g. deeds, cadastre, land dispute resolution, etc.) and which mechanisms should remain with existing ministries and institutions? What type of resistance to the shifting of resources and authority is likely to occur and what type of interventions will help overcome that resistance?
What steps can be taken to reduce gender disparities in the sector (e.g., reform of property laws)?
LAND TENURE (OTHER QUESTIONS)
Please describe the role of your organization in the land tenure process? What are your successes and challenges?
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Sensitive But Unciassified (SBU)
What do some of the different customary frameworks look like in terms of land actors, land institutions, land use rights, land access rights, land ownership rights, etc. What customary frameworks exist in county A, B, etc. We know that different groups have different rules, but what are some of these arrangements/processes? What is working in these arrangements and what is not? What is the current status of the Draft Land Rights Policy Statement and what are the next steps in its adoption? What is the next step in the reform process for this document and the recommendations provided?
What are the interests, alliances, likes and dislikes of the members of the Land Commission? Do they have different scopes of work or do they function as a panel?
What civii society actors are involved in the land sector? How?
What other key individuals are involved in the land sector and what are their likes, dislikes, interests, etc?
What is the role of existing institutional and individual alliances? How do these create challenges (or opportunities?) for the potential reform processes?
What are the underlying interests, incentives, and institutions likely to oppose harmonization of methods?
How are rents, power, and resources distributed in practice?
What are the official and unofficial frameworks regulating women's access to land? Can you tell me more about the 2003 law that has to do with inheritance and women's right to inherit land? is this actually working in practice orjust on paper? Are women inheriting private land like they are legally able to do? What types of land rights exist for women under the various customary arrangements? How are conflicting claims overland currently handled, particularly when lands are contested by some combination of private, public, and community parties? If alternative dispute resolution is not used, how are these disputes handled in the legal system? How does the lack of legitimacy of state actors (as perceived by indigenous populations) affect these populations' abilities to dispute land claims made by the state or private entities?
The Land Commission proposes elevating customary rights to make them equal to the status of private 1 rights. How are they planning to adjust the dispute resolution systems accordingly? Will it make any difference at all if courts are still perceived as illegitimate by indigenous actors?
Besides the institution of the Land Commission and the potential adaptation of some of its recommendations, are there other mechanisms the government has proposed to lead/inform the reform process? Are there other sector building blocks that are working that we could build upon in our own recommendations?
CONCESSIONS (POLITICAL ECONOMY DRIVERS)
Who benefits from the current politicized concessions vetting and negotiations process?
What is the relationship between the various concessions stakeholders and who has the greatest influence over decision making, and at what stages of the process?
Related to above, how does the Inter-Ministerial Committee Function relative to the National Investment Commission?
Is there an appetite to have the Nationai Bureau of Concessions (NBOC) perform rigorous assessments of concession agreements before they are awarded?
Why has the Public Procurement and Concessions Commission (PPCC) backed away from its role as a regulator of the concessions bidding process (as per the PPCC Act)?
What role do the concessions entities in each line ministry play in negotiating concessions agreements (e.g. FDA, MLME, MoAG, NOCAL, etc.)
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Sensitive But Unclassified (SBU)
CONCESSIONS (ACTION FRAMEWORK)
How can monitoring and enforcement agencies be strengthened, such as the Environmental Protection Agency, Forestry Development Agency, and individual line ministries? What political will Exists for strengthening them?
What steps can be taken to help Liberian citizens see benefits from concessions revenues?
CONCESSIONS (OTHER QUESTIONS)
What role does your organization play in the concessions process? What has worked well? What has not? Why?
Has the National Board of Concessions Act been signed after it passed in the legislature? If no, why? If yes, how much money is being appropriated to fund it? What parties advocated for or against its passage? What implementation obstacles are likely to emerge? How is it expected that the new and improved Board will effectively exercise oversight in regard to transparent concessions granting? How will the new law impact the activities ofthe Public Procurement and Concessions Commission (PPCC)? in your opinion, what obstacles prevent the PPPC from functioning as an effective concessions oversight body?
What roles does EPA play (e.g., overseeing social development funds)?
Why are so many individuals members of both the National Investment Commission and the interMinisterial Concessions Committee? Do members take their responsibilities to one or the other more seriously, since it they could have overlapping interests? What efforts have been made to make both more transparent? How do they weigh and analyze the tradeoffs that inherently arise when foreign direct investment interests clash with others, like environmental degradation and community needs? [)0 any government or nongovernmental organizations track which government officials own interests in logging, mineral, agricultural, companies? Are such ownership stakes even illegal under Liberian law?
Why are there delays to ratifying the Voluntary Partnership Agreement (VPA) for timber with the EU? Is there appetite to put in place the iegislation needed to ensure compliance with the VPA if it is ratified?
What steps have been taken to find a new Forest Development Authority Managing Director?
Are steps being taken to enact sanctions, based on the recommendations of the Special Independent Investigative Body (SIIB) report?
Why is the GOL not taking steps to enforce the Presidential logging ban on holders of Private Use Permits (PUPs)?
Does the fact that palm oil concessions were granted without asking for communities’ free, prior, and informed consent make them invalid according to any Liberian legislation?
How were Sime Darby and Golden Veroleum able to obtain their concession agreements? What process did they follow?
Is there political will to pass a revamped Petroleum Law? What would be the features of the new Petroleum Law as they pertain to concessions? What role does NOCAL leadership play in that process?
How does NOCAL leadership influence the concessions process?
Where are there still big concessions waiting to be given out, and who are the major contenders? What relationships do they have with the GOL?
Does the Minister of Labor, Mines, and Energy have a proclivity for reform? If so, what is he looking to amend in the Minerals and Mining Law specifically?
ACCOUNTING/AUDITING (POLITICAL ECONOMY DRIVERS)
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Sensitive But Unclassified (SBU)
Given the lack of capacity and control of the current LlCPA council by a few stakeholders, what points of vulnerability are likely in attempts to modernize the statutory framework for financial reporting through such recommended actions as the enactment of a new corporate law that updates insurance law and revises the Liberian Institute of Certified Public Accountant Act?
What is the role of women in the accounting/a uditing profession? What disparities exist?
How are the dynamics of power (i.e., control by a few elites) in the accounting and auditing sector similar to those in other sectors?
What was the impact of reorganizing the GAC? (lower priority)
Why is there little or no follow up on audit reports by the legislature or M01? (lower priority)
ACCOUNTING/AUDITING (ACTION FRAMEWORK)
Considering the underlying interests and incentives of the three local CPA firms in maintaining control ofthe LICPA council, what strategy for implementing a comprehensive action plan for strengthening institutional capacity to support high~quality financial reporting would have the greatest probability of success?
What steps can be taken to address gender disparities in the sector (e.g., mechanisms for recruiting qualified women)?
ACCOUNTING/AUDITING (OTHER QUESTIONS) Private sector accounting questions:
What is the state of accounting in Liberia? Why? If it is negative, what should be done about it? If positive, ask why then IMF and World Bank reports are saying that the sector is weak.
Do you believe that the statutory framework for financiai reporting should be updated? Why/why not? If yes, what is wrong with the current system? What is the best way to fix it? Will those suggestions ever be implemented? Why/why not?
What is the role of women in the accounting/auditing profession? What disparities exist?
Who is LICPA? Where did they come from? What do they do? Who decides what they do?
How does LICPA relate to the public sector, specifically public sector accounting and audit functions (GAC, Comptroller and Accountant General, Central Bank, etc)?
How does LICPA relate to the private sector (large companies, the chamber of commerce, etc)?
What precipitated the LICPA Act? Who supported it? Did any oppose it? What is good about the act? What is bad about the act? Did it change what LICPA does?
The LlCPA Act only came into effect in June, 2011. We have heard that there are already efforts underway to modify it. Why? (by whom, who benefits, what changes are being proposed, does the interviewee see it as good or bad) Do you think it will pass and why or why not?‘
The revisions to the LICPA Act are a part of a recommended new corporate law. What else will that law impact? Who is supporting it? Who would oppose it?
How are international and local firms carrying out “workarounds” ofthe LICPA restrictions?
What is the overall impact of the LICPA restrictions on the overall sector (i.e., is it making professional services cost more)?
Public sector audit questions:
What is the state of public sector auditing in Liberia? Why? If it is negative, what should be done about it? if positive, ask why then IMF and World Bank reports are saying there are issues related to public sector audit.
What is the role of women in the auditing profession? What disparities exist?
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Sensitive But Unclassified (SBU)
Do you believe that the statutory framework for public sector audit is solid as it is or that it should be updated? Why/why not? If yes, what is wrong with the current system? What is the best way to fix it? Will those suggestions ever be implemented? Why/why not?
What is the role of the newly formed internal Audit Governance Board (lAG B) and internal Audit Secretariat (IAS)? What are they currently doing? How do they relate to the GAC, CAG, and PAAC? Besides the CAG, GAC, PAAC, and lAGB/IAS, are there any other key players in public sector auditing? What could be done to encourage the CAG to provide financial information quickly to the GAC?
Why has the PAAC not reviewed any audits to date? What could be done to encourage them to review audit reports and to take action based upon them?
How do GAC and LIPCA interact? Does GAC train people that then go to work for LICPA firms?
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Sensitive But Unclassified (SBU)
Attachment D: Task Order SOW
SECTION C - DESCRIPTION I SPECIFICATIONS] STATEMENT OF WORK
C.1 BACKGROUND
(1.1.1 Historical Context
Liberia endured a prolonged civil war from 1989 to 2003, which contributed to significant internal and international displacement, along with mass impoverishment, and the collapse of law and order. Public infrastructure and other services were completely destroyed, including civil security, education, health, electricity, water, and sanitation services. Socially productive commercial activities were severely disrupted as warlords looted and vandalized the country. GDP fell by 90 percent between 1987 and 1995, one of the most massive economic collapses ever recorded.
The challenges to launching and sustaining a long-term recovery and development process in Liberia are formidable and include:
Low institutional Capacity and Weak Accountability Systems: Critical checks, balances, and accountability systems either do not exist or are seriously compromised. There are overlapping or unciear mandates for leading, conceptualizing and implementing reforms, and the capacity for effective coordination between agencies is weak. In instances where clear mandates exist, the GOL relies on a few key change agents who are over-burdened and stretched thin.
Rent-Seeking Behavior: Many of the extractive, non~inclusive social, political, and economic systems of the past remain fundamentally unchanged. Old conflicts, such as those relating to the ownership and use of land, are unresolved. Politics continue to be based on “winner takes all” mentalities and focus on personalities and patronage rather than substantive issues. Rent-seeking behavior and corruption are pervasive at all levels of society. While President Sirleaf’s government is seeking to instill and model an inclusive and transformative national vision, old habits are hard to break.
Law Human Resources Capacity: Many of Liberia’s educated elite either fled or were killed during the civil war. An entire generation of youth and children were left with severely disrupted schooling, if any at all. The country lost a significant portion of the potential productivity of an entire generation that could contribute to development progress. Government, the private sector, civil society and international partners are still desperately short of qualified local talent. There is a two—tiered workforce, consisting of a small cadre of highly qualified and motivated leaders side by side with a low-paid workforce that often lacks basic literacy, numeracy, and other critical work skills.
C.1.2 Program Background
Payroll Reform: The civil war affected every facet of life in the country, and the civil service was no exception. A review completed in 2008 reported 210 established civil service job titles at the Civil
Service Agency (CSA); however, there were at least 1,950 job titles being paid by the Ministry of Finance. From 1982 to 1990, the pay of civil servants declined 97 percent, from US $18,814 as the maximum
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salary to US$556 annually.1 This had a deleterious effect on the GOL’s ability to recruit and retain qualified civil servants.
An additional problem noted in the study concerns the use of multiple payrolls. Eighteen percent of total employees received allowances in the 2009/2010 budget, which represents between 22 and 28 percent of the total wage bill. Statistics for the 2012/2013 proposed budget are worse, with allowances representing between 27 and 31 percent of total employee compensation.
The 2008 review noted that poor performance and corruption in the civil service are related to low compensation levels and ineffective pay administration. In order to attract and retain personnel with the requisite knowledge, skills, and abilities, the GOL must be able to offer appropriate compensation levels and ensure timely and accurate payment. However, the GOL remains heavily reliant on external donors to support the salaries of senior managers who are outside the regular civil service payroll structure. The GOL’s Medium Term Pay Strategy Final Report (2009) found that the CSA lacked the
capacity to identify, manage or monitor GOL staffing needs and levels.
Recent GOL investigations have revealed widespread waste, fraud and mismanagement in the civil service payroll. For example, a General Auditing Commission audit of the Ministry of Agriculture, covering the period from 2006/7 through 2008/09, reported that:
"Examination of available records on 489 personnel revealed that a total of three (3) deceased staff, thirty-nine (39) retired staff, thirty-six (36) dismissed staff as well as nine (9) resigned staff were still maintained on the Ministry’s payroll Furthermore sixty-six (66) individ uals whose
3 files were presented as genuinely employed by the MOA did not turn out for the headcount. No
explanation was provided for their absence and therefore this denied assurance that the 66 personnel were MOA employees receiving just salaries."
This suggests that close to one-third ofthe salaries being paid by the Government were going to people who, for various reasons, were no longer working for the identified Ministry.
In March 2012, the Ministry of Finance established a task force to identify weaknesses in the GOL payroll system and related fiscal losses. The task force's preliminary report estimated that the GOL was losing over $200 thousand per month to a range of payroll anomalies. The identified anomalies included:
Names of 385 civil servants duplicated in the payroll data base
Bank accounts 0f185 civil servants duplicated in the payroll database
Names of 350 Ministry of Education employees in the regular payroll database duplicated in the supplementary payroll database
No one (yet) knows the full magnitude of the payroll leakages, but senior GOL officials have estimated (based on a recent Wage Bill Task Force exercise) that approximately $25 million is lost every year. To put this in perspective, the GOL’s total "capacity building” budget for training was $10 million.
Previous GOL efforts to clean up its payroll have yielded temporary progress. However, the results have not been sustained and there has been significant backsliding. Between 2006 and 2008, for example, the GOL claims that it succeeded in removing about 9,000 “ghost workers" and other illegitimate
1 Government of Liberia (2009). Medium Term Pay Strategy Final Report 2009.
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accounts from the civil service payroll. in 2011, just prior to national elections, about 9,000 names were added to the payroll roster of the Ministry of Education alone. Very few of these new personnel were hired through the formal, competitive processes nominally required by the CSA. In 2012, the GOL has renewed its political commitment to payroll reform. USAlD has a strong interest in encouraging and, as appropriate, supporting this process.
In this context, the GOL continues to seek USAID and other international funding to pay the salaries of senior officials in the Ministry of Finance, the Civil Service Agency, and many line ministries. USAID has informed the GOL that it will be unable to continue such support in the absence of a credible plan for cleaning up the GOL’s existing payroll, establishment of systems and controls to prevent future mismanagement, and development of a credible fiscal plan leading to full GOL funding of its civil service payroll.
Land Tenure: Land tenure issues in Liberia are complex and have historically been a source of social conflict. Land disputes all too often erupt into violence, which threatens the peace, security, and stability of Liberia. One recent report noted that nationally, about one in four (23%) Liberians reported having experienced a land dispute since the end ofthe war in 2003.2 Sources of land tenure disputes include: the reintegration of villages and communities disrupted by the civil war; lost deeds; contested inheritance of land, particularly by females; demographic shifts; the allocation of concessions by the GOL; and legal reforms.
Structural issues complicate land tenure in Liberia. Prior to the civil war, Liberia had an incomplete and inconsistent land administration system. The civil war made matters worse. Liberia is trying to rebuild its land administration system but evidence of fraudulent conveyances, forged records, and overlapping tenure claims is appearing as Liberia’s citizens return to their homes and seek to invest in property.
Over this administrative framework is laid the issue of legal pluralism in Liberia. The presence of both statutory and customary law is another contributor to land tenure insecurity. Customary law, for example, does not always provide the predictability, protection, and tenure security for holders of land historically held and managed by customary authorities that more formal systems afford. On the other
hand, statutory law is not commonly understood, trusted or affordable in the rural areas.3
With this land tenure backdrop, the GOL established the Land Commission (LC) on August 4, 2009 by an Act ofthe National Legislature. The LC was officially launched on March 11, 2010 to begin a five-year tenure. The general mandate and purpose of the Land Commission is to propose, advocate, and coordinate reforms of land policy, laws and programs in Liberia. The LC has focused its efforts on several core areas: land tenure and property rights (to include formal and customary rights); land administration; land use and natural resource management; and land dispute resolution.
The Land Commission is coordinating its comprehensive land policy development work with relevant GOL entities, such as the Center for National Documents and Records/Archives (CNDRA), the Ministry of Lands Mines and Energy (M LME), the Bureau of Concessions (80C), the Ministry of Internal Affairs
2 “Talking Peace a Population-Based Survey on Attitudes About Security, Dispute Resolution, and Post-Conflict Reconstruction in Liberia,” Patrick Vinck, Phuong Pharn and Tino Kreutzer, University of California Berkeley June 201 l.
3 “A Study on Alternative Dispute Resolution Systems in the Republic of Liberia: Strategies for Coordination and Operationalization of Systems to Enhance Their Effectiveness," Christopher W. Moore, Ph. D, March 10, 2011, p
11-12.
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In
(MIA), the Law Reform Commission, and the Forest Development Authority (FDA).
As the Land Commission approaches the mid-point of its tenure, questions arise as to whether or not Liberia needs a permanent land agency focused on land policy development that can also respond to arising land tenure and use issues. Currently, land policy and administration are handled by several different ministries, most of which are also affiliated with the utilization of one or more natural
resources.
Concessions Contracts: Liberia anticipates receiving at least $2 billion in concession revenue over the next 8-10 years (more, if oil comes online). It is an essential revenue source that, in turn, will fuel Liberia’s development and poverty reduction. There are a number of active concessions, including for iron ore, palm oil, forestry, and rubber. Others are in the exploratory phase, e.g. oil. Concessions vetting, negotiation, revenue-collection, management, contract enforcement, environment compliance and auditing are handled by a range of government entities. The current process for vetting and negotiating concessions is highly politicized, and some would say non-transparent and nonstandardized. The Inter-Ministerial Concessions Council (iMCC) makes the final determination on what concessions are awarded. Their recommendations are then turned over to the legislature for ratification. A new National Bureau of Concessions (NBOC) has been established to serve essentially as a technical arm to the IMCC. it is expected to examine bidders' revenue and production projections, as well as to negotiate an appropriate tax structure, look at transfer pricing and conduct compliance audits, among other duties. Although the Bureau was established, its annual budget barely cove-rs its operational costs, much less provides it with resources to attract the requisite highly technical staff or consultant experts.
Reform in the Accounting and Auditing Sector: The accounting and auditing sector in Liberia can be characterized by capacity and integrity issues. The sector has largely been controlled by three local firms who rarely invest in training of personnel. The partners of these firms jointly control the council lie, the body responsible for issuing licenses to auditing firms) of the Liberian Institute of Certified Public Accountants (LICPA), which is the regulatory body of the Accounting and Auditing profession in Liberia.
The World Bank issued a Report on Observance of Standards and Codes, Accounting and Auditing (ROSE A&A) in Liberia, in February 2011. This report contributes to the identification and development of the building blocks for a comprehensive action plan for strengthening institutional capacity to support highquality financial reporting, which has direct Impact on local and foreign investors who require credible financial information for investment decision making. A key recommendation of the World Bank report is to modernize the statutory framework for financial reporting through the enactment of a new corporate law that updates insurance law and revises the Liberian Institute of Certified Public Accountant Act.
In March 2011, the Legislature passed into law "The LICPA Act 2010.” Among other requirements, section 24.16, "Restrictions on Practicing as Public Accountant,” constrains international CPA firms from working in Liberia unless they collaborate with local Liberian firms that have been a member 0fthe LICPA for 5 years and also allocate 35 percent of the fee income from any assignment to the local firm. Global CPA firms have questioned this requirement given the lack of threshold capacity levels of local Liberian
firms. '
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The above requirements of the law and related constraints of global and regional firms are slowly hampering the Mission's efforts to expand the use of Liberian implementation Systems and implementing USAID Forward’s IPR goals. This also obstructs foreign direct investment and the
expansion of supply of these services to meet growing demand from USAlD, the GOL and the private
sector,
C.2 Statement of Work
USAID/Liberia has identified the foliowing reforms as critical to the success of its development objectives in Liberia:
Management of the Civil Service payroll system Land tenure
Concessions Contracts
Reform in the Accounting and Auditing Sector
For each of these reforms, the Contractor must:
Frame and assess the scope ofthe problems, challenges, and opportunities through focused political-economy analyses
Identify appropriate research questions, study designis}, and data collection methods and analysis
identify any significant information gaps and make recommendationsfor filling those gaps (e.g., baseline data collection to track improved reliability of salary payments)
Recommend effective strategies for USAID and broader USG engagement with Liberian partners in support ofthose reforms
Analysis supporting this work must address political economy, change management, and social sustainability issues, as well as technical issues. USAlD/Liberia wants to build a stronger knowledge base of stakeholder interests and the political will for tackling patronage, corruption, and other systemic obstacles to the successful and sustainable implementation of critical reforms. Key outcomes from the political-economy analysis include: 1) A full report on the Political-Economy Analysis study of each of the four reforms listed above; 2) A recommended Strategy for Engagement for the Mission’s internal use; and 3} An Implementation Plan for Payroll Reform. Additionally, the Mission is interested in building internal capacity to conduct political-economy analyses. The Contractor must provide a two-day training as part of the deliverables of this task order, with the objective that participating staff will acquire a
basic capacity to plan and implement political—economy analysis by the end of the training.
C.2.1 DESK STUDY AND LOGISTICS
Prior to arrival in Liberia, the Contractor must first complete a desk study to understand the history and context of civil service payroll reform, land tenure issues, timber and mining concessions, anticorruption efforts, and the accounting and auditing sector in Liberia. To Support this review, USAID/Liberia will provide to the Contractor electronic copies of the following documents prior to departure to Liberia:
o USAlD Liberia’s proposed Country Development Cooperation Strategy
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OOOOOO
Review of GOL’s Poverty Reduction Strategy (PR5) and the "Agenda for Transformation”
GOL Act to Reorganize Parts of the Executive Branch of Government (2011)
GOL Pubiic Expenditure and Financial Accountability (PEFA) Assessment (2012) GOL Payroll Reform Strategy
60!. Medium Term Pay Strategy Final Report (December 2009)
GOL Medium Term Pay Strategy (2010) — to be revalidated by GOL
Draft study of ministerial functions to be changed for forthcoming implementation of decentralization (exact blueprint for decentralization/deconcentration/ devolution TBD)
GOL Ministry of Education Civil Service Reform Strategy and initial work to register biometrically and confirm certification for all school teachers through our education Liberian Teacher’s Training Program
GOL Ministry of Education Policies for Reform; Liberian Education Administrative and Management Policies (LEAG Volume Five) [November 2011)
GAC Ministry of Education Teacher Enumeration and Verification Exercise (2010) Recent PFMRAFs (health, education, agriculture underway); internal FARA review for health
GEMS (our flagship economic governance program) institutional assessments that address many of the same elements as a PFM RAF
Evaluation of senior executive service salary payment programs (there have been three different ones we’ve bought into here — we are ceasing our contributions in October]
Government of Liberia Ministry of Education, Report ofthe Auditor General; Payrolls Verification and Enumeration (October 2009—March 2010), Volume 1: Executive Summary and Detailed Report
Land Commission of Liberia and Paul De Wit, Land Rights, Private Use Permits and Forest Communities, April 2012
Moore, Christopher W. 2011. "A Study on Alternative Dispute Resolution Systems in the Republic of Liberia: Strategies for Coordination and Operationalization of Systems to Enhance Their Effectiveness” (March 10, 2011)
Norwegian Refugee Council. Confusion and Palava: The Logic of Land Encroachment in Lofa County, Liberia. A thematic report from the Norwegian Refugee Councii,
2010 - '
U.S. Institute of Peace and George Washington University. Looking For Justice: Liberian Experiences and Perceptions of Local Justice Options, 2009
USAID Democracy and Governance Strategic Assessment Framework, August 2012 USAID Final Evaiuation of the Land Rights and Community Forestry Program, December 2011
USAID Stage 2 Assessment of the Liberian Ministry of Agriculture, 2012
USAlD Stage 2 Assessment ofthe Liberian Ministry of Education, 2012
USAID Stage 2 Assessment of the Liberian Ministry of Health and Social Welfare, 2012
USAID State 2 Assessment of the National Drug Service, August-Se ptember 2012 Vinck, Patrick, Phuong Pham and Tino Kreutzer. “Talking Peace a Population-Based Survey on Attitudes about Security, Dispute Resolution, and Post-Conflict Reconstruction in Liberia” (University of California, Berkeley, June 2011)
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0 World Bank. Liberia insecurity of Land Tenure, Land Law and Land Registration in
Liberia. Report No. 46134-LR, October 22, 2008
0 World Bank, Report on Observance of Standards and Codes, Accounting and
Auditing (ROSC A&A) in Liberia (February 2011)
The assessment team must function with minimal logistical supportfrom the Mission. While USAlD/Liberia will provide some information on key contacts for the research, the Contractor must seek additional contacts and set its own schedule.
02.2 KEY STUDY REPORT, STRATEGY FOR ENGAGEMENT, IMPLEMENTATION PLAN FOR PAYROLL
REFORM QUESTIONS
The key questions below must be addressed. These and other questions should be articulated in further detail in the Contractor’s proposed study design and data collection methods. The Contractor’s proposed study design and data collection methods will be incorporated into Section C ofthe Task Order.
Across a” reform issues:
1. How are power and resources distributed and contested in the Liberian context and what
underlying interests, incentives, and institutions promote or frustrate each identified reform?
2. What gender disparities are encountered and what are the risks of leaving gender disparities
and imbalances unaddressed in policy reform? Are there discernable gender inequities? If so, what are they and what can be done about them?
Payroll Reform:
3. Where are the points of greatest vulnerability to fraud, mismanagement, and corruption in the
civil service payroll system?
4. What technical solutions may help to reduce those vulnerabilities? Taking into account
stakeholders' underlying interests and incentives, what are the potential weaknesses of the technical solutions and what is the probability that they may be defeated?
Land Tenure:
5. As the GOL moves to the deconcentration of land tenure services (e.g., the recording of property deeds), what points of vulnerability to fraud and corruption are likely to arise and what technical and institutional solutions may help reduce or eliminate such vulnerabilities?
6. Given the extensive support by USAID and others for the Land Commission to explore ways to harmonize the formal and traditional legal systems through the use of alternative dispute resolution (ADR) methods, particularly with respect to land tenure disputes, what interventions at the Ministry oflustice (M01), the Judiciary, the Law Reform Commission and the legislature will be necessaryto actualize the policy recommendation the LC will make regarding this issue? What underlying interests, incentives and institutions are likely to oppose harmonization of these disparate legal systems?
7. How is the Government proposing to reconcile electoral, administrative, chiefdom and land use
boundaries? What are the potential flashpoints around this issue and how could they be mitigated?
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8. lfa separate land agency focused on national land policy and land information is established,
what land tenure mechanisms should be located at that agency (e.g. deeds, cadastre, land dispute resolution, etc.) and which mechanisms should remain with existing ministries and institutions? What type of resistance to the shifting of resources and authority is likely to occur and what type of interventions will help overcome that resistance?
Concessions Contracts:
9. Who benefits from the current politicized concessions vetting and negotiations process?
10. What is the relationship between the various concessions stakeholders and who has the
greatest influence over decision making, and at what stages of the process?
11. is there an appetite to have the NBOC perform rigorous assessments of concession agreements
before they are awarded?
12. Why has the Public Procurement and Concessions Commission (PPCC) backed away from its role
a regulator of the concessions bidding process (as per the PPCC Act)?
13. What political will exists for strengthening monitoring and enforcement agencies, such as the
Environmental Protection Agency, Forestry Development Agency, and individual line ministries?
Reform in the Accounting and Auditing Sector:
14. Considering the underlying interests and incentives of the three local CPA firms in maintaining
control of the LICPA council, what strategy for implementing a comprehensive action plan for strengthening institutional capacity to support high-quality financial reporting would have the greatest probability of success?
15. Given the lack of capacity and control of the current LICPA council by a few stakeholders, what
points of vulnerability are likely in attempts to modernize the statutory framework for financial reporting through such recommended actions as the enactment ofa new corporate law that updates insurance law and revises the Liberian Institute of Certified Public Accountant Act?
(1.2.3 APPROACH —DATA COLLECT ION AND ANALYSIS METHODS
The Contractor must submit a detailed work plan that includes: anticipated time-frame(s) for logistical and technical planning; the assessment approach; data collection instrument development, review, and analysis plans and key characteristics of data collection instruments (e.g., questionnaire or interview guide content, example questions or modules, etc.); measures to ensure protection, security, and confidentiality of data; and plans for encouraging participation by national counterparts, if and as appropriate in the design and conduct ofthe study. It is anticipated that the final work plan will be developed collaboratively with the assessment team, USAiD/Liberia, and selected GOL stakeholders, as appropriate.
C.2.4 Specific Tasks
Specific tasks to be undertaken include, at a minimum, the following:
Review of background documents listed in Section C.2.1 Finalize the detailed study design and work plan (to include key information/data collection
needs and likely data sources, and a tentative interview and data source list and selection criteria of interviewees) and data collection instruments and interview question guides. A
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first meeting or conference call will be held with USAID and the Contractor to define and clarify expectations, logistical support, and additional secondary documentation sources
before the assessment activity starts.
Briefing USAID/Liberia and other USG representatives to review and refine the work plan
o in—briefwith USAID/Liberia Mission Director, Development Objective Team Leaders,
the Program Office, and other USG representatives
0 Follow-on meetings with USAlD/Liberia Development Objective Team Leaders, the
Program Office, and other USG representatives
Political-economy analysis field work/data collection according to the approved work plan
0 Meetings and interviews with Government of Liberia, donor, and private-sector
counterparts and their partners (e.g., FH1360), and selected members of Liberia's civil society, media, and academia (at the National, County, and District level) 0 Meetings and interviews with various stakeholders and beneficiaries 0 Identification and follow-up on additional information and data sources Data/information review and analysis Preliminary DRAFTs of: the internal STU DY REPORT; the USAlD/Liberia strategy for engagement; and the proposed Implementation Plan for payroll reform development. The drafts must include an overview of activities undertaken and the analytical approach, key findings, actionable recommendations, and suggested guidance on performance metrics.
Presentation and Out-brief to USAlD/Liberia based on an outline of the STU DY REPORT, to include specific findings and recommendations, a detailed outline of a USAlD/Liberia strategy for engagement, and a detailed outline of a proposed implementation plan for payroll reform development
A two-day training in political—economy analysis for 10 to 15 USAID/Liberia staff following completion of the data collection, analysis, and DRAFT REPORTS.
SECOND REVIEW DRAFT of the STUDY REPORT: The second review draft of the full study report will incorporate suggested input and/or address specific issues raised during the mission out-briefing. USAID will have five working days to submit additional comments on the Report Outline and presentation. The complete SECOND REVIEW DRAFT STUDY REPORT and Recommendations must include:
o A description of the study purpose and the activities undertaken (including a clear
articulation ofthe evaluation questions addressed in the report) 0 Information on the assessment team
- How the independence of the assessment team was protected and
identification of any objectivity and potential conflict of interest addressed - The participation by national counterparts and evaluators in the design and
conduct of the study, if any 0 A detailed account of the assessment study design or approach (including the scope
and underlying assumptions addressed) o A detailed description of the information collection methods (including the selection
criteria used for identifying individuals to interview) 0 Data analysis and findings (including acknowledgement and disclosure of any data
limitations) - Statements of differences (if any) regarding significant unresolved difference of
opinion by USAlD and/or members of the assessment team
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0 Recommendations (these must be supported by the findings and presented as action-oriented recommendations appropriate to the evaluation purpose)
0 Annex(es)thatinclude: - A copy of this SOW - Data collection instruments
- A list of data sources, individuals (if appropriate, given the sensitivity and need
for confidentiality), and sites visited
- Disclosure of conflicts of interest forms for all assessment team members, either
attesting to a lack of conflict of interest or describing existing conflict of interest 0 Guidance on Performance Metrics to include:
- A set of clearly articulated indicators/measures that are: valid, objective,
practical, precise, useful for program management, direct, reliable, adequate, and such that data integrity can be maintained - Indicator reference sheets for each metric or indicator that include:
I rationale (what it measures) I precise definitionls) ' numerator and denominator, as applicable
I unit of measure
I calculation (how to measure it)
I known or anticipated strengths and weaknesses
I suggested disaggregation, measurement tools, data collection methods,
data sources, frequency of data acquisition, estimated cost of data acquisition SECOND REVIEW DRAFT of the STRATEGY for ENGAGEMENT: The SECOND REVIEW DRAFT of a Strategy for Engagement will incorporate suggested input and/or address specific issues raised during the mission out-briefing. USAID will have five working days to submit additional comments on the Report Outline and presentation. The Strategy for Engagement complete DRAFT shall follow USAlD branding procedures.
SECOND REVIEW DRAFT of the IMPLEMENTATION PLAN for PAYROLL REFORM: The SECOND REVIEW DRAFT of the Implementation Plan for Payroll Reform will incorporate suggested input and/or address specific issues raised during the mission out-briefing. USAID will have five working days to submit additional comments on the Report Outline and presentation.
FINAL STUDY REPORT: The Contractor will have four working days after receipt of USAID's comments to submit the final detailed Study Report electronically to USAID/Liberia Program Office.
FINAL STRATEGY for ENGAGEMENT: The Contractor will have four working days after receipt of USAID's comments to submit the final detailed Strategy for Engagement, including performance metrics, electronically to USAID/Liberia Program Office.
FINAL IMPLEMENTATION PLAN for PAYROLL REFORM: The Contractor will have four working days after receipt of USAI D’s comments to submit the final detailed Implementation Plan for Payroll Reform, including performance metrics, electronically to USAID/Liberia Program Office.
C.2.5 TEAM COMPOSITION AND QUALIFICATIONS
Members of the assessment team must include key personnel with demonstrable expertise in: political economy analysis; change management in relation to the implementation of complex policy reforms;
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accounts from the civil service payroll. in 2011, just prior to national elections, about 9,000 names were added to the payroll roster of the Ministry of Education alone. Very few of these new personnel were hired through the formal, competitive processes nominally required by the CSA. In 2012, the GOL has renewed its political commitment to payroll reform. USAlD has a strong interest in encouraging and, as appropriate, supporting this process.
In this context, the GOL continues to seek USAID and other international funding to pay the salaries of senior officials in the Ministry of Finance, the Civil Service Agency, and many line ministries. USAID has informed the GOL that it will be unable to continue such support in the absence of a credible plan for cleaning up the GOL’s existing payroll, establishment of systems and controls to prevent future mismanagement, and development of a credible fiscal plan leading to full GOL funding of its civil service payroll.
Land Tenure: Land tenure issues in Liberia are complex and have historically been a source of social conflict. Land disputes all too often erupt into violence, which threatens the peace, security, and stability of Liberia. One recent report noted that nationally, about one in four (23%) Liberians reported having experienced a land dispute since the end ofthe war in 2003.2 Sources of land tenure disputes include: the reintegration of villages and communities disrupted by the civil war; lost deeds; contested inheritance of land, particularly by females; demographic shifts; the allocation of concessions by the GOL; and legal reforms.
Structural issues complicate land tenure in Liberia. Prior to the civil war, Liberia had an incomplete and inconsistent land administration system. The civil war made matters worse. Liberia is trying to rebuild its land administration system but evidence of fraudulent conveyances, forged records, and overlapping tenure claims is appearing as Liberia’s citizens return to their homes and seek to invest in property.
Over this administrative framework is laid the issue of legal pluralism in Liberia. The presence of both statutory and customary law is another contributor to land tenure insecurity. Customary law, for example, does not always provide the predictability, protection, and tenure security for holders of land historically held and managed by customary authorities that more formal systems afford. On the other
hand, statutory law is not commonly understood, trusted or affordable in the rural areas.3
With this land tenure backdrop, the GOL established the Land Commission (LC) on August 4, 2009 by an Act ofthe National Legislature. The LC was officially launched on March 11, 2010 to begin a five-year tenure. The general mandate and purpose of the Land Commission is to propose, advocate, and coordinate reforms of land policy, laws and programs in Liberia. The LC has focused its efforts on several core areas: land tenure and property rights (to include formal and customary rights); land administration; land use and natural resource management; and land dispute resolution.
The Land Commission is coordinating its comprehensive land policy development work with relevant GOL entities, such as the Center for National Documents and Records/Archives (CNDRA), the Ministry of Lands Mines and Energy (M LME), the Bureau of Concessions (80C), the Ministry of Internal Affairs
2 “Talking Peace a Population-Based Survey on Attitudes About Security, Dispute Resolution, and Post-Conflict Reconstruction in Liberia,” Patrick Vinck, Phuong Pharn and Tino Kreutzer, University of California Berkeley June 201 l.
3 “A Study on Alternative Dispute Resolution Systems in the Republic of Liberia: Strategies for Coordination and Operationalization of Systems to Enhance Their Effectiveness," Christopher W. Moore, Ph. D, March 10, 2011, p
11-12.
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In
(MIA), the Law Reform Commission, and the Forest Development Authority (FDA).
As the Land Commission approaches the mid-point of its tenure, questions arise as to whether or not Liberia needs a permanent land agency focused on land policy development that can also respond to arising land tenure and use issues. Currently, land policy and administration are handled by several different ministries, most of which are also affiliated with the utilization of one or more natural
resources.
Concessions Contracts: Liberia anticipates receiving at least $2 billion in concession revenue over the next 8-10 years (more, if oil comes online). It is an essential revenue source that, in turn, will fuel Liberia’s development and poverty reduction. There are a number of active concessions, including for iron ore, palm oil, forestry, and rubber. Others are in the exploratory phase, e.g. oil. Concessions vetting, negotiation, revenue-collection, management, contract enforcement, environment compliance and auditing are handled by a range of government entities. The current process for vetting and negotiating concessions is highly politicized, and some would say non-transparent and nonstandardized. The Inter-Ministerial Concessions Council (iMCC) makes the final determination on what concessions are awarded. Their recommendations are then turned over to the legislature for ratification. A new National Bureau of Concessions (NBOC) has been established to serve essentially as a technical arm to the IMCC. it is expected to examine bidders' revenue and production projections, as well as to negotiate an appropriate tax structure, look at transfer pricing and conduct compliance audits, among other duties. Although the Bureau was established, its annual budget barely cove-rs its operational costs, much less provides it with resources to attract the requisite highly technical staff or consultant experts.
Reform in the Accounting and Auditing Sector: The accounting and auditing sector in Liberia can be characterized by capacity and integrity issues. The sector has largely been controlled by three local firms who rarely invest in training of personnel. The partners of these firms jointly control the council lie, the body responsible for issuing licenses to auditing firms) of the Liberian Institute of Certified Public Accountants (LICPA), which is the regulatory body of the Accounting and Auditing profession in Liberia.
The World Bank issued a Report on Observance of Standards and Codes, Accounting and Auditing (ROSE A&A) in Liberia, in February 2011. This report contributes to the identification and development of the building blocks for a comprehensive action plan for strengthening institutional capacity to support highquality financial reporting, which has direct Impact on local and foreign investors who require credible financial information for investment decision making. A key recommendation of the World Bank report is to modernize the statutory framework for financial reporting through the enactment of a new corporate law that updates insurance law and revises the Liberian Institute of Certified Public Accountant Act.
In March 2011, the Legislature passed into law "The LICPA Act 2010.” Among other requirements, section 24.16, "Restrictions on Practicing as Public Accountant,” constrains international CPA firms from working in Liberia unless they collaborate with local Liberian firms that have been a member 0fthe LICPA for 5 years and also allocate 35 percent of the fee income from any assignment to the local firm. Global CPA firms have questioned this requirement given the lack of threshold capacity levels of local Liberian
firms. '
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The above requirements of the law and related constraints of global and regional firms are slowly hampering the Mission's efforts to expand the use of Liberian implementation Systems and implementing USAID Forward’s IPR goals. This also obstructs foreign direct investment and the
expansion of supply of these services to meet growing demand from USAlD, the GOL and the private
sector,
C.2 Statement of Work
USAID/Liberia has identified the foliowing reforms as critical to the success of its development objectives in Liberia:
Management of the Civil Service payroll system Land tenure
Concessions Contracts
Reform in the Accounting and Auditing Sector
For each of these reforms, the Contractor must:
Frame and assess the scope ofthe problems, challenges, and opportunities through focused political-economy analyses
Identify appropriate research questions, study designis}, and data collection methods and analysis
identify any significant information gaps and make recommendationsfor filling those gaps (e.g., baseline data collection to track improved reliability of salary payments)
Recommend effective strategies for USAID and broader USG engagement with Liberian partners in support ofthose reforms
Analysis supporting this work must address political economy, change management, and social sustainability issues, as well as technical issues. USAlD/Liberia wants to build a stronger knowledge base of stakeholder interests and the political will for tackling patronage, corruption, and other systemic obstacles to the successful and sustainable implementation of critical reforms. Key outcomes from the political-economy analysis include: 1) A full report on the Political-Economy Analysis study of each of the four reforms listed above; 2) A recommended Strategy for Engagement for the Mission’s internal use; and 3} An Implementation Plan for Payroll Reform. Additionally, the Mission is interested in building internal capacity to conduct political-economy analyses. The Contractor must provide a two-day training as part of the deliverables of this task order, with the objective that participating staff will acquire a
basic capacity to plan and implement political—economy analysis by the end of the training.
C.2.1 DESK STUDY AND LOGISTICS
Prior to arrival in Liberia, the Contractor must first complete a desk study to understand the history and context of civil service payroll reform, land tenure issues, timber and mining concessions, anticorruption efforts, and the accounting and auditing sector in Liberia. To Support this review, USAID/Liberia will provide to the Contractor electronic copies of the following documents prior to departure to Liberia:
o USAlD Liberia’s proposed Country Development Cooperation Strategy
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OOOOOO
Review of GOL’s Poverty Reduction Strategy (PR5) and the "Agenda for Transformation”
GOL Act to Reorganize Parts of the Executive Branch of Government (2011)
GOL Pubiic Expenditure and Financial Accountability (PEFA) Assessment (2012) GOL Payroll Reform Strategy
60!. Medium Term Pay Strategy Final Report (December 2009)
GOL Medium Term Pay Strategy (2010) — to be revalidated by GOL
Draft study of ministerial functions to be changed for forthcoming implementation of decentralization (exact blueprint for decentralization/deconcentration/ devolution TBD)
GOL Ministry of Education Civil Service Reform Strategy and initial work to register biometrically and confirm certification for all school teachers through our education Liberian Teacher’s Training Program
GOL Ministry of Education Policies for Reform; Liberian Education Administrative and Management Policies (LEAG Volume Five) [November 2011)
GAC Ministry of Education Teacher Enumeration and Verification Exercise (2010) Recent PFMRAFs (health, education, agriculture underway); internal FARA review for health
GEMS (our flagship economic governance program) institutional assessments that address many of the same elements as a PFM RAF
Evaluation of senior executive service salary payment programs (there have been three different ones we’ve bought into here — we are ceasing our contributions in October]
Government of Liberia Ministry of Education, Report ofthe Auditor General; Payrolls Verification and Enumeration (October 2009—March 2010), Volume 1: Executive Summary and Detailed Report
Land Commission of Liberia and Paul De Wit, Land Rights, Private Use Permits and Forest Communities, April 2012
Moore, Christopher W. 2011. "A Study on Alternative Dispute Resolution Systems in the Republic of Liberia: Strategies for Coordination and Operationalization of Systems to Enhance Their Effectiveness” (March 10, 2011)
Norwegian Refugee Council. Confusion and Palava: The Logic of Land Encroachment in Lofa County, Liberia. A thematic report from the Norwegian Refugee Councii,
2010 - '
U.S. Institute of Peace and George Washington University. Looking For Justice: Liberian Experiences and Perceptions of Local Justice Options, 2009
USAID Democracy and Governance Strategic Assessment Framework, August 2012 USAID Final Evaiuation of the Land Rights and Community Forestry Program, December 2011
USAID Stage 2 Assessment of the Liberian Ministry of Agriculture, 2012
USAlD Stage 2 Assessment ofthe Liberian Ministry of Education, 2012
USAID Stage 2 Assessment of the Liberian Ministry of Health and Social Welfare, 2012
USAID State 2 Assessment of the National Drug Service, August-Se ptember 2012 Vinck, Patrick, Phuong Pham and Tino Kreutzer. “Talking Peace a Population-Based Survey on Attitudes about Security, Dispute Resolution, and Post-Conflict Reconstruction in Liberia” (University of California, Berkeley, June 2011)
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0 World Bank. Liberia insecurity of Land Tenure, Land Law and Land Registration in
Liberia. Report No. 46134-LR, October 22, 2008
0 World Bank, Report on Observance of Standards and Codes, Accounting and
Auditing (ROSC A&A) in Liberia (February 2011)
The assessment team must function with minimal logistical supportfrom the Mission. While USAlD/Liberia will provide some information on key contacts for the research, the Contractor must seek additional contacts and set its own schedule.
02.2 KEY STUDY REPORT, STRATEGY FOR ENGAGEMENT, IMPLEMENTATION PLAN FOR PAYROLL
REFORM QUESTIONS
The key questions below must be addressed. These and other questions should be articulated in further detail in the Contractor’s proposed study design and data collection methods. The Contractor’s proposed study design and data collection methods will be incorporated into Section C ofthe Task Order.
Across a” reform issues:
1. How are power and resources distributed and contested in the Liberian context and what
underlying interests, incentives, and institutions promote or frustrate each identified reform?
2. What gender disparities are encountered and what are the risks of leaving gender disparities
and imbalances unaddressed in policy reform? Are there discernable gender inequities? If so, what are they and what can be done about them?
Payroll Reform:
3. Where are the points of greatest vulnerability to fraud, mismanagement, and corruption in the
civil service payroll system?
4. What technical solutions may help to reduce those vulnerabilities? Taking into account
stakeholders' underlying interests and incentives, what are the potential weaknesses of the technical solutions and what is the probability that they may be defeated?
Land Tenure:
5. As the GOL moves to the deconcentration of land tenure services (e.g., the recording of property deeds), what points of vulnerability to fraud and corruption are likely to arise and what technical and institutional solutions may help reduce or eliminate such vulnerabilities?
6. Given the extensive support by USAID and others for the Land Commission to explore ways to harmonize the formal and traditional legal systems through the use of alternative dispute resolution (ADR) methods, particularly with respect to land tenure disputes, what interventions at the Ministry oflustice (M01), the Judiciary, the Law Reform Commission and the legislature will be necessaryto actualize the policy recommendation the LC will make regarding this issue? What underlying interests, incentives and institutions are likely to oppose harmonization of these disparate legal systems?
7. How is the Government proposing to reconcile electoral, administrative, chiefdom and land use
boundaries? What are the potential flashpoints around this issue and how could they be mitigated?
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8. lfa separate land agency focused on national land policy and land information is established,
what land tenure mechanisms should be located at that agency (e.g. deeds, cadastre, land dispute resolution, etc.) and which mechanisms should remain with existing ministries and institutions? What type of resistance to the shifting of resources and authority is likely to occur and what type of interventions will help overcome that resistance?
Concessions Contracts:
9. Who benefits from the current politicized concessions vetting and negotiations process?
10. What is the relationship between the various concessions stakeholders and who has the
greatest influence over decision making, and at what stages of the process?
11. is there an appetite to have the NBOC perform rigorous assessments of concession agreements
before they are awarded?
12. Why has the Public Procurement and Concessions Commission (PPCC) backed away from its role
a regulator of the concessions bidding process (as per the PPCC Act)?
13. What political will exists for strengthening monitoring and enforcement agencies, such as the
Environmental Protection Agency, Forestry Development Agency, and individual line ministries?
Reform in the Accounting and Auditing Sector:
14. Considering the underlying interests and incentives of the three local CPA firms in maintaining
control of the LICPA council, what strategy for implementing a comprehensive action plan for strengthening institutional capacity to support high-quality financial reporting would have the greatest probability of success?
15. Given the lack of capacity and control of the current LICPA council by a few stakeholders, what
points of vulnerability are likely in attempts to modernize the statutory framework for financial reporting through such recommended actions as the enactment ofa new corporate law that updates insurance law and revises the Liberian Institute of Certified Public Accountant Act?
(1.2.3 APPROACH —DATA COLLECT ION AND ANALYSIS METHODS
The Contractor must submit a detailed work plan that includes: anticipated time-frame(s) for logistical and technical planning; the assessment approach; data collection instrument development, review, and analysis plans and key characteristics of data collection instruments (e.g., questionnaire or interview guide content, example questions or modules, etc.); measures to ensure protection, security, and confidentiality of data; and plans for encouraging participation by national counterparts, if and as appropriate in the design and conduct ofthe study. It is anticipated that the final work plan will be developed collaboratively with the assessment team, USAiD/Liberia, and selected GOL stakeholders, as appropriate.
C.2.4 Specific Tasks
Specific tasks to be undertaken include, at a minimum, the following:
Review of background documents listed in Section C.2.1 Finalize the detailed study design and work plan (to include key information/data collection
needs and likely data sources, and a tentative interview and data source list and selection criteria of interviewees) and data collection instruments and interview question guides. A
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first meeting or conference call will be held with USAID and the Contractor to define and clarify expectations, logistical support, and additional secondary documentation sources
before the assessment activity starts.
Briefing USAID/Liberia and other USG representatives to review and refine the work plan
o in—briefwith USAID/Liberia Mission Director, Development Objective Team Leaders,
the Program Office, and other USG representatives
0 Follow-on meetings with USAlD/Liberia Development Objective Team Leaders, the
Program Office, and other USG representatives
Political-economy analysis field work/data collection according to the approved work plan
0 Meetings and interviews with Government of Liberia, donor, and private-sector
counterparts and their partners (e.g., FH1360), and selected members of Liberia's civil society, media, and academia (at the National, County, and District level) 0 Meetings and interviews with various stakeholders and beneficiaries 0 Identification and follow-up on additional information and data sources Data/information review and analysis Preliminary DRAFTs of: the internal STU DY REPORT; the USAlD/Liberia strategy for engagement; and the proposed Implementation Plan for payroll reform development. The drafts must include an overview of activities undertaken and the analytical approach, key findings, actionable recommendations, and suggested guidance on performance metrics.
Presentation and Out-brief to USAlD/Liberia based on an outline of the STU DY REPORT, to include specific findings and recommendations, a detailed outline of a USAlD/Liberia strategy for engagement, and a detailed outline of a proposed implementation plan for payroll reform development
A two-day training in political—economy analysis for 10 to 15 USAID/Liberia staff following completion of the data collection, analysis, and DRAFT REPORTS.
SECOND REVIEW DRAFT of the STUDY REPORT: The second review draft of the full study report will incorporate suggested input and/or address specific issues raised during the mission out-briefing. USAID will have five working days to submit additional comments on the Report Outline and presentation. The complete SECOND REVIEW DRAFT STUDY REPORT and Recommendations must include:
o A description of the study purpose and the activities undertaken (including a clear
articulation ofthe evaluation questions addressed in the report) 0 Information on the assessment team
- How the independence of the assessment team was protected and
identification of any objectivity and potential conflict of interest addressed - The participation by national counterparts and evaluators in the design and
conduct of the study, if any 0 A detailed account of the assessment study design or approach (including the scope
and underlying assumptions addressed) o A detailed description of the information collection methods (including the selection
criteria used for identifying individuals to interview) 0 Data analysis and findings (including acknowledgement and disclosure of any data
limitations) - Statements of differences (if any) regarding significant unresolved difference of
opinion by USAlD and/or members of the assessment team
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0 Recommendations (these must be supported by the findings and presented as action-oriented recommendations appropriate to the evaluation purpose)
0 Annex(es)thatinclude: - A copy of this SOW - Data collection instruments
- A list of data sources, individuals (if appropriate, given the sensitivity and need
for confidentiality), and sites visited
- Disclosure of conflicts of interest forms for all assessment team members, either
attesting to a lack of conflict of interest or describing existing conflict of interest 0 Guidance on Performance Metrics to include:
- A set of clearly articulated indicators/measures that are: valid, objective,
practical, precise, useful for program management, direct, reliable, adequate, and such that data integrity can be maintained - Indicator reference sheets for each metric or indicator that include:
I rationale (what it measures) I precise definitionls) ' numerator and denominator, as applicable
I unit of measure
I calculation (how to measure it)
I known or anticipated strengths and weaknesses
I suggested disaggregation, measurement tools, data collection methods,
data sources, frequency of data acquisition, estimated cost of data acquisition SECOND REVIEW DRAFT of the STRATEGY for ENGAGEMENT: The SECOND REVIEW DRAFT of a Strategy for Engagement will incorporate suggested input and/or address specific issues raised during the mission out-briefing. USAID will have five working days to submit additional comments on the Report Outline and presentation. The Strategy for Engagement complete DRAFT shall follow USAlD branding procedures.
SECOND REVIEW DRAFT of the IMPLEMENTATION PLAN for PAYROLL REFORM: The SECOND REVIEW DRAFT of the Implementation Plan for Payroll Reform will incorporate suggested input and/or address specific issues raised during the mission out-briefing. USAID will have five working days to submit additional comments on the Report Outline and presentation.
FINAL STUDY REPORT: The Contractor will have four working days after receipt of USAID's comments to submit the final detailed Study Report electronically to USAID/Liberia Program Office.
FINAL STRATEGY for ENGAGEMENT: The Contractor will have four working days after receipt of USAID's comments to submit the final detailed Strategy for Engagement, including performance metrics, electronically to USAID/Liberia Program Office.
FINAL IMPLEMENTATION PLAN for PAYROLL REFORM: The Contractor will have four working days after receipt of USAI D’s comments to submit the final detailed Implementation Plan for Payroll Reform, including performance metrics, electronically to USAID/Liberia Program Office.
C.2.5 TEAM COMPOSITION AND QUALIFICATIONS
Members of the assessment team must include key personnel with demonstrable expertise in: political economy analysis; change management in relation to the implementation of complex policy reforms;
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effective anti-corruption measures; and the assessment of gender disparities and inequities. The team must include:
I. 1. A Political Economy Analyst/Team Leader with significa nt, demonstrable experience in designing and leading similarly complex, multi-sectoral political-economy analyses; and
2. A Liberian political and cultural expert who is well-connected and has demonstrable knowledge of Liberia's ministries, political and administrative systems, and development policy leadership.
Members of the assessment team, collectively, must have significant, demonstrable expertise and experience relating to the implementation of policy and institutional reforms in the following
areas:
Civil service payroll and human resources management
Regulation and jurisdiction of land tenure, land use rights, and rights to the exploitation of forest, mineral, or other natural resources
Regulation of business establishment, commercial competition, international trade, and professional standards in auditing, accounting, or similar business services sectors
One or more of the team members must have demonstrable expertise and experience in:
Effectively organizing and managing the administrative and logistical requirements of complex assessment teams comparable to this one
Teaching, training, mentoring, and other techniques for effectively communicating knowledge and skills required to conduct rigorous political economy analysis
Training in conducting political-economy analysis
(1.2.5 STAKEHOLDER PARTICIPATION AND LOCAL CAPACITY
If and as appropriate, the approach selected and data collection instrument design must include appropriate individuals within GOL, including MoE, the Ministry of Finance, and additional government officials from various agencies and branches, as well as civil society, the media, private sector and others with a stake in civil service reform and able to cast light on corruption/patronage networks incountry.
The Implementation Plan for Payroll Reform must be developed in close consultation with Liberian reform leaders and based on the political-economy analysis. The plan must include recommended policy commitments and measures to be taken by the GOL and other Liberian stakeholders as well as recommended assistance to be provided by USAID and other donors. it must address issues of sequencing, timing, and contingency planning, and will include indicators and benchmarks by which the GOL and the Mission will be able to monitor progress toward intermediate and final reform goals. The Implementation Plan for Payroll Reform serves as a basis for further consultation, validation, decision, and action.
END OF SECTION C

[End of report, as per the orginal materials here]

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