Sierra Leone's anti-corruption drive presents growing political risks
- 4 April 2018: Julius Maada Bio is sworn in as the country's new president
- 6 April 2018: Government orders audit of the previous administration's performance
- 4 July 2018: Government transition team calls for formal and targeted investigations into the former administration
Out with the oldJulius Maada Bio took office as Sierra Leone's new president in April. He inherited a moderately indebted economy of about 42 per cent of gross domestic product (GDP) and foreign currency reserves sufficient to cover three and a half months-worth of imports. The 5.6 per cent GDP growth in 2017 provided little consolation, due to a current account deficit of 21.5 per cent, which prompted the International Monetary Fund (IMF) to suspend the budget disbursements of its four-year extended credit facility to the then-government in December 2017.
The authors call for further judiciary-led investigations into senior officials
Bio immediately created a Government Transition Team (GTT). The GTT's mission was to assess the spending and accountability of the former administration led by Ernest Bai Koroma of the now-opposition All People's Congress (APC). On 4 July, the GTT presented its final report, with incendiary accusations against the former administration. Accusations included wide-ranging corruption; ethnic nepotism in favour of Koroma's own Limba or the Temne ethnic groups, while discriminating against the Mende (Bio's ethnic lineage); as well as hints that the previous government summarily awarded tax exemptions to foreign mining investors. The report's authors call for further judiciary-led investigations into senior officials, and reviews of public contracts signed by the previous administration. The report alleges among other things that Koroma and his nephew, John Sisay, benefited directly from the USD133 million sale of a 30 per cent share of Sierra Rutile. The company was acquired in 2016 by Australian mining group Iluka Resources, one of the world's largest zircon producers. Sierra Rutile once produced a quarter of the world's rutile a titanium ore used as a colouring agent in manufacturing and industrial production before it temporarily ceased operations in 1995 due to repeated attacks by armed rebels of the Revolutionary United Front, which fought the government in the country's civil war between 1991 and 2002. The allegations against Sisay include claims that he oversaw bribe payments to senior government officials to secure mining licences that were inherited by Iluka. The Australian company self-reported after internal investigations had uncovered the irregularities in August 2017, a year after the company acquired Sierra Rutile. Iluka is still not out of the woods, and could face prosecution and fines, in addition to an uphill struggle to repair relations and the trust of the Sierra Leonean authorities. Such legal proceedings could result in the eventual expropriation of land without compensation if it is found that the title deeds were fraudulently obtained. The authors of the report make a series of recommendations. These range from launching formal investigations into scores of senior civil servants, politicians and businessmen including the former president; conducting an audit of all ministries, departments and agencies; launching a judge-led inquiry with a mandate to recover stolen or fraudulently obtained state funds including vehicles, buildings, and land and prosecuting those found guilty of corrupt practices; investigating ALL roads contracts awarded by the former APC Government. This is not the first time that a mining concession has come under increased scrutiny in Sierra Leone. Guernsey-based Beny Steinmetz Group Resources (BSGR) has been embroiled in a legal battle over its Koidu diamond mine in the Eastern Province. British advocacy group Global Witness has published several reports accusing BSGR of obtaining licences by paying bribes to Sierra Leonean officials. BSGR has denied wrongdoing. Also Read: Liberia's general elections, a litmus test
Furthermore, Sierra Leone's government was the first to launch a formal investigation into mining mispricing following the publication of the 2016 Panama Papers a major trove of leaked documents and emails detailing how some of the world's super-rich used Panamanian law firm Mossack Fonseca to evade paying taxes in their home jurisdictions. The Panama Papers alleged that BSGR-owned Oct'a Group and its subsidiary Koidu Holdings, which manages the Koidu mine, had extracted additional undeclared value from rough diamonds after exporting them from Sierra Leone, in contravention of an agreement with the government. Following approximately a year of suspended activity due to the various legal proceedings facing BSGR, Koidu resumed operations in May 2018. Koroma, in his defence, has blamed the poor state of the economy on the collapse of global commodity prices in 2014 and the concomitant Ebola pandemic which killed more than 3,000 people in Sierra Leone. However, the government and the GTT both say that the economy was in good condition by 2015, when the Ebola outbreak in Sierra Leone had been contained, and alleges that the Koroma administration's mismanagement of the budget and graft are responsible for the poor state of the economy. On 9 July, the government approved some recommendations made in the GTT report, ordering the attorney-general to set up a commission of inquiry, while the president said that all unpaid loans held by politically exposed persons should be repaid within 30 days. Failure to do so is likely to result in arrests or fines. Bio has to restore trust with the IMF to ensure the continued disbursement of its extended credit facility, which the IMF approved in June 2017 and delayed in February 2018 due to the government's failure to address issues IMF-staff raised in a September 2017 review. It is less clear how far the incumbent will pursue the investigations, given that such moves are likely to upset the current social peace, meaning that Bio faces a sensitive balancing act.