Foreign investors may leave Sierra Leone due to corruption and lack of rule of law

Sierra Leone Telegraph: 3 April 2015

China’s economic interests in Sierra Leone have risen by over 400% in the last five years, and this resurgence can be largely explained by its vast investment in the country’s mining sector.

But China’s economic expedition in Sierra Leone has prompted several Sierra Leoneans to now refer to Sierra Leone as the 24th province of China.

Critics say that while senior Chinese government officials – including the chief of police are being held to account and charged with corruption and abuse of office in Beijing, in Sierra Leone, the Chinese are encouraging and fueling corruption in high places – double standards to the highest degree.

And recent events leading up to the full acquisition of Sierra Leone’s largest iron ore mining company – African Minerals Limited, by the Chinese company – Shandong Iron and Steel, is a perfect example of how China’s interests and the interests of those in power in Sierra Leone have become massively intertwined.

A new Chinese business philosophy in Africa, of: “What’s yours is ours.” But honest investors say they will leave Sierra Leone, because of corruption and the porosity of the rule of law.

Analysts believe that with China now poised to bankroll the near bankrupt economy of Sierra Leone, after years of mismanagement and corruption, every sector of the economy – from fishing, forestry, and agriculture, will soon fall under the direct control of Beijing’s industrial cartel.

What is evidently clear also, is that the industrial coup d’état that saw China’s Shandong Iron and Steel, taking full control of African Minerals Limited, was with the blessing of president Koroma, who personally ensured that all due legal niceties were bypassed and shareholders stripped of their rights.

But this abuse of executive powers and misdirection of the judiciary, in order to facilitate the fast-tracking of the transfer of ownership of African Minerals Limited to Shandong, will most certainly destroy any confidence that foreign investors have in Sierra Leone.

Shandong takes over African Minerals.jpg2

Today, Friday, 3 April, 2015, a former shareholder in African Minerals Limited,  contacted the Sierra Leone Telegraph to say that the handling of the African Minerals affair by the Koroma government and the High Court, was at best shambolic, and worse – downright corrupt.

This is what he told the Sierra Leone Telegraph:  

I would like to bring to your attention two UK-listed mining companies which were operating in Sierra Leone, in order that you may perhaps warn private investors not to invest in any companies based in that country.

It is very risky to invest in Sierra Leone, since there is almost no transparency in oversight and governance.

Kaifala Marah at London Mining saleLondon Mining (AIM: LOND) went into administration in September 2014. Its Marampa mine was bought by renowned Romanian/Australian entrepreneur Frank Timis in late October, with the help of the Sierra Leone finance minister Marah (Photo), from the administrator PwC, in a hurried deal at bargain price.

African Minerals’ (AML) (AIM: AMI) Chairman Frank Timis bought the Marampa mine in the knowledge that, at that time, AML needed funding.

He separated AML, the parent company into two parts – African Minerals Engineering Limited and the project companies (Tonkolili mine, Power Plant, Rails and Port) in late 2014.

Moseray fadika - aka Gibril BanguraTimis appointed Gibril Bangura, who also goes by the name of Moseray Fadika (Photo: Right), as CEO of the project companies in January 2015. This information was never announced to the market.

Then came the news from the AMI Regulatory News dated 27 February 2015 that African Mineral’s pre-export finance facility (PFX) debt was bought and transferred from Standard Chartered to Shandong Iron and Steel (SISG) who are the junior partner.

The news report – ‘Interim injunction in Sierra Leone’  said that:

“On 26 February, the Company received by e-mail from SSHK an interim order of the High Court of Sierra Leone, issued on 23 February 2015, in relation to compliance with the shareholders agreements between AML (and subsidiaries) and Shandong Steel Hong Kong Resources Limited (SSHK) a recently set up subsidiary of SISG.

“The document names the plaintiff as SSHK and the defendants as Tonkolili Iron Ore (SL) Ltd, African Railway & Port Services (SL) Ltd, African Power (SL) Ltd, AML and Frank Timis.

“The order grants an interim injunction restraining the defendants from unilaterally taking any steps that will lead to the dissolution, liquidation, winding up or placing into administration of any of the defendant companies. The injunction continues until the hearing and determination of the application, with a hearing date of 2 March 2015.”

Following this, SISG took control of AML assets. An extract from RNS dated 3 March 2015, stated that: “The Lender has taken control of the Holding Companies by appointing new directors who have a voting majority, and has taken steps to take control of AML’s 75% shareholding in the operating companies by appointing replacement directors to those companies.

“The Lender’s sister company, Shandong Steel Hong Kong Resources Limited (both ultimately owned by Shandong Iron and Steel Group), owns the 25% in the operating companies not held by AML.”

There seems to be no rule of law in Sierra Leone, as SISG has taken control of AML assets without, it seems, following due legal procedures.

African Minerals thereafter appointed Deloitte as administrators on 26 March 2015, which is where we as shareholders stand today.

However, the government of Sierra Leone made an announcement about restarting the mine (an AML asset) in partnership with SISG before Deloitte was even appointed.  

This would seem to indicate that SISG is colluding with the government of Sierra Leone, to the detriment of stakeholders, in particular shareholders.

 I hope that you will report this story in the hope that it will prevent anyone else from losing their hard earned money, as likely to happen to the shareholders of African Minerals Limited.

End of Report.

Last August, 2014, the Sierra Leone Telegraph asked one of the top foreign investors in Sierra Leone – former Director and founder of London Mining Limited – Mr. Chris Brown, about his experience of so called ‘dodgy and unfair mining agreements’ in Sierra Leone.

This was his response:

I have read the report on African Minerals by Human Rights Watch, but I am not familiar with the other reports. When I was the Managing Director of London Mining, I lost the Marampa mines and Pepel railway line to African Minerals, under very dubious circumstances.

“The then Minister of Mines and Mineral Resources, Dr Alhaji Abubakar Jalloh, visited Romania on a supposed fact finding mission with two other ministers in 2008.

“Then six days later, the minister signed an MOU with African Minerals to build a new “Standard Gauge” railway between Marampa and Pepel.

“I find it just a bit too much of a coincidence that the Chairman of African Minerals – Frank Timis, was born in Romania, and African Minerals never did actually build a Standard Gauge Railway. Instead, they simply repaired the old narrow gauge railway and extended it to Tonkolili.

“But, rather than fight the decision, I created the “Plan B” road and barge route for London Mining.

“I am a visitor to your country, so it is not up to me to advise how the Government runs its country, but for the Government of Sierra Leone to run the country as it best sees fit.

“My only caveat is that it does not involve me in any corrupt practices. If the Government wants me to invest further capital in the country, then it will have to work harder to attract my investment.

“At the moment, the Government is not really doing a very good job.

As a foreign investor in Sierra Leone, do you believe the government has created the right conditions and environment that are conducive to foreign business investments?

As a foreign investor, I am sorry to say, that in my personal view, Sierra Leone is one of the worst places to invest in the world I have visited, and I have visited a lot of countries!

Firstly, the Government penalises any visitors to your country with high visa costs and landing charges at the airport.

Then, if you import anything into your country through the Freetown Port, it requires up to 15 different signatures, by up to eight different Government agencies in up to five different buildings spread around Freetown (as a result, some of our duty free container actually cost more in demurrage than the duty we saved!).

The labour force is mostly unskilled and whilst they seem cheap on face value, they are not as productive as skilled foreign labourers, and have to be closely monitored against theft every single moment they are on site.

Even when they are caught stealing, they are very difficult to sack because of strong unions and biased courts.

Anyone in the country with any skills, such as accounting and legal professionals, are even more expensive than similar professionals in London and New York, but much more ineffectual.

Borrowing money from the banks in Sierra Leone is prohibitively expensive, at 15-24% interest rates, and is usually repayable within a year!

Then, if you actually make a profit, the myriad of taxes are complicated and designed to create a wealth of bureaucracy and to rake in as much money for the Government.

But despite all that, dealing with corruption in Government is actually much more frustrating for a business, especially if you have a policy of never paying bribes!”

These are related links to the African Minerals Story:  

http://newafricaanalysis.co.uk/index.php/sierra-leone-time-let-go-frank-timis/

http://www.cityam.com/1413777896/sierra-leone-s-finance-minister-joins-london-mining-sale-talks

http://www.statehouse.gov.sl/index.php/component/content/article/34-news-articles/1195-glimmer-of-hope-for-the-mining-industryas-shandong-aml-recommence-mining-operations

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13 Comments

  1. What I really would like to know from African Minerals, is why according to Bloomberg Gibril Bangura aka Super aka Moseray Fadika was paid 1.5 million dollars in 2013?

    How on earth did he become Executive Chairman of African Minerals? The man does not even have a university degree or an MBA. He attended the Atlanta Junior College not even as a full time student but as associate. He came out without a certificate and then attended another low level college in Egypt.

    What therefore qualifies him to become the Executive Chairman of Sierra Leone’s largest iron ore mining company?

    Did he get the job despite his lack of experience and lack of mining expertise in order to look after President Koroma’s shares in the company?

    Is his bank account effectively the same as President Koroma’s bank account? And is this the reason why Koroma wants him to succeed him as President of Salone?

  2. I can’t defend everything in this article, I just want to to say that I’ve met these two guys who bear these two different names. Obviously, Gibril Bangura is not aka Moseray Fadika.

    These are two different persons with two different names. I just want to say the country is ours, hating a particular government does not give us the opportunity to throw the country into the bin.

    It will haunt us all as a nation, even though most of the critics have nothing to lose from a damaged image Sierra Leone. But the many ordinary people are the ones who will find it very difficult to survive from the consequences of our actions.

    With a damaged imaged Sierra Leone, even if a new government takes over tomorrow, it will suffer from this for several wasted years to clean this image before it will attract serious businesses to invest in our country.

    The country has existed with its name Sierra Leone after all the successful governments. So while we criticize please let’s keep in mind that Sierra Leone will still be Sierra Leone even after president Koroma has long gone and anyone of us who is interested in becoming the president.

    Please beware that good images are very easy to loose but bad ones sticks around.

    • The government of Sierra Leone has damaged the country’s image all on its own without any help from anyone.

      Back to the man with the 2 names – I don’t know how much you have been paid for this propaganda, but whatever it is, you are doing a very poor job. A simple check on the internet reveals all – that Gibril Bangura and Gibril Moseray Fadika, also known as Super are one and the same person. He is the Executive Chairman of African Minerals.

      You can fool some of the people some of the time but you cannot fool all of the people all of the time.

  3. Wow, what a world of pain so few will cause for so many. Invest in your people with training, invest in your country’s infrastructure. You have taken wealth that is not yours!

  4. Ernest Koroma is undoubtedly the worst President this country has ever had, since independent in 1961.

    He is a corrupt leader and a hard core criminal that does not deserve to be granted safe passage after the expiration of his presidential term.

    If any government that comes after Ernest, fails to institute a commission of inquiry into his financial affairs and those of his cabinet ministers, then that government should be branded as not being serious to fight corruption, and by extension has no respect for good governance, transparency and accountability which are the cornerstone of national prosperity.

    Ernest Koroma and his cohort need to be taught a bitter lesson they will not forget in a hurry. We should force our politicians to accept that, going into politics should be motivated by your desire to serve your people, and not for personal gain.

    This country has suffered a lot in the hands of selfish and callous crooks, calling themselves politicians.

  5. It is difficult to see how foreign investors can resist coming to Sierra Leone post Ebola. After all, we have our iron ore, diamonds, gold, rutile and soon oil.

    Corruption is an accepted fact of business life in modern economies, and as we aspire to become wealthy as a nation, corruption will always be here. Even the world bank accept some level of corruption to occur.

    The only problem I have with corruption in our country is that those who are making it big, are not investing their wealth here in Sierra Leone. They are taking the money to places like London where they invest. This is very sad.

    President Koroma is not the right man to fight corruption in Sierra Leone. He is deep to his neck with stolen funds. If we say we want to eliminate corruption, we must start with the anti-corruption commissioner himself.

    He knows about everything that is happening in our country, but he cannot rock the boat. He owes too much to the president who is his cousin. They say blood is thicker than justice.

    • Usu Kamara I am not sure whether you are the minister of industry – Usu Boie who has been out of the country for over 6 months now that posted this comment, but I disagree with your views that a certain level of corruption should be expected in Sierra Leone.

      Was it not president Koroma himself who said that he will pursue a policy of zero tolerance for corruption in Sierra Leone? But since he came to power in 2007 we have seen corruption rising out of control.

      The president and his family and friends are milking the cow that is grazing at State House to death, while the people are going hungry.

      Corruption is responsible for the death of thousands through poverty and disease in Sierra Leone, and must be classed by the International Court as a crime against humanity.

      Zero tolerance for corruption is the only policy and it must be pursued and implemented to the letter, if it is to be curbed.

      I am a school teacher that has to feed, cloth and pay for the roof over my family’s heads with only 300,000 Leones a month salary. So why should the president and his ministers be allowed to steal from the state, so they can look after their families?

      Poor people are suffering here, and they are living a very good life and their children sent abroad to study.

  6. I will say it again, it is not possible for foreign investors who are subject to anti-corruption laws in their home countries to successfully operate in Sierra Leone. In fact, the general consensus in London, Zurich, Tel Aviv, New York, Toronto and Johannesburg, the traditional centres of finance for West African extractive industries projects, is that Sierra Leone under the Koroma mafia government is best avoided.

    It is near impossible to raise finance for projects in Sierra Leone from serious capital markets players, and this is not just because of the Ebola crisis.

    The regime in Sierra Leone is viewed as one of the most corrupt in the world and in the current era where the high flying Benny Steinmetz’s of the world are brought low by corruption allegations, serious companies can simply not afford to operate in Sierra Leone.

    In fact it boggles the mind that one or two Western companies like Stellar Diamonds which, according to its recent press releases, is in the process of applying for a mining licence, are under the misguided notion that they can operate in Sierra Leone without engaging in corrupt activity.

    If I was a shareholder and/or financier of Sierra Rutile, Addax or Stellar Diamonds, I would be very, very concerned. And I would challenge the management of these companies to explain how they are able to operate or intend to operate in such a rotten system without becoming tainted. It is simply not possible.

    The government in Sierra Leone is extremely corrupt, even by the standards of West Africa. And the President and those around him, clearly believe they have nothing left to lose.

    The trend now is to grant the president and his family equity in projects. His brothers routinely negotiate all manner of equity deals on behalf of “No. 1”. Several companies have done this and their actions will surely catch up with them in time, not least because the Koroma brothers and Koroma-led cabal of thieves will not be in power forever.

    Also, the Administrators of the US Foreign Corrupt Practices Act and the UK Anti bribery legislation are salivating over the opportunity to convict some of those foreign companies which have, and are operating in Sierra Leone.

    They want to make an example of the Koroma-led government, which seems bound and determined to make corruption a national way of life, even while other jurisdictions are reforming.

    China by the way, is slowly following the lead of the West and is tackling corruption internally. Much has been written about high profile convictions within China, and eventually China’s external corruption policy will be more aligned with what is happening inside the country.

    In the meantime, Sierra Leone will be left behind, a footnote in the African Renaissance story because of the greed, ignorance and shortsightedness of its current leadership.

    • It is high time a whistle blower website which protects the anonymity of whistle blowers, is set up so that those with relevant information about the alleged corrupt activities (as they relate to foreign investors) of members of government including Ernest Koroma, Thomas Koroma and the Koroma family, Minkailu Mansaray, Franklin Bai Kargbo and all the others in that wretched and corrupt government, can come forward without fear of reprisals.

      The US State Department and the UK Serious Fraud Office would welcome any applicable and helpful information. Various stock exchanges around the world (ASX, AIM) and the police in various jurisdictions (Scotland Yard, Australia, RCMP, Switzerland) would welcome relevant information.

  7. Salone is full of gangsters running the country and selling off the family trinkets.

    Johnny P you ask the question how one man can have two official names. This is Koroma’s Salone. Thanks for raising this because here in Freetown we think about it but no one dares ask the question.

    Gibril Bangura aka Moseray Fadika has made a lot of money on the back of Frank Timis. Now he is going to bleed the Chinese dry. Some people here in Freetown believe he is the president’s corrupt surrogate. He gets his hands dirty on behalf of Koroma (but please don’t tell anyone I said so).

    Bangura aka Fadika’s ambition is to become president or presidential running mate. These mafia guys think they can buy high office here in Freetown.

    But this is Koroma’s Salone. Anything goes as long as you have the dosh. Anyone wants to buy chopsticks?
    .

  8. You’re on your own now Sierra Leone. You made your bed out of crispy, deep fried seaweed. Now lie in it!

    I trust the western nations won’t look twice at investing in your corrupt low skilled nation for years to come.

  9. The article and its attachments have made for very enlightening reading.

    Did I read right? How come one man has 2 names? ‘Gibril Bangura who also goes by the name of Moseray Fadika’. Isn’t it illegal to be known by 2 completely different names?

    This is the person who wants to become President of Sierra Leone? I think it is best you first decide what your real name is and stick to it.

    Reliance Insurance Company (which the President used to run before he came to power and which is now being run by his brother), insures Africa Minerals.

    I feel sorry for investors and all the hoops they have to jump through to get what they want. However, mark my words…things will not change even for many many years to come.

    Change will only come through a Rawlings style revolution.

  10. As someone who has written many articles about Sierra Leone’s economy, I could not agree more. Succinctly said!

    I wish there were many more Sierra Leoneans who cared about our country to write this boldly and clearly.

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