The General Auditing Commission (GAC) in line with its statutory mandate as enshrined in Section 53.3 of the 1972 Executive Law of Liberia has concluded a Special Forensic Audit Report on the Fraudulent Transfer of US1, 171,751 from the Central Bank of Liberia (CBL) to the Ecobank Liberia limited. The report was submitted today to the National Legislature and the President of Liberia.

GAC release says, the Auditor General  on 26 May 2009 commissioned this audit based on the Letter of Payment (LPI) request supposedly directed by the President of Liberia through the Deputy Minister of Finance for Revenue.

Letters of Payment, according to the Forensic Audit report, were means through which previous administrations circumvented commitment control and legally sanctioned financial management processes.

GAC release indicates that the Special Forensic Audit Report established that the signatures of the President and the Government officials allegedly involved in the transfer were forged. The signatures analysis   was performed by Meredith DeKalb Miller, a former Federal Bureau of Investigation Forensic Document Examiner hired by AG Morlu.

The findings, GAC release says, also established that the transaction exposed the weak banking regulatory environment, as demonstrated by the ease with the US$1,171,751 was transferred without a beneficiary being named on the transfer request.

It is also noted in Report that the Central Bank of Liberia (CBL) has, up to the time of writing of the audit report, operated without an approved Standard Operating Procedure (SOP) for the Department of banking. The CBL did not provide the GAC an approved SOP when it was requested by AG Morlu.The Report further captured that CBL did not perform even the most minimal due diligence and due care in carrying out this transaction. The transaction was not a regular banking transaction between the Ministry of Finance and the CBL. Letter Payment is a process of payment that had been declared irregular and abolished by the National Transitional Government of Liberia (NTGL).

The Report found no evidence that anyone in the Ministry of Finance,  Office of the President,  and the Ecobank participated to benefit materially from the irregular transfer of the US$1,171,751.However it is noted that proper due diligence was not exercised by the Special Assistant to the Executive Governor and the Deputy governor, as the speed to which the US$1,171,751 was transferred by lower staff could be due to the attachment of the President’s name to the transaction. This was a top down instruction through a letter of payment request unlike a bottom up transaction like encashment of checks.

The report also noted that CBL did not have a threshold for processing financial transactions, as US$1,171,751 was a large amount that should not have been transferred or paid without the explicit approval of the CBL Executive Governor or his proxy. Banking practice suggests that threshold is established for proper initiation and approval of financial transactions so as to prevent irregular transfers, payments and encashment.

The report also showed severe control weakness in the management and controls over accountable documents at the Ministry of Finance. It was the Ministry of Finance’s copy of the flag receipt that was stolen and used in the fraudulent transfer of the US$1,171,751. Mars Jusu Passaway was provided continued and unfretted access to the Reconciliation Unit at the Ministry of Finance, while he was on suspension at the Ministry of Finance for Forgery and voucher scandal. This created the risk exposure, which allows him to gain access to the documents and files between CBL and the Ministry of Finance.

GAC made several attempts to secure from the two persons who have been arrested and detained for masterminding the fraudulent transfer of US$1,171,751,the names of people who recruited and instructed them to develop and carry out the scheme, but they have categorically refused to inform the GAC or the AG of any person that was part of the scheme but have maintained that they will only do so when they are in court.

The Report concludes that Mars Jusu Passaway and Richard Passaway should be jointly and severally held responsible for conceiving, planning, and executing the scheme to defraud the Government of Liberia of US$1,171,751 and that the Government through the Ministry of Justice should institute the appropriate legal actions against for conceiving, planning, conspiring and executing the scheme to defraud the Government of Liberia of US$1,171,751.

Section 53.3 of the 1972 Executive Law of Liberia mandates the Auditor General, among other provisions, to conduct comprehensive post audits, special financial investigations, reconciliation and analyses, and continuous audits on a routine basis.