MONROVIA, Montserrado – President Ellen Johnson Sirleaf has expressed shock over initial results of an ongoing audit process of the Private Sector Development Initiative at the Ministry of Finance and Development Planning.

The alarm caused the president to order the individual in charge of the program to return to Liberia from an official trip.

The program was established in 2014 to financially strengthen Liberian-owned businesses by providing loans to small and medium-sized enterprises.

Once the loans were repaid, they would then be further disbursed to other beneficiaries. The aim was to create jobs and accelerate the participation of local businesses in the economy.

The Executive Mansion said in a release issued Thursday that the preliminary audit has revealed some shocking results that officials at the Ministry of Finance and Development Planning were making loans to themselves in violation of the law.

The audit, which covers the period of 2014 to current, is being executed by the Internal Audit Agency.

“We can say with a high degree of confidence that such a scheme set up at the PDSI is clearly a conflict of interest and will be dealt with by the full weight of the law,” the statement read.

The president, according to the statement, has ordered the principal of the program during the period and former deputy finance minister for fiscal affairs, James Kollie, to return to the country from an official trip to assist in the audit and answer to all the associated issues. Kollie is currently the commissioner of the Liberia Maritime Authority.

“The minister of finance is to have a full audit report on my desk within two weeks for further action,” the president disclosed in the statement. “We remain seized of this matter and will leave no stone unturned in the interest of the nation.”

FrontPage Africa reported that the findings of the preliminary audit show that was a memorandum of understanding reached between the Finance Ministry and the Liberia Bank for Development and Investment to coordinate in running the loan activities of the program, however, customer vetting was done solely by the ministry.

The process, according to the preliminary report, left many loopholes that made default more likely than it should have been. For example, many borrowers used the borrowed funds to start their businesses, when the funds were intended for existing businesses. Additionally, many borrowers did not have evidence of comprehensive market surveys on file. Moreover, some of the beneficiaries did not present any collaterals, as was required.

Kollie, according to the report, signed all the loan approvals. It was established that 24 borrowers who received loans valued at US$965,400 have not paid any amount towards recovery.

“Twelve businesses received US$545,700, but could not be located because they were not visible at the point of address,” the report revealed.

The auditors claimed in the report that when they inquired from inhabitants of the communities about these businesses, community members could not confirm their existence.

“Telephone contacts of the individuals who owned the businesses were also permanently switched off,” it further revealed.

It says 21 borrowers received US$1,159,000, but they have repaid only US$123,125; thus resulting in a balance outstanding of US$1,035,875.00.

“We observed that some loans were disbursed to businesses owned by staffs of MFDP; while some are businesses with whom they got close connections,” the report continued.

“Moreover, some of the businesses in this category have not paid any amount against their obligation/loan. In our opinion, their action to secure loans from MFDP/PSDI, while at the same time serving as staffs of MFDP constitutes a conflict of interest.”

Meanwhile, Kollie has welcomed the development. According to Truth FM, the former deputy finance minister has said he would cooperate with the audit. He has however clarified that he was not notified or contacted by the auditors about the ongoing audit, in line with best practice.

Featured photo courtesy of The White House