The_Open_Door_deel1

-184-
seems to have intented to delay the development of the Bea
Mountains iron ore deposits, officially basing its refusal
effectively to grant L.M.C. the exploitation rights in respect of
the Bea Mountains on the grounds that a concession agreement for
this purpose should be jointly negotiated by L.M.C. and N.I.O.C.
The real reason, however, was that the Liberian policy of taking
a 50? interest in mining companies in the country (cf. LAMCO,
NIOC, and DELIMGO) would have been violated by granting L.M.C.
alone the rights it was seeking confirmation of, i.e. the
exploitation rights with respect to the Bea Mountains (73)-
Underlying the Government's attitude were also the conflicts with
L.M.C. over the title to and the salvage value of the company's
assets at Bomi Hills, a dispute which also included the question
of L.M.C.'s depreciation policy over the years, and that of the
severance pay., This light on the role of the Liberian Government
in the development of the Bea Mountains is not to suggest that
the Government was unaware that the continuing dispute with
L.M.C. was against its interest but its firm stand may well have
evolved from' L.M.C.'s record in Liberia which even had made that
the Government was willing to consider the exploitation of the
Bea Mountains ore deposits by others than L.M.C. (74).
The conflict between the Liberian Government and L.M.C. over
L.M.C.'s assets drew attention once again to the company's .
accounting practices, i.e. its depreciation deductions. L.M.C
had based its depreciation charges on tonnage produced each year
as related to the estimated extent of the ore reserves,
according to one source a not uncommon practice in the mining
industry .(75) whereas no salvage value of the (fixed ^ assets had
been recognized (76). Opinions on the appropriateness -of the
depreciation deductions, however, differ, not only between the
Government and L.M.C but also between the foreign firms hired
in the 196.0's by the Liberian Government to audit L.M.C.'s
books. In 1964 the British firm of Whinnay, Murray & Company had
already reported that in applying depreciation rates L.M.C had
not taken into account an estimated residual value which the
fixed assets might have and, as the 1945 concession agreement
excluded the Government from sharing in capital profits,
recommended that a salvage value should be recognized and the
depreciation rates adjusted (77). A decrease of L.M.C.'s
depreciation rate with 1 percent, e.g. from the average of 6.3?
(on the original value) which L.M.C. applied to 5-3?, would have
increased income taxes by $ 110,000.00 a year prior to 1965 (78).
On the other hand, the U.S. firm of Main Lafrentz & Co. in'1970
considered L.M.C.'s policy not to assign residual value to fixed
assets as appropriate (79).
In 1972 L.M.C recognized that the salvage value of its fixed
assets was higher than zero as it offered the Government - in
vain - a 27? interest in certain of these assets (80). The
question remained unsettled until late 1977 when the Liberian
Government gave L.M.C. an ultimatum to settle the issue within
30 days (81). The dispute was finally ended by a Memorandum of