The_Open_Door_deel1

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The 1967 concession agreement with Lee Edgar Detwiler
LISCO was granted a 70-year concession which gave the company the
exclusive rights to explore for iron ore, manganese, bauxite and
other mineral resources in the Exploration Area, the Wologisi
Mountain Range in Lofa County, during an Exploration Period of
5 years, and exclusive rights with respect to iron ore, manganese
and bauxite deposits in Exploitation Lots, selected from the
Exploration Area, but not totalling more than 300 square miles
(approximately 192,000 acres). The company obtained an option
to negotiate a concession agreement with respect to other ores,
metals and minerals found in the concession area (124).
The concessionaire would pay a 50? corporate income tax but was
allowed numerous deductions for tax purposes such as all taxes,
fees etc. paid to the Government, explicitly excluding income
taxes paid but explicitly including royalty payments and a
depletion allowance. Thus the royalty of 15 cents per ton of
ore in effect became 7s cents per ton of ore.
A depletion allowance had been questioned from the beginning of
the negotiations yet it was granted. This depletion allowance was
a special allowance, officially intended to facilitate
accelerated debt repayment by the Concessionaire. It amounted to
15? of LISCO's Gross Receipts, provided the amount of the
deduction did not exceed 50? of the Net Income of the year in
which it would be deducted and further provided that the amount
of the deduction would be applied in its entirety against
indebtedness in addition to current debt repayment from
depreciation and amortization allowances. The depletion allowance
would not be applied in any one year to the extent that it would
reduce net taxable profits below an amount equivalent to one
dollar per ton of ore exported nor was the depletion allowance
or any part thereof which had not been deducted in any one year
to be deducted in any of the following years. As soon as LISCO's
indebtedness would be liquidated the depletion allowance would
cease to be deducted (125),
The concession agreement did not provide for a maximum debtequity
ratio but instead included a rather loose and vaguely
formulated obligation "to guarantee the continuing solvency of
the Company and to protect the legitimate interests of the
Government, the lenders as well as the shareholders;" (126).
Although only interest payments and not the repayment of the
principal were to be deducted from Gross Income (unlike the
arrangements made with LAMCO and DELIMCO) the deduction of a
depletion allowance in the case of LISCO in effect served the
same purpose and - if put into practice - would erode the
Government revenue in the same way as it had already done in
the case of the LAMCO J.V. and DELIMCO. In view of the
experience gained in the gigantic debt-servicing of these two
companies the Government should have known better.
Another disputed issue which the Government had lost was the