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calculations and consequently of the Treasury's income. The pricing
arrangements to be included should protect the financial interests
of both Liberia and of the foreign investors. Fourthly,
that all regular payments of concession holders to the Liberian
Treasury such as rental payments, stumpage fees, e.g. should be
tied to an index only after these payments have been standardised
in conformity with Recommendation I mentioned above. This
index can be based on the rate of inflation, the terms of trade,
the monetary fluctuations of the U.S. dollar (legal tender in
Liberia) or on the value of the Special Drawing Rights of the
International Monetary Fund.
The Liberian Government should realise that in many cases the
desire to make profits is not the only or main motivation of
foreign capitalists for investing in Liberia. They are, above
all, interested in a guaranteed supply of certain raw materials.
One may cite as examples in this instance, the U.S. owners of
rubber plantations, the U.S. as well as German steel producers
behind the iron ore companies and numerous logging companies.
Liberia should carefully but skillfully exploit this need of
foreign companies.
Finally, one is reffered to Annex 18 which clearly establishes
that the Government's income from the concession sector can be
considerably increased.
IV. The services of legal experts should be
employed in order to modernise the concession
agreements and to correct omissions
The services of legal experts should be sollicited to examine
whether the Liberian laws are up-to-date and appropriate for the
purposes of protecting-the economic interests of the country.
The following examples may serve as illustrations. The Liberian
Revenue Law is silent on the treatment of shut-down expenses.
This gap must necessarily be filled. The omission was only realised
in the late 1970's with the closing down of L.M.C. Another
issue which was not covered by the L.M.C. Concession
Agreement was the payment of severance pay by the concessionaire
when it ended its mining operations in Bomi Hills and laid
off some 2,000 people. The long fight (1977 - 1980) between the
Government of Liberia and the mining company over the severance
payment was partially won by the Liberian Government. All concession
agreements have this omission, therefore they should all
have a provision added which obliges its owners to pay a well
defined severance pay in case of permanent or prolonged shut
down of operations. This is the more important in view of the
expected depletion of LAMCO's main ore body in the Nimba Mountains
in 1986.
V. Concession agreements should never include provisions
which are not enforced or which are redundant
Provisions in existing concession agreements which application
has never been realised should either be enforced or cancelled.