Monrovia, Liberia – A high-stakes conflict over Liberia’s vital railway network has brought to light serious worries about corporate power, corruption, along with foreign attempts to influence the government.
With the support of Canadian billionaire Robert Friedland, High Power Exploration (HPX) has been zealously pursuing exclusive access to the Yekepa-Buchanan railway from the Liberian government. ArcelorMittal invested around $800 million to restore this railway, which had been devastated during Liberia’s civil war. The company, the largest private employer in Liberia and the greatest source of government revenue, uses it as a vital transportation route.
In spite of this, HPX and Ivanhoe Atlantic, its local ally, have been applying pressure on the Liberian government to give them ownership of the railway through a number of backdoor ways. Their initiatives have drawn strong criticism from industry participants and rekindled worries about excessive foreign control over Liberia’s infrastructure and mining industries.
With HPX threatening to get access to the railway or suffer attrition, it is allerged that the Liberian government has been under increasing pressure over the last few weeks. Even though HPX and Ivanhoe Atlantic first proposed a $5 billion “Liberty Corridor” project that was meant to entail the building of a new rail line, this active lobbying has taken place.
Critics argue that HPX’s move to demand access to already-existing infrastructure jeopardizes attempts to create a fair railway policy that permits multiple users.
It is alleged that HPX has pushed its agenda by using financial incentives and political ties. One especially contentious action was HPX’s covert $35 million payment to the previous president George Weah’s government under a framework agreement that the Liberian legislature never approved. Many observers believe that this gift is an obvious example of corporate corruption intended to influence government decisions in HPX’s advantage.
The CEO of Guma Group, a significant HPX partner, and a South African entrepreneur, Robert Gumede, is more crucial to the HPX agreement. Gumede has been connected to questionable contracts in Liberia and has been accused of alleged corruption on several occasions in South Africa. The integrity of the agreement is further called into question by his role in the railway transaction.
A high-profile controversy regarding the purchase of personal protective equipment (PPE) during the COVID-19 outbreak has engulfed Gumede in South Africa. The Special Investigating Unit (SIU) of South Africa claims that Gumede used Red Roses Africa, a business that is intimately associated with him, to arrange an expensive contract for around R600 million (roughly $33.6 million).
According to the investigation, Red Roses Africa made exorbitant profits of around R400 million ($22.4 million) by supplying 25-liter canisters of hand sanitizer to the South African Police at a 370% markup, significantly inflating the cost of necessities. Since then, South African authorities have attempted to recoup millions of dollars in what they claim were illegal benefits from the transaction.
Although Gumede has denied any misconduct, the controversy has damaged his reputation and prompted many to demand that his business dealings be examined more closely. Anti-corruption activists in Liberia have taken notice of his entry into the country, especially his involvement in negotiating contracts with the government.
Gumede’s business dealings in Liberia extend beyond the railway dispute. Earlier in 2024, his name surfaced in a separate controversy involving the importation of 285 units of earth-moving equipment for road maintenance in Liberia.
The Legislature was alarmed by the deal, which was announced by Minister of State without Portfolio Mamaka Bility, who has been accused by many of giving HPX important business information from the president’s office. It was allegedly carried out without following the correct procurement procedures.
Concerns regarding the absence of legislative oversight and the possibility of backdoor transactions have been voiced by lawmakers and transparency advocates. The controversy surrounding Gumede’s involvement in Liberia especially his partnership with HPX has drawn sharp criticism from legislators and civil society groups.
The Senate’s Public Accounts and Audit Committee Chair, Senator Amara Konneh, has demanded a comprehensive examination of the government’s interactions with foreign investors. Senator Konneh asked why the administration would make unofficial deals with politically connected businesspeople without conducting adequate due diligence in a social media post.
These worries were shared by former Liberian Auditor General John Morlu, who argued that the government has to own up to its mistakes and put these agreements through appropriate parliamentary review. “Government business cannot be conducted based on friendships and gentleman’s agreements,” Morlu stated. “Transparency and accountability must be the guiding principles of Liberia’s economic decisions.”
HPX continues to seek strategic influence on Liberia’s railway strategy in spite of the lack of a legally binding agreement with the government. In a letter dated August 23, 2024, Bronwyn Barnes, the president and chief executive officer of HPX, suggested funding the establishment of a National Rail Authority, which would be in charge of the nation’s railroad network.
“We are ready to give the Liberian government financial help for the establishment and start-up of the National Rail Authority. This illustrates our dedication to making sure the train management system runs completely transparently and in accordance with the highest international industry standards,” Barnes said.
This “budgetary support” is seen by analysts and government officials as just another type of financial incentive meant to achieve advantageous conditions for HPX. Critics suspect that the offer is a calculated attempt to get around established procurement regulations because HPX is making this pledge while attempting to complete its Access Agreement with the government.
It is alleged that HPX’s plan is a deliberate attempt to stop ArcelorMittal’s expansion program that offers thousands of new employment, higher government income, and enhanced corporate social responsibility payments to host counties, the president and his administration must adamantly study this carefully.
In Liberia, HPX has a history of obstructing and manipulating rather than investing. The administration has to take note of the extensive propaganda effort that HPX and its supporters carried out in 2021, which resulted in the denial of ArcelorMittal’s revised Mineral Development Agreement on the basis of unfounded allegations.
Liberia lost billions of dollars in potential income and economic gains as a result of the misinformation effort. With HPX and its subsidiary, Ivanhoe Atlantic, attempting to gain control over infrastructure they have not committed to developing financially, history is again being repeated.
In contrast to ArcelorMittal, which has made significant investments in the rehabilitation of the Yekepa-Buchanan railway, HPX and Ivanhoe Atlantic are only interested in utilizing Liberia as a transit location to harvest resources from Guinea; they have no real projects or assets there. But according to reports, Guinean officials have said that they will not allow the transportation of their ore via Liberia, casting doubt on and rendering HPX’s entire proposal not feasible.
The government needs to see this for what it is: an effort to undermine a respectable investment in order to further a goal that would benefit Liberia in return.
Photo credit: Executive Mansion
