The government of Liberia, last month, disqualified the “declared winner” of the preliminary round of the Western Cluster Iron Ore bid, South Africa’s Delta Mining Consolidated (DMC).

The reasons for the disqualification had been fluid ever since, changing depending on who addresses the issue in government circle.

Notwithstanding its changing nature the disqualification, which observers say seems to have come out of the blue, effectively eliminates DMC from the list of companies that are approved to do mining business in Liberia – at least as far as the Western Cluster Bid is concerned.

But DMC is not taking the disqualification lying down. It is fighting back, demanding first an official explanation from the government of Liberia.

The Analyst Staff Writer has been looking at the mining company’s contentions.

South Africa’s Delta Mining Consolidated (DMC) says it is awaiting official explanation from the government of Liberia regarding its reported disqualification from the bidding process for the Western Cluster Iron Ore.

A DMC statement released this week said even though the media had reported widely on the so-called disqualification; it remains completely in the dark about what prompted the Liberian government to unilaterally announce that it had disqualified DMC from the Western Cluster bid.

“Apart from what we have read in the media, we remain completely in the dark about what prompted the Liberian Government to unilaterally announce that it had disqualified DMC from the Western Cluster bid,” said DMC Chief Executive officer, Heine van Niekerk.

	• Dr. Lawrence Bropleh

According to the DMC Chief Executive, it has been more than two weeks now since the media reported his company’s disqualification from the bidding process but that up to date, the government was yet to serve the company a formal notification containing what he called “a proper explanation”.

DMC release recalled that its status regarding the process appeared to have changed dramatically without warning shortly after President Ellen Johnson Sirleaf met with the cabinet sometime in the middle of September.

Precisely on September 14, the release said, Information Minister Dr. Lawrence Bropleh announced to the media that ‘the Cabinet took the decision based on reports that the initial bidding process could have been compromised by external influence or impropriety’.

It further quoted the MICAT boss as indicated that as the result of the suspicion of financial impropriety surrounding the process, “any bidder found to have been involved in any acts volatile of the bidding process, should be disqualified from participating in the new bidding process; and that accordingly, because of acts attributed to Delta Mining Consolidated and Tata Steel, brought to the attention of the Government, the two mentioned companies are disqualified from participating in re-bidding.”

Shortly after Minister Bropleh’s statement, which seemed convinced that there may be compelling evidence in the attribution, according to the statement, President Sirleaf gave an explanation that threw the minister’s statement into doubt.

“On 15 September 2008: President Johnson-Sirleaf stated the following: ‘There is no clear evidence linking anyone to alleged “external influence or impropriety”, but the government was concerned about public perception and what appears to be “circumstantial” (and that) “although there is no clear evidence, besides alleged communications in the press ….it was in the country’s interests to take an action on political grounds”, the DMC release said.

It said while the President at one time conceded that the government risked lawsuit because it has no evidence to back its action against DMC and Tata, the international news agency Bloomberg quoted a Liberian newspaper as reporting that government’s action was due to something order than what role DMC may have played in the suspected external influence in the bidding process.

“In the case of Delta, Delta did not have the financial capacity, unless backed up by a South African financial institution (IDC), but this is not a formal agreement between IDC that formed part of the bid,” the DMC release quoted the news agency as quoting the local newspaper.

Commenting on the issue, DMC legal counsel, Lizane Van Rooyen, said while the company was concerned about the “three different explanations the Liberian government has given so far” it was constrained to stay put pending official comments other than the media reports.

The release said the company’s decision to stay put is despite the fact that a lawyer of DMC, Webber Wentzel, had communicated with Minister Bropleh to retract “his defamatory allegations” specifically that DMC and its personnel engaged in alleged unethical conduct in relation to the Western Cluster Iron Ore mining concession.

“Webber Wentzel, also on DMC's behalf, has written to Liberian Minister of Land, Mines and Energy, Dr Eugene Shannon requesting the Ministry to provide DMC with written confirmation of DMC status in relation to the Western Cluster Iron Ore tender, to confirm whether the media reports referred to above are correct or not, and to set out in detail the reasons for disqualifying DMC and re-launching the bidding process,” the release said.

 It then quoted Cllr. Van Rooyen as saying that the September 29 deadline set by the company for official reply from the Information and Energy ministries had elapsed without any response.

The company did not say what options were opened to it in the wake of what it implied is an unfair treatment in the bidding process, but it indicated that the government’s statement that it lacks financial capacity needed preliminary clarification.

“DMC has a firm contractual agreement with South Africa’s Industrial Development Corporation (IDC), a copy of which was forwarded to the Government during the due diligence phase. The total assets of the IDC, who have a 26% equity interest in our Liberian strategic alliance, are in excess of US$12.2 billion,” the statement said.

Besides the IDC, the release said, DMC has alliances with Johannesburg-based AMB Capital, London-based Canaccord Adams, and Geneva-based Mirabaud.

“We feel that this alliance more than satisfactorily demonstrates our capacity to fulfill our financial commitment to this project,” the release quoted DMC legal counsel as saying.

The release further noted that DMC financial and technical capacity is further evidenced by London Mining Plc’s recent investment of US$120 million into DMC Energy, which will result in a strategic expansion of DMC foothold in the African coal and energy sector. 

Meanwhile, Van Rooyen says the government of Liberia needed to adhere to the principles of transparency that President Sirleaf repeatedly told the world would be the mainstay of business and financial transactions in post-war Liberia.

“Fairness and transparency dictates that the government of Liberia communicates with us directly regarding the grounds upon which they have allegedly disqualified us from the bidding process.

“We have put a huge amount of effort and expense into this project over the last 15 months. We are still committed to the project and we are hopeful that the current uncertainties can be resolved through face-to-face negotiation.

“If, however, we continue to receive no response to our request for dialogue, we will have no option but to pursue the matter through appropriate legal channels. We are particularly concerned about the defamatory statements made by Liberia’s Minister of Information,” Van Rooyen said.

Observers say while the government may have good reasons to intervene in the process, given the checkered history of bidding in Liberia, its silence is likely to question its sincerity.

“If that happens, many companies in South Africa and elsewhere in the world citing DMC example may think twice before considering investing in Liberia. We must not come to this because it will undercut gains made thus far in cleaning Liberia’s international image,” said one observer.