Illicit Subcontracting, Unexplained Factory Construction, and Controversial Business Deals Ignite Fury
By Wremongar Joe & Joseph Tumbey
In December 2023, an article was published, revealing how China Union, once heralded as the single largest foreign direct investment at 2.6 billion, has turned into a curse rather than the promised blessing.
The report coincided with the election of a new lawmaker, who in January complained to the Plenary of the House about China Union, referencing the investigative report.
The House swiftly set up a joint specialized committee to investigate claims, during which China Union admitted to violating the terms and conditions of its Mineral Development Agreement (MDA) multiple times and begged for mercy.
On Monday, the House Investigative Committee released the outcome of its investigative report, further landing the under-fire Chinese ore miner in deeper trouble.
In its report, the House Joint Committee on Investment and Concession, Contracts and Monopoly, Labor, Lands, Mine, and Energy, Judiciary stated that China Union was “non-compliant” with Liberian laws.
The report revealed various breaches, including failure to conduct Social Impact Assessments, incomplete road renovations, lapses in insurance, inadequate consultation with government and communities, and shortcomings in environmental protection, among others.
More troublingly, the House’s joint committee disclosed new breaches, involving subcontracting agreements without government knowledge, unexplained and potentially oversized factory construction, questionable importation and trading activities by subcontracted companies, and the extraction of iron ore residue by TXT, raising concerns about ongoing operations and historic export consignments by China Union.
The House is demanding clarifications on these actions and their implications for China Union’s purpose and compliance with the MDA.
Despite China Union’s appeal and plea to fulfill its obligations under short and long-term settlements, citizens in its host communities are angry in the face of these brazen MDA violations.
They view China Union’s promises as a ploy to appease government officials rather than a genuine commitment to improve working conditions at the troubled Chinese mine.
Some residents in Fuamah are planning a wave of “endless protests” to ensure China Union is “kicked out” of their community if the company fails to live up to its recent commitments of ensuring full compliance with the terms of the MDA. “We don’t trust China Union any longer, but our hope is on our Lawmaker, Foday Fahnbulleh.
We pray and hope that he will continue to fight for our interests or else, we will do all we can to resist China Union here,” said Alfred Cephus, a resident of Fuamah.
Emmanuel Welemongar Mcgill Muapo, a high school teacher and a resident of the Fuamah host community, told reporters that China Union’s concession bridge is the most talked-about subject in various towns and villages.
He wondered how “the government sat down here and allowed these people to disrespect our laws without doing anything.”
Muapo joined several citizens in the affected communities who expressed disappointment in the way China Union has conducted itself by “abusing what they are supposed to do under the MDA,” vowing that “there will be no more chance for them if they fail for the second time.”
Mrs. Mamie Harris Vannieh, who heads market women in the host communities, views the company’s acceptance of MDA violation as a mere attempt to save face. She says China Union’s action was meant to please top government officials instead of being genuine to work in the interest of the common people.
“Now we are all standing by our lawmakers. If they fail to listen to us, we will not listen to them again.”
Critical aspects of the MDA, such as completing the Kakata to Haindii Road, construction of a hydropower plant, medical facilities, scholarships, and employment quotas for Liberians, remain unfulfilled and are major points of contention. However, the people here seem to have no trust that China Union will ever fulfill any of these commitments even with their latest promise and plea up Capitol Hill.
Despite the violations, China Union continues to plead in public and private that it continues to operate, promising in the space of 90 days, it will work to address non-compliance issues.
The company has also pleaded with the joint investigative committee through written communication that all discussions surrounding its violations of the MDA be done privately.
Meanwhile, the Committee made several short- and long-term recommendations, including immediate payment of social security remittances, complete renovation of the roads in the Goma and non-Goma deposit area, an annual social contribution of 3.5 million, as well as renovate, take over, and support the Bong Mines Hospital and central high school.
The joint committee also recommends that China Union be mandated to immediately employ Liberians in senior management roles, build, support, and manage the Fuamah Vocational School, and comply with surface rental fees of $100,000 for the first 10 years and 250 thousand for 15 years, make an annual contribution of $100,000 to scientific research, make available safe drinking water, and temporarily shut down operations of subcontracted companies operating without approval.
For medium and long-term compliance, the House proposed that China Union conducts a Social Impact Assessment (SIA) and produce a Social Action Plan within 2-3 years, establish plans and programs with local communities, and that the government reviews the MDA.
In its Tuesday Marcy 12, 2024 sitting, the House of Representatives endorsed the full report from its joint investigative committee with copies delivered to China Union’s Deputy Manager- Shen Yi Hong for immediate implementation.
Fuamah Sannoyea District Rep Foday Fahnbulleh said January 2024 marked 15 years out of the total of 25 years granted China Union to operate in Liberia, and that he is committed to ensuring that China Union lives up to every single line spelled out in the agreement with Liberia.
Fahnbulleh stated, “The people elected me for this, and this is the beginning of the engagement with China Union. Trust my words; when I say anything, I mean it. We will hold China Union to account for this gross violation of our laws.”
Broader Context:
Chinese investment in Africa has faced substantial criticism for various reasons, raising concerns about its impact on local economies, environmental standards, and governance.
One significant criticism revolves around the opaque nature of Chinese loans and investment deals, often lacking transparency and accountability across African countries.
Critics argue that this lack of transparency can lead to unsustainable debt burdens for African nations, trapping them in long-term financial dependencies.
For instance, the terms of many Chinese loans and agreements are not readily disclosed, making it challenging for host countries to understand the long-term implications of the deals fully.
This lack of transparency has fueled suspicions that China and Chinese firms’ investment practices may not always align with the best interests of the African nations involved.
The situation of China Union in Liberia illustrates a notable example of how investments of Chinese origin would violate domestic laws and fail to live up to their commitment to poor African nations why they take away millions of tons of raw materials.
China Union, a subsidiary of Wuhan Iron and Steel Corporation, violation of its Mineral Development Agreement (MDA) with the Liberian government designed to regulate the extraction of iron ore and ensure equitable benefits for both parties is similar to many reports from across Africa where Chinese concessions operate.
In Liberia, the allegations of environmental degradation, poor labor practices, and a failure to meet agreed-upon infrastructure development commitments by China Union similarly raise questions about the sustainability and ethical considerations of Chinese investments in Africa.
Such instances contribute to the broader criticism of Chinese investments in the region, emphasizing the need for greater transparency, accountability, and adherence to established agreements to ensure mutual benefits for both China and African nations.