Ellen Johnson Sirleaf, President of Liberia

Liberia has been reeling from a scandal that came to light early this summer involving a UK-based carbon trading company and allegations that the company bribed Liberian officials to secure a forest carbon contract. The situation was first brought to light by Global Witness, which discovered evidence of irregular payments to a Liberian government official and a Liberian politician while investigating the environmental, social, and economic implications of the proposed contract.

The proposed deal was between the Liberian government and Carbon Harvesting Corporation (CHC). CHC sought a 400,000-hectare forest concession, or one fifth of Liberia’s forests, from which to sell carbon credits. One news report explained that this deal could have bankrupted Liberia, which is still recovering from years of violent civil war. According to The Guardian, not only was the contract based on flawed and exaggerated emissions estimates, but

“[u]nder the contract, if Liberia’s forests had failed to deliver the full estimated number of carbon credits, based on a minimum target price of around $13.5 per tonne of CO2, it could have been liable to make up the difference to a maximum of $2.2bn. The west African country…had an estimated GDP last year of $1.6bn, according to the IMF.”

Shortly after the alleged contractual improprieties came to light, Liberian President Ellen Johnson Sirleaf established a Special Presidential Investigative Committee to look into the problem. The Committee issued its report and recommendations, and President Sirleaf issued a strong statement on October 12th clearly outlining the course of action she plans to take against the individuals involved in the scandal. Nine current and former government employees have been linked to the fraudulent carbon-trading plan with CHC. Reuters recently reported that the Liberian government plans to prosecute British citizen and CHC Chief Executive Officer, Michael Foster, under Liberia’s anti-corruption laws.

ELAW Partners around the world are also expressing concern about fraud and corruption associated with forest carbon deals. Commenting on news about the Liberian government’s investigative report, a lawyer in Papua New Guinea (PNG) wrote to ELAW:

“There are similar deals being done by what we term as ‘carbon cowboys’ with local landowner leaders and some politicians in Papua New Guinea. They are promising local landowners millions of dollars for voluntary carbon trading.”

Last September, a scandal similar to that in Liberia broke in PNG with allegations that fake carbon certificates were being sold to local landowners. The head of PNG’s Office of Climate Change was implicated (and removed from office), along with private carbon trading firms from Australia.

According to Peter Younger, an Interpol environmental crime specialist: “Organized crime syndicates are eyeing the nascent forest carbon credit industry as a potentially lucrative new opportunity for fraud. . . . Alarm bells are ringing. It is simply too big to monitor. The potential for criminality is vast and has not been taken into account by the people who set it up.”

Alfred Brownell, a long-time ELAW partner from Liberia, tells us that scandals in the country’s forest sector are not a new phenomenon. In 2006, more than seventy timber concessions in Liberia were canceled after an investigation revealed widespread non–compliance with laws and pervasive mismanagement in the forest sector. During that review it was discovered that only 14 percent of the taxes owed to the Liberian government were actually collected, there were over US$64 million in tax arrears accumulated by concession holders, and the combined land area allocated for logging concessions over the last twenty-five years was two and one-half times the forested surface area of the entire country.

A primary reason that these current scandals are emerging is because forest carbon trading is a relatively new frontier with few existing laws to guide implementation and prevent corruption. Some have described forest carbon trading as the new gold rush. As policies and laws are developed to address forest carbon trading, ELAW is working with its partners to ensure that these frameworks are fair for local communities and will effectively contribute to global carbon emission reductions.

Liz Mitchell
ELAW Staff Attorney