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doubtlessly influenced by a financial crisis which made a more
efficient natural resources administration even more urgent the
Government undertook another revision of its arrangements with
L.M.C in the early 196O's. According to the phrasing of the
1965 Amendatory and Tax Agreement between L.M.C, and the
Government the former was forced to accept an income tax
liability of 50? as of January 1, 1965 instead of January 1,
1970 as had been agreed upon in the 1952 collateral agreement
(32). However, in order to have this accepted the Government
relinquished its rights to any other payment from L.M.C. and
promised that it would never again ask for an amendment of the
concession agreement or the collateral agreement (33).
Consequently, royalty payments ceased as of the effective date
of the Tax Agreement, January 1, 1965, and from then on L.M.C.
only paid income taxes, and the usual exploration and surface
taxes. In the ten-year period preceeding the 1965 Agreement
L.M.C.'s taxable profits had amounted to approximately
$ 127,000,000.00 of which the Government had received about
$ 40,000,000.00 as royalty and income tax payments. However,
after the 1965 agreement the company never again achieved the
same high level of profits (see Table 7). One might conclude from
Table 7 that the introduction of a 50? corporate income tax on
L.M.C.'s net profits in 1965 had been long overdue and had come
a little late. When a comparison is made between the low level
of profits in the late 196O's and the 1970's and those of the
1955 - 1965 period when annual profits averaged over
$ 12,000,000.00 with a record profit of nearly $ 17,000,000.00
in 1960. On the whole the nature of the operations accounted for
the tapering off of the profits, though the accounting practices
of L.M.C. were also responsible for this phenomenon. The unequal
sharing in the company's profits during the 1971 - 1977 period
(the Tolbert Administration) was the result of a tougher stand of
the Liberians on various issues affecting the amount of net
profits which resulted e.g. in the payment of a lump sum by
L.M.C. of over $ 2,000,000.00 in 1972 through the Settlement
Agreement of the same year (see below).
The overall -profit-income of the Liberia Mining Company after
paying the Liberian Government what it- was legally entitled to
under the agreements of 1945, 1952 and 1965 can fairly accurately
be estimated to have been about $ 168,000,000.00 during the years
1951 - 1977. This aggregate amount includes adjustments made for
reserves for replacement, expansion, development and other
contingencies, a depletion allowance and other - legal -
financial advantages (34)• As indicated, the Government's share
in the proceeds of the mining and sales of the ore were royalty
and corporate income tax payments totalling $ 84,000,000.00. In
short, two out of every three dollars (net) profits made out of
the Bomi Hills iron ore by L.M.C. left the country.
This of course raises the question of what should be a fair
remuneration for the use of foreign capital and know-how.
Whereas the remuneration of foreign (managerial and
technological) know-how takes place through the payment of