The_Open_Door_deel1

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On January 3, 1963 a Memorandum of Agreement was signed (and
approved by N.I.O.C, M.M.A.L., L.M.C, and President Tubman)
according to which L.M.C. agreed to assist N.I.O.C and M.M.A.L.
with respect to operating matters and the supply of experienced
personnel to operate the mine. It was explicitly stated that
L.M.C. would have no responsibility with regard to sales or
financial matters (53).
The consultancy fees which in subsequent years N.I.O.C paid to
L.M.C. were not included by L.M.C. in its net profits. L.M.C.
here referred to the 1958 mining concession agreement between
N.I.O.C. and the Liberian Government (54). The central question
was whether or not the L.M.C. had been appointed agent by the
1963 Memorandum Agreement. If it had - which L.M.C. claimed (55)
- fees from these activities were exempted from Liberian
taxation, in conformity with Article 7 and Article 12 (g) of the
N.I.O.C. concession agreement of March 13, 1958. If it had not,
- which was the view held by the Government, supported by the
U.S. auditing firm of Main Lafrentz & Co. and confirmed by legal
counsels both in the U.S.A. and in Liberia - L.M.C. had to pay
taxes on this income. The total amount of fees which had been
excluded by L.M.C. from its net income was for the period 1965
(when payment of these fees had started) through 1970 some
$ 1,443,839.48 of which the Liberian Treasury claimed
$ 721,920.00 (56). The question was solved with the Settlement
Agreement of April 25, 1972 when L.M.C. agreed to pay the
additional assessment although in later years some minor
difficulties arose about the proper reporting by L.M.C. of the
consultancy fees received from N.I.O.C. (57).
After an audit of the L.M.C. accounts in 1973 the Government
demanded payment of nearly $ 590,000.00 by L.M.C, on the basis
of nine different claims. Eventually the Government recovered of
this additional assessment an amount of about $ 200,000.00 which
was paid by L.M.C. (58). In 1977 the Liberian Government claimed
another additional assessment, this time amounting to nearly
$ 350,000.00. One of the issues of this assessment involved the
Tropical Trading Company (T.T.C.) which was 100? owned by L.M.C
L.M.C had in 1961 loaned the N.I.O.C $ 600,000 through the
T.T.C. This loan had subsequently been written off against operating
profits in the same year and in 1962 ($ 400,000 and
$200,000 respectively). Thus the Government had been deprived of
$210,000 (calculated at the tax rate of 35? then prevailing).
Though L.M.C. had completely written off this loan on the grounds
that at the time it was not certain at all that the N.I.O.C.
would be a viable undertaking, a not unusual practice in the
mining business, there is no proof that the Liberian Government
had approved this decision (59).
The Tropical Trading Company had over the years paid its
corporate income taxes to the Government, the rates applied
being in conformity with the general income tax laws of Liberia,