The_Open_Door_deel1

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Prices of sales to affiliated corporations are defined as
follows:
"Market prices f.o.b. Monrovia for sales of concentrates
and pellets to any affiliate of Concessionaire will be
calculated annually based on the contract price c.i.f,
Rotterdam in respect of the iron content comparable concentrates
or fine ores and comparable pellets, respectively,
bought by the German and/or Italian steel works
affiliated to the Concessionaire, deducting the annual
freight cost, insurance and connected charges, contracted
for the transport of concentrates and pellets, respectively,
from Monrovia to Holland" (101).
According to an investigation conducted in 1977 and covering the
years 1973 through 1976 Bong's market prices had been fairly
calculated (102).
A possible source of disagreement, however, is the testing of
the ore at the port of discharge to determine the Fe-content of
each shipment - the basis on which the f.o.b. value is determined
- by an employee of Exploration und Bergbau on behalf of B.M.C
As the employee of Exploration und Bergbau who carries out the
testing is indirectly employed by the buyers of the ore an
undesirable potential conflict of interest is created (103),
The concession Agreement states that generally accepted
accounting principles must be applied except where specifically
excluded by the Agreement. However, in 1978 the Government
commissioned auditing firm of Whinney Murray Ernst & Ernst
concluded that for the period 1973 through 1976 in eight
different instances deviations from these principles had occurred
resulting in an understatement of the company's net profits in
this period of $ 4,460,000.00. In this way the Government was
deprived of about $ 2.2 million in corporate income taxes from
the company (104). The auditing firm at the same time reported
that certain comments, criticisms and suggestions made by
Whinney, Murray & Company in 1970 when submitting an audit
report of the company's 19 68 Financial Statements - and which
resulted in over $ 100,000,00 additional payments - were still
valid (105).
The Supplemental Agreement failed to bring about improvements
with respect to fundamental issues such as the tax-exemptions.
Exemption from customs duties and excise taxes alone saved
B.M.C, over $ 6 million in one year (1976) (106). This
represents a loss of about $ 3 million for the Treasury or
nearly 40? of the amount actually received from the company in
this year. Also"B.M.C. 's claim on a concession area which is
far in excess of its actual needs and for a period which far
exceeds the expected life of the mine remained unchanged in the
1974 Supplemental Agreement. The Agreement will expire on
December 18, 2028 whereas the ore reserves of the Bong Mine
will be depleted by 1990. It should be borne in mind, however,
that these remarks apply to most of the Agreements held by
other Concessionaires.