Management Letter
On the Restated Financial Statement Audit of the
National Oil Company of Liberia (NOCAL)
For the Fiscal Periods 1 July 2011 to 30 June 2015
Yusador S. Gaye, CPA, CGMA
Auditor General, R.L.
Monrovia, Liberia
July 2017
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
1 Promoting Accountability of Public Resources
Table of Contents
INTRODUCTION ................................................................................................................ 3
SCOPE AND DETERMINATION OF RESPONSIBILITY ...................................................... 3
1 DETAIL FINDINGS AND RECOMMENDATIONS ............................................................. 5
1.1 Revenue ................................................................................................................... 5
1.1.1 Revenue Recognition ............................................................................................. 5
1.1.2 Accounts Receivable .............................................................................................. 8
1.1.3 Revenue Sharing Ratios “Old Data - PSDM” ............................................................. 8
1.1.4 Revenue Sharing Ratios “New Data – Cost Recovery” ............................................. 10
1.1.5 Revenue Sharing Ratios “Old Data” ....................................................................... 13
1.1.6 Revenue Sharing Ratios “3D Data” ........................................................................ 15
1.1.7 Revenue Sharing Ratios “3D Data – Cost Recovery” ............................................... 18
1.1.8 Redacted Invoices ............................................................................................... 21
1.2 Asset ...................................................................................................................... 22
1.2.1 Property, Plant & Equipment (PPE) ....................................................................... 22
1.2.2 Cash and Bank Reconciliation ............................................................................... 25
1.3 Expenses ................................................................................................................ 26
1.3.1 Travel ................................................................................................................ 26
1.3.2 Consultancy Contracts not in Compliance with PPC Act ........................................... 27
1.4 Corporate Governance Issues............................................................................... 30
1.4.1 Corporate By-Laws .............................................................................................. 30
1.5 Compliance Issues ................................................................................................ 31
1.5.1 Fuel usage log for Generator ................................................................................ 31
1.5.2 Award of Geophysical Services ............................................................................. 33
1.6 Control Issues ....................................................................................................... 34
1.6.1 Internal Control Weakness ................................................................................... 34
1.7 Physical Verification .............................................................................................. 37
1.7.1 Projects Implemented by Implementing Agencies and Institutions ........................... 37
1.7.2 Land .................................................................................................................. 41
1.7.3 Unverified Vehicle Assets ..................................................................................... 43
PRIOR YEAR AUDIT MATTERS NOT IMPLEMENTED .......................................................... 45
2 ANNEXURE ................................................................................................................... 47
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
2 Promoting Accountability of Public Resources
ACRONYMS USED
ABBREVIATION MEANING
AG Auditor General
CGMA Chartered Global Management Accountant
COSO Committee of Sponsoring Organizations of the Treadway
Commission
CPA Certified Public Accountant
GAC General Auditing Commission
GOL Government of Liberia
IAS International Auditing Standards
IFRSs International Financial Reporting Standards
IOCs International Oil Companies
ISSAIs International Standards of Supreme Audit Institutions
LEITI Liberian Extractive Industries & Transparency Initiative
MOUs Memorandum of Understandings
NOCAL National Oil Company of Liberia
PFM Regulation Public Financial Management Regulation
PPC Act Public Procurement and Concession Act
PPE Property, Plant & Equipment
PSCs Production Sharing Contracts
PSDM Pre-Stack Depth Migration
PSTM Pre-Stack Time Migration
RL Republic of Liberia
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
3 Promoting Accountability of Public Resources
THE Audit of THE NATIONAL OIL COMPANY OF LIBERIA Financial Statement for the
fiscal period 1 JULY 2011 TO 30 JUNE 2015
Cllr. Althea Sherman
Acting President/CEO
National Oil Company of Liberia (NOCAL)
Ashmun and Randall Streets
Monrovia, Liberia
July 19, 2017
Dear Cllr. Sherman:
The National Oil Company of Liberia financial statement are subject to audit by the Auditor- General
in term of section 2.1.3 of the New GAC Acts of 2014 as well as in accordance with the Public
Financial management Acts and regulations of 2009. The audit covered the fiscal period 1 July to 30
June 2015.
INTRODUCTION
The audit of the National Oil Company of Liberia (NOCAL) Financial Statements for the ended 1 July
2011 to 30 June 2015 was completed and the purpose of this letter is to bring to your attention the
finding that were revealed during the audit.
SCOPE AND DETERMINATION OF RESPONSIBILITY
The audit was conducted in accordance with the International Standards of Supreme Audit
Institutions (ISSAIs). These standards require that the audit is planned and performed so as to
obtain reasonable assurance that in material respects, fair presentation is achieve in the annual
financial statements.
An audit includes:
Examination on test basic of evidence supporting the amount and disclosures in the financial
statements;
Assessment of the accounting principles used and significant estimates made by
management; and
Evaluation of the financial statement presentation.
The audit will also include an examination, on a test basic, of evidence supporting compliance in all
material respects with the relevant laws and regulation which came to our attention and are
applicable to financial matters.
The matters mentioned in this letter are therefore those that were identified through test
considered necessary for the purpose of the audit and it is possible that there might be other
matters and/or weaknesses that were not identified.
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
4 Promoting Accountability of Public Resources
The financial statements, maintenance of effective control measure and compliance with law and
regulation are the responsibility of the Accounting Officer. Our responsibility is to express our
opinion on these financial statements.
KEY MANAGEMENT PERSONNEL
No. Name Rank Time served
1 Dr. Randolph AKW. McClain President/CEO Feb.24,2012-Sept.30,2015
2 Marie E. Leight-Parker Sr. VP & VP/Finance April 11,2006-Nov.30,2013
3 Ophelia Hoff-Saytumah Vice President/CSR. April 11,2009-Oct.31,2013
4 Vida Mensah Vice President/Adm. May 1, 2012- Sept.30,2015
5 Rufus M. Tarnue Vice President/Tech Feb. 1,2011- Present
6 Pete E. Norman Asst. VP/CSR Feb. 1,2011-Sept.30,2015
7 Lamini Waritay Vice President/Public
Affairs March 1,2014- Sept.20,2015
8 Fulton D. Reeves Comptroller Sept. 18,2006-Oct.31,2015
9 Albert B. Cassell, Sr. Asst. Comptroller Sept.29,2010- Oct. 31,2015
10 Cllr. Althea Sherman Chief Operating Officer Sept.1,2013- Sept.30,2015
11 Cllr. Althea Sherman Interim President/CEO Oct.1,2015-Present
12 Karmo Ville Vice President Finance March 1,2014- Present
13 Cllr. Zaiye B. Dehkee, Director Legal Dept. July1,2012- Oct. 31,2015
14 Mrs. Idella Cooper-Shannon Legal Advisor pres./CEO May1,2012- Oct. 31,2015
15 Robert Sonkarlay Senior Accountant Dec.3,2012- Oct.31,2015
APPRECIATION
We would like to express our appreciation for the courtesy and assistance rendered by the staff of
the NOCAL during the audit.
Yours Faithfully,
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
5 Promoting Accountability of Public Resources
1 DETAIL FINDINGS AND RECOMMENDATIONS
1.1 Revenue
1.1.1 Revenue Recognition
Observation
1.1.1.1 “IAS 18 Revenue” outlines the accounting requirements for when to recognize revenue
from the sale of goods, rendering of services, and for interest, royalties and dividends.
Revenue is measured at the fair value of the consideration received or receivable and
recognized when prescribed conditions are met, which depend on the nature of the
revenue. The criteria required to be met from revenue arising from the sale of goods,
according to IAS 18 paragraph 14 are:
The seller has transferred to the buyer the significant risks and rewards of
ownership.
The seller retains neither continuing managerial involvement to the degree
usually associated with ownership nor effective control over the goods sold.
The amount of revenue can be measured reliably
It is probable that the economic benefits associated with the transaction will
flow to the seller, and
The costs incurred or to be incurred in respect of the transaction can be
measured reliably.
1.1.1.2 It was observed from the inception of the income arrangement between TGS-NOPEC
and NOCAL; the Management of NOCAL appeared to have recognized revenue on a
basis inconsistent with IFRS. Therefore, for the periods under audit when those
recognition basis were applied, revenue were understated for the fiscal years 2011/2012
and 2012/2013 and overstated 2013/2014 and 2014/2015.
1.1.1.3 In addition, although the net effect of the understatements and overstatements appears
to have no net affect overall, NOCAL should apply the policy for recognition of revenue
in line with revenue standards promulgated under IFRS. See table 1 below for
NOCAL recognition of revenue as compared to IFRS.
Table 1: Revenue Recognition (Amounts in USD)
Description Revenue Recognition - IFRS
2011/2012 2012/2013 2013/2014 2014/2015
Amounts Collected: 2D PSTM 9,123,354 3,328,448 2,124,089 170,534
2D PSDM 684,819 138,147 104,547 19,189
2D Ultra Deep 2,165,656 5,382,957 2,201,485 529,466
Other 3D 5,449,870 11,915,759 - -
Sunfish 3D - 416,006 360,224 -
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
6 Promoting Accountability of Public Resources
Table 1: Revenue Recognition (Amounts in USD)
Description Revenue Recognition - IFRS
2011/2012 2012/2013 2013/2014 2014/2015
Well Logs
Total Amount Collected 17,423,699 21,181,318 4,790,345 719,189
Interest
Less Expenses reimbursed by NOCAL
( 745,000)
Total Amount – IFRS 17,423,699 20,436,318 4,790,345 719,189
Revenue Recognition – Basis other than IFRS
2011/2012 2012/2013 2013/2014 2014/2015
Amounts Collected: 2D PSTM 7,051,054 4,524,992 2,596,587 -
2D PSDM 527,874 293,708 104,547 -
2D Ultra Deep 2,165,656 5,382,957 2,201,485 529,466
Other 3D 7,150,801 5,515,120 5,788,832 6,126,927
Sunfish 3D - 302,550 473,681
Well Logs
Total Amount – Other basis 16,895,385 16,019,326 11,165,132 6,656,393
IFRS Adjustments
528,313 4,416,992 (6,374,787)
(5,937,204)
1.1.1.4 It was also noted during the audit that some revenue items were not included in the
Revenue Sharing Report and therefore were neither received nor recognized by NOCAL.
See table 2 below for further detail.
Table 2: Omissions from Revenue Sharing Report
Description
# of
Wells Invoice #
Invoice
Date
Invoice
Amount
Collection
Date
% Amount
(US$)
Shell 7 11424 08/10/2011
17,500 9/9/2011
50% 8,750
Total SA 7 111938 31/05/2008 14,000 11/12/2008 50% 7,000
Total SA
111938 31/05/2008 4,900 11/12/2008 50% 2,450
Sub-total
18,200
Data Type
Invoice
#
Invoice
Date
Invoice
Amount
Audited
Amount Variance
Date
Collected NOCAL 65%
Seismic 0002674 25/11/2009 494,241 606,741 112,500 11/02/2010 73,125
Seismic 0002512 31/08/2009 525,996 540,218 14,221 20/10/2009 9,244
Sub-total 82,369
Total 100,569
Risk
1.1.1.5 The failure of management to record revenue in adherence to IAS 18 could lead to the
misstatement of the financial statements and mislead users of the financial statements.
1.1.1.6 The non-disclosure of revenue items on Revenue Sharing Report could deny NOCAL the
requisite revenue and impede the smooth operation of the entity.
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
7 Promoting Accountability of Public Resources
Recommendation
1.1.1.7 Management should develop a revenue recognition policy that meets the requirements
of International Financial Reporting Standards (IFRSs) and ensures that NOCAL‘s
revenue is recorded in its books on a timely basis.
1.1.1.8 NOCAL should post adjusting entries to conform to IAS 18 and restate the financial
statements for the periods mentioned.
1.1.1.9 NOCAL should institute measures aimed at recovering undisclosed revenues.
Management Response
1.1.1.10 Management acknowledges and notes the auditor’s observation and findings with
respect to revenue recognition for FY2011/2012. Beginning FY2016/2017, NOCAL began
to address this issue by adopting an approved Financial and Accounting Procedural
Manual that includes a revenue recognition policy consistent with the International
Financial Report Standards (IFRS). Additionally, Management has restated its financial
statements for the audited fiscal years in line with IAS 18 per the GAC recommendation
Finally, to the extent that we can prove that revenue remains outstanding from TGS,
management will pursue recovery of those revenues and report to the GAC during
subsequent audits of NOCAL.
1.1.1.11 Management also wishes to clarify that with respect to subsequent fiscal years
(FY2012/2013, FY2013/2014, and FY2014/2015) the nature of the contractual
relationship between NOCAL and TGS made it impractical to recognize revenue when
invoices were issued by TGS. Management only became aware of those transactions
when revenue share reports were submitted to NOCAL by TGS at the end of each month
and it was at that point that management recognized revenue. The fundamental
recognition issue here is that management recognizes revenue when the transactions
became known to NOCAL, regardless of when cash was received. Our review of our
record shows that most of these recognitions were made before the cash was
subsequently received by NOCAL. Management also recognizes the auditor’s assessment
that even though there may have been delayed revenue recognition during intervals of
the audit period this did not have any net effect on the total revenue reported by the
corporation.
Auditor General’s Position
1.1.1.12 We acknowledge Management’s assertion that beginning FY2016/2017 the revenue
recognition is being addressed by adopting an approved Financial and Accounting
Procedural Manual that includes a revenue recognition policy consistent with the
International Financial Reporting Standards (IFRS). We will validate management’s
assertion of adopting IFRS during subsequent audit.
1.1.1.13 Management did not address the issue of posting adjusting entries in the Restated
Financial Statements as recommended. In addition, contractual relations should be
transparent and practicable to ensure that accounting revenue recognition principle is
applicable. Therefore, we maintain our recommendation.
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
8 Promoting Accountability of Public Resources
1.1.2 Accounts Receivable
Observation
1.1.2.1 According to IAS 32 trade receivables are classified as a financial asset, namely an asset
that is a contractual right to receive cash or another financial asset from another entity.
1.1.2.2 We noted that NOCAL did not record accounts receivable arising from transactions with
TGS-NOPEC.
Risk
1.1.2.3 The failure of management to record accounts receivable could lead to the misstatement
of the financial statements and mislead users of the financial statements.
Recommendation
1.1.2.4 Management should develop a revenue recognition policy that meets the requirements
of International Financial Reporting Standards (IFRS) and ensures that accounts
receivable are identified and recorded accurately.
Management Response
1.1.2.5 Management notes the auditor’s recommendation with respect to recognition of
accounts receivable in its financial statements for the audited years. Management
confirms that this observation is particularly true for FY2011/2012 and FY2012/2013.
Beginning in FY2013/2014, Management started to recognize account receivable at the
time of receipt of the revenue share report from TGS. These recognitions were reflected
in financial statements presented to the auditors at the commencement of the audit for
those years. Beginning in fiscal year 2016/2017, Management has adopted an approved
Financial and Accounting Procedural Manual with a section on revenue recognition policy
in line with IFRS that will address accounts receivable recognition issues in the future.
Auditor General’s Position
1.1.2.6 We acknowledge that the receipt of the Revenue Share Report from TGS might not be
timely to assist Management in complying with IFRS. TGS should adhere to the tenets of
the agreements and provide copies of invoices immediately when clients are billed.
However, we will validate Management’s assertion that it has “adopted an approved
Financial and Accounting Procedural Manual with a section on revenue recognition policy
in line with IFRS” during subsequent audit.
1.1.3 Revenue Sharing Ratios “Old Data - PSDM”
Observation
1.1.3.1 Article 4 Section 1 of the ULTRA DEEP-WATER 2D SEISMIC SURVEY AND DATA
MANAGEMENT PROJECT AGREEMENT between NOCAL and TGS of August 4, 2009 states
the following:
“For and in consideration of the Old Data Services, NOCAL and TGS-NOPEC
agree that all Old Data Licensing Fees and Viewing Fees shall be shared by the
parties in the following manner: NOCAL, 65% and TGS-NOPEC 35%.”
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
9 Promoting Accountability of Public Resources
1.1.3.2 We observed that TGS-NOPEC recovered a cost of approximately US$400,000 from
transactions arising from these data without evidence of an agreement between NOCAL
and TGS-NOPEC in respect of recovery of such cost.
1.1.3.3 Furthermore, we recalculated NOCAL’s share of the revenue based on stipulations from
the contract to be US$2,000,897 (65% of revenue as stipulated in the contract) of the
total revenue of US$3,078,303. However, NOCAL received US$1,624,760 resulting into a
variance of US$376,137. See table 3 below and Annexure 1 for detail.
Table 3: Revenue Sharing Ratios Old Data-PSDM
Fiscal
Year Total KMs
# of
Invoices
Total Invoice
Amount
US$
A
NOCAL
Calculation
%
GAC
Recalculati
on (65%)
B
TGS
Calculation
C
Variance
B - C
Prior
year
38,558.66 12
1,621,837.00
10% &
60%
1,054,194
750,880
303,314
2012
23,901.71 11
1,053,568.00
60%
684,819
632,141
52,678
2013
10,382.06 5
212,535.00
60%
138,147
127,521
10,627
2014
3,216.83 2
160,841.00
60%
104,547
96,505
8,042
2015 1
29,522.00
60%
19,189
17,713
1,476
Total 76,059.26 31 3,078,303.00 2,000,896 1,624,760 376,137
Risk
1.1.3.4 Non-compliance with Article 4 Section 1 of the ULTRA DEEP-WATER 2D SEISMIC
SURVEY AND DATA MANAGEMENT PROJECT AGREEMENT could deny NOCAL much
needed revenue.
Recommendation
1.1.3.5 NOCAL should institute measures aimed at recovering the desired revenues in
accordance with Article 4 Section 1 of the 2D Ultra Deep Contract.
Management Response
1.1.3.6 The issue raised here by the GAC stems from an issue of interpretation under the above-
mentioned contract with TGS (the “2009 Contract”), and does not represent an
accounting issue, per se, or a situation in which there was clear non-compliance by TGS
with terms of the 2009 Contract.
1.1.3.7 TGS asserted that under the terms of the 2009 Contract, the 2D PSDM data licensed
under the invoices identified in Annexure 1 was neither “Old Data” nor “New Data” under
the terms of the 2009 Contract, but was effectively a third class of data, independently
developed by TGS from the original raw survey data after the effective date of the 2009
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
10 Promoting Accountability of Public Resources
Contract. (Under the 2009 Contract “Old Data” included 2D data existing as of the
Effective Date and “New Data” included the data collected pursuant to the surveys to be
conducted pursuant to the 2009 Contract).
1.1.3.8 TGS agreed to share the proceeds from the 2D PSDM data on the same basis as: New
Data_90% TGS and 10% NOCAL until TGS recovered the US$400,000 cost incurred in
processing the 2D PSDM data, and thereafter 40% TGS and 60% NOCAL.
1.1.3.9 NOCAL argued that because the 2D PSDM data was derived from the raw survey data
from the initial TGS 2D survey, it should be treated as Old Data.
1.1.3.10 After further review of this matter with external counsel, NOCAL recognized that the
definition of Old data could be read to support TGS’ view. Old Data was defined in the
2009 Contract to mean “data from any source including but not limited to any tapes,
reports, interpretation, seismic, gravity, magnetic and well logs data, whether digitized
or not, acquired, produced, or obtained prior to the Effective Date of this Agreement…”
The 2D PSDM product, which is technologically distinct from the earlier 2D PSTM data,
was clearly created after the Effective Date. Hence, Management, recognizing the
ambiguity related to the language of this provision of the 2009 Contract and realizing
that with such an interpretation this matter could go either way, has decided to further
engage TGS on this matter with the goal of receiving financial benefit for the corporation
from any additional revenue earned on the licensing of the 2D PSDM data. The outcome
of this negotiation will be recorded and reported to the auditors during the audit of
NOCAL in subsequent fiscal years.
Auditor General’s Position
1.1.3.11 We acknowledge Management’s response that TGS will be engaged on this matter with
the goal of receiving financial benefits for NOCAL and report the outcome of the
negotiation to the GAC. However, we did not see evidence of a “third class of data” nor
cost recovery provision of $400,000 in the agreement.
1.1.4 Revenue Sharing Ratios “New Data – Cost Recovery”
Observation
1.1.4.1 Article 6 Section 1 of the ULTRA DEEP-WATER 2D SEISMIC SURVEY AND DATA
MANAGEMENT PROJECT AGREEMENT between NOCAL and TGS of August 26, 2009,
states the following:
For and in consideration of the New Data Services, NOCAL and TGS-NOPEC
agree that all New Data Licensing Fees and Viewing Fees shall be shared as
follows:
o Up to TGS-NOPEC receiving $1,190 USD per km (excluding required
permit costs) in License or viewing fees from the New Data (in other
words, until such time TGS-NOPEC recover its investment in surveying
the area capped at US $17,255,000): all license revenue shall be
shared 90% TGS-NOPEC, 10% NOCAL;
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
11 Promoting Accountability of Public Resources
o Subsequent license revenues would be shared: 40% TGS-NOPEC, and
60% NOCAL until the expiration or termination of the 2009 Agreement.
1.1.4.2 In addition, Article 18 of the Agreement states “each of the Parties shall nominate an
authorized representative and his alternate who will be responsible for all
communications required or made under this Agreement by that Party. Each Party shall
have the right to change such representative or alternate by notice in writing. As at the
date of signature or this Agreement, the names of the Parties’ representatives and their
addresses for service are as follows:
TGS – NOPEC Geophysical Company
Attn: Mr. David Hicks – VP/AMEAP
National Oil Company of Liberia
Attn: Dr. Fodee Kromah
1.1.4.3 We noted numerous inconsistencies in the revenue sharing ratios applied by TGS-NOPEC
to determine NOCAL‘s share of revenue, contrary to the provisions of the agreement
above which led to TGS-NOPEC recovering US$18,315,171 instead of US$17,255,000.
See table 4 below & Annexure 2 for detail
Table 4: Summary of Distribution of Excess Cost Recovered
Description % per
Agreement Amount (US$)
Recovered Amount 18,315,171
Maximum Recoverable per Agreement 17,255,000
Excess Recovered by TGS-NOPEC 1,060,171
Distribution of Excess cost recovered:
NOCAL Share of Excess Cost Recovered 60% 636,103
TGS-NOPEC Share of Excess Cost Recovered 40% 424,068
1.1.4.4 Additionally, we noted that email exchanges between the then Vice President/Finance
about possible expansion of area to be surveyed did not address the cost implication of
such expansion. The silence of both parties on the cost implication of the proposed
expansion exposed the interpretation of their email exchanges to uncertainty.
1.1.4.5 We also noted that TGS-NOPEC seeking the approval of the then Vice President/Finance
to expand the survey area was in clear violation of Article 18 of the contract. As
mentioned above, Dr. Fodee Kromah (the then President/CEO) was the designated
person from NOCAL to contact on matters relating to the contract. We observed no
evidence that TGS-NOPEC was given written notice designating to the then Vice
President/Finance as the authorized representative of NOCAL. Reference table 4
above for detail.
Risk
1.1.4.6 Non-compliance with Article 6 Section 1 (i) and (ii) of the ULTRA DEEP-WATER 2D
SEISMIC SURVEY AND DATA MANAGEMENT PROJECT AGREEMENT could deny NOCAL
much needed revenue.
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
12 Promoting Accountability of Public Resources
Recommendation
1.1.4.7 NOCAL should institute measures aimed at recovering the desired revenues in
accordance with Article 6 Section 1 of the 2D Ultra Deep Contract.
Management Response
1.1.4.8 The issue here is also a question of interpretation of the 2009 Contract, and not an
accounting issue or a simple matter of failure to follow the clear terms of the 2009
Contract. The rights of the parties depend upon whether the 2009 Contract set a
maximum limit on the acreage that TGS would survey, or merely fixed a cost per
kilometer for the survey work and indicate the projected size of the survey.
1.1.4.9 The position of the GAC is based on the assumption that the contract set a maximum
limit on the acreage to be surveyed, and that TGS could recover survey costs only in an
amount equal to the stated cost per kilometer multiplied by the stated acreage amount.
1.1.4.10 TGS takes the position that the acreage surveyed was not intended to be fixed by the
reference in the contract recitals to 14,500 acres, and notes that Article 7.1(ii)
specifically states that “It is understood by TGS and NOCAL that the final program
acquired may be adjusted to reflect industry interest and prefunding.”
1.1.4.11 NOCAL was advised by outside counsel that on these facts, arbitration counsel would not
be comfortable pursuing a claim against TGS based on facts that clearly demonstrate
that TGS conducted an extended survey, with NOCAL’s knowledge, and to NOCAL’s
financial benefit. We were also further advised by external counsel that if the dispute
was taken to arbitration, the TGS interpretation of the contract could likely prevail. In
light of the ambiguity in the provision of the contract and advice provided by external
counsel, Management has decided to further engage TGS to consider ceding additional
revenue share to NOCAL in line with the GAC recommendation. However, Management
recognizes that it faces a significant challenge for recovery of the full amount estimated
by the auditors to be recoverable in the face of incontrovertible evidence that TGS
conducted the survey over an area that exceeded the stated acreage indicated in the
contract.
1.1.4.12 Management respectfully submits a copy of the memo from external counsel regarding
this matter (attached as Exhibit 1.1.4- Memorandum - External Counsel) for GAC review
and consideration.
Auditor General’s Position
1.1.4.13 We acknowledge Management’s assertion that efforts will be made to recover the
additional revenue from TGS. We will validate Management’s assertion during
subsequent audit.
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
13 Promoting Accountability of Public Resources
1.1.5 Revenue Sharing Ratios “Old Data”
Observation
1.1.5.1 Article 1 Section 7 ULTRA DEEP-WATER 2D SEISMIC SURVEY AND DATA MANAGEMENT
PROJECT AGREEMENT between NOCAL and TGS-NOPEC of August 4, 2009, defines
―Old Data as follows:
Old Data means any NOCAL‘s geophysical data from any source including but
not limited to any tapes, reports, interpretation, seismic, gravity, magnetic and
well logs data, whether digitized or not, acquired, produced, or obtained prior
to the Effective Date of this Agreement, in the possession of TGS-NOPEC for
and on behalf of NOCAL under any previous arrangements, agreement or
MOU.
1.1.5.2 Additionally, Article 4 Section 1 states the following:
For and in consideration of the Old Data Services, NOCAL and TGS-NOPEC
agree that all Old Data Licensing Fees and Viewing Fees shall be shared by the
parties in the following manner: NOCAL, 65% and TGS-NOPEC 35%.
1.1.5.3 We observed, during the audit, that revenue from old data amounting to US$5,580,913
were shared 60% or US$3,348,548 to NOCAL and 40% or US$2,232,365 to TGS-NOPEC.
Based on our recalculation, NOCAL should have received US$3,627,593 while TGS-
NOPEC receives $1,953,320. Thus NOCAL received US$279,046 less in revenue than
allowed by the contract. See table 5 below & annexure 3 for detail.
Table 5: Distribution Summary of Understated Old data (PSTM) Revenue
Description
2D PSTM
Revenue
Summary
A
TGS-NOPEC NOCAL
%
Amount
(US$)
B
%
Amount (US$)
(A-B)
TGS-NOPEC calculation of old data
5,580,913.00
40
2,232,365
60
3,348,548
GAC Recalculation based on old data
rate
5,580,913.00
35
1,953,320
65
3,627,593
Understated Revenue 279,046
1.1.5.4 We observed no evidence to support the variations observed in the distribution ratios.
Risk
1.1.5.5 Deviation from contractual agreement by TGS-NOPEC and NOCAL’s inability to identify
and remedy such deviation could deny NOCAL the necessary revenue it is entitled to.
Recommendation
1.1.5.6 Both TGS-NOPEC and NOCAL should ensure that contractual agreements are adhered to
the fullest. Any amendment to the contract should be adequately documented in a form
of an addendum.
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
14 Promoting Accountability of Public Resources
1.1.5.7 NOCAL should seek recovery of the revenue identified through appropriate means
agreed to with TGS – NOPEC.
Management Response
1.1.5.8 NOCAL understands from the preliminary GAC findings and inquiry for feedback during
the audit fieldwork that this issue involves the invoices identified below, each of which is
for 2D data originating under the 2004 2D MOU. (The “kilometer and “type of data”
columns have been eliminated from the original table shown in the preliminary GAC
findings to fit the table on a regular page.)
Invoice
#
Invoice
Date
Fiscal
period
Invoice
Amount
NOCAL%
$
GAC Rx
Variance
Total S.A. 0001495 30/05/2008 2008
378,000 60%
226,800
245,700
(18,900)
Total S.A. 0001495 3/07/2008 2008
90,000 60%
54,000
58,500
(4,500)
Tullow 0001765 15/10/2008 2008
1,358,124 60%
814,875
882,781
(67,906)
Tullow 0001765 15/10/2008 2009
84,883 60%
50,930
55,174
(4,244)
Tullow 0001765 15/10/2008 2009
70,000 60%
42,000
45,500
(3,500)
Anadarko
Petroleum
Corp
0001937 17/12/2008 2009
372,164 60%
223,299
241,907
(18,608)
ConocoPhillips 0002328 18/05/2009 2008
1,791,132 60%
1,074,679
1,164,236
(89,557)
BP Exploration
Operating
0002331 19/05/2009 2009
704,972 60%
422,983
458,232
(35,249)
BP Exploration
Operating
0002331 19/05/2009 2009
54,575 60%
32,745
35,474
(2,729)
Anadarko
Petroleum
Corp
0002386 23/06/2009 2009
16,067 60%
9,640
10,443
(803)
Maralhon Oil 0002512 31/08/2009 2010
525,996 60%
315,598
341,898
(26,300)
1.1.5.9 The GAC takes the position that the NOCAL share of the above invoices should have
been computed on the basis of the 65% share to which NOCAL is entitled for licenses of
“Old Data” under the above-mentioned Ultra Deep contract (the “2009 Contract”). It is
true that the data covered by these licenses is “Old Data” under the 2009 Contract.
However, the 2009 Contract did not become effective until 26 August 2009. (Under
Article 1.16 of the 2009 Contract, the “Effective Date” of the contract is the date on
which it was signed by both parties. NOCAL was the last to sign, on August 26, 2009.)
Therefore, the new 65% NOCAL 35% TGS fee split for “Old Data” was not effective for
licenses granted prior to August 26, 2009, and all license fees paid for 2D data to that
date were split under the terms (as then in effect) of the 2004 2D MOU.
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
15 Promoting Accountability of Public Resources
1.1.5.10 As of 2008, TGS and NOCAL had agreed to split license fees under the 2004 2D MOU on
a 60% NOCAL 40% TGS basis. All of the licenses shown in the above table other than
the most recent license (Marathon) were issued prior to August 26, 2009, and therefore
the correct split applicable to those licenses was 60-40. Only the Marathon license was
issued after August 26, 2009, and only that license fee should have been split on the
65%-35% basis. Therefore, the revenue shortfall is not $279,046, but rather $26,300.
Accordingly, the Management of NOCAL shall seek recovery of US$26,300 and not
US$279,046 from TGS.
Auditor General’s Position
1.1.5.11 We acknowledge Management’s assertion that it will recover the Marathon revenue from
TGS. We will validate Management’s assertion during subsequent audit.
1.1.6 Revenue Sharing Ratios “3D Data”
Observation
1.1.6.1 Article 2 Section 7 of the 3D Multi-Client Seismic Survey Project Memorandum of
Understanding between NOCAL and TGS – NOPEC Geophysical Company ASA of June
14, 2007, states that Trading, Licensing, Open Block Licensing and all other fees
received by TGS-NOPEC shall be shared 40% NOCAL; 60% TGS-NOPEC.
1.1.6.2 Furthermore, we noted reproduction charges in connection with the license of the data
and charges and fees relating to the data and interpretations pursuant to this MOU, or
the use, viewing fees, registration, rental, transportation, delivery, ownership or
operation hereof were not shared with as stipulated in Article 2 Section 7. Based on our
analysis, total other fees amounted to US$2,571,855 and NOCAL’s share of these
charges summed up to US$1,028,742. See table 6 below and Annexure 4 for
detail.
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
16 Promoting Accountability of Public Resources
Table 6: Other Reproduction Charges (Amounts in US$)
Fiscal
Year KMs
Total Amount
Invoiced
Total Audited
Amount Variance
Total
Price/Sq.Km
Audited
Total
Price/Sq.Km
MOU
Total
variance/Unit Variance total
Total
reproduction &
Other Charges
2010/2011 6,413
9,690,031
13,579,266 3,889,236 4566
6,000 1,434
3,135,969
380,968
2011/2012 8,846
13,624,674
13,980,036 355362 5162
6,000 838
4,067,162
355,362
2012/2013 16,410
18,301,608
22,244,957 4154811 7691
8,500 920
2,185,654
1,835,525
Total 31,668 41,616,313 49,804,259 8,399,409 9,388,785 2,571,855
TGS-NOPEC's Share 60%
5,633,271
1,543,113
NOCAL's Share 40%
3,755,514
1,028,742
1.1.6.3 In addition to these charges, TGS-NOPEC charged Anadarko Petroleum Corporation reproduction charges of 0.9% amounting to US$359,250 but
did not share same with NOCAL as stipulated in Article 1 Section 11 of the Memorandum of Understanding. NOCAL’s share of 40% of these fees
amounted to US$143,700. See table 7 below for detailed analysis.
Table 7: Anadarko Reproduction Charges (Amounts in US$)
Client KMs Data
Type
Invoice
Number Invoice Date
Fiscal
Year
Amount
Invoiced Audited Amount
Reproduction
Charges
Anadarko Petroleum Corp – 15 2243 Seismic 1910 12/5/2008 2009 1,478,969 1,492,454 13,485
Anadarko Petroleum Corp – 16 1930 Seismic 1911 12/5/2008 2009 1,272,582 1,284,189 11,607
Anadarko Petroleum Corp – 17 1801 Seismic 1912 12/5/2008 2009 1,187,522 1,198,355 10,833
Anadarko Petroleum Corp – 15 2243 Seismic 1924 12/16/2008 2009 2,957,942 2,984,908 26,966
Anadarko Petroleum Corp – 16 1930 Seismic 1925 12/16/2008 2009 2,545,168 2,568,378 23,210
Anadarko Petroleum Corp – 17 1801 Seismic 1926 12/16/2008 2009 2,375,047 2,396,709 21,662
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
17 Promoting Accountability of Public Resources
Client KMs Data
Type
Invoice
Number Invoice Date
Fiscal
Year
Amount
Invoiced Audited Amount
Reproduction
Charges
Anadarko Petroleum Corp – 15 2243 Seismic 1984 12/29/2008 2009 2,957,942 2,984,908 26,966
Anadarko Petroleum Corp – 16 1930 Seismic 2114 2/6/2009 2009 2,545,168 2,568,378 23,210
Anadarko Petroleum Corp – 17 1801 Seismic 2115 2/6/2009 2009 2,375,047 2,396,709 21,662
Anadarko Petroleum Corp – 15 2243 Seismic 2221 3/26/2009 2009 2,957,942 2,984,908 26,966
Anadarko Petroleum Corp – 16 1930 Seismic 2222 3/26/2009 2009 2,545,168 2,568,378 23,210
Anadarko Petroleum Corp – 17 1801 Seismic 2223 3/26/2009 2009 2,375,047 2,396,709 21,662
Anadarko Petroleum Corp – 15 2243 Seismic 2287 4/30/2009 2009 2,957,942 2,984,908 26,966
Anadarko Petroleum Corp – 16 1930 Seismic 2288 4/30/2009 2009 2,545,168 2,568,378 23,210
Anadarko Petroleum Corp – 17 1801 Seismic 2289 4/30/2009 2009 2,375,047 2,396,709 21,662
Anadarko Petroleum Corp – 15 2243 Seismic 2931 2/12/2010 2010 1,478,953 1,492,454 13,501
Anadarko Petroleum Corp – 16 1930 Seismic 2933 2/12/2010 2010 1,272,566 1,284,189 11,623
Anadarko Petroleum Corp – 17 1801 Seismic 2934 2/12/2010 2010 1,187,506 1,198,355 10,849
39,390,730 39,749,980 359,250
Amount Due to NOCAL 143,700
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
18 Promoting Accountability of Public Resources
Risk
1.1.6.4 Deviation from contractual agreement by TGS-NOPEC and NOCAL’s inability to identify
and remedy such deviation could deny NOCAL the necessary revenue it is entitled to.
Recommendation
1.1.6.5 Both TGS-NOPEC and NOCAL should ensure adherence to the contractual agreements.
Any deviation from and or amendment to the contract should be adequately documented
an addendum.
1.1.6.6 NOCAL should seek recovery of the revenue identified, through appropriate means, from
TGS – NOPEC.
Management Response
1.1.6.7 The GAC position assumes that reproduction charges are a “fee” subject to sharing
under Article 2 Section 7 of the contract referred to above (the “2007 Contract”). This is
not simply an accounting question, but rather a contract interpretation question. TGS
took the position that amounts it charged customers for reproduction services were
charged at cost – i.e., with a profit component – and that the TGS receipts for such
services therefore were not “fees” to be shared with NOCAL. NOCAL took the position
that these charges were a “fee” to be shared.
1.1.6.8 The 2007 Contract does not provide a clear answer to the question of whether a charge
without a profit component constitutes a “fee” for the purposes of that contract.
Therefore, the Management of NOCAL in consultation with legal counsel has decided to
further engage TGS to cede to the corporation revenue earned from reproduction
charges. However, because of the vagueness of language of the contract and coupled
with justification from TGS of additional cost incurred for reproduction, NOCAL
recognizes the challenge of demanding payment of the total amount that has been
deemed to be recoverable by TGS.
Auditor General’s Position
1.1.6.9 We acknowledge Management’s assertions that efforts will be made to recover the
additional revenue from TGS. We will validate Management’s assertion during
subsequent audit.
1.1.7 Revenue Sharing Ratios “3D Data – Cost Recovery”
Observation
1.1.7.1 The 3D Multi-Client Seismic Survey Project Memorandum of Understanding between
NOCAL and TGS – NOPEC Geophysical Company ASA of November 26, 2007, provides
the following definitions:
1.1.7.2 Article 1 Section 8 states that “Survey Management Fees” means the fee of 15%
management fee on the total cost of the survey which is paid proportionally by the
operators of the blocks, and is separate from the “Data Trading Fee” Block Licensing
Fee”.
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
19 Promoting Accountability of Public Resources
1.1.7.3 Article 2 Section 7 states that Trading, Licensing, Open Block Licensing and all other fees
received by TGS-NOPEC shall be shared 40% NOCAL; 60% TGS-NOPEC.
1.1.7.4 Article 8 states “neither Party to this MOU may sell, assign, transfer or otherwise dispose
of, either in whole or part, its rights under this MOU to a third party without the prior
written consent of the other party which consent shall not be unreasonably withheld or
delayed. Any proposed sale, assignment, transfer or disposal by TGS-NOPEC or NOCAL
of all or part of her Revenue Share hereunder shall not be subject to any restrictions”.
1.1.7.5 We noted that TGS-NOPEC was required to recover the cost of survey before effecting
Article 2 Section 7 stated above.
1.1.7.6 Additionally, we noted that the total cost presented to NOCAL upon request amounted to
US$84,756,668. However, the total cost recovered by TGS-NOPEC under this
arrangement summed up to US$94,035,417 resulting to a variance of US$9,278,749.
Based on the sharing ratio presented in Article 2 Section 7 of the MOU, NOCAL’s share of
excess cost recovered by TGS-NOPEC amounted to US$3,711,500. Reference
annexure 5 for detail.
1.1.7.7 We further noted that TGS-NOPEC acquired the services of a third party (BGP) to survey
some of the areas stipulated in the MOU without the written consent of NOCAL in
contravention of Article 8 of the MOU.
Risk
1.1.7.8 Deviation from contractual agreement by TGS-NOPEC could deny NOCAL the necessary
revenue.
1.1.7.9 The acquiring of a third party without consent from NOCAL contravenes the stipulations
in the Agreement and exposes NOCAL to payment for services without prior consent and
assessment.
Recommendation
1.1.7.10 Both TGS-NOPEC and NOCAL should ensure that contractual agreements are adhered to.
1.1.7.11 NOCAL should seek recovery of the revenue from TGS – NOPEC.
Management Response
1.1.7.12 NOCAL respectfully disagrees with the conclusion that the contracts between TGS and
survey vessel operators such as BGP violated the terms of the 2007 MOU. The 2007
MOU requires TGS to obtain and market seismic data and Article 2, section 3, of the
2007 MOU clearly states that TGS will “negotiate the seismic data acquisition . .
.contracts.” Moreover, nowhere in any of the agreements between TGS and BGP
relating to the 2007 MOU is there language suggesting that TGS is attempting to give to
BGP rights that TGS has vis-à-vis its agreements with NOCAL. The language of the
agreements does not, as a matter of law, create an assignment of the right to receive
revenues. It only creates an obligation of TGS to share revenues received. Attached, as
Exhibits 1.1.7A to 1.1.7G, are the TGS agreements with BGP relating to the survey and
the cost sharing.
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
20 Promoting Accountability of Public Resources
1.1.7.13 NOCAL understands that TGS and BGP agreed to share costs and revenues associated
with the survey conducted under the 2007 MOU with respect to Liberia offshore blocks
LB-11 and LB-12. Upon receipt of the draft management letter from the GAC, NOCAL
requested TGS to explain and demonstrate the occurrence of such cost and revenue
sharing and TGS has provided the following materials:
1.1.7.14 Attached as Exhibit 1.1.7A is a document that TGS has provided as evidence of the cost
share arrangements related to Blocks 11 and 12.
1.1.7.15 Attached as Exhibit 1.1.7B is a memorandum from TGS summarizing and explaining the
cost sharing arrangements with BGP.
1.1.7.16 Attached as Exhibit 1.1.7C and 1.1.7D are spreadsheet details setting forth detailed,
invoice by invoice analysis of the costs and the cost allocation relating to the Block 11-12
survey.
1.1.7.17 Attached as Exhibit 1.1.7E is a Power Point presentation setting forth additional
explanations relating to the data set forth in the spreadsheet
1.1.7.18 Attached as Exhibit 1.1.7F are copies of four documents that are referred to in slide 4 of
the Power Point document that provides evidence of the payment/offset of payments
among BGP and TGS.
1.1.7.19 Attached as Exhibit 1.1.7G is a letter from BGP confirming its agreement with the TGS
cost analysis.
1.1.7.20 The information listed above and attached to this response are also available in
electronic copies and can be forwarded to GAC upon request. TGS has informed NOCAL
that the spreadsheet was prepared by a consultant retained by TGS for the specific
purpose of reviewing the data provided by TGS and organizing it for presentation to
NOCAL and GAC. TGS has also advised NOCAL that it would be willing to arrange a
meeting between the consultant and a representative of the GAC at TGS’s offices to
discuss the consultant’s conclusions if that would assist the GAC in understanding the
information provided therein.
Auditor General’s Position
1.1.7.21 We respectfully also disagree with Management’s assertion that “no rights” were
assigned from TGS to BGP. The rights referenced in findings were survey rights
transferred to BGP from TGS NOPEC. The cost sharing arrangement between TGS and
BGP arose out of the transfer of that right of TGS to survey blocks 11 and 12 to BGP
which is in contravention of Article 8 mentioned above. NOCAL entered into a contract
with TGS to survey the blocks due, in part, to the cost efficiency associated with TGS
NOPEC’s activities. Transferring such rights to BGP without NOCAL’s consent subjected
NOCAL to paying for services in which they had little or no direct input into acquiring.
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
21 Promoting Accountability of Public Resources
1.1.7.22 The MOUs and contract audited were read with understanding and the invoices from
TGS NOPEC’’s recalculation shows that TGS owes an outstanding amount to NOCAL. We
maintain that Management pursues TGS to recover the excess revenue. The
Management of NOCAL continuous defense of TGS on the revenue derived from the data
collected and argument that the agreements and contracts are complicated and
impractical to implement is unjustified. The contracts and agreements submitted to the
GAC are easy to interpret. We therefore maintain our recommendation that NOCAL
recover excess revenue arising from such breach of the contract.
1.1.8 Redacted Invoices
Observation
1.1.8.1 Article 10 Section 1 of the Ultra – Deep Water 2D Seismic Survey and Data Management
Project Agreement states that NOCAL or its representatives shall have the right to audit
all receipts, invoices, statements and other records of TGS-NOPEC relating to this
Agreement, with respect to any calendar year (whole or partial) during the Term of this
Agreement and any extension thereof. The audit(s) by NOCAL or its representative shall
be conducted at the expense of NOCAL during standard business hours and upon giving
TGS-NOPEC at least thirty (30) days’ notice of its election to conduct such an audit.
1.1.8.2 We observed that multiple invoices submitted for the audit files were redacted.
According to explanation provided by TGS-NOPEC, these invoices contained transactions
relating to other countries and could not expose same on the basis of the confidentiality
agreements with those countries. We further noted that TGS-NOPEC should not have
included transactions from multiple entities on the same invoices knowing that those
invoices where subject to audit.
1.1.8.3 Therefore, we could not determine whether US$34,847,296.89 of the redacted invoices
were attributable to transactions involving data obtained from blocks outside the
territorial limits of Liberia and pertained to other countries. See table 8 below and
Annexure 6 for detail.
Table 8: Summary of Redacted Invoices
Fiscal year Total # of Invoices Total Amount Not Traced to Revenue
Sharing Schedule (US$)
Prior years 7 13,381,436.82
2011/2012 14 13,943,457.29
2012/2013 9 7,238,956.78
2013/2014 1 283,446.00
Total 31 34,847,296.89
Risk
1.1.8.4 The presentation of redacted invoices to NOCAL could undermine the completeness and
accuracy assertions placed on NOCAL’s revenue generated from the TGS-NOPEC
Contract.
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
22 Promoting Accountability of Public Resources
Recommendation
1.1.8.5 NOCAL should prevail on TGS-NOPEC to provide complete invoices to enable GAC
evaluate the accuracy of the Revenue Sharing Report.
1.1.8.6 TGS-NOPEC should provide information on sale of data and other services to NOCAL
timely upon invoicing of the client in accordance with Article 6 Section 2 (iii) of the Ultra
Deep Water 2D Seismic Survey and Data Management Project Agreement.
1.1.8.7 NOCAL should seek recovery of the revenue identified through appropriate means.
Management Response
1.1.8.8 TGS has explained that the redacted portions of the invoices refer to the licensing of
seismic data from jurisdictions other than Liberia, and that it is required to redact such
information because international oil companies do not want third parties to know the
locations for which they have purchased data. NOCAL believes that this is a
commercially reasonable position in light of the competitive conditions in the
international oil industry.
1.1.8.9 TGS has furnished NOCAL with a letter from recognized petroleum counsel in Houston
reporting that they have examined the invoices involved, and that none of the redacted
information relates to Liberia seismic data. That letter is being delivered to GAC
concurrently with these remarks (See Exhibit 1.1.8-Copy of Assurance Letter from
Gardere-International Law Offices).
1.1.8.10 NOCAL notes that in order to avoid this situation arising again, it will, going forward, ask
TGS not to include charges for non-Liberian data on invoices that cover Liberian data.
Auditor General’s Position
1.1.8.11 We acknowledge Management’s assertion that going forward TGS will not include
charges for non-Liberian data on invoices that do not cover Liberian data. We will
validate Management’s assertion during subsequent audit.
1.2 Asset
1.2.1 Property, Plant & Equipment (PPE)
Observation
1.2.1.1 PFM Regulation A.3 subsection 2 states that "any public officer concerned with the
conduct of financial matters of the Government of Liberia, or the receipt, custody and
disbursement of public and trust moneys, or for the custody, care and use of
government stores and inventories shall keep books or accounts and proper records of
all transactions and shall produce the books of accounts and records of the transaction
for inspection when called upon to do so by the Auditor-General, the Comptroller
General, the relevant internal auditor or any officers authorized by them, by the
Minister.”
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
23 Promoting Accountability of Public Resources
1.2.1.2 IAS 16 Paragraph 73 (a, b, c & d) states that “The financial statements shall disclose, for
each class of property, plant and equipment:
‘(a) the measurement basis used for determining the gross carrying amount;
‘(b) the depreciation methods used;
‘(c) the useful lives or the depreciation rates used;
‘(d) the gross carrying amount and the accumulated depreciation (aggregated
with accumulated impairment losses) at the beginning and end of the
period.”
1.2.1.3 During the audit, we observed that the Management of NOCAL did not fully follow the
PFM Regulation in keeping proper records of assets procured. Additionally, records
presented on the fixed assets register as recalculated by GAC did not agree with those
presented in the Balance Sheets, Income Statements and Cash Flows. See tables 9 –
9B below and Annexure 6 for detail.
Table 9: Balance Sheets Effect - Amounts in USD
Description 2011/2012 2012/2013 2013/2014 2014/2015
NOCAL FS
Cost 1,607,366 2,656,940 4,154,102 4,260,744
Accumulated Depreciation 318,591 1,057,243 1,545,350 1,927,208
Net Book Value 1,288,775 1,599,698 2,608,752 2,333,536
GAC Recalculation
Cost 1,185,189 1,687,689 3,588,628 2,981,072
Accumulated Depreciation 403,739 819,874 1,678,302 2,110,316
Net Book Value 781,450 867,815 1,910,326 870,756
Variance (NOCAL -GAC)
Cost 422,176 969,251 565,474 1,279,672
Accumulated Depreciation (85,145) 237,369 (132,952) (183,108)
Net Book Value 507,325 731,883 698,426 1,462,780
Table 9A: Income Statements Effect - Amounts in USD
Description 2011/2012 2012/2013 2013/2014 2014/2015
NOCAL FS
Depreciation Expense 12,093 738,652 488,107 716,955
GAC Recalculation
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
24 Promoting Accountability of Public Resources
Description 2011/2012 2012/2013 2013/2014 2014/2015
Depreciation Expense 239,609 412,739 788,633 683,431
Variance (NOCAL -GAC) (227,516) 325,913 (300,526) 33,524
Table 9B: Cash Flows Effect - Amounts in USD
Description 2011/2012 2012/2013 2013/2014 2014/2015
NOCAL FS
Capital Additions
548,457
1,049,574
2,162,705
106,642
GAC Recalculation
Capital Additions
491,165
502,500
1,700,617
27,195
Variance (NOCAL -
GAC)
57,292
547,075
462,089
79,447
Risk
1.2.1.4 The failure of the management of NOCAL to adequately maintain fixed assets register
could lead to misrepresentations within the financial statements.
Recommendation
1.2.1.5 The Management of NOCAL should ensure that fixed asset registers are adequately
maintained and agreed to the financial statements.
Management Response
1.2.1.6 The Management of NOCAL wishes to clarify that the finance division of the corporation
maintained Fixed Asset Register (FAR) for the audited period. However, management
acknowledges error in depreciation calculation in some instances, thereby resulting to
errors in depreciation estimates – a non-cash expense. Following the conclusion of the
GAC audit fieldwork, the finance division of NOCAL has restated the financial statements
for the audited years, consistent with consensus reached with the GAC on what the
appropriate depreciation estimates should be. The restated financial statements have
been signed and submitted to the GAC.
Auditor General’s Position
1.2.1.7 We disagree with NOCAL’s assertions that the financial statements have been restated to
reflect the findings above. The findings presented in tables 9 – 9B reflect the financial
records of the restated financial statements. Management should have put in place a
fixed asset management system that addresses the acquisition, use, control, protection,
maintenance, and disposal of the fixed assets of NOCAL. Therefore, we maintain our
recommendation.
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
25 Promoting Accountability of Public Resources
1.2.2 Cash and Bank Reconciliation
Observation
1.2.2.1 Regulation R.3(6), PFM Regulations, stipulates that "the balance of every bank account
as shown in a bank statement shall be reconciled with the corresponding cashbook
balance at least once every month; and the reconciliation statement shall be filed or
recorded in the cash book or the reference to the date and number thereof”.
1.2.2.2 IAS 7 States that “an entity shall disclose the components of cash and cash equivalents
and shall present a reconciliation of the amounts in its statement of cash flows with the
equivalent items reported in the statement of financial position”.
1.2.2.3 During the audit, it was observed from the review of the general ledgers and bank
statements that NOCAL maintained ten (10) bank accounts with 4 Banking institutions.
1.2.2.4 Moreover, the Management of NOCAL did not prepare monthly bank reconciliations for
all of its accounts for eleven consecutive months beginning from July 1, 2011 to May 31,
2012. In the absence of reconciliation statements for the eleven months during the
period 2011/2012, management could not provide evidence that all its accounts were
fully reconciled to their respective ledgers on a monthly basis.
Risk
1.2.2.5 Failure to perform the monthly bank reconciliations could impede the timely detection of
errors and/or omissions in the cash balances.
Recommendation
1.2.2.6 The Management of NOCAL should ensure timely monitoring and supervision over the
preparation of monthly bank reconciliation as required by IAS 7 and the PFM Regulations
to help protect the entity’s resources, through uncovering irregularities over cash.
Management Response
1.2.2.7 Management notes the GAC assertion with respect to FY2011/2012 that bank
reconciliation was not done on a monthly basis per IAS 7 and R.3 (6) of the PFM Law.
However, Management is pleased to report that monthly bank reconciliation statements
have been prepared for all subsequent fiscal periods following FY2011/2012.
Additionally, the finance division has restated it financial statement for FY2011/2012 to
validate the reconciled bank balances of the corporation for that period. GAC has
received and vetted those reconciled balances and has indicated no reservation with
what is recorded and presented in the appropriate sections of the restated financial
statements.
Auditor General’s Position
1.2.2.8 We acknowledge Management’s assertion. However, Management’s failure to conduct
bank reconciliation on a monthly basis in FY2011/2012 is a breach of financial discipline
under A.20 of the PFM Regulation of 2009.
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
26 Promoting Accountability of Public Resources
1.3 Expenses
1.3.1 Travel
Observation
1.3.1.1 Section 32 of the Approved GOL 2012/2013 & 2013/2014 Travel Ordinance states that:
"All public corporations and parastatal organizations shall pay per diem at the same rates
specified herein, subject to the approval of their respective Boards. The other conditions
contained herein shall be adhered to."
1.3.1.2 During the period under audit, it was observed that the management of NOCAL
approved and made several travels. However, from the review of sampled payment
vouchers, we observed no evidence of retirement for the travels made by staff and
officials of NOCAL in the total amounts of US$50,565.24, and US$47,865.96 for the
periods 2012/2013 and 2013/2014, respectively. See table 11 below for detail.
Table 11: Retirement of Foreign Travel
Date Description Voucher # Check # Amount (US$)
2012/2013
6-Dec-12 Travel Expenses 84 2879 6,732.50
30-Nov-12 Travel Expenses 246 2794 25,092.12
19-Jun-13 Travel Expenses 145 4419 18,740.62
Sub-total 50,565.24
2013/2014
8-Nov-13 Travel Expenses 27 2575 4,866.00
8-Nov-13 Travel expenses 28 2576 29,900.00
4-Nov-13 Travel Expenses 44 5535 13,099.96
Sub-total 47,865.96
Total 98,431.20
Risk
1.3.1.3 The failure to retire travel expenses could undermine public accountability and abuse of
public resources.
Recommendation
1.3.1.4 The Management of NOCAL should ensure that officials making travel on its behalf
comply with the Executive Travel Ordinance.
1.3.1.5 The Management should ensure that all officials who made travels on behalf of NOCAL
retire the total amounts of US$50,565.24 and US$47,865.96 disbursed as per diem and
allowances during time of travel.
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
27 Promoting Accountability of Public Resources
Management Response
1.3.1.6 Management acknowledges the auditor’s findings, but believes that the substantive issue
of 1.4.1 is whether the corporation has in fact been adhering to the Executive Travel
Ordinance of the Government of Liberia. To this, Management is pleased to answer in
the affirmative that ALL employees making formal trips on behalf of the corporation are
required to retire their trips upon return to the country. Accordingly, we are pleased to
adduce samples of retirement forms for each of the audited years for your record to
confirm Management’s adherence to the Executive Travel Ordinance. (Exhibit 1.4.1-
Sample of past retirement forms)
1.3.1.7 With respect to the travels listed in “Table 11” above, although Management was unable
to locate the retirement forms relating to a few of those travels sampled; we cannot
conclude that those making the travels did not retire. This could be a matter of poor or
inadequate documentation and not necessarily failure on the part of the individuals to
retire. In an attempt to further clarify the doubts of the auditors, alternative procedures
were performed during the conduct of the audit on ALL of the sample travel documents
listed in “Table 11” above that confirmed that the transactions relating to those travels
were legitimate and that the trips were taken on behalf of the corporation.
1.3.1.8 Management wants to assure the GAC that NOCAL has and will continue to comply with
the relevant provisions of the Executive Travel Ordinance.
Auditor General’s Position
1.3.1.9 The Management of NOCAL is required to ensure that all staff members who undertake
foreign travels retire their travel advances timely. In the absence of retirement of travel
advances, the entire amount should be recovered from those who failed to submit the
travel settlement form. For those who have left NOCAL, the entity should also recover
the amount from them in line with the Travel Ordinance.
1.3.2 Consultancy Contracts not in Compliance with PPC Act
Observation
1.3.2.1 Section 68, subsection 1 of PPC Act of 2007 amended 2010 states that "For the
purposes of procuring the services of a consultant, the Procuring Entity shall prepare a
shortlist of, generally, three (3) to six (6) consulting firms as determined by subsections
(2) and (3) of this Section and, to the greatest extent feasible, comprising consultants of
the same category and similar capacity and business objectives."
1.3.2.2 Additionally, Section 68, subsection 2 of the above provision also states that " When the
estimated contract price of the procurement exceeds the Threshold established by
Regulations promulgated by the Commission, in order to establish the shortlist, the
Procuring Entity shall seek expressions of interest by Publishing a notice and, where
appropriate, placing the notice also in relevant trade publications and technical and
professional journals. The Procuring Entity shall allow at least three (3) weeks for
interested persons to reply to the request for expressions of interest unless the
Commission permits a shorter period."
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
28 Promoting Accountability of Public Resources
1.3.2.3 During our review of sampled payment vouchers for consulting services in the amounts
of US$246,105.50, US$21,600.00, US$79,140.00 and US$68,069.00 for periods
2011/2012, 2012/2013, 2013/2014 and 2014/2015 respectively, it was observed that the
management did not provide evidence of compliance with the PPC Act during the award
of these consultancy contracts. See table 12 below and Annexure 7 for detail
Table 12: Summary of Sampled Consultancy Contracts' Payment Vouchers
Description
PERIODS Total Amount
(US$) 2011/2012
(US$)
2012/2013
(US$)
2013/2014
(US$)
2014/2015
(US$)
Consulting Services 246,105.50 21,600.00 79,140.00 68,069.00 414,914.50
Risk
1.3.2.4 The non-adherence to the PPC Act could lead to the selection of non-responsive bidder
and may deny assurance for an opened competitive procurement process.
1.3.2.5 The non-compliance with provisions of the PPC Act could lead to the selection of
unqualified contractors thereby denying NOCAL the “value” for the “money” spent on
those contractors.
Recommendation
1.3.2.6 The Management of NOCAL should ensure full adherence to the PPC Act during the
procurement of consulting services.
1.3.2.7 The Management should provide material justification why it awarded consultancy
contracts in noncompliance with the PPC Act in the amounts of US$246,566.74,
US$21,600.00, US$79,140.00 and US$68,069.00 during the periods 2011/2012,
2012/2013, 2013/2014 and 2014/2015 respectively.
Management Response:
1.3.2.8 Management notes the auditor’s recommendation with respect to full adherence to the
PPC Act during the procurement of consulting services. Management affirms that during
the audit period, it submitted its annual procurement plans to the Public Procurement &
Concession Commission, which were subsequently approved for all of its expenditure
items including consulting services. (See Exhibit 1.4.2.7A-Approved Procurement Plans)
1.3.2.9 It must be emphasized that Section 8 of the Threshold Regulations for the PPC Act
requires that “Pursuant to Section 71(2) Procuring Entities shall give at least fourteen
(14) days prior notice to the Commission of proposed awards of consulting contracts
when the estimated price of the consulting contract exceeds US$100,000. (US$200,000)
if the contract has been awarded following the solicitation of expressions of interest in
accordance with Section 68(2).”
1.3.2.10 Furthermore, to ensure that appropriate responses were provided for the observations
related to this section, the Interim Management Team reached out to the leadership of
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
29 Promoting Accountability of Public Resources
the former NOCAL Management, that was in place during the audit period, to solicit their
comments and insights and the following information was provided by the former
Management:
Awarded consultancy services of the period 11/30/2011 to 12/31/2011 were
prior to our management period. Thus we have no feedback.
Since they were previously awarded, management agreed to continue to
honor the consultancy services of the period 5/31/2012 to 6/30/2012.
In the 2012/2013 and 2013/2014 periods, the Chie contract falls in the
previously awarded category – management agreed to continue to honor. The
contracts of the others – Jackson and Seakor – had to be awarded in a timely
manner to those individuals who were uniquely qualified for the purpose that
had urgency for the organization.
The Orion Consultancy was a uniquely specialized security based contract. It
had to be awarded in a timely manner and selectively based on the nature of
the contract. Management had run into a period where there had to be some
coordination with national security. Orion was uniquely and specifically
qualified.
In the 2014/2015 periods, again the Chie’s contract falls in the previous
awarded category – management agreed to continue to honor. The contracts
of Harrington and Maples fall again into timely execution with individuals who
were consulting on the third Bid Round based on their consultancy with
NOCAL on the Block 13 negotiations with ExxonMobil.
1.3.2.11 Management believes that the auditor’s assertion with respect to Jacob Kabakole is
incorrect. According to Article 13, Section B of the Corporate By-Laws of NOCAL, the
President & Chief Executive Officer of the Corporation has the authority to appoint all
managers of the various departments and make such rules and regulations for governing
the day-to-day affairs of the corporation. In line with this mandate, Management
granted Jacob Kabakole an employment contract. Hence, the procurement criteria as
prescribed in the PPC Act for consultancy could not have been applicable in this
particular instance. (See Exhibit 1.4.2.7C-Employment Contract for J. Kabakole).
1.3.2.12 Relative to the issue of Coastal Energy Services, the procurement process was followed,
as there is evidence that there was a competitive process where two companies’
proposals were submitted to NOCAL for consideration and Coastal Energy Service was
selected as the most responsive consultant. (See Exhibit 1.4.2.7D-Copy of Payment
Voucher & Memorandum)
1.3.2.13 Similarly, On July 6, 2009 NOCAL issued an Expression of Interest for International
Consultancy on the Exclusive Economic Zone Project. On September 22, 2009, the report
was concluded with ESL Consulting based in Accra, Ghana selected since it was the only
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
30 Promoting Accountability of Public Resources
company that submitted a proposal. Based on the magnitude of the works, several other
amendments to the original contract were concluded between 2009 and 2012. (See
Exhibit 1.4.2.7E-Expression of Interest & Evaluation Report)
1.3.2.14 The Heritage Communication payment was a Corporate Social Relations media
awareness support project that was financed by NOCAL based on a project proposal
submitted by Heritage Communication Inc. NOCAL did not solicit the service, but
approved the proposal for funding on the strength of the proposal’s rationale to assist
NOCAL increase the media understanding of the oil and gas sector and improve media
reporting to reflect the true state of affairs of the oil sector. The key objectives of his
project proposal was to increase public understanding of the oil and gas sector and
ensure that civil society organization understand the key issues relative to the sector.
Hence, the procurement criteria as prescribed in the PPC Act for consultancy were not
applicable. (See Exhibit 1.4.2.7F-Project Proposal & CSR Funding Agreement)
Auditor General’s Position
1.3.2.15 Management is continuous and the relevant records should be available to support all
transactions. Therefore, the current management team should be in the position to
respond to audit queries arising from periods prior to its arrival at NOCAL. With respect
to Jacob Kabakole’s arrangement, the agreement, related payments and tax deductions
clearly show that it is a consultancy contract.
1.3.2.16 The annual procurement plan did not include the services to be provided for which the
Orion Consultancy contract was awarded. The annual procurement plan should include
provision for such service and identify adequate time for implementation. As it relates to
the awarding of contracts with specialized skills, the Management did not present letter
of “no objection” from Public Procurement Concession Commission. Therefore, we
maintain our recommendation.
1.4 Corporate Governance Issues
1.4.1 Corporate By-Laws
Observation
1.4.1.1 PFM Regulation M.12 (1) states “(1) The Board of Directors of each enterprise governed
by this Act shall ensure the efficient management of the financial resources of the
enterprise including the collection and receipt of moneys due to that enterprise or
institution”.
1.4.1.2 It was observed during the conduct of the audit that the Corporate By-Laws of NOCAL
adopted 2004 has several provisions which undermines the practice of good corporate
governance and the efficient management of NOCAL’s resources. For example, Article 6
Paragraph 2, states “The Board may by resolution authorize the payment of fees,
stipends, honoraria, travel or other allowances to Directors for attending meetings of the
board and or traveling in the interests of the corporation. Nothing herein contained
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
31 Promoting Accountability of Public Resources
should be construed to preclude any Director from serving the Corporation in any
capacity and receiving compensation thereof, provided there is no obvious conflict of
interest.”
Risk
1.4.1.3 Corporate by-laws that bestow upon the Board of Directors multiple benefits and allow
Directors to perform additional service for fees could lead to conflict of interest.
Recommendation
1.4.1.4 The Board of Directors of NOCAL should review the Organization’s corporate By-laws to
ensure that it conforms to current legal environment and sound corporate governance
practices.
Management Response
1.4.1.5 The Management of NOCAL takes notes of the risks identified by the GAC regarding the
2004 NOCAL By-Laws. NOCAL assures the GAC that the corporation is currently drafting
new corporate by-law that are consistent with the Business Corporations Act, the NOCAL
Act 2016, and other applicable Liberian Law for consideration and adoption by the
NOCAL Board of Directors.
1.4.1.6 NOCAL wishes to confirm that at no time during the audit period did any Director of the
Board serve in any other capacity or receive salary or additional fees for services
rendered in another capacity. NOCAL further confirms that all travel costs, including
subsistence allowances for Directors traveling on behalf of NOCAL were in compliance
with the official Government of Liberia travel policy.
Auditor General’s Position
1.4.1.7 We acknowledge Management’s assertion that NOCAL is currently drafting a new
corporate by-law that is consistent with the Business Corporations Act of 2016. We will
validate Management’s assertion during subsequent audit.
1.5 Compliance Issues
1.5.1 Fuel usage log for Generator
Observation
1.5.1.1 PFM Regulation A.3 subsection 1 states that "Any public officer concerned with the
conduct of financial matters of the Government of Liberia, or the receipt, custody and
disbursement of public and trust moneys, or for the custody, care and use of
government stores and inventories shall keep books of accounts and proper records of
all transactions and shall produce the books of accounts and records of the transactions
for inspection when called upon to do so by the Auditor-General, the Comptroller
General , the relevant internal auditor or any officers authorized by them, by the
Minister.”
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
32 Promoting Accountability of Public Resources
1.5.1.2 During the audit, it was observed that the Management of NOCAL did not provide
evidence of fuel usage log for generator in the amount of US$502,206.37 for the
period 2011/2012.
Risk
1.5.1.3 Management‘s failure to provide fuel usage log could lead to misapplication of the
entity’s fuel.
Recommendation
1.5.1.4 The Management of NOCAL should produce substantive justification backed by material
evidence for spending US$502,206.37 on generator fuel without the maintenance of a
fuel usage log.
1.5.1.5 Going forward, NOCAL Management should prepare a daily generator fuel receipt and
consumption log that will track the daily usage of fuel. Also, Management should
establish adequate internal control over receipt, distribution and consumption of fuel.
Management Response
1.5.1.6 NOCAL acknowledges the findings of the auditors but believes that the conclusion
reached by the auditors with respect to the issues raised after their review of sample
vouchers and amounts spent on generator fuel for the audited period is incorrect.
1.5.1.7 First, the sample vouchers that the auditors reviewed did not indicate that NOCAL spent
US$502,206.37 on generator fuel. To the contrary, the US$502,206.37 relates to fuel
and gasoline affecting the following categories:
US$434,713.08 of the voucher’s sampled represents monthly fuel benefits to
employees of NOCAL from July 2011 to June 2012.
US$39,913.95 represents fuel allowance to members of the Board of Directors
from July 2011 to June 2012.
US$22,283.37 represents fuel purchased for utility vehicles for the corporation.
1.5.1.8 Hence, only US$8,950 of the total amount of US$502,206.37 was spent on fuel for the
corporation’s generator and said expenditure was appropriately accounted for through a
monthly fuel utilization report. (See Exhibit 1.6.1 – Vouchers and Excel Spreadsheet
including list of employees and Members of the Board and quantity of fuel allowance per
month).
Auditor General’s Position
1.5.1.9 NOCAL’s general ledger shows US$502,206.37 (GL 050400) as Fuel – Generator.
Additionally, the evidence presented by Management shows how monthly fuel was
distributed but there was no evidence that the employees and board members signed for
the fuel. Further, Management provided no generator usage log as evidence that the
fuel was used for the intended purpose. Therefore, Management should be held
accountable for the fuel.
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
33 Promoting Accountability of Public Resources
1.5.2 Award of Geophysical Services
Observation
1.5.2.1 Section 46 (1 & 3) of the amended and restated PPC Act. 2005 states that "(1) Public
procurement shall be undertaken by means of advertised open bid proceedings, to which
equal access shall be provided to all eligible and qualified bidders without discrimination,
subject only to the exceptions provided under this Part for particular methods of
procurement.' '(3) Procuring Entities may use only those methods of procurement
authorized by this Act. If a Procuring Entity uses a method of procurement other than
advertised open competitive bidding, it shall note in the record of the procurement
proceedings the grounds for the choice of the procurement method."
1.5.2.2 During the audit, it was observed that the Management of NOCAL and TGS-NOPEC
Geophysical Company ASA, entered into separate memoranda of understanding on
November 26, 2007, August 4, 2009 and January 14, 2013 for the conduct of a 3D
Multi-Client Seismic Survey Project, where TGS-NOPEC will acquire geophysical data
offshore Liberia; of Ultra Deep-Water 2D Seismic Survey and Data Management Project
offshore Liberia and the Acquisition, Processing, Interpretation, and Marketing of 3D
Seismic Data.
1.5.2.3 Further, the Agreement mentioned that NOCAL conducted a competitive bidding process
in accordance with the PPC Act; however, there was no evidence provided by the
management during the conduct of the audit supporting such assertion.
1.5.2.4 Additionally, NOCAL did not provide evidence in a form of communication from the Public
Procurement and Concession Commission permitting "No Objection" for NOCAL to single
source the services of TGS-NOPEC in 2013, since they had prior MOUs in 2007 and 2009.
Risk
1.5.2.5 The failure to uphold and comply with the PPC Act undermines government’s agenda for
the achievement of transparency and accountability in public procurement.
Recommendation
1.5.2.6 The Management of NOCAL should provide material justification why the PPC Act was
not adhered to during the consummation of the memoranda of understanding with TGS-
NOPEC for the conduct of the 3D Multi-Client Seismic Survey Project, where TGS-NOPEC
would acquire geophysical data offshore Liberia; the Ultra Deep-Water 2D Seismic
Survey and Data Management Project offshore Liberia and the Acquisition, Processing,
Interpretation, and Marketing of 3D Seismic Data.
1.5.2.7 The Management of NOCAL should uphold and comply with the PPC Act during the
award of procurement contracts.
Management Response
1.5.2.8 To ensure that appropriate responses were provided for the observations related to this
section, the Interim Management Team reached out to the leadership of
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
34 Promoting Accountability of Public Resources
the former Management that was in place during the audit period to solicit their
comments and insights and the following information was provided by the former
Management:
1.5.2.9 The NOCAL-TGS partnership for acquiring seismic surveys for the benefit of Liberia goes
back to the MOUs of 2007 and 2009, which GAC acknowledges in 1.6.2.2. Liberia,
through NOCAL gained hundreds of millions United States Dollars valued at
approximately US$68Million over a 9 year period and from which NOCAL contributed
approximately US$37Million to the Government Budget beginning FY2012/2013 to
FY2014/2015.
1.5.2.10 The nature of the NOCAL-TGS partnership commenced at a time that TGS was the only
company willing to take a chance with NOCAL by putting up all of the costs upfront to
conduct the seismic survey and even provide training for employees of NOCAL. In
consideration of taking up this significant risks, the Management of NOCAL in 2007 and
2009 signed contracts with TGS that committed NOCAL to use TGS in the marketing and
licensing of the Liberia’s seismic data with the agreement that TGS would recover it cost
over the period of the agreement and that NOCAL would received financial benefits from
the licensing of the data as well as specialized knowledge from TGS.
1.5.2.11 Hence, considering the prefunding nature and risks associated with this undertaking, it
may have been impractical for the past Management to conduct a competitive bidding
process prior to the signing of various MOUs with TGS. Additionally, because
subsequent management inherited a contractual relationship that had a fixed duration
for a highly specialized project and services, it became unfeasible to have terminated the
existing MOUs and commence a competitive bidding process. The cost of taking such an
action, coupled with the legal, technical, and financial ramifications of finding another
seismic provider in a reasonable time far exceeded the benefit of taking such action.
Therefore, Management has been constrained and for all practical purposes continued
the relationship with TGS.
1.5.2.12 The Management could not verify the reference made in 1.6.2.3 that NOCAL conducted
a competitive bidding process. We think that observation may have been noted in error.
Auditor General’s Position
1.5.2.13 The NOCAL Management should have obtained a No Objection from the PPCC to hire the
services of TGS given the nature of the transaction. Therefore, NOCAL Management is in
breach of the PPC Act by awarding the contract to TGS without reference to the PPCC
for which it should be held accountable.
1.6 Control Issues
1.6.1 Internal Control Weakness
Observation
1.6.1.1 Article 6 Section 4 of the Ultra – Deep Water 2D Seismic Survey and Data Management
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
35 Promoting Accountability of Public Resources
Project Agreement says that TGS-NOPEC shall be responsible for collecting all New Data
License and Viewing Fees due under each New Data License. Within thirty (30) days
following receipt of payment from a Licensee, TGS-NOPEC shall deliver to NOCAL a
statement setting forth the type and amount of the New Data License and Viewing Fees,
together with payment amount due to NOCAL pursuant to Section 6.1 of the same
agreement.
1.6.1.2 Additionally, according to Article 7 Section 2 subsections (iii) and (vii) of the Ultra – Deep
Water 2D Seismic Survey and Data Management Project Agreement,
TGS-NOPEC shall negotiate the New Data Licenses. Copies of New Data
Licenses invoices will be provided to NOCAL.
Provide NOCAL with updated revenue received, inventory of the quantity,
content and form of data acquired, including regular reports, maps, lines of
travels, shot points, types of displays, etc. and current prices thereof.
1.6.1.3 In terms of Article 2 Section 3 (iii), TGS-NOPEC shall, with NOCAL, negotiate the seismic
data acquisition & processing contracts.
1.6.1.4 During the performance of our audit procedures, we observed several control
weaknesses in the implementation of the profit sharing agreements between TGS-
NOPEC and NOCAL.
1.6.1.5 No evidence of NOCAL discussion of varying prices, seasonal effects and discounts
provided to customers.
1.6.1.6 No evidence, with respect to the “Cost Recovery” associated with the 3D project that
TGS-NOPEC provided cost data including invoices for NOCAL record during the survey.
1.6.1.7 No evidence that NOCAL monitored the recovery of cost listing provided.
Risk
1.6.1.8 Failure to design and effectively monitor internal control system could expose NOCAL to
loss of significant revenue.
Recommendation
1.6.1.9 The Board must ensure that management establishes proper mechanism to monitor
controls over the revenue sharing process.
Management Response:
1.6.1.10 With respect to the auditors’ observations regarding “Internal Control Weakness,”
Management wishes to provide the clarifying comments as below:
1. The prices at which seismic data can be licensed depend on the nature of the
area covered by the data – onshore; offshore; offshore deep water; offshore
ultra deep, and the level of demand from international oil companies for new oil
reserves. The areas of likely interest in Liberia today are principally offshore in
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
36 Promoting Accountability of Public Resources
the deep and ultra deep categories. These are the most expensive areas in
which to drill, and at a time of lower oil prices they are areas in which oil
companies will be relatively less interested. The prices for seismic data licensing
also depend on whether oil has been discovered in similar geological formations
in the same general area. No commercial oil discoveries have yet been made in
Liberia. Therefore no meaningful statement can be made about expected future
prices for Liberian seismic data.
2. Disclosures about seasonal effects are inappropriate because licensing of
seismic data is primarily a function of the decisions of the Government on
offering oil exploration rights to the industry.
3. In the absence of meaningful fixed prices or published prices for seismic data,
the concept of discounts is not meaningful.
1.6.1.11 NOCAL had audit rights under the 2004 agreement with TGS (section 12), the 2006 Well
Log agreement (section 5(b)(ii)), the 2009 Ultra Deep 2D agreement (section 10), the
2013 3D Agreement covering Blocks 1-5 (article VII), and the 2013 extension of the
2007 MOU (section 7). NOCAL acknowledges that the 2007 MOU did not contain an
audit right.
1.6.1.12 While it is normal practice to have an audit right, and NOCAL erred in the case of the
2007 MOU (an error that occurred many years prior to the period covered by the current
GAC audit of NOCAL), NOCAL does not agree that the presence of an audit right mean
that the supplier must provide cost invoices to NOCAL independent of the exercise of
NOCAL’s audit right. Further, it is not normal practice in the industry to require cost
invoices to be furnished outside of the context of the conduct of an audit.
1.6.1.13 NOCAL also points out that although there have been a number of questions about the
TGS accounting practices in connection with the administration of the contracts
enumerated above, none of them have related to allegations that invoices submitted did
not represent costs actually incurred. The disagreements have involved issues of
contract interpretation (what revenues are subject to sharing), or revenue side issues
(whether the proper sharing ratios have been applied to revenues received).
1.6.1.14 NOCAL acknowledges that up to the time of the recent PwC audit, NOCAL has not
effectively exercised its audit rights, and that in the future it should be more diligent in
the exercise of this right.
1.6.1.15 However, NOCAL does not agree that prudent management requires that, in the absence
of some reason to suspect that TGS is claiming unsubstantiated costs, TGS should be
required to submit to NOCAL on a regular basis each cost invoice received by TGS. Even
an outside auditor called upon to certify a company’s financial statements will normally
deliver its audit opinion based on a sampling of invoices and other general ledger data
unless the auditor finds some reason to seek a more detailed review.
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
37 Promoting Accountability of Public Resources
Auditor General’s Position
1.6.1.16 The Management of NOCAL should have exercised prudence in administering the
contracts or MOUs entered on behalf of the Government of Liberia with TGS-NOPEC
Geophysical, Company ASA (TGS) to include effective monitoring. Article 7 “Work Plan
for the New Data Acquisition” and Item 7.2 states that “TGS shall act as project manager
for the New Data Survey Project (s) and provide the following services on exclusive basis
of the Term of this Agreement”. In particular, one of the items that would be provided
per 7.2 (vii) “updated revenue received, inventory of the quantity, content and forms of
data acquired, including regular reports, maps, line of travels, short points, types of
displays, etc. and current prices thereof.”
1.6.1.17 Our stance is that there was no effective monitoring by NOCAL to make sure that TGS
complied with the terms of agreements and/or MOUs entered so that the Government of
Liberia obtained maximum value (contract interpretations, revenues, etc.) of contracts
entered. Therefore we maintain our recommendation.
1.7 Physical Verification
1.7.1 Projects Implemented by Implementing Agencies and Institutions
1.7.1.1 The Corporate Social Responsibility Policy of NOCAL under the sub caption “Social
Welfare Program (SWP)” states that “This policy places NOCAL’s commitment of
protecting the environment, upliftment of education, health and socio-economic
development as a topmost priority. All-round development of education, rural
infrastructure, primary health care, environmental protection, promotion of
sports/sportsperson, assistance welfare to youth and women organization in carrying out
community development activities are some of the key areas to be covered under “Social
Welfare Program.”
1.7.1.2 Additionally, the policy also requires that the community development scheme is aimed
at supporting the various socio-cultural activities in future areas of exploration in Liberia.
The scheme will cover the construction of roads, setting up of educational institutions
and primary health centers in the communities affected by oil explorations and other
operational areas of the company.
1.7.1.3 During the audit, we observed that the management of NOCAL through its Corporate
Social Relations Division awarded social contribution to several individuals, institutions
and communities for the construction of clinics, schools, bus terminals, housing units,
provision of laboratory equipment, etc.
1.7.1.4 During the audit, we conducted physical inspection of sampled projects sponsored by
NOCAL under its corporate social responsibility in the amounts of:
US$809,783 - Completed
US$273,533 - Incomplete
US$148,098 - Abandoned
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
38 Promoting Accountability of Public Resources
The status of each of the projects was established during the inspection. See tables 15
– 15B below for detail.
Table 15: Sample of Completed Projects Inspected
Period Beneficiary/ Payee Description of
Project
Payment
(US$) Status /Comment
2011/2012 National Housing
Authority
Sanniquellie Low
Income Housing
Sewage System
60,000.00 Sewage system
complete
2012/2013 Ministry of Education Science Lab Projects 293,902.00 Complete, but not in use
2013/2014 Ministry of Education Science Lab Projects 298,348.00 Complete, but not in use
2013/2014 National Transit
Authority/ Atlantic
Engineering &
Construction Company
Business Terminal,
Gbarnga
142,533.36 Complete, but not in use
2014/2015 Ministry of Education Science Lab Projects 15,000.00 Complete, but not in use
Total 809,783.36
Table 15A: Sample of Incomplete Projects Inspected
Period Beneficiary/ Payee Description of
Project
Payment
(US$)
Status /Comment
2011/2012 National Housing
Authority
Buchanan Low
Income Housing
Sewage System
60,000.00 Sewage system
incomplete
2011/2012 National Housing
Authority
Voinjama Low
Income Housing
Sewage System
71,000.00 Sewage system
incomplete
2013/2014 National Transit Authority/
Atlantic Engineering &
Construction Company
Business Terminal,
Bo Waterside
142,533.36 Incomplete
Total 273,533.36
Table 15B: Sample of Abandoned Projects & Equipment’s Inspected
Period Beneficiary/ Payee Description of Project Payment
(US$) Status /Comment
2011/2012 National Housing Authority 100 KVA Generator for
Voinjama Low Income
Housing Units
20,900.00 Unknown -NHA
could not provide
whereabouts of
generator
2013/2014 Grand Kru Development
Union
Ten (10) Bedroom Clinic 34,500.00 Abandoned
2013/2014 National Transit Authority/
Dougbor Group
Incorporated
Business Terminal, Kakata 92,698.41 Abandoned
Total 148,098.41
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
39 Promoting Accountability of Public Resources
Risk
1.7.1.5 The failure to utilize these assets by the intended beneficiaries could result to rapid
deterioration of them resulting to waste of government resources.
1.7.1.6 The failure of implementing agencies or institutions to fully implement the projects could
lead to the objectives of the projects not being met.
1.7.1.7 The failure of implementing agencies or institutions to account for resources could result
in the loss of government resources.
Recommendation
1.7.1.8 The Management of NOCAL should prevail upon the implementing agencies and
institutions to provide justification for the lack of use of the completed projects and
moreover.
1.7.1.9 The Management of NOCAL should prevail upon the implementing agencies and
institutions to ensure completion of all incomplete projects during the periods under
audit.
1.7.1.10 The Management of NOCAL should recover the full amounts of US$34,500.00 and
US$92,698.41 disbursed to the Grand Kru Development Union and the Dougbor Group
Incorporated, respectively, for the abandonment of the construction of the clinic in
Wropluken, Forkpoh District, Grand Kru County and the Bus Terminal in Kakata, Margibi
County.
1.7.1.11 Additionally, NOCAL should prevail on the National Housing Authority to provide the 100
KVA generator procured for use at the Voinjama Low Income Housing Units.
1.7.1.12 Going forward the Management of NOCAL should ensure that all current and future
MOUs entered into by NOCAL and other organizations should be officially communicated
to the County’s authorities so that they should be aware of projects being implemented
in areas within their jurisdictions.
Management Response
1.7.1.13 According to Article 2 of the Memorandum of Understanding (MOU), captioned “Scope of
the MOU, Roles and Responsibilities, signed by and between NOCAL and beneficiaries,
NOCAL only served as FUNDING Agency and required the relevant implementing
agencies to fully complete and utilize the projects as was agreed in their respective
contracts. Given this background, NOCAL herein provide the following comments:
a) Completed but not in use: Management acknowledges that it has fully
funded the projects listed in Table 15 above and the implementing partners have
successfully completed the works. Reference to the implementing partners listed
in Table 15 above, management is in the process of writing the Ministry of
Education and National Housing Authority to raise the issues observed by the
auditors. To date, management has written a follow-up letter to the National
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
40 Promoting Accountability of Public Resources
Transit Authority, (NTA). In response to NOCAL’s letter, the management of NTA
indicated that it has not optimized the facilities due to the inaccessibility of the
access roads to the stations. For instance, the access road to the Gbarnga
terminal requires the construction of a mini-bride to ensure smooth operations
especially during the rainy season while the Bo Waterside terminal would require
the construction of a retaining wall to mitigate the overflowing of the Mano River
into the station during the rainy season. (See Exhibit 1.8.1.4A-NTA Report)
Management would immediately engage the Ministry of Education and National
Housing Authority and would provide updates in subsequent audit.
b) Incomplete Projects: Management notes the auditor’s findings relative to the
projects listed in Table 15A above. As confirmed by the auditors, the housing
facilities have been fully completed with the exception of the sewage systems;
hence, NOCAL would work with the NHA and the contractor to ensure that the
projects are fully completed as required per the MOUs. Reference to the Bo-
Waterside bus terminal project, the final report from NTA showed that the
terminal was fully completed over two years ago. However, the building is being
undermined by erosion resulting from over flooding of the Mano River, which
occurred over for three consecutive rainy seasons. (See Exhibit 1.8.1.4A-NTA
Report)
c) Abandoned Projects: Management wants to state that the absence of the
generator at the project site does not suggest that the project was not completed
over two years ago. In fact, the auditors confirmed that NOCAL delivered the
generator at the project site but was allegedly removed by personnel of NHA.
Nevertheless, NOCAL would engage NHA to provide the status of the generator
purchased and revert to the GAC in subsequent audit.
1.7.1.14 With regards to the ten (10)-bedroom clinics in Grand Kru County, NOCAL wrote the
Chairman of Grand Kru Development Union (GKDU) to provide updates on the project.
The GKDU responded to NOCAL and provided a report supported by pictures of the
proposed building. The report highlighted that the foundation was completed but due to
the deplorable road conditions the project was delayed. According to the report, a letter
dated August 29, 2014 was sent to NOCAL to provide the balance funds to complete the
project but NOCAL declined due to limited funding in 2015. Hence, the project was
abandoned until December 2016, when the GKDU engaged the county caucus to secure
funding through the Legislative Support Program to recommence the project. The
project has commenced and was awarded to a company under LACE supervision.
1.7.1.15 Relative to the Kakata bus terminal, it was observed that first phase was completed and
amount disbursed for the second phase. According to the contractor, the Ebola Virus
Disease (EVD) outbreak in 2014 left its project manager dead, which caused it to
abandon the project site and materials. Hence, the second phase could not be fully
completed. In furtherance of NOCAL’s follow-up, a meeting was held between with the
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
41 Promoting Accountability of Public Resources
contractor, in which the contractor expressed his willingness to continue with the project
and pleaded with NOCAL to amend the expiration date of the contract in order to secure
external funding against the outstanding value of the contract and complete the second
phase. (See Exhibit 1.8.1.4B-Reports-GRDU/Dougbor Construction)
Auditor General’s Position
1.7.1.16 We acknowledge Management’s assertion on the above findings that it has begun taking
steps in ensuring that completed projects are utilized and that contacts have been made
with the relevant authorities in ensuring the re-commencement and completion of
abandoned and incomplete projects. However, it is suggested that in future, prior to
implementing corporate social responsibility projects, the Management should conduct
surveys along with the implementing partners to get the community involvement in the
selection of the projects. This would ensure that the projects are needed and can be
sustained to avoid waste of resources.
1.7.2 Land
Three Acres of Swamp Land in Oldest Congo Town
Observation
1.7.2.1 During the performance of our audit procedures, we noted that NOCAL acquired a three
(3) acre plot described on a transfer deed dated 26th day of June 2013 and located in
the Sophie Community, Tubman Boulevard, Oldest Congo Town, Montserrado County,
for the total amount of Seven Hundred Thousand United States Dollars
(US$700,000.00).
1.7.2.2 During the field verification on 16 December 2016, we observed that the 3 acre plot was
partly swampy. See photo 1 below for detail
Photo 1: Partial view of the NOCAL’s Swamp Land in Sophia, Congo Town, behind Kailondo Gas Station
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
42 Promoting Accountability of Public Resources
Seven Acres of Land Procured Along the Robertsfield Highway
1.7.2.3 Further we observed that a warranty deed, dated 23rd day of July 2014, was issued to
the National Oil Company of Liberia for the acquisition of seven (7) acres of land,
situated along the Roberts Field High-Way, Schiefflin Township, Margibi County.
Furthermore, the valued of the land was twenty seven thousand United States Dollars
(US$27,000.00).
1.7.2.4 Further, during the field verification, we observed that the 7-acre plot described above
appeared to have been encroached upon.
1.7.2.5 The inspection revealed that NOCAL’s Management did not appear to have regularly
monitored or inspected the land to detect and discourage encroachment.
Risk
1.7.2.6 The failure of the NOCAL’s Management to safeguard its asset could lead to waste of
public resources.
Recommendation
1.7.2.7 The management of NOCAL should provide justification for purchasing a partly swampy
land for $700,000.
1.7.2.8 The Management should ensure that regular inspections of all plots of land are carried
out to avoid theft and encroachment.
1.7.2.9 NOCAL’s Management should seek legal redress in order to repossess its seven acres of
land encroached upon and ensure that the land is resurveyed and all existing structures
are demolished and cornerstones erected.
1.7.2.10 Going forward, NOCAL’s Management should properly secure the lands by either building
fences around them or installing large cornerstones as well as placing “No Trespassing”
signs to deter encroachers.
Management Response
1.7.2.11 Management is pleased to confirm the auditor’s observation that the land was acquired
for US$700,000. The underlying economic decision to purchase the property predates
the current Interim Management Team (IMT) and its members; hence, the IMT has
reached out to the previous Management and solicited the clarifying comments and
justification, which they provided as follow:
1. The label used by GAC that the land is “swampy” is inappropriate. GAC has not
provided any evidence in the form of a technical evaluation report of the land to
validate its assertion. The official DEED received by NOCAL from the owner of
the land in its description does not make any reference to swampland. We think
GAC used of the phrase “swamp land” is intended to generate sensation around
the purchase of the land and not speak to the facts.
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
43 Promoting Accountability of Public Resources
2. The Board and the Management specifically targeted this property as ideally
located to construct the NOCAL Office Building Complex.
1.7.2.12 With respect to the GAC specific recommendations, beginning 2016, Management of
NOCAL has taken several corrective measures including recognizing the land acquisition
in its restated financial statements, the inclusion of the land in the Fixed Assets Register
(FAR) of the corporation and has instructed the designated unit within NOCAL follow
through with the auditor’s recommendation as stipulated under (1.8.2.8, 1.8.2.9, and
1.8.2.10). NOCAL does not agree with the recommendation of (1.8.2.7), in the absence
of incontrovertible evidence from the GAC that the land is “swampy.”
Auditor General’s Position
1.7.2.13 A letter addressed to NOCAL’s former CEO Dr. Randolph A. K. W McClain from the
Environmental Protection Agency dated 21 August 2014 confirms GAC observation that
“the parcel of Land identified in your project document is part of a major wetland
ecosystem that extends from behind the German Embassy continuing towards the
Catholic Hospital”. The communication further stated that “NOCAL should submit a
“flood migration plan” an indication that the property is wetland. Therefore, GAC’s
description is not intended to generate sensation but provides an accurate description of
the property which is supported by the EPA communication to NOCAL.
1.7.2.14 We acknowledge management’s assertion that the cost of the land has been
appropriately classified and have been included in the Fixed Assets Register. .
1.7.3 Unverified Vehicle Assets
Observation
1.7.3.1 PFM Regulations A.3. sub-regulations( 1,2 & 3) states that (1) “Any public officer
concerned with the conduct of financial matters of the Government of Liberia, or the
receipt, custody and disbursement of public and trust moneys, or for the custody, care
and use of government stores and inventories shall keep books of accounts and proper
records of all transactions and shall produce the books of accounts and records of the
transactions for inspection when called upon to do so by the Auditor- General, the
Comptroller General , the relevant internal auditor or any officers authorized by them, by
the Minister.”
1.7.3.2 During the conduct of physical inspection of NOCAL’s vehicles, it was observed that 5
vehicles w US$201,200.00 could not be verified. See table 16 below for detail
Table 16: Listing of Unverified Vehicles N0. ACQUISITION
DATE
ASSETS DESCRIPTION Serial No. ACQUISITION
COST (US$)
2011/2012
1 6-May-12 Chevrolet Captiva SUV 2011 KL1FC5EF1AB-121919 36,000.00
Sub-total 36,000.00
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
44 Promoting Accountability of Public Resources
N0. ACQUISITION
DATE
ASSETS DESCRIPTION Serial No. ACQUISITION
COST (US$)
2012/2013
2 3-Jun-13 Chevrolet Captiva SUV, Automatic KL1FC5CUOCB-092854 43,200.00
3 3-Jun-13 Renault Duster 4x4 VF1HSRC8N48255132 26,000.00
Sub-total 69,200.00
2013/2014
4 6-May-14 Toyota MHFYX59GOE8055623 48,000.00
5 6-May-14 Toyota MHFYX59GXE8055869 48,000.00
Sub-total 96,000.00
Total 201,200.00
Risk
1.7.3.3 The failure of the Management to regularly monitor and inspect fixed assets procured
may create an opportunity for individuals using these assets to divert them into personal
use, thus resulting in the loss of public resources.
Recommendation
1.7.3.4 The Management of NOCAL should update its fixed assets listing by ensuring they are
complete and accurate.
Management Response
1.7.3.5 Management notes the recommendation and herein affirms that the Fixed Asset Register
(FAR) listing has been updated and vetted by the Internal Audit Agency and GAC. The
updated FAR has been included in the restated financial statements. The vehicles noted
above are assigned to current officers at NOCAL and are available for verification.
(Please see EXHIBIT 1.8.3. Pictures of Vehicles)
Auditor General’s Position
1.7.3.6 We acknowledge Management’s assertion that the fixed assets register has been
updated to align with the general ledger. However, we note that no adjusting entry was
proposed and made for the purpose of correcting the misstatements of fixed assets in
the financial statements. We also acknowledge the existence of the vehicles.
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
45 Promoting Accountability of Public Resources
PRIOR YEAR AUDIT MATTERS NOT IMPLEMENTED
No.
Source of the finding
[Auditor General’s Report on
the Audit of the National Oil
Company of Liberia for the
periods 2008 to 2011]
Particulars of
paragraph
Prior Year Recommendations Not
Implemented
1 Management Failure to Report
Account Receivable
Paragraph 2.5.2.5 &
2.5.2.12
NOCAL's Management did not provide
information regarding follow-up with TGS-
NOPEC relative to the litigation involving the
US$6,000,842 and outcome of the follow-up
in its subsequent audit.
2 Revenue sharing ratio "Old
Data"
Paragraph 2.5.3.2 to
2.5.3.4; Page 14
The Management of NOCAL did not provide
evidence in the form of Board authorization
for the amendment of the contractual
agreement from 65%, NOCAL and TGS-
NOPEC 35% to 60% NOCAL and TGS-
NOPEC 40%.
As a result of the change in the sharing
ratio, NOCAL did not received US$272,296
in revenue.
3 Revenue Sharing ratios “New
Data "
Paragraph 2.5.4.5 &
2.5.4.6
The Management of NOCAL did not provide
material evidence to substantiate TGS-
NOPEC’s non-adherence to the August 2009
revenue sharing ratio agreement which
should have led TGS-NOPEC recovery of its
initial investment beginning with the first
sale made under the new agreement.
NOCAL should have received
US$31,737,685 instead of US$8,002,507
thus leaving a variance of US$23,735,178.
The Management did not also provide audit
report on the audit of TGS-NOPEC which
was conducted by Pricewaterhousecoopers
to the GAC during its subsequent audit.
4 2D PSDM Reprocessing Fee
Applied by TGS-NOPEC
Paragraph 2.5.5.2 &
2.5.5.6
The NOCAL's management did not provide
evidence to support the basis for which
TGS-NOPEC withheld US$400,000 as data
reprocessing fee for 2D PSDM.
The Management of NOCAL did not provide
audit report of TGS-NOPEC to verify the
outstanding amount of US$400,000 as
asserted by management in its response in
the prior year report.
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
46 Promoting Accountability of Public Resources
PRIOR YEAR AUDIT MATTERS NOT IMPLEMENTED
No.
Source of the finding
[Auditor General’s Report on
the Audit of the National Oil
Company of Liberia for the
periods 2008 to 2011]
Particulars of
paragraph
Prior Year Recommendations Not
Implemented
5 Old and New Data Work Plans
and other Provisions
Paragraph 2.5.7.2 to
2.5.7.7
The Management of NOCAL did not provide
evidence of the following to the GAC:
1. Provide assistance to establish state of
the art storage facility;
2. Old and New Data marketing plans;
3. Third party companies or clients to be
targeted for licenses; and
4. Plans, specifications and designs for
the data storage facility.
6 NOCAL’s waiver of its share of
US$1,000,000.00 invoice to
China National Offshore Oil
Company
Paragraph 2.5,8.2 &
2.5.8.8
The Management of NOCAL did not provide
evidence of Board authorization for the
waiver of its share of 65% of an invoice
amount of US$1,000,000 to China National
Offshore Oil Corporation.
7 Accounts Payable Paragraph 2.5.9.1 to
2.5.9.5
NOCAL's Management failed to disclosed
account payable during the periods
2009/2010 and 2010/2011 in the amount of
US$120,912 and US$32,197 respectively in
its financial statements.
Additionally, Management of NOCAL did not
provide evidence of proposed audit
adjusting entries.
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
47 Promoting Accountability of Public Resources
2 ANNEXURE
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
48 Promoting Accountability of Public Resources
Annexure 1: LIBERIA 2D PSDM REVENUE SHARING/150542
July 2008 through Sep 2015
Client KMs Data
Type
Invoice
Number
Invoice
Date
Fiscal
Period
Invoice
Amt
% GAC Rx -
65%
TGS CAL Variance
License Fees
Collected:
Chevron U.S.A.
6,090.71 Seismic 0002878 27/01/2010 2010
239,743 10% 155,833 23,974
131,858
Anadarko 4,543.46 Seismic 0003044 31/03/2010 2010
181,739 10% 118,130 18,174
99,956
Anadarko 893.19 Seismic 0003044 31/03/2010 2010
22,963 10% 14,926 2,296
12,630
Anadarko 893.19 Seismic 0003044 31/03/2010 2010
12,657 60% 8,227 7,594
633
Anadarko 99.24 Seismic 0003044 31/03/2010 2010
4,078 60% 2,651 2,447
204
Nexen 3,476.25 Seismic 0003028 31/03/2010 2010
104,288 60% 67,787 62,573
5,214
Chevron 6,090.71 Seismic 0003066 31/03/2010 2010
64,793 60% 42,115 38,876
3,240
Talisman 2,281.05 Seismic 0003593 28/12/2010 2011
205,294 60% 133,441 123,176
10,265
Nexen 50.14 Seismic 0003606 13/12/2011 2012
2,131 60% 1,385 1,279
107
Lukoil
Overseas West
Project
3,315.19 Seismic 0003749 21/02/2011 2011
165,759 60% 107,743 99,455
8,288
Chevron USA 3,291.56 Seismic 0003613 31/12/2010 2011
296,241 60% 192,557 177,745
14,812
Petrobras 5,492.36 Seismic 0003817 30/03/2011 2011
219,695 60% 142,802 131,817
10,985
Nexen
Petroleum
International
(003)
2,091.75 Seismic 0003880 12/05/2011 2011
104,588 60% 67,982 62,753
5,229
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
49 Promoting Accountability of Public Resources
Annexure 1: LIBERIA 2D PSDM REVENUE SHARING/150542
July 2008 through Sep 2015
Client KMs Data
Type
Invoice
Number
Invoice
Date
Fiscal
Period
Invoice
Amt
% GAC Rx -
65%
TGS CAL Variance
Amerada Hess
(025)
9,382.28 Seismic 0004085 31/08/2011 2012
375,291 60% 243,939 225,175
18,765
Dana
Petroleum
(002)
2,680.16 Seismic 0004204 09/11/2011 2012
125,968
60%
81,879 75,581
6,298
African
Petroleum
Corporation
(006)
400.00 Seismic 0004295 22/12/2011 2012
16,000
60%
10,400 9,600
800
African
Petroleum
Corporation
(006)
400.00 Seismic 0004796 09/07/2012 2013
6,353
60%
4,129 3,812
318
Talisman (006) 491.70 Seismic 0004283 20/12/2011 2012
24,585
60%
15,980 14,751
1,229
Kosmos Energy
(003)
3,315.30 Seismic 0004484 28/02/2012 2012
165,765
60%
107,747 99,459
8,288
Kosmos Energy
(004)
1,309.91 Seismic 0004690 25/05/2012 2012
52,397
60%
34,058 31,438
2,620
Talisman (007) 261.68 Seismic 0004283 29/03/2012 2012
13,084
60%
8,505 7,850
654
Tullow (006) 975.60 Seismic 0004667 16/05/2012 2012
39,024
60%
25,366 23,414
1,951
Apache Angola
(001)
4,969.35 Seismic 0004773 28/06/2012 2012
236,044
60%
153,429 141,626
11,802
BHP Billiton
Petroleum
(025)
65.59 Seismic 0004613 25/04/2012 2012
3,279
60%
2,132 1,968
164
Kosmos (SUP
007)
2,144.18 seismic 0004877 31/08/2012 2013
85,767
60%
55,749 51,460
4,288
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
50 Promoting Accountability of Public Resources
Annexure 1: LIBERIA 2D PSDM REVENUE SHARING/150542
July 2008 through Sep 2015
Client KMs Data
Type
Invoice
Number
Invoice
Date
Fiscal
Period
Invoice
Amt
% GAC Rx -
65%
TGS CAL Variance
BG
international
(SUP N004)
1,085.74 Seismic 015121 31/08/2012 2013
50,487
60%
32,816 30,292
2,524
Ecopetrol (1A) 1,134.00 Seismic 0004911 18/09/2012 2013
54,992
60%
35,745 32,995
2,750
Nexen/4717 5,618.14 Seismic ASA-
001198
20/06/2013 2013
14,937
60%
9,709 8,962
747
Ecopetrol (H-
005 / 5119)
3,032.55 seismic 002091 12/12/2013 2014
151,628
60%
98,558 90,977
7,581
Kosmos (H-010
/5310)
184.28 Seismic 002026 27/11/2013 2014
9,214
60%
5,989 5,528
461
CEPSA (H-001
n334)
seismic 003877 26/06/2015 2015
29,522
60%
19,189 17,713
1,476
Total License
Fees Collected
3,078,303
2,000,897 1,624,760
376,137
Annexure 2: LIBERIA ULTRA DEEP REVENUE SHARING/150528
July 2008 tllrough Sep 2015
NOC
AL
TGS
Name KMs Data Type Invoice
#
Invoice
Date
Fiscal
Year
Invoice
Amount
Date
Collected
% TGS CAL GAC Rx % $
License Fees
Collected:
Chevron USA
10,048.09 Seismic,
Grav/MAG
0003628 29/12/20
10
2011
3,779,425
12/1/2011 10%
377,943
377,943
90
%
3,401,483
Tallsman 1,858.01 Seismic,
Grav/MAG
0003593 17/12/20
10
2011
706,045
2/3/2011 10%
70,605
70,605
90
%
635,441
Lukoil
Overseas
1,144.31 Seismic,
Grav/Mag
0003749 21/02/20
11
2011
480,611
4/1/2011 10%
48,061
48,061
90
%
432,550
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
51 Promoting Accountability of Public Resources
Annexure 2: LIBERIA ULTRA DEEP REVENUE SHARING/150528
July 2008 tllrough Sep 2015
NOC
AL
TGS
Name KMs Data Type Invoice
#
Invoice
Date
Fiscal
Year
Invoice
Amount
Date
Collected
% TGS CAL GAC Rx % $
West Project
Petrobras 3,583.39 Seismic,
Grav/Mag
0003817 30/03/20
11
2011
1,497,856
6/7/2011 10%
149,786
149,786
90
%
1,348,070
Nexen
Petroleum
International
(003)
1,926.19 Seismic,
Grav/Mag
0003880 5/12/201
1
2012
789,737
6/20/2011 10%
78,974
78,974
90
%
710,763
KNOC {001) 75.04 Seismic 0003966 29/06/20
11
2011
30,015
9/1/2011 10%
3,002
3,002
90
%
27,014
Shell
Offshore
(002)
3,098.10 Seismic 0004052 10/08/20
11
2012
1,030,118
9/9/2011 10%
103,012
103,012
90
%
927,106
Total S.A.
(026)
1,789.61 Seismic 0004029 8/03/201
1
2011
697,949
9/28/2011 10%
69,795
69,795
90
%
628,154
Amerada
Hess {025)
3,682.57 Seismic 0004085 31/08/20
11
2011
1,469,347
11/7/2011 10%
146,935
146,935
90
%
1,322,412
Dana
Petroleum
(002)
871.42 Seismic,
Grav/Mag
0004204 11/09/20
11
2012
326,946
12/14/201
1
10%
32,695
32,695
90
%
294,252
BP Expl.
Operating
Co. (011)
4,998.15 Seismic 0004214 21/11/20
11
2012
1,942,531
21/12/201
1
10%
194,253
194,253
90
%
1,748,278
Petronas
Cariga!i Sdn.
Bhn.(012)
3,682.57 Seismic,
Grav/Mag
0004249 30/11/20
11
2012
1,469,347
23/12/201
1
10%
146,935
146,935
90
%
1,322,412
African
Petroleum
Corporation
(006)
5,000.00 Seismic,
Grav/Mag
0004295 29/12/20
11
2012
497,362
1/31/2012 10%
49,736
49,736
90
%
447,626
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
52 Promoting Accountability of Public Resources
Annexure 2: LIBERIA ULTRA DEEP REVENUE SHARING/150528
July 2008 tllrough Sep 2015
NOC
AL
TGS
Name KMs Data Type Invoice
#
Invoice
Date
Fiscal
Year
Invoice
Amount
Date
Collected
% TGS CAL GAC Rx % $
African
Petroleum
Corporation
(006)
0004295 30/12/20
11
2012
1,442,638
1/31/2012 10%
144,264
144,264
90
%
1,298,374
African
Petroleum
Corporation
158.81 Seismic,
Grav/Mag
Credit
Memo
9/07/201
2
2013
(61,610)
7/9/2012 60%
(36,966)
(36,966)
40
%
(24,644)
Anadarko
(044)
1,499.96 Seismic 0004277 15/12/20
11
2012
532,487
1/17/2012 10%
53,249
53,249
90
%
479,238
Talisman
(006)
2,333.70 Seismic,
Grav/Mag
0004283 20/12/20
11
2012
975,487
9/2/2012 10%
97,549
97,549
90
%
877,938
Tullow
Liberia
Data View 0004165 20/10/20
11
2012
15,000
9/11/2011 10%
1,500
1,500
90
%
13,500
Statoil (01) 3,997.39 Seismic,
Grav/Mag
23/12/20
11
2012
1,427,068
1/3/2011 10%
142,707
142,707
90
%
1,284,361
ExxonMobil
Exploration
Company
(077)
423.79 Seismic 0004566 23/03/20
12
2012
169,515
5/9/2012 10%
16,952
16,952
90
%
152,564
Petronas
Carigali Sdn.
Bhd. (013)
1,020.00 Seismic 0004585 13/04/20
12
2012
392,700
5/24/2012 10%
39,270
39,270
90
%
353,430
ENI S.p.A.
E&P Division
(013)
3,026.36 Seismic 0004574 30/03/20
12
2012
678,006
5/29/2012 10%
67,801
67,801
90
%
610,205
2012
472,012
60%
283,207
283,207
40
%
188,805
Kosmos
Energy (003)
660.19 Seismic,
Grav/Mag
0004579 4/10/201
2
2013
277,279
4/10/2012 60%
166,367
166,367
40
%
110,912
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
53 Promoting Accountability of Public Resources
Annexure 2: LIBERIA ULTRA DEEP REVENUE SHARING/150528
July 2008 tllrough Sep 2015
NOC
AL
TGS
Name KMs Data Type Invoice
#
Invoice
Date
Fiscal
Year
Invoice
Amount
Date
Collected
% TGS CAL GAC Rx % $
Tullow (006) 1,092.45 Seismic,
Grav/Mag
0004667 17/05/20
12
2012
447,905
6/18/2012 60%
268,743
268,743
40
%
179,162
BHP Billiton
(028)
931.6 Seismic 0004758 27/06/20
12
2012
363,329
8/23/2012 60%
217,997
217,997
40
%
145,332
Kosmos
(006)
1,298.5 Seismic,
Grav/Mag
0004755 25/06/20
12
2012
545,375
8/6/2012 60%
327,225
327,225
40
%
218,150
Ecopetrol
(1A)
941.00 Seismic 0004911 18/09/20
12
2013
383,465
11/26/201
2
60%
230,079
230,079
40
%
153,386
Exxon (H85) seismic 005172 28/12/20
12
2013
2,858,351
1/30/2013 60%
1,715,010
1,715,010
40
%
1,143,340
Inpex (16) seismic 0005204 27/12/20
12
2013
712,514
1/25/2013 60%
427,509
427,509
40
%
285,006
OMV seismic 0005207 14/12/20
12
2013
667,070
2/8/2013 60%
400,242
400,242
40
%
266,828
JOGMEC(396
0 H 003)
Seismic 001091 31/01/20
13
2013
2,180,865
2/28/2013 60%
1,308,519
1,308,519
40
%
872,346
COP (4280
H-033)
Seismic.
Grav/Mag
1332/13
27
31/03/20
13
2013
617,660
3/5/2013 60%
370,596
370,596
40
%
247,064
Kosmos
(4175
HOOS)
95.81 Seismic,
Grav/Mag
001104 2/07/201
3
2014
40,241
5/13/2013 60%
24,145
24,145
40
%
16,096
Nexen/4717 3,852.38 Seismic,
Grav/MAG
ASA-
001198
20/06/20
13
2013
43,016
6/28/2013 60%
25,810
25,810
40
%
17,207
OMV (4528
H007)
765.23 seismic 001518 10/06/20
13
2013
294,612
19/07/201
3
60%
176,767
176,767
40
%
117,845
Exxon/4510
H089
1,207.20 Seismic 001581 30/06/20
13
2013
458,736
2/8/2013 60%
275,242
275,242
40
%
183,494
Inpex
(H00214976)
2,580.64 Seismic 001670 15/08/20
13
2013
1,032,255
9/13/2013 60%
619,353
619,353
40
%
412,902
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
54 Promoting Accountability of Public Resources
Annexure 2: LIBERIA ULTRA DEEP REVENUE SHARING/150528
July 2008 tllrough Sep 2015
NOC
AL
TGS
Name KMs Data Type Invoice
#
Invoice
Date
Fiscal
Year
Invoice
Amount
Date
Collected
% TGS CAL GAC Rx % $
Ecopetrol (H-
005 I 5119)
4,473.15 seismiclgra
v mag
002091 12/12/20
13
2014
1,878,723
21/01/201
4
60%
1,127,234
1,127,234
40
%
751,489
Chevron (H-
033 I 5290}
1,273.73 selsmic/gra
v mag
002064 11/12/20
13
2014
463,552
3/18/2014 60%
278,131
278,131
40
%
185,421
Murphy (H-
00816176)
seismicfgra
vity
002742 26/06/20
14
2014
398,679
7/31/2014 60%
239,208
239,208
40
%
159,472
Total (H-045
f 5762)
1,112.10 seismic/gra
v mag
002566 15/04/20
14
2014
483,764
11/20/201
4
60%
290,258
290,258
40
%
193,505 Total License
Fees Collected
34,907,984
10,769,695
10,769,695
24,138,289
Recovered Amount Sum of a =
18,315,171
Maximum Recovery per
Agreement
17,255,000
Excess Recovery 1,060,171
NOCAL Share of Excess Cost
Recovered
636,103
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
55 Promoting Accountability of Public Resources
Annexure 3: LIBERIA 2D PSTM REVENUE SHARING/150115; 150397 Rate per
Agreement
65%
July 2008 through 2015
Client GAC NOCAL
License Fees
Collected: KMs Data Type
Invoice
Number
Invoice
Date
Fiscal
Period Invoice Amount % $ GAC Rx Variance
Total S.A. 699.98 Seismic 0001495 30/05/2008 2008
378,000 60%
226,800 245,700
(18,900)
Total S.A. 699.98 Interpretation
Report
0001495 3/07/2008 2008
90,000 60%
54,000 58,500
(4,500)
Tullow 4244.14 Seismic 0001765 15/10/2008 2008
1,358,124 60%
814,875 882,781
(67,906)
Tullow 4244.14 Grav/Mag 0001765 15/10/2008 2009
84,883 60%
50,930 55,174
(4,244)
Tullow 4244.14 Interpretation
Report
0001765 15/10/2008 2009
70,000 60%
42,000 45,500
(3,500)
Anadarko Petroleum
Corp
992.44 Seismic 0001937 17/12/2008 2009
372,164 60%
223,299 241,907
(18,608)
ConocoPhillips 6396.90 Seismic 0002328 18/05/2009 2008
1,791,132 60%
1,074,679 1,164,236
(89,557)
BP Exploration
Operating
2819.89 Seismic 0002331 19/05/2009 2009
704,972 60%
422,983 458,232
(35,249)
BP Exploration
Operating
2728.76 Grav/Mag 0002331 19/05/2009 2009
54,575 60%
32,745 35,474
(2,729)
Anadarko Petroleum
Corp
803.33 Grav/Mag 0002386 23/06/2009 2009
16,067 60%
9,640 10,443
(803)
Maralhon Oil 1421.63 Seismic 0002512 31/08/2009 2010
525,996 60%
315,598 341,898
(26,300)
StatoilHydro 3440.55 Seismic 0002580 30/09/2009 2010
1,082,053 65%
703,334 703,334
0
StatoilHydro 3354.00 GravfMag 0002580 30/09/2009 2010
60,372 65%
39,242 39,242 -
StatoilHydro 267.05 Seismic 0002580 30/09/2009 2010
83,987 65%
54,592 54,592
0
Chevron U.S.A. (First
Payment)
6090.71 Seismic 0002581 30/09/2009 2010
146,113 65%
94,973 94,973 -
Repsol 2226.86 Seismic 0002675 30/11/2009 2010
793,130 65%
515,535 515,535
0
StatoilHydro 289.54 Seismic 0002610 28/10/2009 2010 65% 59,189
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
56 Promoting Accountability of Public Resources
Annexure 3: LIBERIA 2D PSTM REVENUE SHARING/150115; 150397 Rate per
Agreement
65%
July 2008 through 2015
Client GAC NOCAL
91,060 59,189 (0)
StatoilHydro 149.44 Grav/Mag 0002610 28/10/2009 2010
2,690 65%
1,748 1,748
(0)
Nippon Oil 723.49 Seismic 0002762 12/11/2009 2010
312,708 65%
203,260 203,260
0
Marathon Oil 1763.29 Seismic 0002841 30/12/2009 2010
678,866 65%
441,263 441,263
(0)
Total S.A. 1348.31 Seismic 0002674 25/11/2009 2010
494,241 65%
321,257 321,257
(0)
Chevron U.S.A.
(Second Pi:iyment)
6090.71 Seismic 0002877 26/01/2010 2010
1,515,224 65%
984,896 984,896
(0)
Chevron U.S.A. 6090.71 Grav/Mag 0002878 27/01/2010 2010
47,949 65%
31,167 31,167
(0)
StatoilHydro 891.19 Seismic 0002781 21/12/2009 2010
280,278 65%
182,181 182,181
0
Nexen 3476.25 Sefsmic 0003028 31/03/2010 2010
910,778 65%
592,006 592,006 -
Nexen 3335.47 Grav/Mag 0003028 31/03/2010 2010
53,368 65%
34,689 34,689 -
Chevron U.S.A.
(Third Payment)
6090.71 Seismic 0003066 13/04/2010 2010
409,505 65%
266,179 266,179
0
Chevron U.S.A. 6090.71 Grav/Mag 0003066 13/04/2010 2010
12,959 65%
8,423 8,423 -
Statoil-Hydro 3137.25 Seismic 0003152 20/05/2010 2010
988,234 65%
642,352 642,352 -
Hongkong Tongtai 4000.01 Seismic 0003092 30/04/2010 2010
355,000 65%
230,750 230,750 -
CNOOC 4000.01 Seismic 0003092 30/04/2010 2010
510,000 65%
331,500 331,500 -
CNOOC partner fee
waived by NOCAL
Seismic
(350,000) (350,000) -
African Petroleum
Corporation
0003244 7/12/2010 2011
619,468 65%
402,654 402,654 -
Talisman 2281.05 Seismic &
Grav/Mag
0003593 28/12/2010 2011
684,315 65%
444,805 444,805 -
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
57 Promoting Accountability of Public Resources
Annexure 3: LIBERIA 2D PSTM REVENUE SHARING/150115; 150397 Rate per
Agreement
65%
July 2008 through 2015
Client GAC NOCAL
Nexen 50.14 Seismic 0003606 13/12/2010 2011
16,195 65%
10,527 10,527 -
Lukoil Overseas West
Project
3315.19 Seismic,
Grav/Mag
0003749 21/02/2011 2011
1,359,676 65%
883,789 883,789 -
Petronas Carlgali
Overseas
5051.85 Seismic 0003734 22/02/2011 2011
1,869,184
65%
1,214,970 1,214,970 -
Chevron USA 3291.56 Selsmlc &
Grav/Mag
0003613 31/12/2010 2011
671,866
65%
436,713 436,713
(0)
Petrobras Seismic &
Grav/Mag
0003817 30/03/2011 2011
2,037,459
65%
1,324,348 1,324,348 -
Hess (020) 5051.85 Seismic 0003876 5/06/2011 2011
1,682,266
65%
1,093,473 1,093,473 -
Nexen Petroleum
!nternational (003)
2091.75 Seismic 0003880 5/12/2011 2012
763,489
65%
496,268 496,268
0
KNOC (001) 324.64 Seismic 0003966 29/06/2011 2011
123,362
65%
80,185 80,185 -
Liberia Japan
Petroleum Ltd. (002)
5535.90 Seismic &
Grav/Mag
0004069 29/08/2011 2012
2,103,642
65%
1,367,367 1,367,367 -
Petronas Carlgali
Sdn. Bhn.(009)
143.06 Seismic 0004054 16/08/2011 2012
52,933
65%
34,406 34,406 -
Total S.A. (026) 426.52 Seismic 0004029 8/03/2011 2011
157,814
65%
102,579 102,579 -
Shell Offshore {002) 3598.01 Seismic 0004052 10/08/2011 2012
1,086,599
65%
706,289 706,289 -
KNOC (002) 172.57 Seismic 0004063 26/08/2011 2012
65,578
65%
42,626 42,626 -
Amerada Hess (025) 4330.43 Seismic &
Grav/Mag
0004085 31/08/2011 2012
1,599,987
65%
1,039,992 1,039,992
(0)
Petronas Carigali
Sdn. Bhn. (01OJ
817.88 Grav/Mag 0004166 25/10/2011 2012
14,722
65%
9,569 9,569 -
Dana Petrleum (002) 2637.68 Seismic &
Grav/Mag
0004204 9/11/2011 2012
848,166
65%
551,308 551,308
0
License Fees
Collected:
.
- -
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
58 Promoting Accountability of Public Resources
Annexure 3: LIBERIA 2D PSTM REVENUE SHARING/150115; 150397 Rate per
Agreement
65%
July 2008 through 2015
Client GAC NOCAL
Peppercoast
Petroleum (004)
143.06 Grav/Mag 0004262 7/12/2011 2012
3,577
65%
2,325
2,325 -
Petronas CarigaH
Sdn. Bhn.(012)
4187.36 Seismic &
Grav/Mag
0004249 30/11/2011 2012
1,539,896 65%
1,000,932 1,000,932 -
African Petroleum
Corporation (006)
400.00 Seismic &
Grav/Mag
0004295 22/12/2011 2012
137,200 65%
89,180 89,180 -
Talisman Energy
(006)
491.70 Seismic &
Grav/Mag
0004283 20/12/2011 2012
159,446 65%
103,640 103,640
(0)
Kosmos Energy
(003)
3315.15 Seismic &
Grav/Mag
0004484 28/02/2012 2012
1,326,117 65%
861,976 861,976 -
Talisman Energy
(007)
261.68 Seismic &
Grav/Mag
0004570 29/03/2012 2012
99,437 65%
64,634 64,634
0
ENI S.p.A. E&P
Division (013)
2537.40 Seismic 0004574 30/03/2012 2012
926,151 65%
601,998 601,998 -
African Petroleum
Corporation (007)
1839.07 Grav/Mag 0004584 12/04/2012 2012
27,586 65%
17,931 17,931 -
Peppercoast
Petroleum (004)
143.06 Grav/Mag 0004262 7/12/2011 2012
(3,577) 65%
(2,325) (2,325) -
Kosmos Energy
(004)
1309.91 Seismic &
Grav/Mag
0004690 25/05/2012 2012
504,316 65%
327,805 327,805 -
Tullow (006) 975.60 Seismic &
Grav/Mag
0004667 16/05/2012 2012
368,777 65%
239,705 239,705 -
African Petro (008) 1156.08 seismic 0004741 13/06/2012 2012
32,408 65%
21,065 21,065 -
Apache Angola (001) 4969.35 Seismic &
Grav/Mag
0004773 28/06/2012 2012
1,893,322 65%
1,230,659 1,230,659 -
Apache Angola (001) 4969.35 interpretation 0004773 28/06/2012 2012
45,000 65%
29,250 29,250 -
BHP Billiton
Petroleum (025)
1274.85 Seismic &
Grav/Mag
0004613 25/04/2012 2012
447,510 65%
290,881 290,881
0
African Petroleum
Corporation (006)
1079.39 Seismic &
Grav/Mag
0004796 7/09/2012 2013
61,610 65%
40,046 40,046
(0)
African Petroleum
Corporation (006)
Seismic &
Grav/Mag
0004796 9/07/2012 2012
(6,353) 65%
(4,129) (4,129)
0
Kosmos (SUP 007) 2144.18 Seismic & 0004877 31/08/2012 2013 65% 536,580
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
59 Promoting Accountability of Public Resources
Annexure 3: LIBERIA 2D PSTM REVENUE SHARING/150115; 150397 Rate per
Agreement
65%
July 2008 through 2015
Client GAC NOCAL
Grav/Mag 825,508 536,580 (0)
BG international
(SUP N004)
1085.74 Seismic 0015121 31/08/2012 2013
379,870 65%
246,916 246,916
0
Ecopetrol {1A) 2268.00 Seismic &
Grav/Mag
0004911 18/09/2012 2013
439,934 65%
285,957 285,957
0
Inpex (1B) seismic 0005204 27/12/2012 2013
514,204 65%
334,233 334,233
(0)
JOGMEC(3960 H
003)
Seismic 0001091 31/01/2013 2013
1,931,262 65%
1,255,320 1,255,320
0
OMV seismic 0005207 14/12/2012 2013
404,567 65%
262,969 262,969
(0)
Kosmos (4175 H009} 184.28 seismic/gravit
y
0001104 2/07/2013 2014
73,710 65%
47,912 47,912 -
Nexen/4717 8953.61 seismic/gravit
y
ASA-001198 20/06/2013 2013
72,672 65%
47,237 47,237
(0)
OMV (4528 HOO?) 1070.44 seismic 0001518 10/06/2013 2013
396,062 65%
257,440 257,440
0
Inpex (H002/4976) 3130.35 seismic 0001670 15/08/2013 2014
1,189,533 65%
773,196 773,196 -
Ecopetrol (H-005
15119)
3032.55 seismic/gravit
y
0002091 12/12/2013 2014
1,213,020 65%
788,463 788,463 -
Murphy {H--
008/6176)
seismic/gravit
y
0002742 26/06/2014 2014
791,567 65%
514,518 514,518
(0)
CEPSA (H-001 n334) seismic/gravit
y
0003877 26/06/2015 2015
262,360 65%
170,534 170,534 -
TotalLicense Fees
Collected
46,087,840
29,334,800 29,607,096
(272,296)
Data View Fees
Collected:
- -
Hongkong Tongtai Data View 0003092 26/09/2008 2009
135,000 60%
81,000 87,750
(6,750)
Kosmos {AS) Data View 5/11/2012 2013
95,000 65%
61,750 61,750 -
230,000
142,750 149,500
(6,750)
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
60 Promoting Accountability of Public Resources
Annexure 3: LIBERIA 2D PSTM REVENUE SHARING/150115; 150397 Rate per
Agreement
65%
July 2008 through 2015
Client GAC NOCAL
FeesInvoiced Not
Collected:
- -
Mittal Investments Data View 0001460 20/05/2008 2008
135,000 65%
87,750 87,750 -
Total Invoiced Not
Collected
135,000
87,750 87,750 -
Total All 46,452,840 29,565,300 29,844,346 (279,046)
Annexure 4: Other Reproduction Charges “3D Data”
Client KMs Data
Type
Invoice
Number
Invoice
Date Fiscal Year
Amount
Invoiced
Reproduction & Other
Charges
Chevron - 11 & 12 3013 Seismic 3359 9/3/2010 2011 4,590,000 64,500
Chevron - 14 1900 Seismic 3359 9/3/2010 2011 2,550,000 -
Chevron - 13 & 14 1500 Seismic 3613 12/31/2010 2011 2,550,031 316,468
Anadarko Petroleum Corp - 8 & 9 4855.9 Seismic 4203 11/9/2011 2012 5,644,638 355,362
Amerada Hess - 11 & 12 1547.5 Seismic 4573 3/22/2012 2012 3,095,084 -
Amerada Hess - 8 & 9 2442.5 Seismic 4540 3/22/2012 2012 4,884,952 -
ENI (A0) - 11 & 12 3013.4 Seismic 4906 9/13/2012 2013 5,424,196 614,735
ENI (A1) - 14 2024.5 Seismic 4907 9/13/2012 2013 3,198,688 413,482
Hess - 8 & 9 SUP 34 2442.5 Seismic 5085 11/30/2012 2013 488,492 511,508
Chevron 8 & 9 (H23) 2442.5 Seismic 5155 12/17/2012 2013 4,884,916 295,799
Exxon (3079 H079) - 13 2022.2 1459 5/21/2013 2013 4,044,322
Chevron 8 & 9 (H23) 5155 2013
Exxon (3079 H079) - 13 1459 2013
Chevron 8 & 9 (H23) DM 2442.5 repro 5155 2013 211,462
Exxon (3079 H079) - 13 DM 2022.2 repro 1459 2013 49,532
Total 41,616,312 2,571,855
TGS' Share 60% 1,543,113
NOCAL's Share 40% 1,028,742
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
61 Promoting Accountability of Public Resources
Annexure 5: Revenue Sharing Ratios" 3D Data "Cost Recovery"
GAC RECAL
15% 40% 60%
Client KMs Data
Type
Invoi
ce
Num
ber
Invoice
Date
Fisca
l
Year
Amount
Invoiced Audited Amount
Reproduction
Charges
RECOVERED
COST
Managem
ent fees
NOCAL
SHARE
TGS
SHARE
RECOVER
ED COST
Anadarko
Petroleum
Corp - 15 2243 Seismic 1910 12/5/2008 2009 1,478,969 1,492,454 13,485 1,286,060 192,909 77,164 115,745 1,286,060
Anadarko
Petroleum
Corp - 16 1930 Seismic 1911 12/5/2008 2009 1,272,582 1,284,189 11,607 1,106,593 165,989 66,396 99,593 1,106,593
Anadarko
Petroleum
Corp - 17 1801 Seismic 1912 12/5/2008 2009 1,187,522 1,198,355 10,833 1,032,628 154,894 61,958 92,936 1,032,628
Anadarko
Petroleum
Corp - 15 2243 Seismic 1924 12/16/2008 2009 2,957,942 2,984,908 26,966 2,572,124 385,819 154,327 231,491 2,572,124
Anadarko
Petroleum
Corp - 16 1930 Seismic 1925 12/16/2008 2009 2,545,168 2,568,378 23,210 2,213,190 331,978 132,791 199,187 2,213,190
Anadarko
Petroleum
Corp - 17 1801 Seismic 1926 12/16/2008 2009 2,375,047 2,396,709 21,662 2,065,259 309,789 123,916 185,873 2,065,259
Anadarko
Petroleum
Corp - 15 2243 Seismic 1984 12/29/2008 2009 2,957,942 2,984,908 26,966 2,572,124 385,819 154,327 231,491 2,572,124
Anadarko
Petroleum
Corp - 16 1930 Seismic 2114 2/6/2009 2009 2,545,168 2,568,378 23,210 2,213,190 331,978 132,791 199,187 2,213,190
Anadarko
Petroleum
Corp - 17 1801 Seismic 2115 2/6/2009 2009 2,375,047 2,396,709 21,662 2,065,259 309,789 123,916 185,873 2,065,259
Anadarko
Petroleum
Corp - 15 2243 Seismic 2221 3/26/2009 2009 2,957,942 2,984,908 26,966 2,572,124 385,819 154,327 231,491 2,572,124
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
62 Promoting Accountability of Public Resources
Annexure 5: Revenue Sharing Ratios" 3D Data "Cost Recovery"
GAC RECAL
15% 40% 60%
Anadarko
Petroleum
Corp - 16 1930 Seismic 2222 3/26/2009 2009 2,545,168 2,568,378 23,210 2,213,190 331,978 132,791 199,187 2,213,190
Anadarko
Petroleum
Corp - 17 1801 Seismic 2223 3/26/2009 2009 2,375,047 2,396,709 21,662 2,065,259 309,789 123,916 185,873 2,065,259
Anadarko
Petroleum
Corp - 15 2243 Seismic 2287 4/30/2009 2009 2,957,942 2,984,908 26,966 2,572,124 385,819 154,327 231,491 2,572,124
Anadarko
Petroleum
Corp - 16 1930 Seismic 2288 4/30/2009 2009 2,545,168 2,568,378 23,210 2,213,190 331,978 132,791 199,187 2,213,190
Anadarko
Petroleum
Corp - 17 1801 Seismic 2289 4/30/2009 2009 2,375,047 2,396,709 21,662 2,065,259 309,789 123,916 185,873 2,065,259
Anadarko
Petroleum
Corp - 15 2243 Seismic 2931 2/12/2010 2010 1,478,953 1,492,454 13,501 1,286,046 192,907 77,163 115,744 1,286,046
Anadarko
Petroleum
Corp - 16 1930 Seismic 2933 2/12/2010 2010 1,272,566 1,284,189 11,623 1,106,579 165,987 66,395 99,592 1,106,579
Anadarko
Petroleum
Corp - 17 1801 Seismic 2934 2/12/2010 2010 1,187,506 1,198,355 10,849 1,032,614 154,892 61,957 92,935 1,032,614
Oranto - 11
& 12 3013 Seismic 2184 3/4/2009 2009 2,264,583 - -2,264,583 1,969,203 295,380 118,152 177,228 1,969,203
African Petro
H -001 - 8 &
9 5050 Seismic 2917 1/31/2010 2010 2,500,000 2,500,000
- 2,173,913 326,087 130,435 195,652 2,173,913
Oranto - 11
& 12 3013 Seismic 2184 3/4/2009 2009 6,735,417 9,000,000 2,264,583 5,856,884 878,533 351,413 527,120 5,856,884
Oranto - 11
& 12 3013 Seismic 2677 11/30/2009 2010 9,000,000 9,000,000
- 7,826,087
1,173,91
3 469,565 704,348 7,826,087
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
63 Promoting Accountability of Public Resources
Annexure 5: Revenue Sharing Ratios" 3D Data "Cost Recovery"
GAC RECAL
15% 40% 60%
African Petro
H -001 - 8 &
9 5050 Seismic 2917 2/17/2010 2010 1,744,600 1,744,600
- 1,517,043 227,557 91,023 136,534 1,517,043
African Petro
H -001 - 8 &
9 5050 Seismic 3006 3/22/2010 2010 4,732,200 4,732,200
- 4,114,957 617,243 246,897 370,346 4,114,957
African Petro
H -001 - 8 &
9 5050 Seismic 3067 4/13/2010 2010 6,122,600 6,122,600
- 5,324,000 798,600 319,440 479,160 5,324,000
African Petro
H -001 - 8 &
9 5050 Seismic 3141 5/7/2010 2010 6,327,200 6,327,200
- 5,501,913 825,287 330,115 495,172 5,501,913
African Petro
H -001 - 8 &
9 5050 Seismic 3201 6/8/2010 2010 3,073,400 3,073,400
- 2,672,522 400,878 160,351 240,527 2,672,522
Oranto - 14
1900 Seismic 2678 11/30/2009 2010 4,000,000 4,000,000
- 3,478,261 521,739 208,696 313,043 3,478,261
Oranto - 14
1900 Seismic 3361 9/7/2010 2011 6,000,000 6,000,000
- 5,217,391 782,609 313,043 469,565 5,217,391
Broadway -
13/Pepperco
ast 2000 Seismic 3879 2011
15,000,00
0 15,000,000
- 13,043,478
1,956,52
2 782,609
1,173,9
13
13,043,47
8
African Petro
H -001 - 8 &
9 5050 Seismic 3823 4/5/2011 2011 1,250,000 1,250,000
- 1,086,957 163,043 65,217 97,826 1,086,957
108,140,730 359,250 94,035,417 14,105,313 5,642,125 8,463,188 94,035,417
TOTAL COST TO RECOVER 84,756,668
Excess Cost Recovered 9,278,749
Amount Due to NOCAL 3,711,500
Anadarko - Other fees 359,250
Amount Due to NOCAL 143,700
Total amount due NOCAL 3,855,200
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
64 Promoting Accountability of Public Resources
Annexure 6: Redacted Invoices
Invoice Number Fiscal year Amount Not Traced to Rev. Sharing
Schedule (US$)
4054 2012 2,146.00
4204 2012 859,929.19
4166 2012 8,940.00
4690 2012 40,947.25
4283 2012 840,482.01
4574 2012 1,183,803.05
4667 2012 37,302.22
4741 2012 2,486.12
4773 2012 3,291,591.20
4613 2012 1,540,730.05
4877 2013 30,446.37
12612 2013 960,643.12
4911 2013 2,311,079.20
5204 2013 564,829.54
1091 2013 87,874.16
5207 2013 471,827.64
1198 2013 73,230.58
2091 2014 283,446.00
3880 2011 1,399,944.94
3606 2011 111,336.00
3817 2011 5,993,793.50
2580 2010 2,673,083.82
3593 2011 1,554,346.00
1765 2009 21,000.60
2331 2009 1,627,931.96
4295 2012 3,099,600.00
4277 2012 17,513.31
4566 2012 333,996.89
4758 2012 2,683,990.00
1327 2013 2,117,380.25
633 2013 621,645.92
Total 34,847,296.89
Management Letter on the Restated Financial Statement Audit Of The National Oil Company of Liberia For The Periods Ended 1 July 2011 to 30 June 2015
65 Promoting Accountability of Public Resources
Annexure 7: Sampled Consultancy Services Awarded in Non-compliance with PPC Act
Date Payee Check # Amount (US$)
2011/2012
11/30/2011 Fodee Kromah 00802787 4,500
11/30/2011 Jacob S. Sandike 00802744 3,150
12/31/2011 Albert T. Chie 00000031 3,600
12/31/2011 Fodee Kromah 00000032 4,500
12/31/2011 Jacob S. Sandike 00000033 3,150
12/31/2011 Devin Corp 00000051 5,460
12/31/2011 Jacob Kabakole 00000111 18,000
12/31/2011 ESL Consulting ltd ESL Consulting ltd 139,046
12/31/2011 Albert T. Chie 802786 3,600
5/31/2012 Albert T. Chie 1181 3,600
6/30/2012 Coastal Energy 1387 48,500
6/30/2012 F.Kromah 1463 4,500
6/30/2012 F.Kromah 1182 4,500
Sub-total 246,106
2012/2013
11/23/2012 Albert T. Chie A02659 3,600
5/2/2013 Samuel P. Jackson A00004054 4,500
5/2/2013 Stanley Seakor A00004053 4,500
6/4/2013 Stanley Seakor A00004344 4,500
6/4/2013 Samuel P. Jackson A00004346 4,500
Sub-total 21,600
2013/2014
11/1/2013 Samuel P. Jackson 5533 4,500
11/18/2013 ORION CONSULTANCY 5634 30,000
12/2/2013 Stanley Seakor 5771 4,500
12/2/2013 Samuel P. Jackson 5772 4,500
12/2/2013 Albert Chie 5770 5,535
12/18/2013 Albert Chie 5931 5,535
5/13/2014 Stanley Seakor 6946 4,500
6/9/2014 Stanley Seakor 7072 4,500
6/24/2014 Albert T. Chie 7199 5,535
6/30/2014 Stanley Seakor 7296 4,500
6/30/2014 Albert T. Chie 7285 5,535
Sub-total 79,140
2014/2015
11/26/2014 Peter Harrington Wire Transfer 8,249
11/26/2014 Susan Maples Wire Transfer 6,981
5/18/2015 Albert T. Chie A8679 9,840
6/25/2015 Heritage Communication A8860 43,000
Sub-total 68,070
Total 414,915
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