The Analyst (Monrovia)

ANALYSIS
3 March 2008
Posted to the web 3 March 2008


Firestone Rubber Plantations Corporation (FPCO), the largest American investment in Africa south of the Sahara, recently negotiated with NTGL an 86-year addendum to the 99-year concessionaire agreement it signed with the Charles D.B. King Administration back in 1926.

Many in the human rights community rejected the addendum or the idea of it, given Firestone's alleged 'inhumane treatment of its employees". They wanted it scrapped or fixed to reflect the reality of present-day Liberia and international business and trade profiles.  


The government has released a "Summary of the Main Changes Brought About by the government of Liberia's Review of the 2005 Concession Agreement with Firestone Liberia Inc." While nothing is heard from that community yet, observers say the "changes" show marked improvement.

The Analyst Staff Writer has been testing the observation.

Observers say taken at face value, a document released last week by government indicates that "Firestone has put on human face, conceding graciously to critical positions held by rights advocates" over the last several years.

They say the document indicates that Firestone has finally conceded its role as partner to the socio-economic growth of Liberia through the provision of assistance to Liberian farmers and by providing growth incentives to plantation workers.

The document: "Summary of the Main Changes Brought About by the Government of Liberia's Review of the 2005 Concession Agreement with Firestone Liberia Inc." on which the conclusion is based, outlined changes made from the NTGL-FPCO 2005 negotiation in14 thematic areas related to Firestone's operations in Liberia.

According to it, Firestone's stay in Liberia beyond the current term that expires in 2025 will now extend to 2041, covering a "Rehabilitation Term and Regular Term".

The 2005 NTGL agreement, in contrast, covered a "Rehabilitation, Regular, and Extended Term" and extended Firestone's stay by 86 years up to 2091 without requiring the company to acknowledge the Liberian government's ownership of all rubber trees and other non-movable assets in production area at the termination of the agreement.

Instead of being free to engage without limit in the production and utilization of agriculture products in Liberia, according to the "changes" document, Firestone is now limited to the production and utilization of rubber and rubber products in the production area.

Observers say what that means is not exactly clear, but there is plan by parties to the agreement to prepare a map that will confirm Firestone's total concession area of 118,990 acres and no more.

The 1926 agreement, negotiated by then Secretary of State Edwin Barclay under the pressure of the US State Department granted Firestone a one million acre concession for a 99-year period.

The "changes" document is silent on how much of the 1,000,000 acres, which cover 4% of the country's territory, represents nearly 10 per cent of the arable land, exempted from all present and future taxes, and over which Firestone has unlimited rights, has been utilized thus far.

Firestone's tax exempt derived from a Harvey Firestone's negotiated loan agreement that turned Liberia de facto into an American protectorate and initially compelled the government to promise to encourage, support or assist the efforts of the Firestone Company to maintain an adequate labour supply.

But all that is now gone with the company agreeing to use government's airports, harbor, port or similar facilities without special tax considerations or un-negotiated or unsolicited exemptions as agreed to in the 2005 agreement, the "changes" document says.

Contrary to the past when the prices of rubber were the exclusive decision of Firestone and its affiliates subject to a 90-day revision by government, such decision will now be determined by reference to available international reference prices or indices.  

"For dry rubber, the export sales price shall be based on the daily closing price on the Singapore Commodity Exchange ("SICOM") of TSR20. For latex concentrate, the export sales price shall be based on the daily noon day price on the Malaysian Rubber Board ("MRB") for latex in bulk concentrate," the "changes" document says.

It says when the agreement comes into effect the purchase price to Liberian rubber farmer will be based on international index (SICOM for dry rubber or MRB for latex) export sales price less cost of sale incurred by Firestone Liberia and a reasonable mark-up.

"Allocations used in computing deductible costs and Firestone Liberia's markup subject to government review," the new agreement indicates.

The purchase price of rubber from Liberian rubber farmers had been derived by taking the average of prices received by Firestone Liberia for the same type of rubber less the cost of conversion, processing, transportation, taxes and duties, administrative and production overhead, and reasonable profit.

The wrestling of exclusive power to set the price regime from the hands of Firestone, a local rubber farmer told this paper, promises a new growth for the Liberian rubber industry. "We will now get something from our labor unlike the past when we depended on Firestone to determine what we get for our rubber."

But that's seems not to be the only improvements in the pipeline for Liberian rubber farmers.

"During the Rehabilitation Term, Firestone Liberia [is] to provide 700,000 rubber stumps per year of the same quality it uses for its own replanting to qualified Liberian rubber farmers free of charge. Firestone Liberia [is] to sell, at its own cost, farm supplies to qualified Liberian rubber farmers.

Firestone Liberia [is] to contribute $50,000 to independent study to be commissioned by the Ministry of Agriculture on ways to support and enhance the rehabilitation of the natural rubber industry in Liberia and to assist small holder," the "change" document notes.

Water and sanitation, besides improvement in wage and reduction in work quota, has been a critical point of workers' discontent in recent plantation unrests, but there are indications that even that will be diffused by the negotiated changes.

Instead of providing access to clean and safe drinking water to all residential communities within the production area prior to the end of 2015 in keeping with previous agreement, Firestone now commits itself to providing potable water at the rate of at least one well per every 30 houses.

"[Firestone has agreed] that each household in the Production Area will by Dec. 31, 2011 have a bathroom or safe and sanitary latrine," the "changes" document further discloses.

Besides, it noted, the company has agreed to construct 2,300 new houses, meeting Firestone Liberia's improved housing standard by Dec. 31, 2010. This new commitment will provide one house for each Firestone Liberia employee entitled to housing by 2015.

Prior to this, according to document, the company will renovate all damaged and older housing intended for habitation to conform to basic features of Firestone's improved housing standard by Dec. 31, 2017.

Firestone has previously committed itself to providing education for employees' registered children at least to grade nine with responsibility to operate and maintain Harbel Multilateral subject to approval of government, but now it will run secondary-level schools plus more.

"In addition to completing construction on its own schools through the high school level, Firestone Liberia shall provide financial assistance to the Harbel Multilateral High School of a $165,000 over a three year period from 2008 to 2011," the document discloses.

More than that, it says, the company is obliged to contribute $35,000 annually through 2015 to a government administered and operated adult education program in the production area, with priority for dependent spouses.

"Additionally, Firestone Liberia [is] to provide $115,000 through 2015, and thereafter $150,000 annually in scholarships for Liberian citizens, with a quarter of such amount to be reserved for Margibi County students. Firestone Liberia [is] to provide $50,000 annually to the University of Liberia's College of Agriculture," it says further about education aid.

The "changes" document says the company will not only provide preferential employment opportunities for qualified Liberians up to 50% of senior management positions in 10 years, but that it will also provide on-the-job and vocational training for Liberian citizens as required by its operations and qualify them for employment positions.

The FPCO, according to the "change" document, is committed to investing $10 million in a rubber wood facility to produce sawn timber, kiln dried lumber and veneer.

The expected start date for the main plant is in June this year with initial employment of 500 persons and potential increment to 1,000. The company had no such or other commitment such as the construction and operation of tyre factory, in previous agreement, analysts have found.

The annual rental fee for government land which was in the concession of 50 cents per acre and subject to upward adjustment in 10 years, the "change" document says, is now $2.00 per acre for a total of $237,980.

"Rental rate to be adjusted for inflation once every 5 years using U.S. Implicit Price Deflator," the "change" document says further.

Analysts say where the negotiated "change" scored high in the many thematic areas including Conduct of Operations, Education Employment, Training and Use of Liberian Products and Services, Manufacturing, Community Resources and Support for Liberian Farmers, Adequate Capital, and Income Taxation, etc., it was a long shot from satisfactory in the areas of employee's welfare, public health and safety and environmental measures.

Firestone's operations, they say, have polluted the Farmington River in Margibi Country for well over eight decades and wreaked irreparable damage to the river's marine life thereby posing life-threatening danger to Liberian residing on the river's banks.

Despite this, they noted further, the agreement seemed contented with making FPCO to simply acknowledge Liberian environmental legislation regulating the concessionaire's obligation and agreeing to report annually the status of its environmental management plan as required under the Environmental Protection Management Law of Liberia.

"The urgency of removing tons of toxins from that river in order to return residents to Owen's Grove and surrounding villages does not seem to bother the government and FPCO.

But it's serious. Instead of pledging to enforce the environmental law, the government settled for an annual report from a company that for several years sees nothing wrong with dumping tons of sulfuric acid and ammonia into the river through giant pipes," said Margibi County university student Peter Samuels.

He said the government should have negotiated the cleaning of the river and compensation for residents. "If the government and company continue to play hanky-panky with that issue, one day it will blow out of proportion and embarrass everyone," he warned.

Besides the silence on what observers called the massive pollution of the Farmington River is the issue of improved salaries for plantation workers that had been the core issue for agitation in recent years for improved wages, water and sanitation conditions, and education.

"Neither the 2005 NTGL agreement nor the current 2008 negotiated change said anything about the improvement in the workers' wages. This has been a hotly contested issue. It sets the plantation on edge and that draws our attention to the character of that company concerning its regards for human rights and service to humanity," said Morley Thomas of Margibi County who claimed to be a rights advocate.

The contention has largely centered on the argument that FPCO was paying each employee a daily wage of $3.19 before deductions for a task considered "colossal and impossible to complete by one person.

International Labor Rights Fund (ILRF) said in a recent report that each plantation worker is entitled by the company to tap a total of 1,125 trees in five short hours beginning at dawn, clean and place the tapping cups on each of the trees in his tasks, and apply "harmful" pesticides, and fertilizers.

Besides this, it said, the tapper must also trim and otherwise keep his trees healthy. But that is not all.

"And then there is the most dreaded burden: the tapper must load himself like a mule and walk barefoot for up to an hour carrying 150 pounds of latex balancing two heavy buckets on a stick.

Many of the tappers bear extreme scars and bone and muscle deformities on their shoulders from performing this onerous task three times a day," noted the report which characterized the task of the plantation worker as slavery.

The report alleged that because the task would not be completed by many plantation workers, they were compelled to enlist the services of their wards, children, and wives in order to earn the day's wage.

"Firestone is encouraging child labor against several international conventions and this must change," the report said.

But the question is, "Has enough been done to change the situation or are government negotiators exhausted, leaving Liberia de facto into an American protectorate as Harvey Firestone perceived it in 1926?"

Time will tell; perhaps the "human face" that, observers say, PFCO has put on will have a multiplying effect for the better. Or perhaps not.