## tarea2025106-source-pdf ## Source details **Canonical URL:** [tarea2025106-source-pdf](https://www.imf.org/-/media/files/publications/tar/2025/english/tarea2025106-source-pdf.pdf) ## Other formats - [Markdown version](/-/media/files/publications/tar/2025/english/tarea2025106-source-pdf.pdf.md) - [Structured JSON version](/-/media/files/publications/tar/2025/english/tarea2025106-source-pdf.pdf.json) --- ### Mission, scope, team, data and limitations - Governance and Corruption Diagnostic (GCD) mission: February 10th to 21st, 2025. - Interdepartmental IMF team (LEG/FAD/MCM) led by Mr. David Robinson; short-term expert: Mr. Jamie Hitchen. - Report based on information obtained during the February 2025 main mission; does not capture reforms after February 2025 except where footnoted. - Stakeholder engagement included Minister of Finance, Central Bank, Ministry of Justice, Office of Auditor-General, Anti-Corruption Commission, Sierra Leone Revenue Administration, National Minerals Agency, civil society, private sector and international partners. - Financial support: Government of Japan/Ministry of Economy, Trade and Industry. - Attribution: All analysis and conclusions belong to IMF staff only. ### Executive Summary — country context, persistent dynamics, and impacts - Country context and macroeconomic impacts: - Population: approximately 8.7 million. - Key shocks: 2014 Ebola outbreak; COVID-19 pandemic. - Economic consequences cited: low growth, high inflation, increased poverty, mounting debt vulnerabilities, eroded foreign reserves. - Persistent governance dynamics: - Informal practices, politicized appointments, elite networks undermining independence of oversight institutions. - “Winner-takes-all” dynamic around political transitions. - 2024 dismissal of the Auditor General raised debate on protection of independent oversight. - Corruption impacts: - Constrains fiscal space for health, education, infrastructure; informal payments burden vulnerable populations. - Extractive sectors, land allocation, and the judicial system identified as main sources of corrupt rents. - Extractives 2023: export value USD 1.2 billion; total revenues from extractive sector USD 48 million. - Legal/policy commitments: - Fifth National Anti-Corruption Action Plan (2024–2028) priorities include integrity management committees and extractives transparency. ### Core diagnostic findings — structural weaknesses (summary) - Structural weaknesses identified: - Limited independence of key governance institutions. - Gaps in legal and regulatory frameworks for managing public resources. - Proliferation of informal practices and weak enforcement. - Limited access to fair and efficient dispute resolution mechanisms. - Quantitative governance indicators (selected): - Worldwide Governance Indicators control of corruption: -0.51 (2018) to -0.57 (2023). - WJP Rule of Law Index, “absence of corruption”: 0.36 (2021–2023) to 0.35 (2024). - IIAG anti-corruption index: 49.1 (2018) to 43 (2023). - CPI: 30 (2018) → 35 (2023) → 33 (2024). - V-Dem executive bribery sub-index: 1.75 (2021) to 1.44 (2022). - V-Dem executive embezzlement sub-index: 2.63 (2021) to 2.46 (2022). - WGI control of corruption time-series sample: -0.87, -0.8, -0.83, -0.91, -0.51, -0.57. ### Priority recommendations (examples from Executive Summary) - 1. Ensure MWF accountability: - Actions: (i) subject it to core Public and private sector legislation; (ii) merit-based appointment procedures for directors and MWF dividend policy; (iii) publishing the FY24 audited financial statements. - Authority: MoF/MoJ - Objective: Strengthen accountability and transparency of fiscal governance - Timeline: MT - 2. Enhance disclosure for mining licensing and production: - Actions: disclosure of mining license application details, evaluation criteria, award justification, and independently audited production statistics including BO identification of all stakeholders in the mining sector. - Authority: MMMR - Objective: Strengthen Licensing and Contract Transparency - Timeline: ST - Note: Recommendations classified ST — Short Term (up to six months) and MT — Medium Term (6–18 months). --- ### Section II — Fiscal governance and mining sector vulnerabilities Key mining sector facts and dynamics - Sector contribution: some 7 percent of GDP and 80 percent of goods exports; employs about 2.84 percent of the labor force (section excerpt). - As of June 2024: 21 active large-scale mining licenses. - Active license counts (as of 31 December 2023): - Artisanal Mining License: Diamonds 268; Gold 80; Columbite 4. - Small Scale Mining License: Mixed* 41 incl. 18 for gold and diamonds. - Large Scale Mining License: Mixed* 21 incl. 6 for gold and diamonds. - Exploration License: Mixed* 10 incl. 6 for gold. - Mining Lease: Mixed* 3 incl. 1 for diamonds. - Production and reporting discrepancies: - 2022: NMA reported total mining exports of 937 million USD; mining companies reported 995 million USD — difference of 58 million USD. - 2023: NMA reported total production value of 1.2 billion USD; mining companies reported 1.4 billion USD — difference of 200 million USD. - Historical mining revenue performance (2010–23): median 0.9 percent of GDP; standard deviation 0.4 percent of GDP. Two phases: - 2010–2014: average ~1.5 percent of GDP (std dev ~0.3). - After 2014: average fiscal revenues from sector declined to about 0.7 percent of GDP. - 2023 sector contributed around 0.6 percent of GDP. Governance weaknesses and corruption risks in extractives - License allocation: first-come-first-served permitting; open tendering not yet utilized. - Discretionary fiscal incentives and contract negotiations create multiple fiscal regimes and monitoring difficulties. - Beneficial ownership (BO) disclosure incomplete; NMA capacity limited to identify BOs. - Artisanal mining: - Estimated to represent about 2.6 percent of the labor force in 2019; accounts for up to 40% of mining production; employs over 300,000 people. - Estimated 700 active artisanal sites: 485 diamond sites; 200 gold sites. - 2021 artisanal share of exports: gold 42 percent; diamonds 33 percent; coltan 59 percent. - More than 50% of Sierra Leone’s diamonds estimated to be smuggled out. - Estimated lost revenue and illicit movement from artisanal extraction: 558 million USD per annum (2006–2016). - SWIFT transfers in 2024: approximately 20 billion USD. Recommended measures for extractives (selected) - Enforce Open, Competitive Bidding for Mining Licenses. - Authority: NMA/MoF; Timescale: ST - Phase out discretionary mining contract negotiations and apply EIRA 2018 to new contracts. - Authority: NMA/MoF; Timescale: ST - Strengthen Licensing and Contract Transparency; publish all mining license contracts. - Authority: NMA/MoF; Timescale: MT - Strengthen beneficial ownership disclosure mechanism; mandatory public disclosure for mining companies. - Authority: NMA/FIU; Timescale: MT - Formalize collaboration between NRA and NMA to improve monitoring of artisanal gold exports. - Authority: NRA/NMA; Timeline: ST State participation: Corporation and Mineral Wealth Fund (MWF) - Corporation established in 2023; MWF established as a limited liability company wholly owned by the Corporation; not yet operational. - Government free carried interest: 10 percent free carried interest in new companies; GoSL had not yet activated it as of mission. - MountView Konzern Management Services awarded 10-year management contract to provide MWF management services; selection process information limited. - Governance and fiscal risks: - Joint venture agreements cited that may grant full tax exemptions to partners, reducing fiscal potential. - MWF Articles cap dividend payments at an amount recommended by Board, limiting GoSL role in dividend expectations. - Both Corporation and MWF authorized to borrow and obtain guarantees, posing fiscal risk. - Recommended MWF actions (excerpted): - Develop and approve MWF Dividend Policy. — Authority: MoF; Timescale: ST - Publish Corporation and MWF annual audited financial statements promptly. — Authority: MoF; Timescale: MT - Subject MWF to PFM Act (2016), ACA (2008), upcoming SOE Bill, Companies’ Act (2009). — Authority: MoF; Timescale: ST - Establish transparent, merit-based nomination and appointment process for professional directors. — Authority: MoF; Timescale: ST State-Owned Enterprises (SOEs) — governance and fiscal exposure - Government retains majority ownership in eighteen SOEs. - SOE loans: US$36.5 million at end-2023 concentrated in two major SOEs. - Example: Electricity Distribution and Supply Authority (EDSA): - subsidy SLE 729.6 million in 2022; - additional SLE 274.6 million allocated in first half of 2023; - outstanding arrears US$39 million as of June 2023. - MOF estimates over 60 percent of SOEs suffer high deficits, low profitability, significant liabilities, tight liquidity, and insolvency risks. - Recommendations (selected): - Adopt the SOE Governance Bill. — Authority: MoF; Timescale: MT - Professionalize SOE corporate governance; enforce mandatory reporting and audit deadlines. — Authority: MoF; Timescale: ST - Digitalize SOE reporting via automated platform. — Authority: MoF; Timescale: MT Expenditure arrears, cash management, and PIM - Verified “legacy” arrears pre-2018: SLE 3.2 billion (about USD 320 million, or 10 percent of GDP at the time); SLE 536 million settled between 2020–2022. - New post-2018 arrears: SLE 1.7 billion as of June 2023 (exclusive of outstanding cheques). - Cash management concerns: - Daily discretionary payment prioritization by MoF leadership; use of Financial Secretary (FS) letters to circumvent IFMIS. - Cash and Debt Management Committee mandate not fully executed. - Arrears recommendations (Table 8 excerpts): - Develop transparent prioritization of payments. — Authority: MoF; Timescale: ST - Remove excessive discretion; involve Cash and Debt Management Committee. — Authority: MoF; Timescale: ST - Implement digital Arrears Profiling System linked with IFMIS. — Authority: MoF; Timescale: MT - Public Investment Management (PIM) risks: - RFQ accounted for 68 percent of contracts by number; competitive methods (ICB and NCB) 18 percent by number but 63 percent by volume. - In 2022, cost overruns for reviewed contracts reached 74 percent. - PIM recommendations (selected): - Create centralized database for all public investments. — Authority: MoPED; Timeline: ST - Publish National PIM Operational Manual and prioritization criteria. — Authority: MoF; Timescale: MT - Enforce competitive procurement methods and strengthen contract oversight. — Authority: MoF; Timescale: ST --- ### Section III — Revenue administration, tax exemptions, and customs NRA governance, targets and human resources - NRA Act (2022) establishes semi-autonomous NRA; President appoints Board and Commissioner General subject to Parliament’s approval. - 2024 collection performance: 99.1 % collection against target. - Sierra Leone tax to GDP ratio: 14.8% in 2024. - Internal Affairs Unit (IAU): - Organogramed staff complement: 20; current strength: five. - IAU responsibilities include investigations and staff asset declarations; lacks secure IT platform and access to ACC systems. Tax exemptions and duty waiver governance - Finance Act 2025 amended Tax and Duty Exemptions Act to eliminate option to negotiate exemptions from corporate income tax and withholding tax for new investments and expiring agreements. - Duty and Waiver Committee meets Tuesdays and Thursdays; concerns over poorly designed concessions and lack of stakeholder input (notably NRA). - Recommendation: NRA to compile and publish a comprehensive tax expenditure report annually. — Authority: NRA; Timeline: MT IT systems, integration and compliance - NRA acquired Integrated Tax Administration System (ITAS) integrated with ASYCUDA World and Data Warehouse; ITAS not yet interfaced with NMA licensing system, BSL, IFMIS, National Investment Board, NPPA. - Reliance on commercial off-the-shelf systems (COTS) constrains adaptability; need access to source code or configurable solutions. - Recommendation: integrate ITAS with third party data sources, including NIB and NMA. — Authority: NRA/NIB/NMA; Timeline: MT Customs operations and ITS involvement - ASYCUDA World operational in all Customs sites but pre-declaration functionality not activated. - ITS (Integrated Trade Services) role: - ITS conducts destination inspections, issues Classification and Valuation Certificates, and charges a declaration and processing fee increased from 0.5% to 1% of consignment value without stakeholder consultation. - Recommendation: at contract expiry, revisit ITS involvement and fully capacitate Customs. — Authority: NRA/Customs; Timeline: MT - Customs IT integration risks: - Lack of integration between ASYCUDA World and ITS, Bolorie, shipping agencies, Ports Authority creates opportunities for gaming the system and value discrepancies; immediate recommendation: commission comparison of Customs Valuation Certificates issued by both parties. — Authority: NRA; Timeline: ST - Operational recommendations: - Activate pre-declaration and centralized processing; acquire ASYPM for performance measurement. — Authority: NRA; Timeline: ST - Enforce code of conduct to eliminate conflicts of interest (e.g., officers operating freight forwarding businesses). — Authority: NRA; Timeline: ST Extractive revenue tracking capacity - NRA Extractive Industry Revenue Unit (EIRU): six staff managing all extractive-related taxes; faces acute capacity constraints. - Recommended: capacitate EIRU, give authority to value all minerals exported, and implement interfaces with NMA. — Authority: NRA; Timeline: MT/ST Key measures from Table 11 (preserve exact phrasing) - Conduct and finalize a TADAT reassessment. — Authority: NRA — Timeline: ST - Adhere to the National Revenue Act in appointments to avoid patronage complications. — Authority: NRA — Timeline: ST - Capacitate the IAU and acquire IT platform. — Authority: NRA/MoF — Timeline: MT - Formalize IAU–ACC relationship. — Authority: NRA/ACC — Timeline: ST - Update NRA Code of Conduct and enforce it. — Authority: NRA — Timeline: ST - Integrate ITAS with third party data sources. — Authority: NRA/NIB/NMA — Timeline: MT - Strengthen EIRU and monitoring of gold exportation. — Authority: NRA/NMA — Timeline: ST/MT - Implement ASYCUDA Performance Management and mandate pre-declaration. — Authority: NRA — Timeline: ST --- ### Financial sector oversight, Bank of Sierra Leone (BSL) and supervision Financial sector snapshot and risks - Number of banks: 13 (footnote: 2 state-owned banks, 2 domestic privately owned banks and 9 foreign banks). - Capital ratios average >40 percent (reflecting zero risk-weighted government bonds). - NPL ratio average declined to less than 10 percent over the last year. - Credit to rest of economy: 4 percent of GDP. - Treasury bill 365-day yields noted high; update after first draft: inflation reduced to 7%; Treasury Bill 365-day rate reduced to 15.7 percent. BSL governance, independence and collegial decision-making - BSL Act (2019, amended 2023) lists four objectives without hierarchy: issue/manage currency, price stability, support government economic policy, contribute to financial stability. - Governor and two Deputy Governors: fixed 5-year terms; six non-executive board members: 3-year terms; appointments by President. - Concern: de facto independence must be strengthened; past Governor relieved of duties without public disclosure. - Recommendation (Table 12): - Improve accountability and transparency of supervision; publish supervisory objectives and regulatory activity. — Authority: BSL; Timeline: ST - Develop disclosure and transparency requirements for banks; enforce annual report publication. — Authority: BSL; Timeline: MT - Modernize fit-and-proper framework for major ownership and beneficial owners; amend Banking Act as needed. — Authority: BSL; Timeline: MT - Develop internal operational procedures for licensing, transfers of significant ownership, and corrective/sanctioning powers. — Authority: BSL; Timeline: MT - Increase supervisory intensity of on-site inspections. — Authority: BSL; Timeline: ST - Enhance AML/CFT supervisory resources (BSL has 2 FTE for AML/CFT supervision). — Authority: BSL; Timeline: MT Supervision of APEX bank, community banks and SOE exposures - APEX bank delegated supervision of FSAs and community banks; limited capacity and governance problems; APEX board includes representatives of institutions it supervises — governance concern. - Recommendation: reform oversight of community banks and APEX bank supervision. — Authority: BSL; Timeline: MT - State-owned banks and related-party transactions: - Exposures to SOEs not treated as related party exposures; recommendation to apply arms’ length and related-party qualitative requirements to state-owned banks’ transactions with SOEs. AML/CFT supervision and financial integrity - 2024 AML/CFT Act designates supervision across several authorities; BSL responsible for financial institutions supervision but has not updated supervisory methodologies; BSL has 2 FTE for AML supervision. - FIA and AML: - FIA received 133 STRs between 2022 and 2024; corruption-related STRs: 11 (2022), 2 (2023), 1 (2024) — total corruption STRs 14. - Only 05 STRs received from DNFBP Sector (Law Firms). - FIA submitted twelve dissemination reports to ACC between 2022–2024; none effectively investigated or prosecuted for money laundering. - Recommendation: increase resources for AML/CFT supervision, develop risk-based supervisory frameworks, and improve interagency coordination. — Authority: BSL/FIA/AML supervisors; Timeline: ST/MT --- ### Rule of Law, judiciary, land and property rights Rule of law trends and judicial integrity - WJP indicators: downward trends in “constraints on government powers” and regulatory enforcement; Sierra Leone below regional averages on several measures. - Judicial integrity and public perception: - Afrobarometer 2022: 34% of respondents consider judges and magistrates mostly corrupt; 55% consider some corrupt — total 89% who believe some form of corruption exists in judiciary. - Appointment and removal mechanisms: - President appoints judges upon advice of JLSC and subject to Parliament’s approval; President not bound by JLSC advice; Parliament rarely exercises vetting power. - Contractual judges allowed and commonly used; contract renewals and suspensions can undermine tenure security. - Removal and suspension processes can leave suspensions indefinite and subject to presidential discretion. - Case assignment and backlog: - Chief Justice solely responsible for assignment of cases; no written procedural rules or deadlines. - In 2023, at least 500 cases discovered unassigned for several years. - Recommendation: establish formal procedure for assigning cases to minimize discretion. — Agency: Judiciary/MoJ/JLSC; Timescale: ST/MT Fast Track Commercial Court (FTCC) and civil justice outcomes - FTCC average time to resolve contract dispute: 515 days. - Comparator: Sub-Saharan Africa average 654.9 days; OECD high income average 589.6 days. - Cost for enforcing contract through courts: 39.5%. - FTCC access limited (based in Freetown) and perceived as not viable by business community. Land tenure, registration and expropriation risks - Land tenure: dual system (freehold and customary); about 95% of territory under customary law; Western Area under freehold. - Urban land registration manual; integrity of records in Ministry of Lands Housing and Country Planning questionable; theft/tampering with land records reported. - Leases by government: example 74,000 acres leased between 2011–2013 and subleased to a palm oil company. - Expropriation: constitution allows expropriation for limited grounds; due process and adequate compensation rated below regional averages. - Recommendations (selected, Table 13 excerpts): - Develop and publish granular case management system. — Agency: Judiciary/MoJ/JLSC; Timescale: MT - Prohibit appointment of contractual judges. — Agency: Judiciary/MoJ/JLSC; Timescale: ST - Maintain and strengthen digital database of land titles. — Agency: MoL; Timescale: MT - Cooperate with ACC on corruption risk assessment in land records. — Agency: JLSC/MoL/NLC/MoJ; Timescale: ST --- ### Anti-corruption framework, ACC, settlements, IMCs and asset recovery Anti-corruption institutional structure and strategic plans - Principal legislation: Anti-Corruption Act (ACA) 2000 (amended 2008, 2019). - ACC powers: prevention, investigation and prosecution of corruption offences; Commissioner has power to pursue out-of-court settlements (sect. 7, ACA 2019 amendment). - National anti-corruption strategic instruments: - NACS/NACS 2024–2028 (promulgated December 2024). - Fifth National Anti-Corruption Action Plan (2024–2028). Asset declaration system and verification gaps - Asset declaration requirements: upon taking office, biennially and when leaving office (sect. 119, ACA) for officials grade 7 and above; declarations cover official, spouse and children; filed through electronic platform (www.anticorruption.gov.sl). - ACC reported compliance up to 98% but no systemic mechanism to verify declarations; verification random or complaint-driven. - Suggested reforms: - Amend ACA to permit publication of PEP asset declarations (subject to privacy/security safeguards). - Adopt risk-based verification approach. Integrity Management Committees (IMCs) and coordination - IMCs present in MDAs and Local Councils to develop anti-corruption policies; at report preparation there were 82 IMCs while total MDAs exceed 125 and Local Councils number 25. - ACC NACS Secretariat to formalize IMC approaches; authorities committed to increasing IMCs by 40%. - Recommendation: institutionalize and fund IMCs and publish IMC monitoring reports. — Authority: ACC/various MDAs; Timeline: ST/MT Non-Prosecution Policy, settlements and impact on prosecutions - ACC Non-Prosecution Policy developed in 2022 to guide non-conviction-based asset recovery; settlements require refund plus interest (not less than 10%) and disqualification from public office for not less than three years. - Outcomes and concerns: - ACC recouped over 80mn SLE via settlements since policy introduction. - Sharp decrease in number of prosecutions charged by ACC to court since 2022 despite relatively steady investigation numbers. - ACC settlements not consistently published; limited transparency and judicial review. - Recommendation: revise ACA to impose judicial review/approval of settlement agreements and publish Non-Prosecution Policy and settlements on ACC website. — Authority: ACC/MoJ; Timeline: ST/MT Investigation, prosecution and ACD performance - ACC investigated 503 cases between 2020 and 2025 (Yearly: 2020:100; 2021:113; 2022:93; 2023:81; 2024:116). - ACD statistics: 78 cases handled from 2020 to 2025; 30 convictions and 24 ongoing cases — statistics provided by ACD. - Forfeiture and asset recovery: - Between 2018 and 2024 ACC recovered over SLE 45,000,000 and various assets; none of the related cases charged in court. - Recommendations (selected summary): - Create independent recommendation body for senior oversight leadership (Auditor General, Central Bank, ACC, Head of Judiciary, MWF) with published criteria and publication of reasons for recommendations; involve civil society monitoring. — Authority: MoJ; Timeline: MT - Enhance asset declaration verification using risk-based approach and consider publication for PEPs. — Authority: ACC/MoJ; Timeline: ST/MT - Harmonize asset recovery frameworks in AML and Anti-Corruption Acts; institute procedures for management of frozen/seized properties and appoint specialized asset managers. — Authority: MoJ/ACC/FIA; Timeline: ST/MT - Strengthen ACC and ASSL resourcing, consider dedicated budgets. — Authority: MoF; Timeline: ST Key statistics and public perception - Corruption volume estimate (study presented to ACC): 2016–2018 ranges between 10.45 to 15.9 trillion old Leones (SLL) (458 million USD to 698 million USD). - Average annual loss to corruption estimated at minimum 12.7 percent GDP. - 2023 irregularities with ministries and departments: 152.6 million SLE (6.7 million USD). - Afrobarometer corruption perception: 41.1 % report significant increase, 9.7% mild increase. - Public trust indicators: - Afrobarometer (2022): approximately 46 percent believe a local government office or anti-corruption authority would not take action upon reporting corruption; 64.2 percent cite risks of retaliation. - ACC staff turnover rate in 2022: 8.5%. - IMCs at report time: 82; total MDAs: over 125; Local Councils: 25. - FIA STRs 2022–2024: total STRs 133; corruption STRs 14; embezzlement STRs 2. --- ### AML/CFT framework, FIA, DNFBPs, and financial investigations Legal and institutional developments - AML/CFT/PF Act (2024) addressed prior deficiencies and made Sierra Leone compliant or largely compliant on 28 of 40 FATF Recommendations. - Section 85(1–3) of 2024 Act: designates sectoral AML supervisors; FIA acts as supervisor where designated supervisors fail to act. - FIA governance: Financial Intelligence Advisory Board chaired by Minister of Finance; Board meets at least twice a year; Director of FIA is Secretary with no voting rights. - Financial Crimes Working Group established by FIA for proactive monitoring and capacity building. Supervisory capacity and DNFBP vulnerabilities - Supervisory capacity gaps: - FIA Examination and Compliance Department allocated 15% of resources and 18 staff members for evaluation/compliance; DNFBP supervisors largely not operational. - BSL allocated 2 FTE to AML supervision despite being designated AML/CFT supervisor for financial institutions. - DNFBPs at very high risk: mining, real estate, gaming; also lawyers, accountants, car dealerships. - Recommendation: update risk-based supervisory frameworks, dedicate resources to BSL AML supervision, operationalize DNFBP supervisors. — Authorities: AML/CFT Supervisors/MoJ/BSL; Timeline: ST/MT Beneficial ownership (BO) and transparency - No national, reliable, up-to-date mechanism to collect and maintain BO information in line with FATF Standards. - NMA efforts under Mines and Minerals Development Regulations 2023 to collect BO for applicants/license holders (5%+ shares) but verification and sanction mechanisms weak. - Recommendation: implement accurate, accessible BO registry for all legal persons and arrangements. — Authorities: NIB, NMA, FIA/relevant MDAs; Timeline: MT/ST Financial intelligence, STRs and use in investigations - FIA STRs 2022–2024 (exact counts): - 2022: Corruption 11; Embezzlement 1; Total STR Received 27. - 2023: Corruption 2; Embezzlement 0; Total STR Received 64. - 2024: Corruption 1; Embezzlement 1; Total STR Received 42. - Total (2022–2024): Corruption 14; Embezzlement 2; Total STR Received 133. - FIA disseminations to ACC: twelve reports (2022–2024); none effectively investigated/prosecuted for money laundering. - ACC made three information requests to FIA since 2022. - Recommendation: increase STR reporting from DNFBPs, improve FIA–ACC operational cooperation, and build financial investigation capacity within ACC. — Authorities: ACC, FIA; Timeline: ST/MT AML enforcement, investigations and asset recovery constraints - ACC investigated 503 cases (2020–2025) but only nine corruption-related money laundering investigations since 2018; none resulted in court charges for money laundering. - Legal tools in 2024 Act: - Section 112: restraining orders and directions for management/disposal. - Section 120: civil forfeiture framework on balance of probabilities. - Asset management gap: - Absence of efficient mechanisms to manage frozen/seized properties before disposal; risk of deterioration or loss of value. - Recommendation highlights: - Conduct corruption-related money laundering risk analysis. — Authorities: ACC, FIA; Timeline: MT - Increase successful investigations/prosecutions of corruption-related money laundering by limiting adverse effects of Non-Prosecution Policy, providing financial investigation training, and increasing FIA use by ACC. — Authorities: ACC and FIA; Timeline: ST/MT - Harmonize Asset Recovery Legal Frameworks between 2024 Act and Anti-Corruption Acts. — Authorities: MoJ/ACC, FIA; Timeline: ST/MT - Implement standardized procedures for managing frozen/seized properties (appoint specialized asset managers). — Authorities: MoJ/ACC, FIA; Timeline: ST/MT --- *IMF | Technical Report – Sierra Leone Governance & Corruption Diagnostic (excerpts from tarea2025106-source-pdf)* ### Preface _________________________________________________________________________ 7 ### Preface ### Mission scope and timeline - In response to a request from the Government of Sierra Leone, an International Monetary Fund (IMF) mission undertook a governance diagnostic assessment from February 10th to 21st, 2025. - The report is based on information obtained during the February 2025 main mission. - The report does not capture any reforms that have been introduced since February 2025 save those referenced in footnotes. ### Team composition - Mission leader: Mr. David Robinson. - Mission team members: Ms. Yao Deng, Mr. Andrew de Castro, Mr. Ibrahima Diarra, Ms. Natalie Manuilova, Mr. Dumisani Masilela, Mr. Jesper Berg. - Short-term expert: Mr. Jamie Hitchen. - Additional IMF support acknowledged: Mr. Christian Saborowski (IMF Mission Chief for Sierra Leone), Mr. Aidar Abdychev (Senior Economist in the Sierra Leone country team), Mr. Wayne Mitchell (IMF Resident Representative in Sierra Leone), Mr. Rashid Kargbo (IMF economist, Freetown office), Mr. Ilyas Tufan (FAD Resident Advisor in Sierra Leone), Mr. Robert Clifton (Senior Economist in the Sierra Leone country team), Mr. Garth Nicholls (Senior Economist in the Sierra Leone country team), Ms. Alexandra Rajs (administrative and technical contributions), and Mr. Emmanuel Mathias (overall guidance and advice). ### Stakeholder engagement - The mission met with: - The Minister of Finance and his senior staff. - The Governor, Deputy Governor and officials of the Central Bank of Sierra Leone. - Ministry of Justice and Ministry of Lands. - Office of Auditor-General and Office of the Attorney General. - Anti-Corruption Commission. - Sierra Leone Revenue Administration and Customs. - Right to Access Information Commission and the Ombudsman’s Office. - Financial Intelligence Unit and Banking Association. - Ministry of Mines and Mineral Resources and the National Minerals Agency. - Representatives of state and private banks. - Numerous members of civil society, the private sector and international partners working on governance and anti-corruption issues. ### Data and limitations - The assessment reflects information available during the mission in February 2025. - Reforms or developments occurring after February 2025 are not captured, except where explicitly noted in footnotes. ### Acknowledgements and support - The mission expresses sincere appreciation for the excellent support and cooperation provided by officials and staff of the various Ministries, Departments, and agencies consulted. - The mission is grateful to civil society and staff of international partners for sharing information and providing valuable insights. - Financial support: This Governance and Corruption Diagnostic Report was provided with the generous financial support of the Government of Japan/Ministry of Economy, Trade and Industry. - Attribution: All analysis and conclusions belong to IMF staff only. *IMF | Technical Report – Sierra Leone Governance & Corruption Diagnostic | Preface (February 2025)* ### Executive Summary ### Executive Summary ### Mission and scope - An interdepartmental (LEG/FAD/MCM) Governance and Corruption Diagnostic (GCD) mission was conducted during February 10th, 2025, to February 21st, 2025, at the request of the authorities of Sierra Leone. - The diagnostic assessment followed the IMF’s 2018 Framework on Enhanced Fund Engagement on Governance and focused on corruption vulnerabilities and governance weaknesses linked to corruption in macroeconomically critical priority areas: - (i) fiscal governance; - (ii) financial sector oversight; - (iii) anti-money laundering and combating the financing of terrorism framework (AML/CFT); - (iv) Rule of Law. - The GCD also assessed the effectiveness of the anti-corruption framework to address corruption risks in core state functions. ### Country context and recent history - Sierra Leone is a constitutional republic in West Africa, home to approximately 8.7 million people, located between Guinea, Liberia, and the Atlantic Ocean; it gained independence from the United Kingdom in 1961 and operates under a presidential system with separate executive, legislative, and judicial branches. - A brutal civil war from 1991 to 2002—marked by destruction of much of Freetown—was attributed by the Sierra Leone Truth and Reconciliation Commission (SLTRC) to systemic governance issues; many SLTRC recommendations, especially those related to governance, have not been fully implemented. - After strong post-conflict recovery, growth has slowed due to external shocks, weak institutions, and persistent governance challenges. Key shocks and stresses included the 2014 Ebola outbreak and the COVID-19 pandemic. - Economic consequences noted include low growth, high inflation, increased poverty, mounting debt vulnerabilities, and eroded foreign reserves. ### Persistent governance dynamics - Longstanding institutional and political dynamics have perpetuated informal practices, politicized appointments, and elite networks that constrain the effectiveness and independence of key state institutions, including oversight bodies such as the anti-corruption commission and the judiciary. - Executive influence over appointments to ministries, departments, and agencies has sometimes raised concerns about institutional capture and uneven enforcement of accountability. - Political transitions have at times reinforced a “winner-takes-all” dynamic, with shifts in administration often accompanied by shifts in access to public resources. - Civil society engagement in oversight is constrained by limited transparency and absence of effective, inclusive participation platforms. - The 2024 dismissal of the Auditor General after scrutiny of executive expenditures raised debate about protection of independent oversight and checks and balances. ### Impacts of corruption on development and the private sector - Corruption remains a significant challenge to sustainable development and inclusive growth, constraining fiscal space for critical investments in health, education, and infrastructure, and limiting service delivery effectiveness. - Informal payments and barriers to accessing public services disproportionately burden the most vulnerable, with negative implications for equity and human capital development. - In the private sector, regulatory opacity, perceived favoritism, and inconsistent enforcement discourage investment and limit private sector–led growth. - Main sources of corrupt rents include the extractive sectors, land allocation, and the judicial system. - Extractives sector statistics for 2023: export value of extractives was USD 1.2 billion compared with USD 48 million total revenues generated from the extractive sector that same year. ### Legal and policy commitments - Authorities have publicly reaffirmed commitment to anti-corruption; President Bio described corruption as “an existential threat that must be confronted and defeated.” - The fifth National Anti-Corruption Action Plan (2024–2028) identifies priorities including strengthening integrity management committees, enhancing public access to draft legislation through a parliamentary portal, and improving extractives transparency through enactment of the Sierra Leone Extractive Industries Transparency Initiative Bill. ### Core diagnostic findings — structural weaknesses - The assessment highlights structural weaknesses in key state functions that hinder sustainable economic development. Core issues include: - Limited independence of key governance institutions. - Significant gaps in legal and regulatory frameworks for managing and overseeing public resources. - Proliferation of informal practices and weak enforcement, contributing to a perception of impunity and eroded public trust. - Limited access to fair and efficient dispute resolution mechanisms. ### Detailed sector findings - Anti-Corruption and AML - Anti-corruption and AML frameworks are overall in place but require upgrades to address governance weaknesses and corruption vulnerabilities. - Most significant governance weaknesses: limited functional and financial autonomy of key oversight institutions; questionable appointment practices; limited effectiveness of access to information framework; poor transparency and accountability of key institutions. - Absence of a risk-based approach to AML supervision is a profound governance weakness, elevating corruption risks, including for Designated Non-Financial Businesses and Professions (DNFBPs) identified as exposed to high-risks of laundering of criminal proceeds, including corruption. - Specific operational gaps: inadequate monitoring of politically exposed persons (PEPs); ineffective application of sanctions; minimal (and in some respects a total absence of) suspicious transaction reports (STRs); limited resources to investigate and prosecute money laundering. - Fiscal governance - The GDA mission focused on mines and minerals sector, oversight of State-Owned Enterprises (SOEs), PFM arrears, and public investment management (PIM). - Mining and minerals sector: - Governance is undermined by discretionary incentives and opaque contracts. - Discretionary negotiations of fiscal incentives (tax concessions) are available for investors, negotiated at government discretion, hindering revenue administration and elevating reliance on fees and trade taxes. - Existing mineral licensing and contracting practices create corruption vulnerabilities and unfair revenue-sharing deals. - Historical mining revenue performance (2010-23): median of 0.9 percent of GDP and volatile with a standard deviation of 0.4 percent of GDP. Two phases described: - 2010 to 2014: mining revenues averaged about 1.5 percent of GDP, with a standard deviation of about 0.3. - After 2014: average fiscal revenues from the sector declined to about 0.7 percent of GDP. In 2023, the sector contributed revenue of around 0.6 percent of GDP. - State-Owned Enterprises (SOEs): - Many SOEs operate at a loss, driven by quasi-fiscal activities not sufficiently compensated by the budget, creating unsustainable dependency on government support. - Insufficient performance assessment frameworks, lack of transparency, dispersed and weak oversight, and political interference create corruption vulnerabilities. - SOE board appointments appear based on political preference rather than merit. - Arrears and cash management: - While the Ministry of Finance adopted an Arrears Clearance Strategy and improved cash management, revenue collections remain insufficient to cover all payments. - No clear prioritization of payments; many payments are “ad-hoc,” with decisions apparently made daily by MoF Leadership, creating room for corruption in payment prioritization. - Observed corruption risks include misallocation and diversion of funds, over-invoicing and embedded penalties. - Public investment management: - Fragmented project selection and politicized budgeting undermine public investment governance. - Absence of a unified project pipeline, no consolidated database for public investments, no pipeline of appraised and prioritized projects, and lack of criteria for decision making. - Processes allow circumvention of selection and appraisal requirements for some projects; budgetary decisions appear politically influenced (especially in the roads sector). - Revenue and customs administration: - Deficient integrity management and outsourced valuation heighten corruption risks. - NRA Act compares well with good practice de jure but de facto practice deviates, particularly regarding appointment of personnel. - Revenue Internal Affairs Unit is heavily understaffed and poorly regulated, with no system to manage staff assets declarations. - Valuation of goods is performed by a private entity that levies a fee increased from 0.5% to 1% of the value of the consignment without stakeholder consultation—identified as a clear corruption risk. - Financial sector oversight - Governance gaps and limited supervisory capacity weaken financial sector oversight and transparency. - Legal framework for the Bank of Sierra Leone (BSL) to conduct supervision is generally adequate, but BSL’s de facto independence must be strengthened. - Needs include promoting collegial decision-making, better accountability and transparency, and improved use of corrective and sanctioning powers. - Frameworks for licensing and change of control should be strengthened; regulatory and supervisory frameworks need improvement for banks’ corporate governance, related-party transactions, and disclosure and transparency. - Intensity of supervision is inadequate and may be challenged by high-level interventions; governance of state-owned banks and the APEX bank is problematic. - BSL’s capacity to supervise the AML/CFT area is limited; supervisory procedures to enforce banks’ disclosure and transparency need establishment. - Rule of Law, judiciary, and land/property rights - Concerns about judicial integrity, contract enforcement, and property rights—particularly land management—are significant. - Unclear allocation of property rights and minimal progress in digitizing property records generate long-term disputes and encourage opaque means to influence dispute resolution. - Corruption risks around land are particularly severe due to lack of clarity around titles and absence of a meaningful property registry. - Judicial integrity concerns include incentives for illicit payments to accelerate legal resolutions, opaque case allocation, and use of ‘contractual judges’. - Need to strengthen independence and competency of both the judiciary and the Judicial and Legal Services Commission. ### Priority recommendations (immediate actions and timelines) - The report provides a list of “priority” recommendations to address immediate corruption risks and longer-term structural reforms. Two items presented in the Executive Summary are: 1. Ensure MWF accountability by: - (i) subjecting it to core Public and private sector legislation; - (ii) merit-based appointment procedures for directors and MWF dividend policy; and - (iii) publishing the FY24 audited financial statements. - Authority: MoF/MoJ - Objective: Strengthen accountability and transparency of fiscal governance - Timeline: MT 2. Enhance disclosure of mining license application details, evaluation criteria, award justification, and independently audited production statistics including BO identification of all stakeholders in the mining sector. - Authority: MMMR - Objective: Strengthen Licensing and Contract Transparency - Timeline: ST - The full report subsections contain an extensive list of recommendations aimed at achieving better governance that operates with integrity and in accordance with the rule of law. *IMF | Technical Report – Sierra Leone Governance & Corruption Diagnostic | Executive Summary* ### 3. Publish by end of fiscal year the Annual Report of ### 3. Publish by end of fiscal year the Annual Report of ### Selected governance and anti-corruption recommendations (summarized) - 3. Publish by end of fiscal year the Annual Report of the NAC/NAP (or progress reports on implementation from top 10 spending agencies/ministries). - Responsible: ACC/MoJ - Objective: Improve transparency of ACC - Timeframe: MT - 4. Enhance the asset declaration system to require: - (i) online publication from asset declarations of PEPs; and - (ii) risk-based verification of those asset declarations. - Responsible: ACC - Objective: Strengthen accountability of officials - Timeframe: MT - 5. Improve STR processes in the five banks with the lowest ratio of transactions to STRs; (ii) strengthen financial statements disclosure requirements; and (iii) strengthen BSL’s AML supervision of preventive measures applying to PEPs. - Responsible: BSL/FIU - Objective: Strengthen accountability and transparency of fiscal governance - Timeframe: MT - 6. Strengthen AML/CFT supervision for dealers in precious metals and stones. - Responsible: FIU - Objective: Enhance AML supervision - Timeframe: ST - 7. Publish the names of the 10 spending agencies with the lowest level of competition on procurement tenders (for contracts above a specified value). - Responsible: MoF - Objective: Enhance transparency in fiscal governance - Timeframe: ST - 8. Eliminate the appointment of contractual judges and require publication of JLSC recommendations and the reasons supporting them. - Responsible: JLSC/Office of President - Objective: Strengthen judicial independence and rule of law - Timeframe: ST - 9. Publish a list of all tax exemptions (including the monetary value), and strict criteria for granting additional exemptions. - Responsible: MoF, NRA - Objective: Improve revenue transparency - Timeframe: MT - 10. Create a recommendation body for leadership positions of the Supreme Audit Institution (the Auditor General’s Office), the Central Bank, the Anti-Corruption Commission, the Head of the Judiciary, and the Mineral Wealth Fund, that includes: - (i) the recommendation of candidates based on published criteria; - (ii) the publication of reasons for recommendations; - (iii) the involvement of civil society and independent experts with international experience. - Responsible: MoJ/MoF/JLSC - Objective: Enhance oversight and transparency of senior officials’ appointments - Timeframe: MT - 11. Develop and implement multi-criteria analysis to guide project prioritization and selection; formalize and publish the National PIM Operational Manual and projects prioritization criteria and involve the Cash and Debt Management Committee in decision-making for settling the budgeted arrears. - Responsible: MoF - Objective: Enhance transparency of public investment management - Timeframe: MT - 12. Enhance BSL's mandate as a banking supervisor including its independence in practice, to strengthen and promote collegial decision-making, to improve oversight of banks’ accountability, disclosure and transparency, and its use of corrective and sanctioning powers. - Responsible: BSL - Objective: Strengthen financial sector oversight - Timeframe: MT - Note: The recommendations are classified as ST – Short Term to be implemented in up to six months or MT – Medium Term that may require 6-18 months. ### Nature and severity of corruption and governance vulnerabilities (findings) - Corruption has been a serious issue in Sierra Leone for decades, persistently hindering post-conflict recovery and economic development. - Corruption vulnerabilities are closely associated with unequal distribution of benefits, particularly in gold and diamond extraction and trade. - A study presented to the ACC in 2019 estimates the volume of corruption for 2016 to 2018 ranges between 10.45 to 15.9 trillion old Leones (SLL) ( 458 million USD to 698 million USD), higher than the combined revenue of 8.8 trillion SLL for these three years. - At the minimum, an average of 12.7 percent GDP was lost to corruption on an annual basis. - In 2023, the irregularities with ministries and departments amounted to 152.6 million SLE (6.7 million USD). ### Public perception and institutional trust (findings) - Afrobarometer data: around 50 percent of respondents reported either a significant (41.1 %) or mild (9.7%) increase of corruption. - Sierra Leone’s CPI score: declined from 35 to 33 (out of 100). - General distrust exists toward the justice and revenue collection sectors (e.g., judges and magistrates, police, tax officers). - MTNDP 2024–2030 highlights that trust in public institutions has been challenged by perceived widespread corruption, nepotism, and political patronage. - Authorities acknowledge corruption and illicit financial flows remain a challenge to effective government functioning and a threat to socio-economic growth. ### Quantitative governance indicators (findings) - Worldwide Governance Indicators: control of corruption dropped from -0.51 (2018) to -0.57 (2023). (Score range: -2.5 to 2.5) - WJP Rule of Law Index, sub-index “absence of corruption”: declined from 0.36 (2021, 2022, 2023) to 0.35 (2024), slightly below the regional average (0.38). - IIAG anti-corruption index: declined from 49.1 (2018) to 43 (2023). - CPI: increased from 30 (2018) to 35 (2023) but declined to 33 in 2024. - V-Dem executive bribery sub-index: declined from 1.75 (2021) to 1.44 (2022). - V-Dem executive embezzlement sub-index: declined from 2.63 (2021) to 2.46 (2022). - V-Dem judicial corruption sub-index: improved in 2022 (from 1.85 to 2.19) then deteriorated to 2.12 (2023) and 1.98 (2024). - V-Dem legislature corruption sub-index: increased in 2022 (from 1.85 to 2.31) then deteriorated to 2.12 (2023) and 1.98 (2024). - WGI control of corruption scores shown for 2013–2023 include values: -0.87, -0.8, -0.83, -0.91, -0.51, -0.57 (presented as part of time-series). ### Economic features reinforcing corruption vulnerabilities (findings) - Key features contributing to corruption vulnerabilities: - Strategic importance attached to the mining sector (large-scale production of iron ore, gold, diamonds, rutile, bauxite and coltan). - Inadequate oversight and governance of SOEs. - Weak public investment management. - Predominant position of the informal economy. - Weak rule of law, including a judiciary that lacks independence. - Lack of security in real property rights due to poor land registration infrastructure and corruption in land management. - Linkages with other organized crimes. *Source: IMF | Technical Report – Sierra Leone Governance & Corruption Diagnostic* ### 2023. This sector plays an important role in the economy, contributing some 7 percent of GDP and ### IMF | Technical Report – Sierra Leone Governance & Corruption Diagnostic ### Extractive industries and mining sector - The sector contributes some 7 percent of GDP and 80 percent of goods exports, but only employs about 2.84 percent of the labor force. - Inbound investors hold most large-scale mining licenses; fiscal terms are determined by individual agreements with the government. - As of June 2024, there were 21 active large-scale mining licenses. - Most minerals are exported with little processing or local value addition. - Between 2009-2018 Sierra Leone had one of the highest ‘value gaps’ globally, representing 35% of total trade value and averaging 82 million USD per annum. - Lost revenue and illicit movement of funds from artisanal extraction were estimated to reach 558 million USD per annum between 2006 and 2016. - In 2024 total transfers to and from Sierra Leone using SWIFT amounted to approximately 20 billion USD. ### Artisanal mining and informality - Artisanal miners were estimated to represent about 2.6 percent of the labor force in 2019, accounting for up to 40% of mining production and employing over 300,000 people. - There are an estimated 700 active artisanal sites: 485 mine diamonds and 200 mine gold. - In 2021, artisanal mining represented 42 percent of the total export value for gold, 33 percent for diamonds, and 59 percent for columbite-tantalite ore (coltan). - More than 50% of Sierra Leone’s diamonds have been estimated to be smuggled out of the country through suspicious deals involving artisanal miners, intermediaries and officials. - Informality in the mining sector poses significant corruption risks, including under-reporting of production and illicit export. ### Corruption risks and governance weaknesses in extractives - The extractive industries remain among the highest risk areas for corruption due to potential for large profits and undue influence on policymaking. - Weaknesses identified include absence of accurate statistics on production, wide use of first-come-first-serve permitting over competitive bidding, freezing or renegotiation of concessions, disputes with companies, and community opposition to projects. - Land issues and an opaque, deficient land registration system complicate commercial viability and create corruption vulnerabilities. - Several corrupt incidents in the mining sector have involved nepotism, ‘kickbacks’, and bribery. ### State-owned enterprises (SOEs) and oversight - SOEs play an essential role given substantial state participation and intervention; privatization progress has been slow due to vested interests and structural limitations. - Persistent sub-optimal performance, poor service delivery and weak corporate governance practices in SOEs are attributed to lack of effective oversight and limited capacity. - SOE board appointments often appear based on political preference rather than merit, weakening corporate governance. - A recently launched Mineral Wealth Fund (MFW), in nature a SOE, may face transparency and accountability challenges; the mission could not identify sector expertise and professional qualification of the third party engaged to manage the MWF. - State-owned banks (Rokel Commercial Bank and Sierra Leone Commercial Bank) appear to have been increasingly pressured to provide the government with loans to meet recurrent expenditure obligations or pay off mounting energy debts, increasing risk of non-performing loans and bank failures. ### Public investment management and infrastructure - The MTNDP emphasizes infrastructure construction, especially strengthening transportation, as one of the five national goals (‘Big Five Game Changers’). - The infrastructure sector is typically vulnerable to corruption; the MTNDP points to endemic corruption as a key challenge to maintaining cost for road projects. - Weaknesses in public investment management and lack of prioritization raise concerns about discretion in selecting projects and allocation of budget funding. ### Rule of law and judicial independence - The structure of the judiciary significantly inhibits its independence, leading to unpredictability in legal dispute outcomes and doubts over contract enforcement. - Poor land management, including pervasive corruption related to freehold tenure in the Western Area and land under customary law, results in weak security of real property rights and impacts investor confidence. - The appointment, suspension and removal process of the Chief Justice is essentially controlled by the executive branch, potentially compromising the rule of law. ### Informal economy and petty corruption - Sierra Leone has 86 percent of its workforce in the informal sector, mostly engaged in petty trading and agriculture. - A Ministry of Finance survey found two-thirds of respondents claimed “it is very difficult to do business in the informal sector without giving bribes to some law enforcement agents”. - Petty corruption is prevalent in the informal sector; reductions in corruption can mitigate the extent of the shadow economy and boost productivity growth. ### Political appointment processes and public administration risks - Selection and appointment of public officials are largely decided by the President with limited pre-selection and scrutiny, including for oversight bodies, SOEs and their Boards. - Appointment and removal processes appear linked with the election cycle and political affiliation, creating incentives to prioritize short-term personal gains over long-term reforms. - Recruitment and promotion processes for middle-ranking personnel often lack transparency, enabling favoritism and reinforcing the practice of sababu. ### Business environment and patronage networks - The business community reports patron-client relationships and cultural tolerance to corruption; private entities may align with political elites to secure business opportunities and favorable conditions (e.g., expedited approvals and sole-source licenses). - Reported investor obstacles include discretionary increases in custom duties, stalling shipments, selective enforcement of tax audits, duplicated fees, and arbitrary termination of lease agreements. - “Pop-up businesses” may emerge to exploit short-term gains tied to regime changes. ### Causes, manifestations, and public perceptions of corruption - National Risk Assessment (2017) cited ‘entrenched nepotism’ and ‘patronage networks’ as drivers that have eroded trust in the public sector. - Corruption Perception Survey (2019) ranked causes of corruption: poverty (70%), greed (69%), lack of integrity (59%), and low salaries (54%). - Sierra Leone has one of the highest poverty rates globally — 56.8% of the population are living below the national poverty line. - The nature of corruption is both transactional (petty) and high-level; procurement award processes are a key channel for diversion of public funds by senior officials. ### Anti-corruption institutions and recent reforms - The Anti-Corruption Act 2008 (replacing ACA 2000) was further amended in 2019; the Anti-Corruption Commission (ACC) was granted broad powers to prevent, investigate, prosecute, and punish corrupt practices. - A specialized anti-corruption court (the Anti-Corruption Division of the High Court) was established to fast-track adjudication of corruption and financial/economic crimes. - The Audit Service Sierra Leone (ASSL) has an excellent reputation and played a pivotal role during the Ebola and COVID-19 crises by conducting audits (including real-time) of emergency responses; annual audit reports have flagged irregularities such as “ghost workers”. - The ACC maintains collaboration with agencies such as the ASSL and NPPA to strengthen accountability mechanisms and support prosecutions. - Autonomy of these institutions may be undermined by political influence; suspension and removal of the former Auditor General and her deputy raised serious concerns. ### Public trust, oversight, and resource constraints - Trend analysis shows declining public trust over the past 15 years in Parliament (34%) and the Judiciary (36%). - According to Afrobarometer (2022), almost 70 percent of respondents hold that MPs have failed to perform their jobs and over 85 percent believe MPs have been involved in corruption to various extents. - Lack of financial and operational autonomy renders Parliament and the Judiciary increasingly influenced by the executive branch, weakening scrutiny over executive appointments, contracts, and agreements and contributing to losses in large economic transactions and reduced domestic revenue. *IMF | Technical Report – Sierra Leone Governance & Corruption Diagnostic* ### 13. The nature of corruption is further aggravated by inadequate law enforcement. Constraints ### 13. The nature of corruption is further aggravated by inadequate law enforcement. Constraints ### Law enforcement, impunity, and public perceptions - Constraints of resource and human capacities in the ACC and the ACD of the High Court contribute to delays in enforcement of corruption cases. - Insufficient autonomy and accountability of the justice sector compound impunity for corruption. - There is a general perception of biased prosecution of corruption cases, inclining to protect “sacred cows”. - Corruption Perceptions Survey: 69.7 percent of respondents perceive politicians as main “sacred cows”. - Corruption Perceptions Survey: 60.2 percent of respondents perceive top government officials as main “sacred cows”. - Initiation of corruption inquiries and indictment of several former high-ranking government officials has sometimes been perceived as politically motivated. - The wide use of the Non-Prosecution Policy by the ACC, despite its effectiveness in recovering assets, poses fundamental challenges to the rule of law and due process. ### Holistic approach to corruption reduction - Corruption is described as complex and embedded in systemic interactions across sectors; responses require holistic approaches to reduce structural vulnerabilities, minimize incentives, and drive behavioral change. - Effective anti-corruption efforts often involve collaboration between the public and private sectors, civil society organizations, media, and accountability agencies. - Positive experiences in ensuring integrity of emergency responses demonstrate that linking various sources with transparent practices, enhancing oversight and monitoring, and fostering public participation can contribute to reducing corruption vulnerabilities. *Italic: IMF | Technical Report – Sierra Leone Governance & Corruption Diagnostic (excerpts from Section preceding Section II).* ### Section II. Fiscal Governance — Background and mining sector vulnerabilities - Strong fiscal governance supported by a sound public financial management (PFM) system is an important foundation for integrity, transparency, and accountability; targeted PFM reforms should proceed to improve public finances and narrow corruption vulnerabilities. ### Mining sector: importance and key figures - The mining sector accounted for up to 70 percent of total exports. - The sector employs about 1 percent of Sierra Leone’s official labor force. - Mineral resource revenues fluctuated around 1 percent of GDP, compared to 20 percent in Guinea or 57 percent in Liberia. - Average contribution to budget revenues over the past decade: 5.5 percent. - EITI implementation: Sierra Leone achieved a high overall score of 87.5 out of 100 points (EITI Board, 2022). - Estimated revenues lost from illegal mining activity: 558 million USD per annum (estimate cited). ### Institutional framework and transparency improvements - Key institutions and laws: - Sierra Leone Ministry of Mines and Mineral Resources (MMMR) - National Minerals Agency (NMA) - Mines and Minerals Development Act (2023) - Extractive Industries Revenue Act (EIRA 2018) - Public Financial Management Act (2016) - Digitalization and disclosures: - NMA operates an online geoscience data portal and an interactive map of available minerals and current rights allocation. - NMA runs an online license application process trackable through applicants’ individual cabinets. - Beneficial ownership information for present license holders is incomplete (e.g., final beneficiary data), but work is ongoing. ### Active licenses and artisanal mining (as of 31 December 2023) - Artisanal Mining License: - Diamonds: 268 - Gold: 80 - Columbite: 4 - Small Scale Mining License: - Mixed*: 41 incl. 18 for gold and diamonds - Large Scale Mining License: - Mixed*: 21 incl. 6 for gold and diamonds - Exploration License: - Mixed*: 10 incl. 6 for gold - Mining Lease: - Mixed*: 3 incl. 1 for diamonds - Note: “Mixed” refers to multiple minerals. Specific breakdowns are not detailed individually. ### Production, reporting gaps, and illicit flows - Artisanal operations are substantial but often informal, lacking access to capital, technology, and formal markets. - Estimated lost revenue and illicit movement of funds: 558 million USD per annum between 2006 and 2016 (bulk from extractive industries and artisanal mining). - Reporting discrepancies: - 2022: NMA reported total mining exports of 937 million USD; mining companies reported 995 million USD — difference of 58 million USD. - 2023: NMA reported total production value of 1.2 billion USD; mining companies reported 1.4 billion USD — difference of 200 million USD. ### Governance gaps and sources of discretion - Gaps identified in license allocation, contract negotiations, tracking of mineral resource revenues, disclosure of beneficial ownership, and illicit export/illegal trade linked to artisanal mining. - Mines and Minerals Development Act establishes license types and mandates issuance by the Minister of Mines upon NMA Board recommendation; artisanal licenses are processed by NMA regional offices; all active license information is available at the NMA Online Repository. - Open tendering is not yet utilized; licenses are allocated on a first-come-first-served basis, reducing competitiveness and increasing discretionary power. - Large degrees of discretion in negotiating mining license terms have produced multiple fiscal regimes and difficult-to-monitor arrangements. - Recent legal change: Tax and Duty Exemption Act was amended by the Finance Act of 2025, eliminating the option to negotiate exemptions from corporate income tax and withholding tax for any new investments and for existing investment agreements where such exemptions come to expire. ### Capacity and beneficial ownership challenges - NMA reports inability to effectively identify license applicants’ beneficial owners due to low staff capacity and lack of access to critical global platforms for corporate/private owner tracking. - Absence of an effective beneficial ownership disclosure mechanism can conceal conflicts of interest and facilitate corrupt practices. - Remoteness of mining sites, high-value nature of gold and diamonds, and capacity constraints in key agencies create opportunities for under-reporting of production and illicit export. ### Suggested measures discussed in the report - Further formalization of artisanal mining and promotion of fair trade through improved access to finance. - Expand capacity for monitoring and enforcement of mining regulations and enhance coordination among regulatory bodies. - Consider introducing a centralized marketing and sales platform to help artisanal miners access fair and competitive trade terms, enhance traceability, and stabilize prices (drawing on Botswana’s centralized diamond marketing example). - Adopt digital traceability tools and invest in infrastructure such as assay labs and secured trading centers to reduce illicit trade. - Strengthen transparency in revenue collection and allocation through consistent EITI reporting and community engagement. - Introduce open tendering for license applications and mineral rights allocation as soon as practical. *Italic: IMF | Technical Report – Sierra Leone Governance & Corruption Diagnostic (excerpts from Section II: Fiscal Governance, Mining Sector Governance Vulnerabilities).* ### 32. Weak capacity to track and monitor mineral revenues was also identified as a constraint. ### 32. Weak capacity to track and monitor mineral revenues was also identified as a constraint. ### Capacity constraints in revenue management - The NRA Extractive Industry Revenue Unit (EIRU) manages the handling of all extractive-industry related taxes but faces acute capacity constraints with only six staff. - Lack of digital solutions for reporting extractive revenues compounds capacity weaknesses. - Without improvements in tracking and management of mineral revenues, funds may be misappropriated or diverted, reducing the benefits to local communities and the nation. ### EITI cooperation and transparency efforts - Sierra Leone’s cooperation with the EITI has played a key role in reforming the mining sector and continues to serve as a platform for improving disclosure of mining contracts and streamlining revenue payments. - Sierra Leone EITI (SLEITI) is working to: - advance beneficial ownership disclosure; and - strengthen accountability at the subnational level by clarifying payment streams, expected revenue and recipients of subnational revenues. - Addressing these vulnerabilities is critical to attracting responsible investments and maximizing public benefits from the extractive sector. ### Recommendations (Table 4) - Enforce Open, Competitive Bidding for Mining Licenses: define the “strategic” minerals, as per the Mines and Minerals Development Act of 2022, invoking the need to conduct open tendering for awarding licenses for such minerals. - Authority: NMA/MoF - Timescale: ST - Dispense with Mining Contract Negotiations: phase in the EIRA 2018 application for all new mining contracts to grow the mining revenues, move away from project level negotiations and remove discretion in investors’ treatment. - Authority: NMA/MoF - Timescale: ST - Strengthen Licensing and Contract Transparency: Introduce full disclosure of mining license application details, evaluation criteria, award justification, and publication of all allocated mining contracts, as promulgated by the IMF Fiscal Transparency Code and EITI principles. Publish all mining license contracts for public scrutiny. - Authority: NMA/MoF - Timescale: MT - Strengthen the beneficial ownership disclosure mechanism for mining companies: Implement a mandatory public disclosure for beneficial ownership of mining companies to prevent shell companies and hidden ownership by officials, in line with international standards. - Authority: NMA/FIU - Timescale: MT ### State intervention: Corporation and Mineral Wealth Fund (MWF) - Current state of operations and ownership: - The mining sector is operated by private sector investors with no state ownership; state intervention is limited to 10 percent free carried interest in new companies registered to operate in the mining sector. - The GoSL, through the Sierra Leone Mines and Minerals Development and Management Corporation (‘The Corporation’), was in the process of activating the 10 percent free carried interest, but as of the mission conclusion, there were no instances when this free carried interest was yet activated by the GoSL. - The Corporation: - Established in 2023 with the Sierra Leone Mines and Minerals Development and Management Corporation Act. - Tasked with negotiating mining agreements domestically and internationally, prioritizing ventures with other governments, and aiming to maximize returns from mineral exploitation. - Established as a budget entity funded by budget appropriations and allowed to borrow funds directly, presenting fiscal risks to public finances. - The Mineral Wealth Fund (MWF): - The Corporation will deliver on its mandate via a fully owned Mineral Wealth Fund (MWF), established under the Companies’ Act (2009) as a limited liability company wholly owned by the Corporation. - The MWF is not yet operational, conducting preparatory works for future mining operations and finalizing its corporate structure. - The Corporation was allocated assets by Parliament, including an identified land plot with substantive iron ore deposits and an adjacent railway to deliver ore to the port. - State interaction with existing mining sites: - The rest of the mining sites operate under existing legislation with no aim to undermine ongoing contracts or take over sites already held by other investors; the State does not appear to be competing with private investors or seeking to impose policies over existing contracts. ### Corporate governance and accountability pre-conditions - Good practice frameworks to guide state involvement include: - the OECD Guidelines on Corporate Governance of State-Owned Enterprises (2024, revised); - the Santiago Principles or Generally Accepted Principles and Practices (GAPP); - the IMF Fiscal Transparency Code. - Classification and legal obligations: - The Corporation and the MWF, given government majority ownership and commercial operations, are classified as SOEs and should be fully accountable to Sierra Leone's existing legislative frameworks and requirements (PFM laws, SOE laws, Audit laws). - Board composition and appointment concerns: - The Corporation Board consists of nine members, six of whom represent institutions and are already appointed; three other Board members of good repute and proven integrity are yet to be appointed by the President. - The MWF Board consists of nine members including ex-officio ministers, two persons from among Sierra Leoneans with business executive experience, three individuals nominated by MountView Konzern Management Services Company, and two independent directors. - The absence of detailed mechanisms for proper selection of non-statutory board members leaves open the possibility of politically motivated and sub-optimal candidates entering future Boards. - Recommended board governance improvements: - Clearly define boards’ mandate and ultimate responsibility for entities’ performance. - Insulate boards from political interference through inclusion of professional independent members. - Introduce transparent merit-based selection of professional board members carried out by a collegial body (such as a nomination committee). - Establish open and transparent selection of executive management appointed by and accountable to the boards. - Implement performance monitoring systems that link executive management remuneration to financial performance. - Ensure timely audit by the Auditor General with full disclosure of audit results to the public and Parliament. - Specific governance actions recommended for Sierra Leone: - Introduce transparent, merit-based nomination process and clear qualification requirements for professional directors, including a clear definition of independence, relevant sector expertise, and minimum years of experience. - Establish a collegial nomination and appointment process (e.g., nomination committee) to identify candidates for presidential appointment. - Establish specialized Board committees (at least audit and nomination committees), chaired by qualified independent board members; remuneration and nomination committee should have a majority of independent members; audit committee should be fully independent. ### Executive management, MountView, and performance monitoring - Executive management outsourcing: - MountView Konzern Management services company was awarded a 10-year contract (with an option to extend for two consecutive five-year terms) to provide all management and operational services on behalf of the MWF shareholder—the Corporation. - The contract covers MWF activities and joint ventures to be established under its mandate. - The mission was informed the selection process was conducted under the PPP Law, but the mission did not have access to information to confirm adherence to Part VII competitive and transparent procedures. - The selection of MountView and a due diligence report were approved by Cabinet, with the Management Services Agreement ratified by Parliament. - Need for open and competitive selection and accountability: - Open and competitive selection of executive management is crucial to ensure professionalism and accountability to Boards and the government. - The MWF’s Boards currently lack professional representation and expertise to monitor MountView’s conduct; the performance framework for MountView must be strengthened and vigorously monitored by government. - Key performance monitoring actions: - The GoSL should establish Key Performance Indicators (KPIs) for MountView and ensure their monitoring as soon as possible. - Although MountView is not receiving compensation until mining operations begin, the MWF Board should require MountView to report on implementation without delay and establish regular performance review practices. - As of the report date, MountView has been conducting its mandate since January 2023 but had not prepared financial statements, and their performance review had not yet taken place. ### Fiscal and legal constraints and risks from MWF arrangements - Constraints on potential fiscal revenue from MWF mining activities: - Existing framework agreement between the MWF and China Oversees Engineering Group Co. Ltd (2024) grants joint venture operations under the agreement full tax exemptions and fiscal incentives available in Sierra Leone, largely reducing fiscal revenues potential. - Dividend payments are capped by the MWF Articles of Association at an amount recommended by its Board of Directors, which severely limits the GoSL’s role in setting dividend expectations. - Policy tools and gaps: - Developing the Dividend Policy for the MWF could be used to establish the minimum expected revenues from the MWF and its joint ventures. - Fiscal risk considerations: - Both the Corporation and the MWF are authorized to borrow and obtain guarantees, exposing the government to fiscal risks and contingent liabilities. - The combination of limited revenue potential and unlimited risks from future borrowings is not conducive to building public wealth or maximizing fiscal returns from the mineral sector. *IMF | Technical Report – Sierra Leone Governance & Corruption Diagnostic* ### 47. The PFM Act does help mitigate some of these risks and the MFW should comply in full. ### 47. The PFM Act does help mitigate some of these risks and the MFW should comply in full. ### PFM Act and MWF compliance - The PFM Act subjects the MWF to a dividend policy to be designed and approved by the MOF, which can set the returns to Sierra Leone notwithstanding other provisions. - The PFM Act and its underlying regulations provide governance benefits for the MWF, including: - approval of financial and investment plans; - financial targets; - approval of borrowings and guarantees as a fiscal risk management measure for the MOF; - approval of dividend policy. - No legislative change is needed for these provisions to take effect as the MWF already falls under the PFM Act (as defined in its Part I). ### Joint ventures, transaction expertise, and MountView - Key finding: If the MWF establishes joint ventures with interested investors, these must be entered into and monitored by qualified experts. - Required skills for professionals structuring joint ventures: - proven legal and financial skills; - experience with the mining sector; - experience in international negotiations. - Recommended safeguards: - engage professional transaction advisors or commission independent third-party reviews as warranted. - example cited: government of Botswana engaged high level external expertise (legal, technical, financial) at the Pula Fund’s inception to match private partner resources. - Mission engagement note: - the mission was not initially able to meet MountView management to assess their expertise in the mining sector or experience in similar ventures; these issues were addressed satisfactorily in a subsequent virtual meeting. ### Legislative alignment and application of core laws to MWF - Recommendation: MWF should be made subject to core public sector and private sector legislation because of its hybrid public-private structure and strategic role. - Specific legislative applications recommended: - PFM Act (2016) — apply fully to MWF; - upcoming SOE Bill — apply once enacted by Parliament; - ACA (where relevant); - Companies’ Act (2009) — continue compliance. - Expected governance outcomes from applying these laws: - alignment of legislative requirements with SOE good practices on board composition and qualification; - strengthened financial reporting and disclosure requirements; - strengthened internal controls and audit procedures; - better alignment with strategic development objectives of Sierra Leone. ### Table 6 — Key operational and governance recommendations (excerpted measures) - Establish Clear Criteria for Professional Board Members: - define merit-based criteria, definition of independence, relevant expertise, minimum years of experience; - open MWF board positions to foreign nationals to expand candidate pool. - Authority: MoF; Timescale: ST - Develop and publish Transparent, Merit-Based Nomination and Appointment Process for Professional Independent Board Directors. - Authority: MoF; Timescale: ST - Develop and approve a performance management framework for MountView with KPIs and regular reporting to MWF Board. - Authority: MoF; Timescale: ST - Develop and Approve the MWF Dividend Policy to direct a fair share of MWF and joint ventures’ profits to the state budget. - Authority: MoF; Timescale: ST - Publish the Corporation and the MWF annual audited financial statements promptly and update published information once audits are complete. - Authority: MoF; Timescale: MT - Ensure MWF transparency and accountability by subjecting them to PFM Act (2016), ACA (2008), the upcoming SOE Bill, and Companies’ Act (2009). - Authority: MoF; Timescale: ST ### Oversight of State-Owned Enterprises — governance structure and gaps - SOE landscape and reforms: - Government retains majority ownership in eighteen SOEs. - Management and structural review of MDAs, parastatals, and SOEs undertaken to propose strategic alignments. - A new SOE Governance Bill is undergoing revisions before Parliament. - Current oversight fragmentation: - MoF carries ownership function for state-owned banks, coordinates SOE budgeting, sets SOE dividend policies (for banks only), and monitors fiscal risks. - National Commission for Privatization (NCP) conducts ownership function for non-financial SOEs, sharing responsibility with line ministries. - Fragmented ownership creates governance gaps and limits oversight effectiveness. - Draft SOE Governance Bill proposes establishment of a SOE Ownership and Governance Commission to exercise state ownership and oversee non-financial SOEs. ### SOE corporate governance weaknesses and transparency deficits - Board composition concerns: - SOE boards are often dominated by government officials appointed by virtue of position rather than merit or skill. - Weak selection and appointment procedures lack clear professional qualification criteria. - Resulting risks: excessive political representation, ineffective management, suboptimal decision-making, increased corruption vulnerabilities. - Transparency and disclosure issues: - Level of transparency and disclosure by SOEs remains critically low; financials and key facts are unreported for extended periods. - Opaque partnership arrangements have produced financial liabilities and reputational risks (example: State Lottery partnership). - Financial reporting and audit delays: - Many SOEs fail to submit annual financial statements on time; some do not submit at all. - Legal framework mandates monthly and quarterly SOE reporting, but compliance is weak due to limited capacity, weak accounting systems, and financial constraints. - Consequence: MoF struggles with timely financial oversight and fiscal risk management. ### SOE fiscal risks and fiscal exposure - SOE debt and concentration: - SOEs’ loans have reached US$36.5 million at the end-2023, with heavy concentration in two major SOEs. - Loss-making SOEs and fiscal support: - Many SOEs operate at a loss and rely heavily on government support. - Example: Electricity Distribution and Supply Authority (EDSA): - subsidy of SLE 729.6 million in 2022; - additional SLE 274.6 million allocated in the first half of 2023; - outstanding arrears of US$39 million as of June 2023. - MOF estimates that over 60 percent of SOEs suffer from high deficits, low profitability, significant liabilities, tight liquidity, and insolvency risks. - Root causes of SOE financial strain: - quasi-fiscal operations without adequate government reimbursement; - lack of performance monitoring frameworks; - weak corporate governance structures. - Longer-term risks: - heavy dependence on bailouts and absent price adjustment mechanisms exacerbate operational losses, especially in energy SOEs. - lack of clear dividend policy limits financial contributions from profitable SOEs (e.g., state-owned banks). ### Table 7 — Key SOE recommendations (excerpted measures) - Adopt the SOE Governance Bill to supplement the PFM Act (2016). - Authority: MoF; Timescale: MT - Professionalize SOE corporate governance with clear selection criteria, sector experience requirements, and independence safeguards. - Authority: MoF; Timescale: ST - Enforce Mandatory Reporting and Audit Deadlines with penalties for non-compliance (e.g., freezing government funding, individual penalties). - Authority: MoF; Timescale: ST - Introduce Performance Monitoring Systems with clear KPIs, link board/executive performance to reporting, and consider performance-based incentives. - Authority: MoF; Timescale: MT - Analyze and Quantify Quasi Fiscal Activities to identify system-wide costs to the Budget and reimburse SOEs appropriately so they can operate on a for-profit or break-even basis. - Authority: MoF; Timescale: MT - Digitalize SOE Reporting and Disclosure by developing an automated platform for SOE financial reporting and mandating electronic submission of quarterly and annual statements. - Authority: MoF; Timescale: MT ### Expenditure arrears — scale, causes, and cash management practices - Budget credibility issues: - lack of timely approval of credible fiscal frameworks and firm expenditure ceilings; - misalignment between government policies and budgetary allocations leads to frequent in-year adjustments and overruns (notably Defense, Police and Roads). - Arrears strategies and persistence: - GoSL issued an Arrears Clearance Strategy for 2020-2025, revised in 2023 for 2023-2028 to capture verified arrears pre-July 2023. - Despite strategies, expenditure arrears continue to accumulate; some arrears cleared at start of new fiscal year using new-year budget funds, distorting planning and execution. - Composition and magnitude of arrears: - “Legacy” arrears (pre-2018) verified by the Auditor General at SLE 3.2 billion (about USD 320 million, or 10 percent of GDP at the time), of which SLE 536 million were settled between 2020-2022. - New post-2018 arrears reached SLE 1.7 billion as of June 2023 (exclusive of outstanding cheques) per the Revised Arrears Clearance Strategy (2023-2028). - The 2020-2025 Arrears Clearance Strategy’s failure was primarily attributed to the COVID-19 pandemic, lack of financing, and rejection of a proposed discount by vendors. - Cash management discretion: - Payment prioritization decisions are made daily by MOF leadership due to liquidity constraints; payments are matched with daily cash availability and only selected payments are made. - Current practice allows some payments to be prioritized over others without clearly defined criteria or documented decisions, increasing governance risk and opportunities for corruption. *IMF | Technical Report – Sierra Leone Governance & Corruption Diagnostic | 39–45* ### 63. In addition, some transactions are conducted outside of the established cash management ### tarea2025106-source-pdf - 63. In addition, some transactions are conducted outside of the established cash management ### Cash management and arrears: key findings - Some transactions are conducted outside of the established cash management process through Financial Secretary (FS) letters that serve as priority cheques, circumventing the Integrated Financial Management Information System (IFMIS). - Use of FS letters distorts cash management procedures, creates opportunities for discretionary prioritization, complicates the payment process, and undermines control in public financial management. - The Cash and Debt Management Committee has an explicit mandate (Terms of Reference (2021)) to oversee public debt issues (including arrears), maintain an accurate database of domestic arrears (including accumulated interest), track payments, report on balances of arrears across Ministries, Departments and Agencies, and produce quarterly arrears clearance reports for the Minister of Finance. These roles are not currently performed fully and effectively by the Committee. - Pre-2018 arrears have been verified by the Auditor General, but there is no up-to-date registry of all outstanding arrears. - Lack of a comprehensive digital tracking system limits prioritization of clearances, allows continued accumulation of arrears without proper oversight, and creates vulnerabilities. - Digitalization of arrears tracking and linkage with IFMIS can significantly enhance efficiency, transparency and reduce vulnerabilities. ### Arrears: recommendations (as in Table 8) - Develop and Implement Transparent Prioritization of Payments: - Authority: MoF - Timescale: ST - Action: develop a clear, rules-based approach to prioritization and ranking of settling the arrears for both – “legacy” and newly accumulated. - Remove Excessive Discretion in Decision Making on Payments: - Authority: MoF - Timescale: ST - Action: involve the already existing Cash and Debt Management Committee in the decision-making process for settling the budgeted arrears – both, “legacy” and newly accumulated. - Manage the Flow of New Arrears: - Authority: MoF - Timescale: ST - Action: develop commitment control mechanism to ensure that MDAs do not enter into new financial obligations without confirming that funds are available in the budget, following the committed principle of “Not in Budget, No Funding.” Enforce penalties for unauthorized spending to ensure enforcement and accountability at all levels. - Implement Digital Arrears Tracking Systems: - Authority: MoF - Timescale: MT - Action: invest into a digital solution for Arrears Profiling System to capture all types of arrears as defined in the PFM Act (2016) to improve tracking, reporting of all arrears and their details, including beneficiary details, amounts owed, and payments made. Consider introducing a real-time commitment tracking to prevent overspending. - Initiate Disclosure and Reporting of Arrears: - Authority: MoF - Timescale: ST - Action: prepare comprehensive reports on arrears and their status to be included as part of the Budget Execution Reports to allow real-time monitoring by accountability institutions and civil society groups. ### Public Investment Management (PIM): key findings and vulnerabilities - PIM is vulnerable to corruption risks due to inadequate project preparation and selection, weak price forecasting, limited competition, and poorly designed tenders, with particularly serious implications for low-income countries where infrastructure investment is a higher share of GDP. - In Sierra Leone, PIM shortcomings include weaknesses in project appraisal and selection, occasional uncompetitive procurement practices, limitations in multi-annual budgeting, project abandonment, sub-standard asset quality, and expenditure arrears on investment projects. - Recent institutional improvements include: - National Public Investment Policy in 2021 (updated in 2024 to include gender and climate parameters). - Pre-investment Guidance Manual in 2022. - Extension of the Public Investment Program (PIP) to include a list of capital projects for local councils. - Promulgation of the 2020 Public Procurement Regulations. - Development of the roads project database for the 2025 Sierra Leone Roads Agency PIP and publication of comprehensive roads budget as the 2025 Budget Annex. - Establishment of the National Monitoring and Evaluation Agency (NAMEA). - Ongoing development of the Public Investment Management Information System (PIMIS) with World Bank support. - Remaining gaps and implementation weaknesses: - Absence of a comprehensive, centralized project database consolidating key information on public investments (including PPPs and SOEs). - No unified pipeline of appraised and prioritized projects and lack of clear decision criteria, resulting in a PIP that includes too many underfunded projects. - Weak linkage between annual budget appropriations and multiannual investment commitments; multi-year commitments are not collected and tracked by the MOF in the macro-fiscal framework. - Risk-driven contract cost inflation: contractors bid higher prices due to payment arrears and inflation expectations; contracts are often amended during implementation. - In 2022, cost overruns for all contracts (goods, services, works) reviewed by the NPPA reached 74 percent. - Procurement reform progress exists, but enforcement gaps, resistance to transparency, limited MDA capacity, delayed supplier payments, and overreliance on Request for Quotation (RFQ) persist. - RFQ accounted for 68 percent of all contracts by number; competitive methods (ICB and NCB) accounted for 18 percent of contracts by number but 63 percent by volume. - Project monitoring and evaluation face technical and capacity challenges; implementing MDAs lack technical capacity for proper monitoring of ongoing construction. - NAMEA establishment is expected to improve monitoring and evaluation capacity. ### PIM: policy recommendations (summary of Table 9 and Table 10) - Create a centralized database for all public investments (including PPPs and SOEs), incorporating multi-year contracts and commitments, accessible to MOF and NAMEA to inform budget decision-making. - Authority: MoPED - Timeline: ST - Undertake a comprehensive review of all projects underway and in the pipeline to ensure only appraised projects are included in the PIP and selected for funding. - Authority: MoPED - Timeline: MT - Overhaul the PIP annex in budget documents to include total costs, multiyear commitments, project duration, and total variations. - Authority: MoPED - Timeline: ST - Ensure commitment and payment controls by enforcing provisions of the Public Financial Management Act (2016) on excess spending. - Authority: MoPED - Timeline: ST - Develop and implement multi-criteria analysis to guide prioritization and selection of projects in the PIP. - Authority: MoPED - Timeline: ST - Develop the planned asset register and update maintenance manuals to ensure critical infrastructure resilience to governance vulnerabilities and climate change. - Authority: MoPED - Timeline: MT - Gradually incorporate climate vulnerability analysis into asset registries and include quantitative analysis of long-term and discrete fiscal governance risks in the Fiscal Risk Statement. - Authority: MoPED - Timeline: MT - Establish a Unified Public Investment Database to consolidate information on all public investments, including PPPs and SOEs; ensure comprehensive data integration to improve transparency and strategic allocation of resources. - Authority: MoF - Timescale: MT - Introduce standardized project selection and prioritization; formalize and publish the National PIM Operational Manual and project prioritization criteria to insulate budgetary decisions from political influence. - Authority: MoF - Timescale: MT - Strengthen appraisal capacity and contract management by building technical capacity at NAMEA, MOF, MoPED and other MDAs; include contingent liabilities from PPPs and SOEs in investment planning. - Authority: MoF/MoPED/NAMEA - Timescale: MT - Enforce the use of competitive procurement methods and strengthen contract oversight; strictly enforce procurement regulations to minimize irregularities and promote competitive methods (ICB and NCB). - Authority: MoF - Timescale: ST - Enhance PIM cycle transparency: publish reports on investment planning, procurement, and project execution; launch eGP for real-time publication of contract awards, project statuses, and financial reports. - Authority: MoF - Timescale: ST - Strengthen monitoring and evaluation practices: empower NAMEA to strengthen project monitoring at all stages and continue capacity-building programs for NAMEA and MDAs. - Authority: MoF/NAMEA - Timescale: ST/MT *Source: https://www.imf.org/-/media/files/publications/tar/2025/english/tarea2025106-source-pdf.pdf* ### Section III. – Revenue Administration – Tax and ### Section III. – Revenue Administration – Tax and Customs ### A. Governance of National Revenue Administration - The National Revenue Authority (NRA) Act of 2022 establishes the NRA as a semi-autonomous entity with its own legal personality and powers to sue and be sued. - The Act specifies roles and appointment powers: - President, subject to Parliament’s approval, appoints the NRA Board and the Commissioner General (CG). - NRA Board appoints two deputy Commissioner Generals (DCG). - CG, subject to Board approval, appoints Commissioners, Deputy Commissioners, Assistant Commissioners, Directors, Deputy Directors, Assistant Directors, and the Head of Internal Audit. - CG appoints other staff below the levels outlined above without deferring to the Board. - The Act attempts to specify qualifications for the CG and DCG but these remain quite broad. - Identified adherence issues: - Appointment of current DCGs was managed outside provisions of the Act, with the President appointing them instead of the Board. - Lists of individuals for employment are sometimes provided by high-ranking individuals, creating risks of appointing under-qualified or beholden staff and potential integrity lapses. - Target setting and revenue objectives: - The Ministry of Finance retains target setting; medium-term revenue strategy aims to increase revenue to GDP ratio to 20% in the medium term. - NRA collection performance: 2024 returned a 99.1 % collection against target. - Sierra Leone tax to GDP ratio: 14.8% in 2024. - Recommendations / implications: - Conduct a repeat TADAT assessment (last completed in September 2016; note: after first draft the mission was informed a TADAT was conducted in July 2025 though not yet finalized). - Strengthen Ministry of Finance forecasting capacity while managing associated corruption risks. - Provide NRA with adequate resources and IT systems to pursue good international practice. ### B. Accountability and Integrity of the Human Resource - Internal Affairs Unit (IAU): - Established per the NRA Act to investigate corruption cases and manage staff asset declarations upon employment acceptance. - Organogramed staff complement: 20; current strength: five. - With current complement, IAU can investigate very few cases and prioritizes administrative ones. - Heavy reliance on the Anti-Corruption Commission (ACC) for complex or criminal cases. - No guideline exists for referral of cases to the ACC or for feedback to the IAU. - In the last three years, IAU referred two criminal cases to ACC and received feedback on one; no feedback on the other. - Asset declaration function: - Section 38 of the NRA Act: “Every person who accepts a letter of appointment from the Authority shall submit to the head of the internal affairs division a declaration of assets in the form specified by the Authority.” - IAU does not yet perform asset declaration enforcement due to absence of a secure IT platform. - IAU currently relies on national policy for assets declaration administered by the ACC but has no access to ACC systems. - Recommendations: - Formalize the IAU–ACC relationship with guidelines specifying: - Nature and gravity of allegations requiring immediate ACC referral versus those managed internally. - Timeframes for ruling or referral to ACC. - Feedback mechanisms to enable NRA processing of implicated staff. - Acquire a secure IT platform to manage staff asset declarations. - Establish formal access agreement with ACC systems to support enforcement. ### C. Management of Tax Exemption - Legal changes: - Finance Act 2025 amends the Tax and Duty Exemptions Act 2023 to eliminate the option to negotiate exemptions from corporate income tax and withholding tax for new investments and for existing investment agreements where such exemptions expire. - Duty and Waiver Committee: - Meets Tuesdays and Thursdays to consider waiver applications and advise the Minister. - Composition: Legal Department, Multilateral Projects Division, Fiscal Risks Division, Revenue and Tax Policy Division, Budget Bureau. - Concerns: - Some legislated concessions are poorly designed and lack effective monitoring, creating opportunities for abuse. - Many concessions are designed by the Ministry of Finance without input from critical stakeholders, including the NRA, resulting in some legal provisions not being implemented or enforced. - Tax expenditure reporting: - Section 6 (1)(b) of the Tax and Duty Exemptions Act compels the Minister for Finance to submit negotiated agreements to Cabinet and Parliament for ratification, but several exemptions are not covered by this provision. - NRA currently compiles customs-related tax expenditures only. - Recommended actions: - Ensure involvement of all critical stakeholders (including NRA) in the design of tax concessions. - Develop systems to monitor use of incentives by beneficiaries to ensure intended use. - NRA should compile and publish a comprehensive tax expenditure report annually that: - Collects laws and regulations governing each tax expenditure and changes over time. - Compiles a list of tax expenditures to analyze (deductions, credits, exemptions, preferential rates). - Estimates revenue loss associated with each tax expenditure using historical data, surveys and studies and/or economic modelling. - Assesses and presents the economic and social impact of each tax expenditure. ### D. Resilience of Core Business Systems and Processes to Corruption - IT systems and integration: - NRA acquired a new Integrated Tax Administration System (ITAS); efforts ongoing to promote full utilization and develop modules. - ITAS is currently integrated with ASYCUDA World and the ‘Data Warehouse’. - Interface with the Electronic Cash Register (ECR) system is being tested. - Gaps and vulnerabilities: - ITAS does not facilitate automatic payments of taxes. - ITAS is not interfaced with critical systems: National Minerals Agency’s licensing system, Bank of Sierra Leone, Integrated Financial Management System, National Investment Board, National Public Procurement Agency. - Several critical compliance management activities are not supported by current IT platforms. - Use of COTS: - Heavy reliance on commercial off-the-shelf systems (COTS) constrains NRA’s ability to adapt to policy changes due to lack of source code and configuration flexibility. - Need to balance cost-effectiveness and agility; obtain source code to allow periodic adjustments while benefiting from vendor upgrades. - Taxpayer guidance and rulings: - NRA has not developed a mechanism to issue private and public rulings or practice notes. - Result: similar cases may be ruled upon individually, risking inconsistent outcomes and reputational damage. - Compliance management: - NRA is developing a compliance risk management framework; currently relies on partially automated methods to design interventions and identify taxpayers for audits. - Full automation would improve benefits for Authority and taxpayers. - Auditing: - NRA is audited regularly by the Office of the Auditor General (AG). - AG is introducing performance audits for all auditees; recommendation that NRA be prioritized in this endeavor. - Recommendations: - Continue IT platform improvements and implement interfaces with critical national systems to strengthen compliance and close corruption opportunities. - Secure access to source code or configurable solutions to adapt to policy changes. - Implement mechanisms for issuing private and public rulings and practice notes. - Fully automate compliance risk management processes. - Prioritize performance auditing of NRA by the Auditor General. ### E. Vulnerability of the Customs Function - ASYCUDA World rollout: - ASYCUDA World is operational in all Customs sites but pre-declaration functionality is not activated. - System allows traders to declare goods before arrival and enables centralized risk-based processing; non-activation forces declarations upon arrival and maintains port-based processing teams. - Consequence: increased interaction between traders/freight forwarders and port officers, creating corruption risk. - Operational challenges and vulnerabilities: - ASYCUDA World is web-based and requires reliable electricity and internet; Sierra Leone experiences frequent and long-lasting electricity disruptions causing internet outages. - Non-enforcement of pre-declaration reportedly results in some goods leaving controlled areas without full processing/release, sometimes in collusion with Customs officers. - Some Customs officers operate freight forwarding businesses, creating direct competition and clear conflicts of interest. - Performance measurement: - ASYCUDA World does not deliver customs performance measurement; an ASYCUDA System for Performance Management (ASYPM) module exists but has not been acquired. - NRA lacks ways to measure customs performance to determine efficiency and detect integrity lapses. - Involvement of International Trade Services (ITS): - The Customs Act 2011 empowers the Commissioner General to examine goods and process declarations. - An agreement with ITS (signed by the Ministry of Trade and Industry) grants ITS similar authority; ITS conducts destination inspections, scans consignments, issues Classification and Valuation Certificates, and charges a declaration and processing fee initially fixed at 0.5 percent then increased to 1 percent without stated justification or stakeholder consultation. - Despite ITS involvement, Customs continues to perform its legal functions independently, prolonging the goods clearing process with no added value. - Recommendations: - Activate ASYCUDA World pre-declaration functionality and establish centralized processing to reduce officer-trader interaction. - Acquire and adopt ASYPM to enable customs performance measurement and integrity detection. - Enforce a strict code of conduct to eliminate conflicts of interest (e.g., officers operating freight forwarding businesses). - Reassess the role and contractual terms of ITS to align with legal authority and avoid duplication and unnecessary fees. *IMF | Technical Report – Sierra Leone Governance & Corruption Diagnostic* ### 97. The lack of integration of the ASYCUDA World system with those of major stakeholders at ### tarea2025106-source-pdf - 97. The lack of integration of the ASYCUDA World system with those of major stakeholders at ### Customs IT integration and corruption risk - Paragraph 97: The lack of integration of the ASYCUDA World system with systems used by ITS, Bolorie (the private company that runs the seaport), shipping agencies and the Ports Authority means each entity only sees what has been entered into its own system with no way of cross-checking and verifying the information. This is identified as a major corruption risk and opens opportunities for traders, freight forwarders, and officers to game the system. - Evidence noted: discrepancies in the values used for the final clearance of goods. - Immediate action recommended: the NRA commissions a comparison of the Customs Valuation Certificates issued by both parties to determine whether there are any discrepancies. - Short-to-medium term operational recommendation: at the end of the current contract, ITS should be removed from this value chain and Customs be fully capacitated to perform this work. ### ASYPM (Box 2) — benefits for Customs management - Interrogates the database and facilitates data mining for Customs management. - Offers a ‘data and customs procedure’ consistency crosscheck to Customs management. - Data readily available for studying operational trends and enabling decision-making. - Increased monetary value of corrections made by examiners. - Identify staff needing to improve their capacity and performance. - Increased compliance by consignors with Customs requirements. - Source of Box 2: UNCTAD and WCO ### Proliferation of private sector entities in public functions (ITS and destination inspection) - Paragraph 98: ITS entered when pre-shipment inspections were common; destination inspection replaced pre-shipment in 2009. Continued ITS involvement is now crowding into the statutory government Customs function. - Governance concern: the Ministry of Industry and Trade took the lead role in contracting, which is described as incorrect given Customs is a government function enshrined in law. - Risks identified: continuous nature of the work requires careful procurement, contract terms, performance monitoring, and management; hiving off public sector functions to private sector opens opportunities for corruption. - Policy recommendation: Sierra Leone should refrain from hiving off public sector functions to the private sector and instead focus on building capacity of responsible government agencies. ### Vulnerabilities in revenue from the extractive industry and NRA capacity (Paragraphs 99–101) - Paragraph 99: - FAD assistance helped develop the Extractive Industry Revenue Act of 2018. - The Extractive Industry Revenue Unit (EIRU) is established within NRA’s Large Taxpayer Office and is being staffed and trained. - Current constraint: EIRU staffed by only five people, including the head of the unit. - IT limitations: NRA still developing IT platforms required to support EIRU; outstanding work includes incorporation of royalty returns and fiscal exemptions; no interface with the National Minerals Agency to electronically capture licensed miners. - Operational consequence: EIRU relies on manual processes, focuses only on larger mining operations, and has abandoned monitoring of artisanal mining. - Paragraph 100: - NRA has considerable difficulties monitoring gold exports due to artisanal miners not keeping formal records, activity near borders with Guinea and Liberia, and export through entry points where NRA lacks presence. - Current reliance on NMA for assistance lacks a formal mechanism. - Recommendation: NRA and NMA collaborate to devise a comprehensive strategy to improve monitoring of artisanal miners. - Paragraph 101: - FAD Technical Assistance report (December 2023) analyzed historical shipments by two large-scale iron ore mines and found the industry consistently reported prices below the Safe Harbor for the period reviewed. - Recommendation: implement the Safe Harbor to curb undervaluation. - NRA action: verified legal basis and consistency with existing mining lease agreements; issued a public notice on the implementation of the Safe Harbor guidelines for iron ore pricing in December 2024. ### Safe Harbor implementation and guidelines (Paragraph 102) - Paragraph 102: - Guidelines developed with FAD assistance are already being used by the NRA team. - Need identified: the guidelines have yet to be published and there is a need to publish them. ### Key recommendations from Table 11 (preserve exact measures, authorities, timelines) - Conduct and finalize a TADAT reassessment to establish NRA’s adherence to good international practice in tax administration. — Authority: NRA — Timeline: ST - Adhere to the National Revenue Act in the appointment of staff of the Authority to avoid the complications associated with patronage. — Authority: NRA — Timeline: ST - Capacitate the Internal Affairs Unit by staffing it adequately and acquiring the IT platform to facilitate execution of their mandate. — Authority: NRA/MoF — Timeline: MT - Formalize the relationship between IAU and the Anti-Corruption Commission to facilitate effective and transparent handling of corruption cases in NRA. — Authority: NRA/ACC — Timeline: ST - Update the NRA Code of Conduct and enforce it to curb malpractice such as the ownership of freight forwarding agencies by Customs staff. — Authority: NRA — Timeline: ST - Integrate the NRA’s ITAS with third party data sources, particularly the National Investment Board and the National Mining Agency to broaden the tax base. — Authority: NRA/NIB/NMA — Timeline: MT - Strengthen collaboration between NRA and NMA and devise a comprehensive strategy to improve the monitoring of the exportation of gold. — Authority: NRA/NMA — Timeline: ST - Capacitate the NRA’s Extractive Industry Revenue Unit and give them full authority to value all minerals being exported. — Authority: NRA — Timeline: MT - Compile and publish a comprehensive tax expenditure report annually to bring about transparency. — Authority: NRA — Timeline: MT - Implement ASYCUDA Performance Management to monitor the system’s performance. — Authority: NRA — Timeline: ST - Mandate the pre-declaration of goods and establish a central processing unit away from the entry point. — Authority: NRA — Timeline: ST - Mandate the comparison of customs clearance values issues by ITS to those of the Customs Department in the short term. — Authority: NRA/Customs — Timeline: ST - Upon expiry of the current contract, revisit the involvement of Integrated Trade Services in the performance of core Customs functions. — Authority: NRA/Customs — Timeline: MT ### Context and linkages with broader governance and financial sector oversight (Paragraphs 103–115) - Governance diagnostic draws on Basel Core Principles for Effective Banking Supervision (April 2024) and prior IMF assessments including the Financial Sector Stability Review (FSSR) 2020. - Key observations: - Progress on legal basis for regulation and supervision: BSL Act and Banking Act amended; primary legislation provides a good basis but more work is needed. - Intensity of supervision remains inadequate; need to increase focus on corporate governance and transactions with related parties. - Financial sector snapshot: - There are 13 banks in Sierra Leone (note: composition described in footnote: 2 state-owned banks, 2 domestic privately owned banks and 9 foreign banks). - Capital ratios of banks average more than 40 percent, reflecting dominant share of zero risk-weighted government bonds in assets. - NPL ratio has on average declined to less than 10 percent over the last year. - Around half of deposits are denominated in foreign currency. - Treasury bills with a maturity of 365 days give a yield of more than 40 percent; interest rates on loans around 20 percent; inflation reduced to 13 percent (footnote notes an update after first draft: inflation reduced to 7%, Treasury Bill 365-day rate reduced to 15.7 percent). - Credit to the rest of the economy is limited to 4 percent of GDP. - Supervision resources and capacity: - Banking Supervision Department: 36 FTE. - Financial Stability Department: 17 FTE. - OFISD: nine staff members. - BSL will spend substantial resources on implementing elements of Basel II and III in 2025 and likely subsequent years, posing a burden on core supervision capacity. - Governance of BSL: - Bank of Sierra Leone Act of 2019 (amended in 2023) lists four objectives: issue and manage the currency of Sierra Leone, price stability, support the economic policy of the Government, and contribute to fostering and maintaining a stable financial system. No hierarchy of objectives is established. - The Act states the BSL shall license, register, supervise, and resolve financial institutions; BSL is the resolution authority with powers including bail-in of liabilities. - Independence provisions: central bank autonomy and prohibition on board members taking instructions from any person or body; Governor and two Deputy Governors have fixed 5-year terms; six non-executive board members have 3-year terms; appointments made by the President; removal only for reasons in the Act. However, a past Governor was relieved of duties without public disclosure of reasons. - Concern: enhancing practical independence is particularly important given the supervision of state-owned banks (the largest banks) and the risk of government interference. _Italic: IMF | Technical Report – Sierra Leone Governance & Corruption Diagnostic | excerpts from pages cited_ ### 116. It is important to further promote collegial decision making. According to the BSL Act, the ### It is important to further promote collegial decision making. ### Collegial decision-making and institutional arrangements - Paragraph 116: According to the BSL Act, the Governor has all the operational responsibilities in relation to banking supervision, including issuing and revoking licenses, issuing cease and desist powers, instructing any supervised entity, and imposing administrative penalties. - The BSL’s board is responsible to control and oversee the BSL and, among other things, approve its budget and approve secondary legislation for financial institutions, including supervisory guidelines. - In practice, the board also approves important supervisory decisions. - A Financial Policy Committee (FPC) has been established to advise on policy issues relating to financial stability, micro and macroprudential supervision, and resolution and financial market infrastructures; the FPC is chaired by the Governor and its members include the two Deputy Governors and relevant department heads. - Recommendation (paragraph 116): Further promote collegial decision-making to ensure decisions are more broadly based and clearly define the decision-taking bodies for all licensing, regulatory and supervisory decisions, considering the significance of the issue. ### Conflict of interest and staff governance - Paragraph 117: The BSL Act contains provisions on conflict of interest that address relevant aspects. - The Act contains a provision limiting the Board and staff’s responsibilities to cases of intentional wrongdoing or gross neglect. - Senior staff at the BSL have a one-year cooling off period before going on to positions in supervised entities. - There is a limited turnover of supervisory staff. - The primary legislation includes legal protection for the supervisor. - BCP CP2 requirement noted: supervisor must have effective internal governance and communication processes enabling timely supervisory decisions appropriate to the significance of the issue. ### Accountability, transparency and public reporting - Paragraph 118: The BSL submits periodic reports on the state of the economy to the Minister of Finance, and these reports are published within three months. - The Minister can request information on certain functions of the BSL, though not information related to the banking supervision function. - The BSL publishes a financial stability report; the latest version is dated 2023 (footnote notes update to 2024 with aggregated Banking System data published in line with Basel Core Principles). - The BSL does not publish its supervisory objectives and priorities, nor information about the discharge of its duties in relation to those objectives. - The supervisory framework has not been disclosed, and not all secondary legislation and guidelines are up to date on the website. - The BSL does not publish information on the banking system in aggregate as required by the BCP (footnote indicates update to 2024). - Finding: Greater transparency will give improved scrutiny of performance by interested parties outside of the BSL. ### Legal powers and scope under the Banking Act - Paragraph 119: The Banking Act of 2019 gives the BSL powers and establishes high-level requirements for banks’ licensing, corporate governance, transactions with related parties, capital and reserves, liquidity, ownership and control, restrictions on lending, supervision and control, resolution, receivership and liquidation, accounts and audits, and sharing information with other supervisors. - The Act contains fit and proper requirements for both banks’ executives and non-executive board members. - Shortcomings in implementation of these provisions are identified in subsequent paragraphs. ### Guidelines, supervisory framework, and risk-based supervision - Paragraph 120: The BSL has issued several guidelines underpinning the Banking Act (footnote lists specific guidelines). - The BSL needs to develop certain guidelines and internal procedures that implement the guidelines. - The BSL has moved to risk-based supervision, but the framework needs further development (footnote: the Risk Based Supervision Framework has been updated in line with best practice of the WAMZ Member Countries, including cyber security, IT risks, and climate risks). ### APEX bank oversight and supervisory capacity for FSAs and community banks - Paragraph 121: The APEX bank has limited capacity to function as a supervisor of the FSAs and community banks and continues to suffer from governance problems. - The APEX bank has delegated responsibility to supervise both the FSAs and the community banks. - APEX Bank has nine board members, two from FSAs and two from community banks. - NPLs are already high, most loans are uncollateralized, and implementation of new accounting standards will result in large write downs. - Limited oversight by the BSL of how the APEX bank conducts supervisory functions; general view is that supervision is insufficient. - The board of the APEX bank including representatives of the institutions the APEX bank supervises represents a governance problem. - These issues were highlighted in the FSSR report, but the BSL has not implemented reforms in this area. ### Banks’ licensing, fit and proper assessments, transfer of significant ownership, and major acquisitions - Paragraph 122: Legal basis for licensing decisions strengthened; BSL issued a guideline on requirements for licensing in 2020 specifying information to be provided, minimum requirement for current paid in capital and a license fee, and time requirements in the Banking Act for BSL response. - No BSL internal operational procedures for assessment of applications and making licensing decisions were observed by the mission. - BSL has received three applications since 2020; still in process; no licenses revoked; one foreign bank sold its franchise to another foreign bank. - Paragraph 123: Banking Act specifies five general criteria for fit and proper, and a draft guideline specifies experience, reputation, conflicts of interest and independence of mind, time commitment, collective suitability, and financial integrity; requirements for years of experience for CEO and executive directors; BSL can conduct interviews. - No internal operational procedures specifying how to manage an application were observed. - Paragraph 124: Banking Act requires prior written approval by the BSL for acquiring a significant share in a bank or financial holding company but does not specify criteria for the decision nor list fit and proper test of the acquirer, including beneficial owner, as a criterion. - Banking Act sets no time limit for BSL response on transfers of significant ownership. - No internal operational procedures for assessment and decision-making on transfer of significant ownership were observed. - BSL has taken three decisions in this area over the last three years and in no cases rejected a transfer of significant ownership. - Paragraph 125: BSL approves mergers and certain acquisitions; prior written approval required for any merger and certain acquisitions including transactions in the financial group that the bank is part of. - No requirements for approval of acquisitions of other banks unless in the form of a merger; international standards (BCP CP7) require power to approve or reject all major acquisitions or investments. - BSL shall include impact on financial system stability and whether transaction is in the public interest in its decision; Banking Act sets a time limit for BSL response. - No internal operational procedures for decisions on mergers and major acquisitions were observed. ### Corrective and sanctioning powers - Paragraph 126: Banking Act gives BSL powers to react in a wide range of circumstances, including failure to comply with the Act or conducting business in a manner considered unsafe. - Supervisory measures range from a warning to revoking a bank’s license, issuing fines, and taking further action as necessary. - No internal operational procedures that define the application of corrective and/or sanctioning actions were observed, including for escalated supervisory actions for unreasonable delay in bank actions and long-lasting issues. - The BSL does not publicly disclose applied enforcement measures. - Banks must include enforcement measures in their annual report, but these reports are not systematically published (cf. paragraph 61). ### Corporate governance, related-party transactions, and disclosure - Paragraph 127: Guidelines on corporate governance were published in 2023; they define corporate governance and draw from Basel Committee, G20/OECD, and the National Corporate Governance Code. - Framework covers board responsibilities, corporate culture and values, oversight of senior management, committees, conflict of interest, senior management, role of the CRO, internal audit, and board composition; ‘duty of care’ and ‘duty of loyalty’ are defined; all banks required to have a code of conduct. - Implementation is at an early stage and should be further enhanced. - Paragraph 128: BSL has started supervising banks’ corporate governance but no manual for supervising governance policies, processes and practices was provided; scope exists to roll out supervision more widely with focus on core issues. - Paragraph 129: Banking Act contains a definition of related parties and provisions on loans to related parties, but definition is too narrow—“loans to related parties” cover only credit exposures (on-balance sheet and off-balance sheet) and do not include service contracts, asset purchases and sales, construction contracts, lease agreements, derivative transactions, borrowings including deposits from related parties, and write-offs (as defined in BCP footnote 57). - Requirements: loans to related parties must not be given on preferential terms, are more restricted in size than single exposure limits, require special board approval, and must be reported to both the board and the BSL; write-offs require approval of both the board and the BSL. - Governance guidelines include provisions on conflicts of interest. - State-owned banks' exposures to state-owned enterprises (SOEs) are not considered exposures to related parties; recommendation that state-owned bank’s transactions with SOEs should respect typical qualitative requirements of related party transactions (footnote 153: ensuring arms’ length basis, avoiding conflicts of interest, approved and monitored by boards). - No internal operational procedures on supervision of transactions with related parties were observed. - Finding: Important to increase supervisory intensity of on-site inspections to comprehensively assess transactions with related parties to reduce risk of misappropriation of bank resources. - Paragraph 130: Banking Act requires financial statements be published no later than 3 months after the end of the financial year, but many banks do not comply and do not publish other information. - International standards (BCP CP 28 and BCBS Corporate Governance Principles Principle 12) require banks to disclose material information on objectives, organizational and governance structures and policies, major share ownership, related party transactions, and compensation practices. - There is no legislative requirement for the BSL to review and enforce disclosure standards. - No internal operational procedures on supervision of bank disclosures were shown. ### Abuse of financial services and AML/CFT supervision - Paragraph 131: Sierra Leone’s economic activity exposes the country to risks of abuse of financial services; BSL’s capacity to supervise this area is limited. - BSL has 2 FTE allocated to AML/CFT supervision. - FATF/GIABA mutual evaluation of Sierra Leone in 2020 concluded there was a moderate understanding of the ML/TF risks Sierra Leone faces. - Recommendation: Improve off-site and on-site supervisory methodologies for AML/CFT. ### Recommendations (Table 12, Section H) - Measure 1 (BSL, ST): Improve accountability and transparency of the supervision function (both BSL and OFISD) through additional disclosures: - Publish supervisory objectives and priorities, and, at least annually, report on actual regulatory and supervisory activity, including corrective and sanctioning actions. - Regularly publish information on the banking system in aggregate. - Take action to ensure that all secondary legislation and guidelines are up to date on the website. - Disclose information about the supervisory framework on the website. - Measure 2 (BSL, MT): Develop disclosure and transparency requirements for banks. Establish supervisory procedures to supervise and enforce banks’ disclosure and transparency. Take actions to ensure all banks disclose their annual reports. - Measure 3 (BSL, MT): Modernize the framework for the suitability assessment of banks’ major ownership, including beneficial owners, board members, and senior management. Amend Banking Act to enhance fit and proper criteria for acquirers of significant ownership or controlling interests. - Measure 4 (BSL, MT): Develop internal operational procedures for licensing, transfer of significant ownership, major acquisitions, supervisory processes, application of corrective and sanctioning powers, to facilitate/supervise the implementation of laws and regulations. - Measure 5 (BSL, ST): Increase supervisory intensity of on-site inspections, including comprehensive assessments of banks’ corporate governance and transactions with related parties. Develop secondary legislation and supervisory procedures for banks’ transactions with related parties. - Measure 6 (BSL, MT): Amend the BSL Act to explicitly state that the BSL’s primary objective of banking supervision is to promote the safety and soundness of banking systems following the appropriate hierarchy of i) price stability; ii) financial stability; and iii) supporting government economic policy. - Measure 7 (BSL, ST): Enhance supervisory independence in practice by adding more safeguards related to supervision of state-owned banks. - Measure 8 (BSL, MT): Further promote collegial decision-making and clearly define the decision-taking bodies for all licensing, regulatory and supervisory decisions, accounting for the significance of issues. - Measure 9 (BSL, MT): Enhance BSL‘s AML/CFT supervisory function by: - i) increasing resources dedicated to AML/CFT supervision and capacity building. - ii) improving off-site and on-site supervisory methodologies for AML/CFT. - Measure 10 (BSL, MT): Reform the oversight of community banks currently under the supervision of the APEX bank. - Measure 11 (BSL, MT): Establish a legal requirement that the reason(s) for removal of the BSL Governor is (are) publicly disclosed. *IMF | Technical Report – Sierra Leone Governance & Corruption Diagnostic — excerpts (paragraphs 116–132).* ### 133. As assessed by international indicators, the rule of law has been on a downward trend in ### As assessed by international indicators, the rule of law has been on a downward trend in Sierra Leone ### International indicators and overall trend - The Rule of Law Index of the World Justice Project (WJP) shows an 8-year downward trend in the sub-sector on “constraints on government powers” in Sierra Leone. - The country is on a 2-year downward trend on regulatory enforcement. - Sierra Leone scored below the regional average on: - the ability of the judiciary to limit powers of the government; - the ability of the government to sanction officials for misconduct; - all regulatory enforcement sub-factors, including due process in expropriation. ### Historical findings and root causes (Truth and Reconciliation Commission) - The Truth and Reconciliation Commission identified: - subordination of the judiciary to the executive; - lack of security of tenure of judges; - appointment of contractual judges; - wide discretion in the assignment of cases; - lack of civil society representation in the selection process for judges; - these were identified as sources of discontent that led to the civil war. - The framework largely remains the same as it was prior to the conflict. ### Judicial integrity and public perception - Creating a solid foundation for an independent judiciary is critical to the protection of economic rights and the enforcement of the rule of law. - An Afrobarometer survey in 2022 shows: - 34% of respondents consider that judges and magistrates are mostly corrupt; - 55% consider some judges and magistrates corrupt; - totaling 89% of respondents who believe there is some form of corruption in the judiciary. - Integrity vulnerabilities stem from: - the appointment system; - case assignment system; - backlog in the disposition of cases; - political interference, abuse of authority and bribery are reported as prevalent. - The Anti-corruption Commission (ACC) has charged only one judge for corruption since its creation. - The Judicial Legal Service Commission (JLSC) has, to its knowledge, not investigated a judge concerning bribery or corruption-related conduct. - The ACC has expressed reluctance to investigate judges due to perceived higher evidential bar and concern about being seen to interfere in the judicial process. - Civil society and business sector sources indicate: - bribery in the judiciary is a reason ethical businesses avoid resolving conflicts through the judicial system and prefer out-of-court settlements. - Authorities, including the ACC and the Judiciary, generally dismiss the prevalence of bribery. ### Appointment of judges and JLSC structure - Section 120 (3) Act No. 6 of the 1991 constitution mandates judicial independence, but the judiciary is vulnerable to executive influence, particularly the President. - Section 135 (1) (2) states appointments to the Chief Justice position and all other judges of the Superior Court of Judicature are made by the President, upon the “advice” of the JLSC and “subject” to the approval of Parliament. - The President is not bound by the advice of the JLSC. - Parliament rarely exercises its right to review Presidential appointments. - The JLSC composition: - Chief Justice (chairperson); - the most senior justice of the Court of Appeals; - the Solicitor-General; - the chair of the Public Service Commission; - a practicing counsel from the Bar Association; - two non-lawyers. - All ad-hoc JLSC members are appointed by the President; the bar association representative and the non-lawyer representative are directly appointed by the President with a term of three years. - The JLSC’s accountability is exclusively to the President; as a constitutional commission, its actions are protected from being questioned in any legal proceedings (save for constitutionality). - The President has the right to dismiss appointed JLSC members for inability to discharge the functions of the office or for misconduct, and may re-appoint members; the constitution does not limit the number of re-appointments. - The constitution does not provide independence safeguards for the JLSC comparable to other constitutional offices (Electoral Commission, Political Parties Registration Commissions, Attorney-General and Minister of Justice, Auditor-General). ### Civil society participation and parliamentary oversight - Participation by civil society in the appointment process is very limited: - Applications to judicial positions are not published by the JLSC; - there are no opportunities for citizens to be heard on qualifications or to raise objections. - Two lay members of the JLSC are appointed by the President and may not be representative of civil society. - Parliamentary right to disapprove Presidential appointments is rarely exercised; one appointee served for two years before appearing before Parliament and was approved despite strong public objections. - Sierra Leone’s parliament suffers from issues of independence affecting its oversight functions. ### Contractual judges and implications - The Constitution allows the President to appoint “contractual judges” who have already attained the age of retirement or the age at which they are required to vacate office; such contracts are subject to renewal by the President and valid until revoked by the President. - Contractual appointments bypass parliamentary approval and effectively place judges at the discretion of the President with no security of tenure. - This practice has been common and is available for any position including Supreme Court Justices. - Consequences: - disenfranchises Parliament from vetting appointments; - enables executive influence over judges through threat to livelihood; - undermines the balance between branches of government and judicial independence. ### The Chief Justice: appointment, tenure, and removal risks - The Chief Justice is appointed by the President, upon the advice of the JLSC and subject to Parliament’s approval. - The retirement age for the Chief Justice and all other judges is 65 years. - Contractual judge arrangements can apply to the Chief Justice, allowing continuation at the President’s discretion. - Removal process for the Chief Justice: - President must receive a petition and establish a tribunal consisting of 3 Supreme Court Justices or legal practitioners otherwise qualified to be appointed in the Supreme Court and 2 more members who are not members of parliament or legal practitioners; - all tribunal members are Presidential appointees; - grounds for removal are not specified in the Constitution. - Removal requires the tribunal’s recommendation and approval by a 2/3 majority in Parliament. - The President may suspend the Chief Justice on his own volition provided the case has been referred to the tribunal; suspension remains until revoked by the President or the tribunal recommends in favor of the Chief Justice. - The tribunal is not constrained to resolve issues within a specified period; suspension can be effectively perpetual or until retirement age. - Past practice: in at least the past two Presidential transitions, the Chief Justice resigned shortly after assumption of office of a new President, allowing the President to appoint his own Chief Justice, further consolidating executive power. - The imbalance of power affects perception of the rule of law and has a chilling effect on judicial independence. ### Assignment of cases and transparency risks - The judiciary lacks a system for assignment of cases; the Chief Justice is solely responsible for assigning cases to judges within the tenured judicial system. - No written procedural rules exist for assignment of cases, nor prescribed deadlines for assignment. - Limitation: assignment must respect jurisdiction for specialized courts (Anti-corruption Court, Fast Track Commercial Court), but specialized courts have been assigned cases outside their jurisdiction. - Risks: - Chief Justice can influence how and when cases are resolved; - possibility of assigning high-profile or desirable cases to particular judges, which may affect promotion prospects or be financially lucrative; - lack of limitation of discretion and lack of transparency raises integrity concerns. - Recommendation from the assessment: - establish a formal procedure for assigning cases that minimizes discretion and considers caseload, skill set, experience/seniority, to enable a fairer and more transparent system. ### Case backlog, resources, and data constraints - Judges report caseloads as “beyond human understanding”. - Contributors to backlog: - lack of resources (including human capital); - absence of a reliable case management system; - absence of punitive measures for slow case disposition; - incentives for corruption. - The Constitution provides that court decisions must be rendered not later than three months after the conclusion of trial; however, there is no legal redress or remedy if this period is exceeded. - The Constitution protects judges of the superior courts from any suit arising out of performance of duties. - Reports of delays in the trial stage are rampant. - Very limited data was provided by authorities; public access to data is difficult, limiting the ability to assess judiciary efficiency. - Case data is manually collected and collated; the judiciary has a manual case management system despite prior creation of a digital case management system. - The Chief Justice is unable to determine case load and case disposition rate without the ability to efficiently assign cases. *IMF | Technical Report – Sierra Leone Governance & Corruption Diagnostic | sections 133–160* ### 161. The World Justice Project Rule of Law index show a 3-year downward trend for Siera ### The World Justice Project Rule of Law index show a 3-year downward trend for Siera Leone on civil justice ### Rule of law, civil justice, and regulatory enforcement - The World Justice Project Rule of Law index shows a 3-year downward trend for Sierra Leone on civil justice. - The index measures ease of access to resolution mechanisms for civil disputes, including affordability, integrity, timeliness, and enforcement of decisions. - A similar downward trend is also apparent in regulatory enforcement. - Delays in disposition of cases create corruption risks by incentivizing corrupt actors and discouraging litigants from using the legal system. ### Government initiatives to address case backlogs - Objective: Increased equal Access to Justice Sector Reform Strategy (2024-2030). - Planned measures: - Improve infrastructure: creation of court buildings and mediation centers. - Increase workforce: recruitment of judges, magistrates, and support staff. - Improve case-management system. - Provide more training for judges and prosecutors to improve judicial service delivery and enforcement of the rule of law. - Assign supervisors to different courts to expedite trials. ### Assignment of cases — risks and system weaknesses - Current practice: - The Chief Justice is solely responsible for assigning cases to judges within the tenured judicial system. - No written procedural rules exist for assignment of cases to judges. - No prescribed deadline exists for cases to be assigned to a judge. - Only limitation: specialized courts (e.g., Anti-corruption Court or Fast Track Commercial Court) must be assigned cases within their jurisdiction, though instances of assignment outside jurisdiction have occurred. - Corruption and integrity risks: - Sole discretion of the Chief Justice allows potential influence over how and when cases are resolved, including assignment of high-profile or desirable cases which may affect judges’ promotion prospects or yield lucrative outcomes. - The lack of limitation on discretion raises legitimate questions concerning the integrity of the process and potentially on judges themselves. - Empirical indicator of the problem: - In 2023, after a change in leadership in the judiciary, at least 500 cases were discovered to have remained unassigned for several years. - Recommended institutional reform implied by the mission: - Establish a formal procedure for assigning cases that minimizes discretion and considers caseload and reasonable considerations (such as skill set, experience/seniority) to allow a fairer and more transparent system. ### Contract enforcement and the Fast Track Commercial Court (FTCC) - FTCC structure and jurisdiction: - FTCC is a division of the High Court with original jurisdiction over several commercial cases, including governance of business entities, disputes over Le 50,000,000 (approximately $2,200) and above involving commercial arbitration, enforcement of foreign awards, banking, and mortgage securities. - “Assessors” (non-lawyer subject-matter experts) sit with judges and give expert non-binding advice; at least two assessors shall participate when required by the presiding judge. - Procedural rules: - Alternative dispute resolution processes are mandatory before pre-trial. - FTCC is required to complete judgment within six months from the date of commencement (regular courts: render judgment three months after conclusion of trial). - Trials must be continuous, daily; adjournments (on limited grounds) cannot exceed 72 hours. - Appeals from FTCC are reviewed by the Court of Appeal and the Supreme Court. - Performance and outcomes: - It takes an average of 515 days to resolve a contract dispute in Sierra Leone through the FTCC. - Comparators: Sub-Saharan African average is 654.9 days; OECD high income average is 589.6 days. - The cost for enforcing a contract through the courts is 39.5%. - The most recent contract enforcement dispute resolved by the High Court was in 2021; no other disputes appear to have reached the High Court since the case database was made available on-line. - Perceptions and usage: - Small and medium businesses often eschew resolving disputes in the court system due to lack of trust, undue costs and delays (both above regional averages), and perception of improper government influence. - In the World Justice Project Rule of Law Report for 2024, Sierra Leone scored significantly lower than the regional average on whether Civil justice is free of improper government influence. - Sources in the business community do not consider the FTCC a viable venue for conflict resolution. - Access limitations: - FTCC is based in Freetown and has no branches elsewhere; access is difficult for litigants outside the capital. - Original land disputes outside the capital typically relate to customary land and fall under local courts present within chiefdoms. ### Alternative dispute resolution (ADR) - ADR status: - ADR is embedded within the judicial framework and available as an extrajudicial form of settlement. - Arbitration rules of the court are still being developed. - Sierra Leone is a signatory to the New York Convention and ICSID. - Sierra Leone scored below the regional average on the World Justice Project Rule of Law Index 2024 on whether ADR mechanisms are accessible, impartial, and effective. - Legal developments: - The 2022 Arbitration Act formalizes and strengthens ADR as a viable venue for resolving disputes. - The new Customary Land Rights Act prescribes mechanisms for resolving disputes regarding customary land contracts through the Chiefdom and regional land commission offices. - Informal courts called ‘barrays’ are often relied upon in the Western Area where local courts are prohibited. - The Legal Aid Board (LAB) also offers an alternative venue for disputes. ### Security over real property, land tenure, and registration - International and index ratings: - Sierra Leone scored a 3 in the CPIA property rights and rule-based governance index (1 is the lowest and 6 is the highest). - Land classification and tenure: - Land is classified into state land, private land, and customary land under a dual tenure system (freehold tenure and customary land tenure dating back to the 1927 Protectorate Land Act). - Customary land is governed by traditional rules in chiefdoms, villages, or towns; under customary law the Paramount Chief holds land in trust on behalf of the community. - About 95% of the territory falls under Customary law; only the Western Area (including Freetown) is covered under freehold. - Non-citizens are not allowed to own land, although it is estimated that 20% of all arable land is leased to foreign businesses. - Challenges to security of property: - Difficulties in establishing ownership, ambiguity in customary land rules, uncertainty of dispute resolution outcomes, vulnerabilities to corruption, and expropriation affect confidence in investments in real property. - Urban land registration is underdeveloped, still fully manual; integrity of records in the Ministry of Lands Housing and Country Planning is questionable. - Theft and tampering with land records is widespread, with reports of bribery for access to, disposal or alteration of documents. - Mortgages are uncommon due to inability to confirm ownership and property boundaries. - There is no formal registration system for customary land, generating disputes particularly over economically important land; violent clashes have resulted from perceived unfairness in foreign land deals. - Case load and dispute resolution: - In 2015 an estimated 50% of cases in the local courts involved land disputes; some rough estimates heard by the mission suggest it is now closer to 70% in the entire judiciary. - Backlogs in disposition of land-related cases limit confidence in real estate investments. - Land disputes are not under the jurisdiction of the Fast Track Commercial Courts. - Local courts (Local Court Act of 1963, structure amended in 2011) have original jurisdiction on civil and criminal matters outside the Western Area, but face lack of resources, non-application of due process and unpredictable costs. - Role of Paramount Chiefs and customary arrangements: - Paramount Chiefs are custodians of customary land and any significant agreements must be approved by the Paramount Chief; the power is often used as an economic or political tool rather than as an impartial arbiter. - Outright sale of customary land is prohibited; customary land may be leased. Paramount Chiefs or chiefdom councils traditionally negotiated on behalf of owners. - Agreements between mining companies and customary landowners are often disadvantageous to local communities; prior to the Customary Land Rights Act, FPIC only meant an obligation to consult and large-scale mining did not require FPIC. - Formal lease agreements for mining are rare; where executed, paramount chiefs and councils represent the community and may not always act in the community’s best interest. - Speculative buyers have been found to lease customary land intending to profit from later transfers to investors. - Government leasing practices: - The government has leased customary land with intention to sub-lease to investors; 74,000 acres were leased by the government between 2011 to 2013 and subsequently subleased to a palm oil company. - Chiefdom council negotiations with the government sometimes proceeded with minimal community participation, raising conflict of interest concerns. - Legal and institutional reforms on land: - Two landmark laws enacted in August 2022: National Land Commission Act (NLCA) and Customary Land Rights Act (CLRA). - Key provisions: reorganize land registry infrastructure, establish a registry for customary land, formalize land dispute resolution procedures (including customary land), restrict industrial development use, impose inclusion of certain contractual obligations into lease contracts, limit leases by foreign entities, establish grievance mechanisms, reduce maximum term for leases of customary land to 50 years, require registration of land before negotiations can commence, and provide that leased land not used within 5 years of the lease will revert to the owner. - Status and implementation: enacted but not yet executed or enforced; Ministry of Land plans to pilot the program in select areas. Significant improvement is not expected in the short term due to substantial data verification and encoding needs. The World Bank is providing technical assistance; significant resources will be needed from the authorities for sustainability. - Informal taxation and fees: - Informal taxation of customary land users is common: non-statutory fees such as community development fees, social insurance fees and access to water sources fees. - These may be collected through the Chiefdom or directly from individuals or groups, paid by chiefdom members and outsiders, and may sometimes be in kind. *IMF | Technical Report – Sierra Leone Governance & Corruption Diagnostic | 79–83* ### 189. Expropriation of property is allowed under the Constitution, but only for limited grounds ### 189. Expropriation of property is allowed under the Constitution, but only for limited grounds ### Expropriation legal framework and investor protections - Expropriation of property is constitutionally allowed for limited grounds including public safety and security. - Investment Promotion Act of 2004 provides protections for investments. - Sierra Leone is a signatory to the International Center for Settlement of Investment of Disputes (ICSID) Convention and the Multilateral Investment Guarantee Agency (MIGA) that protects foreign investors from expropriation risks. - Sierra Leone scored below the regional average in the World Justice Project Rule of Law Index on due process and adequate compensation during expropriation proceedings. - Adequate compensation can be challenging due to difficulty in establishing ownership and land boundaries with the current land registration system. ### Reported abuses and land-grabbing risks - The mission learned there are cases where expropriation of private property, particularly lucrative examples, has been abused to reclassify private land into state land to allow for rent seeking in its disposition. - Land grabbing is prevalent, with reported syndicates involving government officials manipulating or destroying records to illegally acquire land. - Syndicates reported include people in government who facilitate: - the conversion of land into state land; or - the large-scale leasing of customary land, taking advantage of poor governance in these agreements, to sublease for a profit. ### Selected recommendations related to land, courts, and governance (Table 13 excerpts) - Develop a case management system that collects and regularly publishes granular information on case disposition rate. - Agency: Judiciary/MoJ/JLSC - Timescale: MT - Enforce the prescribed period for resolving court cases with proportionate disciplinary/administrative consequences for judges and lawyers. - Agency: Judiciary/MoJ/JLSC - Timescale: ST - Prohibit the assignment of non-relevant cases to specialized courts. - Agency: Judiciary/MoJ/JLSC - Timescale: ST - Maintain and strengthen the digital database of land titles. - Agency: MoL - Timescale: MT - Cooperate with ACC in conduct of corruption risk assessment in record keeping of land titles and data in the Ministry of Lands, National Land Commission, and the Ministry of Justice. - Agency: JLSC/MoL/NLC/MoJ - Timescale: ST - Introduce and implement a policy to end the appointment of contractual judges. - Agency: Judiciary/MoJ/JLSC - Timescale: ST - Introduce/amend the relevant court procedural rules to prohibit assignment of cases outside the jurisdiction of the court and to ensure the transparent and non-arbitrary assignment of cases to judges. - Agency: Judiciary/MoJ/JLSC - Timescale: ST - Introduce a policy that provides for a) transparency in the selection process for members of the judiciary (including public participation in the evaluation of applicants) and b) defined criteria for the selection of judges. - Agency: Judiciary/MoJ/JLSC - Timescale: ST - Promote alternative dispute resolution as a venue for commercial conflict resolution. - Agency: Judiciary/MoJ/JLSC - Timescale: ST - Amend the Constitutional Provision that allows for the suspension of the Chief Justice at the sole discretion of the President. - Agency: MoJ/Office of the President - Timescale: MT ### Effectiveness of the anti-corruption framework — overview - Section VI assesses legal, institutional, and operational challenges and proposes reforms to strengthen the anti-corruption framework. - The anti-corruption framework generally follows international standards; principal legislation includes the ACA 2000 (amended in 2008 and 2019). - The Anti-Corruption Commission (ACC) is the principal authority for prevention, investigation and prosecution of corruption offences. - Sierra Leone is party to international treaties aimed at combating corruption, but international conventions must be domesticated to have legal effect. - The country completed UNCAC Implementation Review cycles with clearly identified gaps. ### Political commitment and strategic plans - Authorities have emphasized the need to prioritize the fight against corruption; President Bio has highlighted steps taken since 2018 and reiterated support for the ACC. - Initiatives include the Pay No Bribe Campaign. - The MTNDP identifies governance and accountability as a key enabler and emphasizes strengthening the fight against corruption and illicit financial flows. - The Plan lists targets for the ACC by 2030, including strengthening systems and processes, raising public awareness, enhancing law enforcement and partnership, and improving performance on global corruption indicators. - NACS 2024-2028 (promulgated December 2024) encompasses four strategic objectives: - Accountability and Transparency; - Coordination and Capacity; - Social Justice; - Utility Governance. - Authorities reported that an action plan would be developed pursuant to the NACS, but the relevant work was just initiated at the time of reporting; subsequent note indicates Action Plans from MDAs have been developed and implementation has begun, with the Steering Committee and IMCs established and operational. ### Structural weaknesses undermining anti-corruption efforts - Key weaknesses: insufficient independence of anti-corruption institutions (including oversight bodies); shortages in financial, technical, and operational capacities; deficiencies in prevention/detection mechanisms; heavy use of settlement and prolonged court processes for corruption cases. - The NACS process shows shortcomings in transparency and coordination: - Governance structure of the National Steering Committee (NSC) and selection of “prominent individuals” is unclear. - Progress reports of the NSC and monitoring reports by Integrity Management Committees (IMCs) are not required to be published. - The mission could not locate the Annual Report of the NSC on NACS 2018-2023, which is supposed to be publicly accessible. - Some entities were not aware of proposed activities relevant to them, indicating dissemination and coordination gaps. ### Asset declaration system — findings and gaps - Public officials must file declarations of income, assets, and liabilities with the ACC upon taking office, biennially, and when leaving office (sect. 119, ACA). - Obligation applies to officials holding grade 7 positions and above. - Declarations cover the assets of the official, spouse, and children and are filed through an electronic platform (www.anticorruption.gov.sl). - Sanctions exist for non-compliance (sect. 122); ACA amendment enables ACC to issue a default notice and sanctions including salary withholding, suspension, and dismissal (sect. 122A (2) and sect. 122A (5)). - ACC reported compliance was up to 98%. - Previous statistics reported by authorities on asset disclosure: - Number of Institutions -182 - Number of total staff - 17,253 - Total Declarants - 15,712 - Total Defaulters -1,541 - Total MDAs with 100% Declaration – 52 - Total MDAs with 90% - 99% - 51 - Total MDAs with 50% - 89% - 66 - Total MDAs with 0% - 49% - 13 - There is currently no systemic mechanism to verify asset declarations; verification is either random or complaint-driven (sect. 121, ACA). - No designated ACC officer to conduct verification; plans exist to create an asset declaration department but resource limitations prevent recruitment. - Section 119 of the ACA requires declarations to be kept confidential, which may hinder public scrutiny; NACS 2024-2028 calls for publication of asset declarations. - Recommendations implied: - Amend ACA to allow publication of declarations for Politically Exposed Persons with due consideration for private data protection. - Adopt a risk-based approach to verification rather than blanket verification. ### Corruption risk assessment — practices and limitations - ACC developed a Corruption Risk Assessment tool “systems and process review” with two modalities: comprehensive review and thematic review. - Comprehensive reviews require ACC consultation with the concerned entity, presentation of preliminary findings, and a report identifying key risks and recommendations. - The concerned body has three months to address identified issues; ACC evaluates remedial actions and can apply sanctions including holding the head of the public entity accountable. - Corruption risk assessment reports are published on the ACC’s website, but there is limited information on follow-up actions. - NACS 2024-2028 highlights MDAs do not fully implement ACC Systems Review recommendations and no sanctions have been practically applied by the ACC against MDAs in non-compliant cases. *IMF | Technical Report – Sierra Leone Governance & Corruption Diagnostic* ### 202. Further measures to strengthen corruption risk assessment are essential to help ### Further measures to strengthen corruption risk assessment are essential to help enhance transparency and integrity ### Corruption risk assessment: current scope and gaps - Currently, corruption risk assessment only covers a small number of MDAs; prioritization reflects ACC’s limited manpower and resources and centers on the “game changer” sectors for national development decided by the Government. - A more systemic assessment would: - Help acquire a comprehensive understanding of risks at the national level. - Identify public positions particularly vulnerable to corruption. - Enable gradual shift to a risk-based approach for corruption prevention. - Sectors and industries recommended for prioritization include the extractive and mineral sector, revenue administration, and police. - The Corruption Prevention Manual, which provides an operational guide for carrying out risk assessment and other corruption prevention activities, needs to be reviewed to address emerging policy issues and operational and structural gaps by August 2025. - The Corruption Risk Assessment Guidelines were reported to be used by authorities but were not publicly accessible during the mission; after the first draft of this report, these guidelines were uploaded to the website in August 2025. - The NACS secretariat and the Corruption Prevention Department within the ACC plan to develop a common approach to the IMCs in conducting corruption risk assessments, including by using the scorecard for MDAs and Local Councils. - Having clear and transparent policies and procedures is critical for conducting effective corruption risk assessment. ### Access to Information - Legal framework: - Right to Access Information Act 2013 (RAIC) provides for disclosure of information held by public authorities, including on a proactive basis (sect. 8(1)); denial only in exceptional cases (part III). - Access to Information Commission (AIC) established to oversee implementation of the RAIC (sect. 30). - Appeals on denial can be made to the public authority, then to the AIC, and further to the High Court (sect. 46). - Implementation gaps and challenges: - Only a handful of MDAs have developed proactive publication schemes pursuant to RAIC (sect. 8(3)). - Government open data portal exists but very few datasets have been updated on a regular basis. - AIC cited inadequate financial, human and operational resources, an entrenched culture of secrecy, and insufficient compliance by various MDAs on proactive publication. - AIC priorities include: - Promoting enactment of a draft bill on records and archives management and data protection. - Improving complaints management and speeding up response to requests. - Developing a framework to support MDAs in updating websites and publishing annual reports. ### Institutional accountability and transparency of reporting - Delays in preparation and publication of policies and activity reports across government weaken institutional accountability. - While lack of resources and capacity constraints are cited, a strong tendency for opacity in the public sector is identified as a root cause. - The ACC cited several policies and activity reports during the mission, but many are not published on the website or are difficult to find, making public oversight challenging. - Limited transparency and accountability in the public sector are significant impediments to corruption prevention. - Post-mission update: GoSL reported that the ACC has commenced, though not concluded, roll-out of Gifts Register in MDAs. ### Conflicts of interest and public integrity - Legal rules on preventing and managing conflicts of interest are relatively comprehensive; implementation needs monitoring. - Section 45 of the ACA prescribes rules on conflicts of interest, including sanctions on non-compliance. - Activities outside MDAs that could pose potential conflicts must be declared (Civil Service Code, Regulations and Rules: Principles of the Civil Service, sect. (d) (iv); ACC, sect. 7, Codes of Conduct). - Gift disclosure rule: - Gifts or personal benefit exceeding 500,000 SLE in value or where total value received directly or indirectly from one source in any twelve-month period exceeding this amount shall be disclosed to the relevant public body (sect. 51(4), ACC); hand-over is not required. - Failure to disclose may result in a fine or imprisonment (sect. 51(5), ACC). - Implementation gaps: - NACS 2024-2028 indicates no gift registers in most MDAs and Local Councils, jeopardizing effective implementation of gift regulations. - No post-employment restriction established for former public officials taking up new functions within the private sector. - Limited information on monitoring and oversight of operations; lack of transparency may hamper effective implementation of conflicts of interest rules. ### Importance of accountability: audit process and parliamentary oversight - Strengthening accountability in the audit process can reduce opportunities for corruption. - Audit Service Sierra Leone (ASSL) plays a critical role, but auditee compliance tends to be weak, hampering effectiveness in identifying irregularities associated with corruption. - Problems identified: - Submission of financial statements and evidence has often been tampered to hide questionable transactions. - Clauses on surcharges for non-compliance have never been implemented. - Public Accounts Committee (PAC) oversight is limited; PAC suffers institutional weaknesses that undermine legitimacy, effectiveness, and follow-up on audit reports. - PAC lacks a sub-committee to track MDAs’ compliance with its recommendations. - Consequence: These gaps can be exploited by corrupt persons to escape accountability. ### Anti-corruption institutional arrangements and independence concerns - Multiple MDAs and institutions engage in anti-corruption efforts, including the ACC, the Office of the Attorney-General and Minister of Justice, the ASSL, the National Public Procurement Authority, the Office of the Ombudsman, and an Anti-Corruption Division (ACD) in the High Court. - Legal safeguards against undue influence exist but may be insufficient in an environment of heavy executive powers: - Laws and governance structures lack important protections and contain mechanisms that allow the President to exert control over oversight bodies, potentially curtailing institutional, operational and financial autonomy. - Legal safeguards for independence vary across agencies; ACC independence is established by section 9 of the ACA, while Auditor General’s independence is enshrined in the Constitution (sect. 119). - Autonomy is not clearly addressed in relevant laws for some oversight bodies (e.g., ASSL). - Executive discretion in selection, appointment, and dismissal of senior officials: - ACC Commissioner and Deputy-Commissioner appointed by the President, subject to parliamentary approval (sect. 3, ACA); tenure set at five years with eligibility for re-appointment for another term (sect. 4). - Selection process is opaque and lacks clear procedure, undermining transparency and public scrutiny; Parliamentary Appointment Committee vets nominees but little information is available on decision-making. - Removal standards and process for ACC Commissioner and Deputy-Commissioner set under sect. 4 of the ACA; if an investigation is required, President appoints a tribunal; selection of tribunal members remains closed and lacks sufficient oversight. - During tribunal investigations the President may suspend the official from performing functions (sect. 4(7), ACA); suspension can be indefinite in practice, potentially pressuring officials to resign. - Auditor General is appointed by the President with no clear procedure; removal procedures provided under sections 119(9) and 137 of the Constitution. - Case concerns and international standards: - Suspension and removal of the former Auditor-General and Deputy Auditor-General raised serious concerns domestically and internationally. - INTOSAI warned suspension decision may “negatively affect the Audit Services’ ability to perform its accountability function without fearing retaliation and/or repercussions”, contravening the Mexico Declaration on SAI Independence. - Tribunal findings of serious misconduct and ethical violations were controversial, with alleged due process violations. - Timeline and procedural concerns: - On 11 November 2021, then Auditor-General and Deputy Auditor-General were suspended, a month before the planned release of the Annual Auditor General’s Report for Financial Year 2020. - In July 2024, the President accepted the Tribunal’s recommendation and progressed the case to Parliament; with an over two-thirds majority vote, Parliament approved the removal despite opposition rejection and Lawyers’ Society concerns about procedural irregularities. - The removal has had an adverse impact on ASSL independence and may undermine its credibility and effectiveness. - Recommendation: - Authorities are encouraged to comply with international standards and good practices to ensure independence and effectiveness of the ASSL in maintaining transparency and accountability. *IMF | Technical Report – Sierra Leone Governance & Corruption Diagnostic | excerpt* ### 210. In this context, an important step forward would be the creation of an independent body ### 210. In this context, an important step forward would be the creation of an independent body ### Recommendation: Independent body for recommending senior leadership - Create an independent body with responsibility for recommending leadership candidates for senior oversight bodies, including as a minimum: - the Supreme Audit Institution (the Auditor General’s Office) - the Central Bank - the Anti-Corruption Commission - the Head of the Judiciary - the Mineral Wealth Fund (for reasons identified elsewhere in this report) - Recommendations to be: - based on published criteria - accompanied by an obligation to publish reasons for recommending particular candidates - Require civil society monitoring of the recommendations and publication of that monitoring to add an additional layer of accountability - Expected benefits: - improve accountability and transparency - reduce the perception that senior appointments are based on political expediency rather than merit - involve meaningful engagement of civil society through scrutiny - Potential extension: - extend the transparent recommendation (and selection) mechanism to other senior roles where transparency is important (for example, senior professionals for the Mineral Wealth Fund governance structures) ### Country examples of transparent selection mechanisms (Box 3) - Indonesia: - Multi-step process for Chairperson and Deputy Chairpersons of the Corruption Eradication Commission (KPK): - (i) Announcement in leading newspapers and on websites - (ii) Selection Committee formed with members appointed by the House of Representatives (DPR) and representatives from government, law enforcement, academia, civil society, and anti-corruption professionals - (iii) Evaluation: background checks and a public "fit-and-proper test" - (iv) Shortlisting: top ten candidates submitted to the President - (v) Final selection: President and DPR select five candidates (1 Chairperson and 4 Deputies) from the shortlist - Ukraine: - Head of the National Anti-Corruption Bureau (NABU) selected through a multi-stage process: - (i) Announcement and Application - (ii) Initial Screening by a competition commission of six members (three appointed by the Cabinet of Ministers; three selected based on proposals from international and foreign organizations) - (iii) Testing and Interviews including general aptitude tests and integrity interviews - (iv) Final Selection: commission shortlists top candidates and recommends top three to the Cabinet of Ministers for appointment - Sri Lanka: - Appointment of the Director General of the Commission to Investigate Allegations of Bribery or Corruption (CIABOC): - Governed by the Constitution (as amended by the Twenty-First Amendment) and the Anti-Corruption Act, No. 9 of 2023 - President appoints head of CIABOC only on recommendation of the Constitutional Council and in consultation with the Commission - Constitutional Council is an independent consultative body composed of senior political leaders and representatives from civil society to safeguard independence of appointments ### Resources, autonomy, and operational constraints for anti-corruption institutions - Financial and human resource constraints: - Anti-corruption agencies’ budgets (including ASSL) subject to regular state budget process and at the suggestion of the President, reducing financial autonomy and jeopardizing independence - All institutions reported budgetary constraints causing operational challenges, including delayed disbursement affecting recruitment and retention - Continued budget cut for the ACC highlighted as limiting capacity-building programs - Low salary scale impedes retention of skilled professionals; ACC staff turnover rate amounted to 8.5% in 2022 - Material and capacity gaps: - Severe shortages of vehicles and office space - Insufficient IT and other material infrastructure - Lack of intelligence officers, particularly in provincial offices, incommensurate with workload - Resource inadequacies hinder ACC’s capacity to launch proactive investigations - Anti-Corruption Division (ACD) of the High Court: - Established in 2019 under Section 2 of the High Court (Divisions) Order 2019 to hear and determine all anti-corruption matters instituted by the Anti-Corruption Commissioner - Composition: 2 specialized judges and 5 general jurisdiction judges designated by the Chief Justice, all trained on adjudication of corruption cases - Gaps: - No specific rules promulgated on selection of ACD judges - Little information on disciplinary measures imposed on anti-corruption judges by the Judicial Legal Service Commission (JLSC) - ACD does not have a dedicated budget; resources allocated by the High Court - No case management and tracking mechanism at the ACD ### Integrity Management Committees (IMCs) and inter-agency coordination - Purpose and composition: - IMCs established with ACC support in various MDAs, Local Councils and different branches to develop anti-corruption policies, strengthen integrity and promote implementation of the NACS within agencies - Composition usually includes the Internal Auditor, Finance Officer, Procurement Officer, and other relevant posts - Operational challenges: - IMCs are directly supervised by the ACC’s NACS Secretariat but lack financial and operational autonomy, leading to staff shortages and high turnover associated with poor record management - Some MDAs lack strong ownership of IMCs, limiting functionality - Coverage and targets: - At time of report preparation there were 82 IMCs, far less than the total number of over 125 MDAs and 25 Local Councils - Authorities committed to increasing the number of IMCs by 40% in the future - Expectations include: - (i) strengthen monitoring of IMCs’ operations, analyze and publish monitoring reports to enhance transparency and public scrutiny - (ii) mandate institutionalization and funding of the IMCs - Coordination mechanisms: - ACC has concluded Memoranda of Understanding (MoU)s with several MDAs (examples: Audit Service Sierra Leone (October 2022), Office of the Ombudsman (July 2019), FIU (April 2019), Public Sector Reform Unit (August 2019), and the NPPA) - MoUs need renewal and more fixed coordination is encouraged - NACS 2024-2028 identifies insufficient anti-corruption coordination, e.g., weak collaboration between ACC and ASSL and requests real implementation of MoU with specific targets, formal relationship between ACC and Directorate of Internal Auditors (MoF), and setup of joint task forces for auditing high risk MDAs and Local Councils ### Whistle-blower protection and public trust - Legal framework: - ACA prescribes protection for informants and witnesses, including protection of their identities (Sects. 81 and 82) - ACC’s non-binding whistleblower protection policy includes temporary relocation and legal aid - A 10% Reward Scheme is included for whistleblowers and informants who provide cogent information leading to the recovery of funds - Authorities reported a comprehensive whistleblower protection policy concerning all criminal offences would be finalized soon - ACC has a report centre and a hotline allowing anonymous reporting; IMCs can facilitate public reporting - Implementation gaps and perceptions: - Limited capacities and resource constraints raise questions about effectiveness in practice - NACS 2024-2028 underscores MDAs and Local Councils do not have an effective whistleblower mechanism as a preventive tool - UNCAC review highlights need to codify and establish a formal whistleblower protection system beyond measures in ACA - Public trust metrics: - 2022 Afrobarometer survey: approximately 46 percent of respondents considered that a local government office or anti-corruption authority would not take any action upon reporting corruption (e.g., misuse of funds or solicitation of bribes) - 64.2 percent of respondents referred to risks for retaliation or other negative consequences emanating from reporting ### Investigation, prosecution, and the ACC’s Non-Prosecution Policy - ACC powers and settlement mechanisms: - ACA’s 2019 amendment grants the ACC Commissioner power to pursue corruption cases through out-of-court settlement in addition to prosecution (sect. 7) - ACC can enter into an agreement with a suspect to: - (i) refund the amount involved plus an interest of not less than 10% - (ii) preclude himself/herself from holding public office for a period not less than three years - ACC has power without a warrant to enter any business and can arrest persons suspected of committing a corrupt act (sects. 66 and 70, ACA) - Non-Prosecution Policy: - Developed in 2022 with support of the UK/Sierra Leone Pro Bono Network to guide non-conviction-based asset recovery - Serves as an internal guideline for prosecutors and outlines principles and core criteria for prosecutorial discretion, including nature of offence, suspect cooperation, capacity to provide restitution, probable sentence if convicted, impact on public, necessity of stronger deterrence, etc. - Prescribes alternatives to criminal prosecution: civil penalties, restitution for misappropriation offences (Section 87 and Section 133 of the ACA 2008, as amended in 2019), forfeiture and confiscation of assets, cooperation agreements, non-prosecution agreements, and deferral agreements - Transparency and publication: - During the mission the Non-Prosecution Policy had not been published; only a limited PowerPoint slide was available on ACC’s website - Authorities reported each settlement decision would be announced with a press release indicating the perpetrator, corrupt conduct and recovered amount, but the mission found only a few releases on ACC’s website - No centralized online dissemination of press releases; difficulty forming a comprehensive picture of settlement practices - Debarment from office for at least three years is found in only a few settlements, raising questions on uniformity of implementation - Lack of publicly available material on violations of settlement agreements hinders evaluation of compliance - Outcomes and concerns: - Since introduction of the settlement option, the ACC recouped over 80mn SLE (including government stolen vehicles and a duplex building) - Use of settlement considered effective for asset recovery compared with lengthy court processes - However, the application of the Non-Prosecution Policy has led to a significant decrease in the number of prosecutions: - sharp decrease in corruption cases charged by the ACC to the court since 2022 even though number of cases investigated remains relatively steady - raises concerns over balance between settlement and court proceedings, potential erosion of accountability and rule of law, and weakening of the court system due to fewer opportunities to manage complex cases and establish legal precedents - ACD has reported minimal caseload over past years, defeating original objective of specialized court - Terms of settlement are more lenient than typical criminal penalties, potentially increasing possibility for perpetrators to escape or minimize punishment and reinforcing a culture of impunity ### Key statistics and data (as provided) - ACC staff turnover rate in 2022: 8.5% - Number of IMCs at time of report preparation: 82 - Total number of MDAs: over 125 - Total number of Local Councils: 25 - Authorities committed to increasing number of IMCs by 40% - Whistleblower Reward Scheme: 10% for information leading to recovery of funds - Public trust metrics (Afrobarometer 2022): - approximately 46 percent believe a local government office or anti-corruption authority would not take action upon reporting corruption - 64.2 percent cited risks of retaliation or negative consequences from reporting - ACC asset recovery via settlement since policy introduction: over 80mn SLE - Settlement debarment from office duration found in some settlements: not less than three years - Anti-Corruption Division composition: 2 specialized judges and 5 general jurisdiction judges - Investigation of Corruption Offenses by ACC (Data and Statistics provided by ACC): - Year 2020: Number of Cases Investigated 100 - Year 2021: Number of Cases Investigated 113 - Year 2022: Number of Cases Investigated 93 - Year 2023: Number of Cases Investigated 81 - Year 2024: Number of Cases Investigated 116 - Total (2020–2024): 503 *IMF | Technical Report – Sierra Leone Governance & Corruption Diagnostic* ### 222. Notwithstanding the Non-Prosecution Policy, the heavy use of settlement raises a ### Notwithstanding the Non-Prosecution Policy, the heavy use of settlement raises a ### ACC discretion, settlements, and perceptions of impunity - The ACC bears the power to make a final decision on settlement or prosecution. - Through a settlement, the perpetrator only needs to refund the amount involved plus a small interest and be barred from the public office for at least three years. - General criminal penalties for corruption offences involve a fine of at least 50,000 SLE or a minimum 5-year term of imprisonment or both. - The mission learned that some high-profile cases have been resolved through settlement rather than prosecution, generating a perception of impunity, unfairness, and selective justice. - The ACC’s broad prosecutorial discretion on settlement is not subject to court review in Sierra Leone, and it is not clear how the rights of all parties (including bona fide third parties) are safeguarded in the process. - Judicial scrutiny is emphasized as critical for resolutions between the ACC and suspects to ensure conformity with legal standards and safeguard due process. - The ACC’s settlement practice may undermine the separation of powers and raises questions regarding political influence associated with deficiencies in the appointment and dismissal procedure of the ACC’s top management. ### Adjudication of corruption offenses — Anti-Corruption Division (ACD) of the High Court - Despite a specialized function and a reasonable caseload, the adjudication process of the ACD of the High Court remains lengthy. - Contributing factors to delays: - Deficient financial and operational resources. - Frequent court adjournments (mainly due to witness absenteeism, ill preparation of both prosecution and defense, and absence of the accused persons). - Lack of specialized rules. - Centralized processes at the Office of the Master and Registrar of the High Court. - Lack of judicial accountability. - Use of recorders to prepare transcripts is effective, but audio-visual equipment that would facilitate hearings was stolen and not replaced. - According to ACD statistics: "78 Cases handled from 2020 to 2025; 30 Convictions and 24 Ongoing Cases – Statistics provided by ACD." - Most convictions occurred around 2020 and 2021; over the past six years, wide use of the Non-Prosecution Policy by the ACC appears to have resulted in a significant drop in conviction numbers. - Forfeiture: Although sect. 98 of the ACA provides for forfeiture of a convicted person’s property, the ACD case brief refers to only one forfeiture case since its establishment. - Sentencing and deterrence issues: - A Sentencing Guideline exists, but there is a widespread perception that anti-corruption judges are generally inclined to impose the minimal criminal punishments of either a fine (50,000 SLE) or an imprisonment (five-year term of imprisonment) instead of combining both as provided by the ACA. - In practice, most perpetrators chose to pay a fine instead of serving imprisonment. - Application of minimal penalties may not be sufficient to exert a deterrent effect on corruption. - Transparency: High Court case judgements are published online, but there is no specific section dedicated to the ACD judgements on the website. ### Recommendations on the anti-corruption framework (summary of key measures) - Strengthen independence, integrity and accountability of senior oversight officials (e.g., ACC Commissioner/Deputy Commissioner) by introducing an independent selection and appointment body that is transparent, merit-based, and participatory, including: - Recommendation of candidates based on published criteria after a public call for application, with a recommended shortlist of at least three candidates being approved by Parliament before the President’s appointment. - Publication of reasons for recommendations. - Monitoring by civil society of recommendations and publication of monitoring outcomes. - Authority: MoJ; Timeline: MT. - Enhance the effectiveness of the asset declaration system, through: - Revising the ACA to permit publication of asset declarations starting from PEPs, with due consideration for privacy and security (mid-term). - Ensuring verification of asset declarations following a risk-based approach (short-term). - Authority: ACC/MoJ; Timeline: ST/MT. - Enhance transparency and accountability for the application of the Non-Prosecution Policy, including: - Revising the ACA to impose a judicial review and approval of settlement agreements reached between the ACC and suspects within a prescribed time (mid-term). - Publishing the Non-Prosecution Policy on the ACC’s website so it is readily accessible (short-term). - Dedicating a defined section on the ACC’s website to publish all settlements since 2019 (short-term). - Promulgating a regulation to guide implementation of the ACA and prescribe enforcement powers of the ACC (mid-term). - Authority: ACC/MoJ; Timeline: ST/MT. - Strengthen implementation of the NACS, including: - Developing an action plan corresponding to the list of tasks under the NACS (short-term). - Publishing the Annual Report of the NSC in monitoring NACS implementation (short-term). - Considering publication of progress reports produced by the NSC and monitoring reports submitted by MDAs and Local Councils (mid-term). - Enhancing inter-agency coordination and dissemination of the NACS (short-term). - Authority: MoJ/ACC; Timeline: MT/ST. - Enhance establishment and operations of Internal Monitoring Committees (IMCs) by: - Promoting institutionalization and funding of IMCs. - Strengthening monitoring and publishing IMC monitoring reports. - Enhancing operational autonomy of IMCs within MDAs and Local Councils. - Publishing relevant policies and enhancing record management (mid-term). - Authority: Various MDAs/ACC; Timeline: ST/MT. - Continue to reinforce corruption risk assessment: - Perform a systemic national-level assessment of corruption risks (short-term). - Enhance monitoring of Systems Review recommendations and apply sanctions where appropriate (mid-term). - Prioritize follow-up on assessments for sectors particularly vulnerable to corruption (e.g., extractive and mineral sector, revenue administration, police, etc.) (mid-term). - Finalize review of the Corruption Prevention Manual and publish it on the ACC’s website (short-term). - Authority: ACC; Timeline: ST/MT. - Facilitate access to information: - Promote enactment of a draft bill on records and archives management and data protection (mid-term). - Improve complaints management and speed up responses to requests (mid-term). - Develop a framework to support MDAs in updating websites and publishing annual reports/activity reports/policies (short-term). - Authority: Right to Access Information Commission; Timeline: ST/MT. - Manage and prevent conflicts of interest: - Enable registration or tracking of gifts received by public officials (short-term). - Impose post-employment restrictions for former public officials moving to the private sector (short-term or mid-term). - Strengthen monitoring and oversight of conflicts of interest systems and increase transparency (mid-term). - Authority: ACC/various MDAs; Timeline: ST/MT. - Strengthen ACD functioning: - Put in place clear rules on selection of ACD judges and criteria for judicial accountability (short term). - Establish a mechanism to train witnesses to reduce court adjournments (mid-term). - Examine the sentencing process to ensure appropriate penalties for deterrence (mid-term). - Provide sufficient equipment, such as audio-visual facilities (mid-term). - Establish a dedicated website section to publish ACD judgements (short term). - Codify and establish a formal whistleblower protection system beyond limited ACA measures (mid-term). - Authority: JLSC/MoJ; Timeline: ST/MT. - Strengthen coordination of anti-corruption efforts, particularly between the ACC and ASSL: - Ensure effective implementation of the MoU with specific targets (mid-term). - Establish a formal relationship between the ACC and the Directorate of Internal Auditors (MoF) (short-term). - Set up joint task forces for auditing high risk MDAs and Local Councils (mid-term). - Authority: ACC/MoF; Timeline: ST/MT. - Grant sufficient financial and human resources to oversight bodies (particularly the ACC and ASSL), including considering adopting a dedicated budget for their operation. - Authority: MoF; Timeline: ST. ### Anti-Money Laundering (AML) — introduction and legal/institutional arrangements - Since the GIABA Mutual Evaluation Report (MER) in December 2020, Sierra Leone has effectively improved the technical compliance of its AML Framework. - The Anti-Money Laundering and Combatting of Financing of Terrorism and Financing the Proliferation of Weapons of Mass Destruction Act of 2024 (‘the 2024 Act’) addressed deficiencies in customer diligence by financial institutions and DNFBPs, assets freezing and confiscation including non-conviction-based confiscation, coverage of PEPs linked to International Organization, and the ability to recover property of corresponding value. - To date, Sierra Leone is compliant or largely compliant on twenty-eight FATF Recommendations out of forty. - Fraud, corruption, and bribery among public officials are identified as predicate crimes generating the highest level of proceeds of crime (identified in the 2023 NRA and 2020 MER). - DNFBPs in mining, real estate, gaming sectors, as well as lawyers, accountants, and car dealerships are identified as having a very high vulnerability to laundering of criminal proceeds, given the largely informal economy and high use of cash. - There has been no targeted risk analysis in Sierra Leone specifically on corruption-related money laundering; ineffective investigation and prosecution of money laundering cases by key authorities (such as the ACC) impede collection of qualitative data on where corruption proceeds are being laundered. - The Financial Intelligence Agency (FIA) provides vital financial intelligence but has a limited role in investigations, underscoring the need for stronger collaboration and support for the ACC. - Legal and institutional framework: - Main legal instruments include the AML/CFT/PF Act, 2024; Directives and Guidelines For Financial Institutions on the Prevention of Money Laundering/Terrorism Financing 2017; and Directives and Guidelines for Mobile Money Service Providers on the Prevention of Money Laundering, Terrorism Financing and Proliferation Financing 2023. - Competent authorities include the Office of the Attorney-General and Minister of Justice, the Office of the Director of Public Prosecutions, National Investment Board, Sierra Leone Police, ACC, FIA, Central Bank, and any law enforcement agency or person lawfully exercising such powers. - Section 107(1) of the 2024 Act empowers any competent authority, including the ACC, with the power to investigate or prosecute unlawful activities to also tackle related offenses including money laundering, financing of terrorism, and financing the proliferation of weapons of mass destruction. - Section 107(2) allows prosecuting authorities to collaborate with other law enforcement agencies to facilitate necessary investigations. - Jurisdiction and court divisions: - The High Court has jurisdiction to adjudicate corruption and money laundering offenses and has dedicated the Anti-Corruption Division (ACD) and the Criminal Division respectively. - Sections 2 and 8 of the High Court (Divisions) Order 2019 provide that the ACD shall hear and determine all anti-corruption matters instituted by the Anti-Corruption Commissioner (ACC), while the Criminal Division hears other criminal matters, making the ACD designated to adjudicate corruption-related money-laundering cases. - Institutional autonomy: - Sierra Leone has established a Financial Intelligence Agency (FIA) with increased operational autonomy. - The 2024 Act replaced the previous Inter-Ministerial Committee (IMC) with the Financial Intelligence Advisory Board, removing the IMC oversight requirement and ensuring greater operational independence of the FIA. *IMF | Technical Report – Sierra Leone Governance & Corruption Diagnostic | selected excerpts* ### 234. While there are AML coordination mechanisms in place in Sierra Leone, their efficiency ### tarea2025106-source-pdf - 234. While there are AML coordination mechanisms in place in Sierra Leone, their efficiency ### AML coordination structures and operationalization - Sierra Leone has established the Financial Intelligence Unit Advisory Board (‘the Board’) to enhance AML/CFT coordination at both policy and operational levels, replacing the IMC. - The Board is chaired by the Minister of Finance and comprises key government officials, including the Attorney-General, the Governor of the Bank of Sierra Leone, the Commissioner of ACC, and heads of various law enforcement agencies. - The Board is to meet at least twice a year and can appoint committees to assist in its functions, but no evidence has been provided regarding its operationalization. - Unlike its predecessor, the Board does not have supervisory powers over the activities of the FIA, allowing the FIA greater operational independence. The Director of the FIA is the Secretary of the Board, with no voting rights. - A Financial Crimes Working Group has been established by the FIA to provide a framework for cooperation and coordination among members and to: - proactively monitor significant financial crimes; - track international standards and disseminate relevant knowledge among stakeholders; - enhance information sharing and streamline investigations; - conduct comprehensive studies to identify vulnerabilities within the financial landscape; - implement capacity building and training initiatives for personnel to address money laundering and terrorist financing. ### C. Anti-Money Laundering Preventive Measures — Monitoring compliance with AML requirements - Sections 85(1), 85(2) and 85(3) of the 2024 Act provide that AML supervision of financial and non-financial sectors is to be conducted by several authorities, including: - the Bank of Sierra Leone for financial institutions, currency exchange, and transmission businesses; - the Sierra Leone Insurance Commission for the insurance industry; - the General Legal Council for legal practitioners; - the Institute of Chartered Accountants of Sierra Leone for chartered accountants; - the National Minerals Agency for the mining sector; - the National Tourist Board for casinos, including internet casinos/gaming; - the FIA if a sector does not have a designated supervisory authority or if any designated supervisory authority fails to undertake the required action. - In line with Section 85(2) of the 2024 Act, the FIA is currently acting as the supervisor of the real estate sector. Key capacity and implementation constraints - Supervisory capacity gaps and the absence of sectoral AML risk-based supervision frameworks hinder effective monitoring of reporting entities, especially DNFBPs identified as high-risk for laundering of criminal proceeds, including corruption. - In practice, the FIA’s Examination and Compliance Department bears the burden of AML supervision of DNFBPs. - Section 85(3) of the 2024 Act allows the Agency to act as supervisory authority where designated supervisory authorities do not act, which is currently the case for all supervisors of DNFBPs. - Supervisors of high-risk sectors (mining, gaming), as well as lawyers, accountants, and car dealerships, are yet to be operational and dedicate resources to AML supervision. - The FIA has allocated 15% of its yearly resources and dedicated eighteen staff members to its evaluation and compliance department, but the lack of sectoral AML risk-based supervision frameworks for DNFBPs impedes compliance monitoring. - There is limited evidence demonstrating effective implementation of AML risk-based supervision within the financial sector. - The Anti-money Laundering Act was amended in 2024 to make the BSL the designated AML/CFT supervisor of financial institutions, currency exchange, and transmission businesses, with responsibility for overseeing most reporting entities in this sector. - The BSL has dedicated only two staff members to AML supervision. - Despite the 2024 Act addressing national technical compliance deficiencies like PEP identification, the Bank of Sierra Leone has not updated its supervisory methodologies. - After the first draft of this report, the mission learned that the FIA, in collaboration with BSL and SLICOM, is in the process of developing risks based supervisory tools. ### Politically Exposed Persons (PEPs) - Section 63 of the 2024 Act mandates that reporting entities implement robust risk management systems to identify customers and apply enhanced due diligence measures for PEPs. - Measures include obtaining senior management approval before entering or continuing business relationships with PEPs, identifying the source of wealth and funds, and conducting ongoing monitoring. - Section 63 applies to international PEPs, their family members, close associates, and individuals entrusted with prominent functions by international organizations. - Reporting entities must determine if beneficiaries of life insurance policies are PEPs and, in higher-risk cases, inform senior management prior to paying out to allow for enhanced scrutiny and potential filing of suspicious transaction reports. ### D. Transparency of Beneficial Ownership (BO) information - Since its MER in 2020, Sierra Leone has not implemented a mechanism to collect and maintain reliable, readily accessible and up-to-date information regarding beneficial owners of legal entities and legal arrangements in line with FATF Standards. - The National Mineral Agency (NMA) has ongoing efforts under section 58 of The Mines and Minerals Development Regulations, 2023, to collect BO information for applicants and license holders holding 5% or more of shares. - Challenges to BO data quality at the NMA include: - absence of a verification mechanism; - lack of effective, proportionate, and dissuasive sanction mechanism for non-compliance by applicants and license holders; - BO information collected does not always extend to identifying beneficial owners who are natural persons holding 5% or more of shares of mining companies (GoSL Online Repository). - The lack of reliable BO information and low enforcement of AML preventive measures in high-risk sectors limit effective identification of PEPs and create significant challenges for competent authorities. - The FIA indicated that financial institutions have started providing periodic PEPs reports, but it is not clear to what extent the Bank of Sierra Leone and the Sierra Leone Insurance Commission are monitoring compliance in this regard. DNFBPs remain particularly vulnerable to illicit involvement of high-risk BOs such as PEPs. ### E. Financial intelligence — Receipt, dissemination, and STRs - Corruption-related suspicious transaction reports (‘STRs’) remain notably scarce relative to reported levels of corruption. - Between 2022 and 2024, the FIA received 133 STRs, mainly from financial institutions, with sixteen of them related to corruption offenses. - STRs by year (Table 16): - 2022: Corruption 11, Embezzlement 1, Total STR Received 27 - 2023: Corruption 2, Embezzlement 0, Total STR Received 64 - 2024: Corruption 1, Embezzlement 1, Total STR Received 42 - Total: Corruption 14, Embezzlement 2, Total STR Received 133 - Only 05 STRs received from DNFBP Sector (Law Firms). - Between 2022 and 2024, the FIA submitted twelve dissemination reports to the ACC but none of those cases were effectively investigated or prosecuted for money laundering. - Over that period, the FIA received three information requests from ACC. - The limited flow of STRs and limited financial intelligence dissemination may hinder investigations and perpetuate a cycle of impunity, underscoring the need for enhanced awareness and engagement with reporting entities, AML/CFT supervisors, and other stakeholders. ### F. Anti-Money Laundering enforcement — Investigations, prosecution, adjudication, and asset recovery Investigation and prosecution - The ACC captures all instances of corruption-related investigation and prosecution as required by Section 7(1) of Anti-Corruption Act, 2008. - The ACC investigated 503 cases between 2020 and 2025 on several types of corruption offenses, originating from sources including the Sierra Leone Police, the FIA, the Audit Service (ASSL) through Audit Report, Civil Society Organizations, and the public. - Although AML provisions (Section 107(1) and 107(2) of AML/CFT Act, 2024) empower law enforcement agencies to collaborate, investigate, and prosecute money laundering, the ACC has predominantly focused investigations on corruption. - Since 2018 the ACC has conducted only nine corruption-related money laundering investigations; none led to court charges for corruption-related money laundering. - Inconsistencies between AML and Anti-Corruption frameworks complicate parallel investigations and prosecutions. For example: - Section 7 of the Anti-Corruption (Amendment) Act, 2019, empowers the Commissioner to either initiate court proceedings or negotiate settlements, permitting repayment plus interest and temporary disqualification from public office—an approach that may encourage settlements rather than prosecution. - Both Acts may refer to similar offenses using different terminology (e.g., Section 52 of Anti-Corruption Act, 2008), creating potential confusion and impeding effective prosecution. - Insufficient use of financial intelligence and minimal financial investigation training hinder corruption-related money laundering investigations: - Despite an MoU in April 2019 between the ACC and the FIU’s predecessor, the ACC has made only three information requests to the FIA since 2022. - ACC staff participated in only four money laundering-related training activities attended since 2022. - Section 111 of the 2024 Act grants the High Court of Justice automatic jurisdiction to try an accused person on an indictment containing an offence specified in the 2024 Act without the need for a preliminary investigation or prior application for the preferment of an indictment, but no corruption-related money laundering cases have been reported to have been tried under this jurisdiction. - Potential contributors to lack of trials include resource limitations (insufficient funding, inadequate infrastructure), lack of case preparation and insufficient evidence, and lack of cooperation and clear jurisdictional dedication between the Anti-Corruption Division and the Criminal Division. Asset recovery - Sierra Leone’s Asset Recovery Framework is generally in line with FATF Standards. - The 2024 Act addresses prior deficiencies regarding asset forfeiture related to real assets: - Section 112 allows competent authorities to apply for restraining orders against individuals suspected of holding or controlling property linked to unlawful activities; applications can be made ex-parte and supported by affidavit to prevent disposal of potentially illicit assets. Courts can give directions on management and disposal, including sale of perishable property. - Section 120 establishes a framework for civil forfeiture, permitting authorities to seek confiscation of property derived from unlawful activities without criminal prosecution or conviction; the standard of proof is based on a balance of probabilities. *Source: tarea2025106-source-pdf - 234. While there are AML coordination mechanisms in place in Sierra Leone, their efficiency* ### 253. The absence of efficient mechanisms to manage frozen or seized properties before their ### tarea2025106-source-pdf - 253. The absence of efficient mechanisms to manage frozen or seized properties before their ### Asset management challenges for frozen or seized properties - The absence of efficient mechanisms to manage frozen or seized properties before their final disposal presents a significant challenge for the Sierra Leone Asset Recovery framework. - While the court has the authority to issue directions regarding the management and disposal of assets, including the sale of perishable items, the lack of a structured process for handling properties that are under restraint can lead to deterioration or loss of value. - This gap may hinder the effectiveness of asset recovery efforts and undermine the overall objectives of the legislation aimed at combating financial crimes. ### Proposed procedural remedies - Develop and implement standardized procedures for the management of frozen or seized properties. - Mechanisms could include: - Appointing specialized asset managers. - Establishing clear guidelines for the administration and protection of properties throughout the duration of legal proceedings. - Ensuring proper maintenance and security of assets during interim periods to enhance likelihood of successful recovery and uphold integrity of the asset forfeiture process. ### Legislative and policy inconsistencies affecting recovery - Discrepancies between the asset recovery frameworks under the AML and the Anti-Corruption Acts may constitute a burden to effective recovery and management of corruption proceeds. - The Commissioner of the ACC has the power to negotiate agreements with suspects, allowing them to refund the amount involved plus interest and temporarily disqualify themselves from public office. - This discretionary power has been extensively used since its enactment and "takes away the opportunity to recover laundered proceeds derived from corruption offenses." - The ACC developed a Non-Prosecution Policy in 2022 with the support of the UK/Sierra Leone Pro Bono Network to guide the use of this discretionary power. ### Asset recovery outcomes (2018–2024) - Despite challenges, between 2018 and 2024, the ACC successfully recovered: - over SLE 45,000,000 - and various assets, including 2 Landcruiser Toyota Prado vehicles returned to a building, motorbikes in Koidu City, and 47 laptop computers returned to the National COVID-19 Emergency Response Center (NaCOVERC). - The Commission has repaid these recovered funds and returned assets to several institutions, including: - the Ministry of Transport and Aviation - Sierra Leone Road Safety Authority - the Aberdeen Women’s Centre - the University of Sierra Leone - the National COVID-19 Emergency Response Center (NaCOVERC) - the National Revenue Authority - Noteworthy: none of the related cases have been charged in court. ### Recommendations on the Anti-Money Laundering Framework (excerpt) - Conduct an informed risk analysis to increase understanding of corruption-related money laundering. - Authorities: ACC, FIA, other relevant MDAs - Timeline: MT - Increase the number of successful investigation and prosecution of corruption-related money laundering offenses by: - (i) Ensuring that the use of non-prosecution policy by ACC is not a burden to efficient conduct of corruption-related money laundering investigation and prosecution. - (ii) Providing regular financial investigation training activities to ACC staff. - (iii) Increasing the use of Financial Intelligence by ACC to leverage FIA expertise related to financial investigation. - Authorities: ACC and FIA - Timeline: ST/MT - Address challenges related to the ACC non-prosecution policy that hinder the recovery of laundered proceeds by: - (i) Harmonizing Asset Recovery Legal Frameworks of the 2024 Act and Anti-Corruption Acts to close existing gaps such as those related to the use of settlement in corruption cases. - (ii) Implementing standardized procedures for managing frozen or seized properties, including appointing specialized asset managers and establishing clear guidelines for the administration and protection of these properties. - Authorities: MoJ/ ACC, FIA - Timeline: ST/MT - Implement an accurate, up-to-date, and accessible beneficial ownership registry for all types of legal persons and legal arrangements in line with FATF Standards and EITI Principles. - Authorities: NIB, NMA, FIA/ relevant MDAs - Timeline: MT/ST - Improve compliance monitoring efforts of AML supervisors by: - (i) Updating risk-based supervisory frameworks for financial sectors to be in line with provisions of the 2024 Act. - (ii) Dedicating adequate resources for BSL’s AML supervisory activities. - (iii) Establishing AML risk-based supervision frameworks for DNFBPs, especially high-risk sectors, such as mining, real estate, gaming sectors as well as car dealerships, lawyers, and accountants. - (iv) Allocating adequate resources to the operationalization of designated AML/CFT supervisors of non-financial sector to allow FIA to have more focus on its core missions. - Authorities: AML/CFT Supervisors/MoJ/BSL - Timeline: ST/MT - Improve interagency coordination and cooperation to effectively combat money laundering related to corruption by: - (i) Implementing a dynamic training activity to allow both competent authorities to identify corruption and related money laundering red flags. - (ii) Ensuring proper operationalization of FIA Advisory Board and Financial Crimes Working Group. - Authorities: ACC, FIA Advisory Board, and FIA - Timeline: ST/MT ### Annex excerpt — Digitalization in SOE reporting and transparency - Digitalization of SOE reporting has significantly enhanced transparency of public finances by implementing standardized electronic reporting systems that improve accuracy and timeliness of financial disclosures. - Country examples cited: - Cabo Verde: In 2023, the MOF launched the “SOE Manager” IT platform; currently, twenty-six of a total of 43 SOEs have interfaced their systems with the “SOE Manager”. - Ghana: Integrated digital platforms to submit SOE financial data electronically and make it publicly accessible; State Interests and Governance Authority (SIGA) oversees SOE performance. - Estonia and Lithuania: Use centralized platforms to publish annual financial statements and operational results of SOEs; Lithuania publishes aggregated and company level information including corporate governance indices. - Brazil: SIEST (Sistema de Informações sobre Empresas Estatais) is Brazil’s official system for registration and reporting of SOEs, consolidating financial and operational data from all Brazilian SOEs. - These examples demonstrate how digitalizing SOE reporting enhances transparency, strengthens fiscal oversight, and reduces potential for mismanagement and corruption. *IMF | Technical Report – Sierra Leone Governance & Corruption Diagnostic (excerpt).* --- _Source: https://www.imf.org/-/media/files/publications/tar/2025/english/tarea2025106-source-pdf.pdf_