So Madam President, Can Severance Pay Hold In NOCAL’s Woes?

By Atty Philip N. wesseh (PNW)

One issue that made major headlines in the local media last week was the ugly situation at the Liberia Oil Company of Liberia (NOCAL), which led to President Sirleaf making a nationwide address, in which she endorsed the National Oil Company of Liberia (NOCAL) Board’s approved Sustainability Action Plan (SAP) aimed at ensuring the viability of the entity so that it continues to pursue its mission to develop Liberia’s hydrocarbon resources effectively in the best interest of the nation.

She said the Board’s Action Plan calls for drastic steps to bring costs under control and put NOCAL on a more viable financial footing, adding that these would include significant staff cuts, a reconstitution of the Board, and retirement/replacement of the senior executive leadership.

Prior to endorsing the issue of the Action Plan, there have been reports that the company was heading for bankruptcy and collapse because of unnecessary spending, huge salaries and unnecessary travels, something, that are responsible for the financial woes at the company. Further, it was also said that those at NOCAL were making more salaries than United states President Barrack Obama, something the company said it was not true.

Citing some reasons for the problems at NOCAL, the President said, she underscored that the execution of Production Sharing Contracts (PSCs) with super majors and other reputable international oil companies also resulted in significant interest in Liberia’s hydrocarbon sector with record licensing of seismic data and related revenue; noting that during this period, average revenue generated, US$30.5 million, compared to average annual revenue of US$4.5 million in prior years.

This, according to her, translated into US$10.6 million annual payments to the Government’s Consolidated Fund. The average annual revenue for the sale of seismic data/component for the period 2010–2013 was US$15.6 million – a 300 percent increase when compared to annual seismic revenue generated for earlier periods, she indicated.

President Sirleaf stressed that it was regrettable that, commencing in the fourth quarter of 2013, NOCAL’s revenue for seismic data sale began a precipitous decline, during which total seismic revenue fell by 29 percent from the prior fiscal year and was compounded by the Ebola virus disease of 2014 that led to a reduction in investor-interest across all economic sectors for the impacted West African region.

Furthermore, “There is no doubt that the current oil price collapsed and other external factors, including our recent Ebola challenge which contributed to the current financial crisis that the company is facing”. She further intimated that the Liberians despite the obvious decline in revenue that began in late 2013, NOCAL continued hiring staff at an alarming rate with exorbitant benefits resulting in the current wage bill of over US$7 million per annum.”

Accordingly, President Sirleaf said that the following administrative actions became prudently compelling:

  1. A few members of the Board will continue as an Interim Board until reconstituted. Appropriate severance payment will be made to those leaving.
  2. Contrary to practice, she directed that severance to senior management be reduced by 50 percent and further subjected to tax deductions.
  3. The current President/CEO will be retired with severance, as approved.
  4. The Board will require the immediate resignation or dismissal of the Vice President for Administration, the Vice President for Public Affairs and the Acting Vice President for Corporate Social Relations (CSR) who will receive severance as approved.
  5. An Interim Transition Team composed of the current Chief Operating Officer, the Vice President of Finance and the Vice President of Technical Services, will hold over in the transition period, with severance delayed until the period is over.
  6. The Interim Transition Team under guidance of the Board will take on the immediate task of implementing the SAP, including payment of severance to employees at all levels of the organization and reducing staff to not more than 50 employees.
  7. The Interim Board and Interim Management Team will assure responsibility to implement the Media Intervention Framework and the Security Plan to protect physical assets and documentation. It will give support to the Internal Audit Agency which has been authorized to audit and undertake an inventory of all physical assets.

Today, I join the debate on the situation at NOCAL, especially on the “severance” for officials of the company, some of whom have been asked to resign or be dismissed. The issue in this matter, considering public debate is whether or not some of these officials who were in the driver’s seat are entitled to severance pay. Severance Pay is defined as “compensation that is paid to a qualified employee who has his or her employment “severed.” It compensates an employee for losses (such as loss of seniority) that occurs when a long-term employee loses his or her job.”

Also, “Severance pay,” refers to money (apart from back wages or salary) paid by an employer to a dismissed employee. Such a payment is often made in exchange for a release of any claims that the employee might have against the employer. It is also defined as “money paid to employees who have been dismissed (generally through no fault of their own) to compensate for the time they are not going to work because of the job loss.”

The book, “Labor Relations & Collective Bargaining” (6th edition, page 300) which also refers to severance pay, as “dismissal pay” says it is an income provided to employees who have been permanently terminated from the job through “no fault’ of their own.” Also, the book, “West’s Business Law (9th edition page 1079) says such a pay is necessary “if the termination is not employee’s fault.”

Considering these definitions and the action of the President, there is a need for concern, as to who is really responsible for the problem at NOCAL, as some of those in the driver’s seat are to receive severance pay. Then, who really are responsible for the woes? Are they the former officials or managers? This is the million dollars question.

Now, it is an indisputable fact that these individuals’ services have been terminated, but the million-dollar question, as being discussed in the public is whether or not such a principle is applicable to some of these officials who sat on the demise of the institution. Is it that they are not responsible for the problems at the company for which they are to be compensated? This is my concern. Again, if so, then who? Let us be reminded that it is said, “One cannot benefit from his or her wrong.”

It is believed that some of them, knowingly and being fully aware of the financial picture of the institution went on as the President said, “despite the obvious decline in revenue that began in late 2013, NOCAL continued hiring staff at an alarming rate with exorbitant benefits resulting in the current wage bill of over US$7 million per annum.”

With this, is severance pay applicable or appropriate? This is the issue at bar. For the sake of expediency, should officials or employees be given benefits for actions that caused the decline of an institution, like in the case of NOCAL?

What is important in this issue of severance pay is the “intent.” Many times people do not understand the intent of a piece of law or policy. Severance pay, in my interpretation of its intent, is not to award benefits to individuals who consciously and knowingly, deliberately and intentionally initiated or implemented policies that undermine the growth and development of an institution.

The definition of crime makes this simple as one can be held for Commission (committing the act forbidden by law) or omission (for failure to act to stop when there is a duty) and so in this situation, certain individuals who have been asked to resign or face dismissal; cannot they be exculpated? This is where “nonfeasance” and “malfeasance” also come into play.

I am asking these questions because to initiate such a policy such as “severance pay” can be likened to awarding individuals who are allegedly culpable for the demise of an institution.

I am raising these issues for reconsideration of this matter of severance pay. At the same, I should not be misconstrued as suggesting that there should not be severance pay for some, but my concern, like that of others is to critically consider the issue of culpability.

Once more, as I close, the issue is: whether or not severance pay can hold where certain individuals who are to benefit from this severance, are culpably responsible for the demise of the company. I REST MY CASE.