Firestone and Liberia: A HISTORY OF BROKEN PROMISES, SHELL GAMES, AND HIDDEN PROFITS

[Kushnology]

Liberia is a shill of the U.S. government. Amerikkka has held financial interest in Liberia while manipulating economic and political affairs of the country since it's conception which is why Liberia is supposedly courting Africom. Liberia is not truly free nor independent. Amerikkka prefers it that way.

Slavery ain’t dead, it’s manufactured in Liberia’s rubber http://www.laborrights.org/press/Fir...uka_042507.htm

Blame America for Conflict in Liberia http://www.commondreams.org/views03/0711-10.htm

Liberia to Israel: Fixing US Settler States: http://www.globalblacknews.com/GardnerLiberia.html

Amerikkkan imperialism in Liberia: http://www.mltranslations.org/IvoryCoast/liberia.htm

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By Carl Patrick Burrowes, Ph. D.*

Firestone’s involvement in Liberia can be dated to January 13, 1925, when the National Legislature approved three draft agreements between the Republic of Liberia and the company. The first, known as the “Mount Barclay Lease,” transferred property formerly held by a British rubber company. The second granted Firestone a lease of one million acres (equal to 4 percent of the country’s territory and nearly 10 percent of the arable land). The third agreement committed the company to built a harbor. After the Legislature had approved the agreements, Harvey Firestone took the first of many controversial steps that would come to characterize his company’s dealings with Liberia: He inserted a clause (the infamous “Clause K”), which made the one million acre lease dependent on the government accepting a $5 million loan from him. Firestone’s proposal aroused widespread and high-level protests inside the country: The secretary of the treasury denied the need for a new loan in his Annual Report for the Fiscal Year 1925, while the attorney general of Liberia judged some articles in the Loan Agreement to be unconstitutional.1

These objections notwithstanding, Harvey Firestone secured support for his position from the U. S. State Department. According to several historians, Firestone viewed approval of the loan as an important means for him to win some control over the Liberian government. The U. S. government supported Firestone’s position because it was interested in securing a port on the West African coast as a coaling station for naval use.2

Negotiations dragged on from January until October because some Liberian opponents objected to the idea of taking a loan from the same source to whom a one million acre concession had been granted. To sidestep their concerns, it was decided that the loan would come from the Finance Corporation of America, a wholly owned Firestone subsidiary, especially created for this purpose. This fig leaf still met with tremendous opposition in the Legislature, but that was overcome when opponents were threatened with impeachment by Firestone allies, including Arthur Barclay, a former president of Liberia who had been hired as one of Firestone’s local lawyers.3

Firestone subsequently reneged on the agreement to build a harbor within five years. But, when the Liberian government suspended payments of the loan in the 1930s due to an economic depression, Harvey Firestone sought to have the U. S. government invade the country, in hopes of returning to office former President Charles D. B. King, who was now serving as Harvey Firestone’s private attorney in Liberia.4

In 1949, the Delaware-based company that held the land concessions in Liberia, was liquidated and all of its assets, rights, liabilities and obligations were transferred to the Firestone Tire & Rubber Company in Akron. The parent company subsequently incorporated a new subsidiary in Liberia, the Firestone Plantations Company, to which it then sublet its local plantation and other assets. Thus, the U. S. company was allowed to deduct the depreciation of its assets in Liberia from its gross income before arriving at its profits, which affected its tax liability in the United States. A system of retained earnings by the subsidiary, which permitted the self financing of the Liberian operations, impeded the work of American and Liberian income tax assessors.5

Throughout the company’s history a major issue in its relations with the Liberian government has been inter-company transactions between the Firestone Rubber & Tire Company and its various subsidiaries – in Liberia and elsewhere, including the following wholly-owned subsidiaries in Liberia: the Finance Corporation of America, the United States Trading Company, the United State Liberia Radio Corporation, the Bank of Monrovia, the Liberian Construction Company, and the Lone State Transport Company. Under the terms of the Loan Agreement, the revenues of the Liberian Government had to be deposited in a bank, the “United States Trading Company Banking Department,” a Firestone subsidiary. Firestone Plantation Company also served as agent for the Farrell Lines, the Elder Dempster Line, and the Barber Steamship Lines.6 The shipments of rubber from Liberia were carried out by the L. and C. Marine Transport Ltd., a wholly owned subsidiary incorporated in Bermuda, and shipments were insured by the Insurance Company of North America, another wholly owned subsidiary.7

Transactions between these subsidiaries and others affected how Firestone calculated profits and, hence, taxes to Liberia. For a time the Firestone Plantation Company carried on its books an interest-free loan to its U. S. parent of $8 million to over $19 million. The government of Liberia took the position that the company should have paid income tax on this perpetual balance at 6 percent, but the company refused. In addition, the Firestone Plantations Company claimed deductions for rentals paid to the parent company in Akron varying from $730,932 in 1963 to $964,938 in 1971. Under Liberian law, however, the amounts deducted on “leased” assets would have been closer to $200,000 per year.8

From 1926 to 1977, total profits made by Firestone in Liberia have been estimated at between $410 million and $415 million, which dwarfed its payments to the government. During its first ten years of its operations, the company paid the government approximately $100,000-$150,000. From 1939 to 1945, it is estimated that profits amounted to $4 million annually, which were free of all taxes except the 1 percent export tax, averaging $60,000 per year. In the 1951-1977 period, direct taxes paid by Firestone averaged about $4 million a year.9

From the creation of the Firestone plantation until now, the company has engaged merely in extraction of raw rubber without investing in any value-added manufacturing facilities. During this same period, the company invested in tire factories in other countries that did not produce rubber on a significant scale. From 1967 to 1970, the Liberian government sought to involve Firestone in the creation of a local tire factory, but negotiations were unsuccessful because of the conditions imposed by the company. Firestone required Liberia to conclude favorable trade agreements with Sierra Leone and Cote d’Ivoire for the distribution in those countries of outputs from the proposed factory. It also demanded that Liberia submit any disputes between the government and the company to the International Centre for Settlement of Investment Disputes, which would have meant a surrender of sovereign rights. Had the government met all of those conditions, the plant agreed to by the company was so small that it would have utilized less than 1 percent of the country’s natural rubber output.10

When the plantation began operation in the 1920s, tappers were paid 24¢ per day, which would have been worth $9.19 in 2004 (calculated on the basis of the unskilled wage rate of comparison).11 In reality, 80 years after Firestone secured its agreement with Liberia, tappers earn $3.19 per day, which means a loss of $6 per day compared to what their grandparents were earning.12

If the problem of falling wages had been addressed when Liberia was at peace and company profits were high, it wouldn’t be so acute today. It is time for Firestone to forge a new relationship with its workers (by allowing representation by a democratically elected union) and with the people of Liberia (by negotiating a new concession agreement with the duly elected government). No more extraction without manufacturing. No more gun-boat diplomacy. No more deteriorating living standards for tappers while managers play golf on a manicured course.

http://www.stopfirestone.org/history.shtml