Stretching a Contract

Liberia and Firestone. Few country-and-company couplings have been as enduring as the one between the iconic American rubber and tire company and the West African nation germinated by onetime American slaves, even though the former is now owned by Japan's Bridgestone and the latter has suffered disastrously from civil war.

What began in 1926 is entering a renewed phase that is evidence of Liberia's return from chaos and the determination of the government--aided by high-powered nonprofit experts--to get more value for the nation's assets. The relationship started soon after scion Harvey Firestone Jr. joined the family business and was dispatched on a critical assignment: to find a cheap, reliable source of natural rubber to get around the duopolistic pricing of the British and Dutch. After visiting several countries, he settled on Liberia. Securing rights to 220 sq. mi. (almost 57,000 hectares), the company eventually planted 8 million rubber trees. Between 75,000 and 80,000 people--about 7,000 families--live on the plantation, which revolves around a small "capital," Harbel (a contraction of the names of Harvey and his wife Idabelle). Liberia still provides roughly 40% of Firestone's rubber.

For more than 20 years, from 1980, however, Liberia was also the location of a murderous internal conflict that claimed 200,000 lives and destroyed much of the nation's infrastructure. When the troubles subsided in 2003 with the installation of a transitional government protected by some 15,000 U.N. peacekeepers, Firestone was looking to resume operations, while ArcelorMittal, the Anglo-Indian steel giant, wanted to reopen an iron-ore mine. But the deals that emerged from negotiations in 2005 were criticized as far too favorable to the companies.

In 2006, Ellen Johnson Sirleaf was elected President, and she vowed to renegotiate the contracts. To make good on her promise, the Harvard-trained banker tapped into her overseas network and enlisted the International Senior Lawyers Project (ISLP), which has been quietly offering pro bono help to developing--and deserving--nations since about 2002.

Previously, much of ISLP's work focused on promoting human rights and democratic governance. But more recently, the lawyers--mostly active or retired partners from major firms--have been throwing their weight behind efforts to craft better economic deals, training government officials to negotiate more favorable trade agreements and even sitting in at the negotiating table.

In Liberia, new deals with Firestone and ArcelorMittal allowed the country to assert a more robust sovereignty and ratchet up earnings through higher taxes. The new deal closed the loophole of intracompany transfer pricing, which has always provided a convenient means of lowballing export values.

In Firestone's case, land-rental rates were quadrupled to $2 an acre (about $5 a hectare) per year over the life of the contract, which was trimmed by 50 years to end in 2041. The company also agreed to build a $10 million rubberwood factory that will employ 500 workers and could be the beginning of a new product line--one that other major rubber producers have had for years.