Foreign Investors Fueled Violence and Corruption in South Sudan, Report Finds
Numerous banks and multinationals have hands in shady deals with the new nation’s elites and warlords.
A cabal of ruling elites and warlords in South Sudan have been propped up by a complex and global web of corruption that includes would-be American arms dealers, British business tycoons, and Chinese oil giants, according to a new report released on Thursday.
The report, released by the Sentry, an investigative arm of the nonprofit group Enough Project, pulls back the veil on how powerful elites and warlords in one of the world’s poorest nations have stayed in power and amassed vast personal wealth off the state’s public funds and resources while international banks, corporations, and foreign investors stood to profit.
“Nearly every instance of confirmed or alleged corruption or financial crime in South Sudan examined by The Sentry has involved links to an international corporation, a multinational bank, a foreign government or high-end real estate abroad,” the report says.
Drawing on a trove of documents and forensic financial analysis, the report sheds new light on the scale of corruption in South Sudan, an oil-rich country that has been in civil conflict for over five years. It also provides a detailed portrait of how China has expanded its political and financial footprint in Africa, operating with South Sudanese security services and militias widely accused of carrying out atrocities and war crimes against civilian populations.
Years of violence and instability have plunged South Sudan into what is considered one of the worst humanitarian crises in the world.
South Sudan first seceded from Sudan to become the world’s newest country in 2011, after decades of struggle and with strong U.S. support for independence. But it fell into a civil war in 2013 after South Sudanese President Salva Kiir and his deputy, Riek Machar, split into rival factions vying for power. All sides in the civil war, including government forces and militias that act as their proxies, have been accused of mass killings, rapes, and other war crimes. An estimated 383,000 people have died as a result of the war, and nearly 2.5 million refugees have fled to neighboring countries to escape the violence.
While it remains one of the world’s poorest countries, South Sudan’s ruling elite and rival warlords have managed to stockpile significant wealth inside and outside the country, with tens of millions of dollars changing hands through multiple banking jurisdictions in certain transactions, as the Sentry report details.
“If the country was hijacked by military officials and politicians, it’s these international companies and banks that are driving the getaway car,” said J.R. Mailey, the director of investigations at the Sentry, in an interview with Foreign Policy.
Kiir is at the center of a major network of corporations and front companies illustrative of the country’s widespread corruption. The Sentry tracked over a dozen companies in 13 different countries, including China, Kenya, and Australia, where members of Kiir’s family were listed as shareholders or directors.
Three Chinese investors in 2016, for example, established a company with Kiir’s 19-year-old daughter to obtain lucrative mining permits in mineral-rich regions of South Sudan. Weeks after they obtained the permits, the government’s military “drove thousands of people from the land where they held a permit” in a campaign marked by violence against civilians, according to the report. The exact details of transactions surrounding the permits have not been made public by the South Sudanese government.
The Dar Petroleum Operating Company, a consortium primarily run by two state-owned oil corporations from China and Malaysia, “provided material support” to pro-government militias that have been accused of targeting civilians and U.N. sites in attacks, according to documents cited in the report. Dar Petroleum in one instance also covered a $686,000 hotel bill for South Sudan’s then-oil minister, Ezekiel Lol Gatkuoth, according to documents obtained by the Sentry. Gatkuoth was fired in June, reportedly over corruption allegations.
Other foreign nationals have worked to form lucrative business ventures with South Sudanese government officials or warlords. In early 2018, for example, the California-based American arms dealer Ara Dolarian tried to sell over $43 million worth of weapons to the leader of an armed opposition group in South Sudan through a Kenyan-based company, First Monetary Security Ltd. Dolarian’s business venture was foiled when he was arrested by U.S. authorities in May and charged with “illegally brokering the sale of military-grade arms and munitions, money laundering, and conspiracy,” according to the U.S. Department of Justice.
In 2015, two British businessman, Abdelkarim Adam Eisa Mohamed and Dawd Adam Rife Abute, formed an oil company with a top South Sudanese general who has been accused of forcibly recruiting child soldiers. Both Mohamed and Rife are also major shareholders in South Sudan’s National Credit Bank. The bank opened in 2013 with former IMF chief Dominique Strauss-Kahn reportedly attending the ribbon-cutting ceremony.
In all of the detailed examples, “only one of the implicated international actors has faced significant consequences for collaborating with a government engaged in grand corruption and violence,” according to the report.
The Sentry urged the United States, the European Union, and other foreign governments to crack down on these banks and investors engaged in allegedly corrupt activities in South Sudan, including stepping up sanctions on the family members of South Sudanese officials and military leaders, blocking their access to luxury goods and real estate properties they own abroad, and boosting anti-money laundering efforts.
“Kleptocrats can’t act alone. They ultimately need a bank to move the money overseas, they need business partners,” Mailey said. “We’ve found there are a wide range of international actors completely willing to do this in South Sudan.”