S. Sudan awarding billion-dollar contracts to US-sanctioned businessmen who are part of Kiir’s inner circle-Report
According to a new investigative report released on Thursday by The Sentry, the government of South Sudan is awarding billions of dollars in contracts to companies that appear to be controlled by sanctioned persons close to the president.
The report details how Kur Ajing Ater and Benjamin Bol Mel Kuol, two powerful South Sudanese businessmen who are part of President Salva Kiir’s inner circle and are sanctioned by the US, maybe evading US sanctions.
According to incorporation records, contracts, and social media posts reviewed by The Sentry, several companies that have received billions in US dollar-denominated contracts from the government of South Sudan over the last three years are owned by relatives of Ajing and Bol Mel, who are the likely beneficial owners. After the US designated Ajing and Bol Mel for sanctions, these companies were formed.
“The awarding of lucrative government contracts to companies beneficially owned by sanctioned individuals is a sad indication of the Kiir regime’s lack of interest in fighting corruption,” said Debra LaPrevotte, Senior Investigator at The Sentry. As those in power continue to line their pockets, undermine stability, and sell out South Sudan’s future, the activities detailed in our recent investigation expose the unchecked looting of the country’s wealth and resources.”
“A well-worn scheme for sanctioned persons to evade the internal compliance controls at banks is to establish new companies with unsanctioned associates and family members serving as proxies,” said Justyna Gudzowska, Director of Illicit Finance Policy at The Sentry. Financial institutions should tighten up their compliance systems as soon as possible in order to identify and scrutinize such potential proxies. Banks and other financial institutions should be on the lookout for the individuals and entities highlighted in this report and conduct appropriate due diligence on them right now.”
According to the Sentry, officials involved in the contracting process were likely aware of the alleged beneficial owners of the companies because of the size of the contracts, which totaled over $4 billion, and Ajing and Bol Mel’s level of influence and access in Juba. At least one of the contracts given to ARC Resources, a Bol Mel-connected company, has been flagged by the UN Panel of Experts on South Sudan for inconsistencies with the national budget.
“At least some of these contracts were no-bid, indicating that government spending continues to provide opportunities for large-scale corruption,” according to the Sentry. The fact that the contracts were written in US dollars means that the funds are likely to have entered the US financial system, according to the Sentry report.
The report recommended that the US Treasury Department investigate and, if appropriate, impose sanctions on the individuals and entities named in the report, including Amuk for Trading and Investment Co Ltd, Christine Achol Akot, Kuol Akol Wieu, Africa Resource Corporation (ARC), Save Nation Co. Ltd., Winners Construction Co. Ltd., and Equip Logistics Co. Ltd.
“The US should also engage partners in the United Kingdom (UK) to urge them to use the UK’s new anti-corruption sanctions authority to designate Ajing, Bol Mel, and their networks,” the report recommended. The US government should amend the South Sudan and Global Magnitsky Executive Orders to include a provision relating to sanctioned individuals’ immediate family members.”
The US Financial Crimes Enforcement Network (FinCEN) should also update its existing 2017 advisory on political corruption risks in South Sudan to include sanctions evasion red flags, according to the other recommendation.
“FinCEN advisories are extremely important in anti-corruption and sanctions enforcement efforts. The Sentry suggested that both US and international banks be alerted to pay closer attention to collecting information on South Sudanese entities subject to sanctions. “The United States should keep working with South Sudan to develop strong corporate transparency, oversight, and accountability mechanisms. Sanctions are frequently only as effective as how they are applied.”
According to the report, the US should work closely with South Sudan’s government and other relevant stakeholders to enforce sanctions and improve the implementation of anti-money laundering and counter-terrorist financing (AML/CFT) laws.
“The government of South Sudan should enforce the country’s anti-money laundering and counter-terrorist financing laws. The existing AML/CFT legal framework in South Sudan is plagued by a lack of implementation and accountability mechanisms, allowing for misconduct. The government of South Sudan should take steps to operationalize its AML/CFT statutes to protect its financial system from future abuse, according to the report.
The Sentry is an investigative and policy group that tracks dirty money linked to African war criminals and transnational war profiteers, with the goal of preventing those who profit from violence from accessing the international financial system.