Press Release / / 10.14.21

Report: Sanctioned South Sudanese Businessmen Are Skirting US Sanctions

ALERT FROM THE SENTRY:

Sanctioned Businessmen Linked to Multibillion-Dollar Contracts with South Sudan Government

 

October 14, 2021 (Washington, DC) – 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, warns The Sentry in a new investigative report released today. The report details how Kur Ajing Ater and Benjamin Bol Mel Kuol, two influential South Sudanese businessmen who are sanctioned by the United States and are part of President Salva Kiir’s inner circle, are potentially skirting US sanctions.

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, according to incorporation records, contracts, and social media posts reviewed by The Sentry. These companies were registered after Ajing and Bol Mel were designated for sanctions by the US.

Debra LaPrevotte, Senior Investigator at The Sentry, said: “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. The activities detailed in our recent investigation further expose the unchecked looting of the country’s wealth and resources, as those in power continue to line their pockets, undermine stability, and sell out South Sudan’s future.”

Justyna Gudzowska, Director of Illicit Finance Policy at The Sentry, said: “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. Financial institutions should urgently tighten up their compliance systems to identify and scrutinize such potential proxies. Most critically now, banks and other financial institutions should be on the lookout for, and conduct appropriate due diligence on, the individuals and entities spotlighted in this report.”

The size of the contracts—totaling over $4 billion—and Ajing and Bol Mel’s level of influence and access in Juba make it likely that officials involved in the contracting process knew the alleged beneficial owners of the companies. The United Nations Panel of Experts on South Sudan has flagged at least one of the contracts given to a Bol Mel-connected company, ARC Resources, for inconsistencies with the national budget.

The Sentry was able to verify that at least some of these contracts were no-bid, indicating that government spending continues to provide opportunities for large-scale corruption. The fact that the contracts were in US dollars makes it likely that the funds have touched the US financial system.

Key recommendations in The Sentry’s report:

The United States

  • The Treasury Department should investigate and, if appropriate, impose sanctions pursuant to Executive Order 13818 (Global Magnitsky) on the individuals and entities named in this report: 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 designate Ajing, Bol Mel, and their networks using the UK’s new anti-corruption sanctions authority.
  • The US government should amend the South Sudan and Global Magnitsky Executive Orders to include a provision concerning immediate family members of sanctioned individuals.
  • The US Financial Crimes Enforcement Network (FinCEN) should update the existing 2017 advisory on political corruption risks in South Sudan to include sanctions evasion red flags. FinCEN advisories play a critical role in anti-corruption and sanctions enforcement efforts. Both US and international banks should be alerted to pay closer attention to collecting information on South Sudanese entities under sanctions.
  • The US should continue to engage South Sudan on taking steps to build strong corporate transparency, oversight, and accountability mechanisms. Sanctions are often only as effective as their implementation. The US should closely engage South Sudan’s government and relevant stakeholders on sanctions enforcement and better implementation of anti-money laundering and countering the financing of terrorism (AML/CFT) laws. It should also provide support for South Sudan’s efforts to become a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), the Financial Action Task Force (FATF)-style regional body focused on members’ implementation of global AML/CFT standards.

South Sudan

  • South Sudan’s government should enforce the country’s AML/CFT laws. South Sudan’s existing AML/CFT legal framework is plagued by a lack of implementation and a dearth of accountability mechanisms, opening the door to misconduct. To shield its financial system from future abuse, the government of South Sudan should take steps to operationalize its AML/CFT statutes; investigate the influence of politically exposed persons (PEPs) in its financial sector and other key parts of the economy; and implement strong customer due diligence, know your customer, and suspicious activity reporting requirements to mitigate the threat of future abuse. The government should also investigate Ajing and Bol Mel for corrupt conduct.

Financial institutions

  • Banks should conduct enhanced due diligence, ongoing monitoring, and transaction reviews for sanctioned South Sudanese individuals and entities. Financial institutions processing transactions or maintaining accounts for the companies named in this alert should conduct enhanced due diligence to determine if there is any indication of money laundering, fraud, corruption, or sanctions violations. As this alert has highlighted, sanctioned individuals in South Sudan appear to be actively using techniques to evade sanctions and continue to do business on a massive scale. These alleged activities illustrate the crucial need for enhanced due diligence and additional close monitoring of the activities of the sanctioned entities and their broader network.
  • Global banks, particularly those with correspondent banking relationships, should help strengthen AML/CFT frameworks at partner regional financial institutions. Correspondent banking relationships provide vital services, but they also come with money laundering and terrorist financing risks. US, UK, and European Union (EU) banks that maintain correspondent banking relationships with financial institutions in South Sudan and its neighboring countries, especially Kenya, should encourage respondent partners to strengthen their AML/CFT frameworks.

Read the full report and recommendations: https://thesentry.org/reports/south-sudanese-skirting-sanctions

For media inquiries or interview requests, please contact: Greg Hittelman, Director of Communications, +1 310 717 0606, gh@thesentry.org