October 5, 2022 (Washington, DC / Nairobi) – Nearly a billion dollars vanished in a massive bank credit scam that had devastating, deadly impacts on children and communities across South Sudan, according to a new investigative report released today by The Sentry. The funds, officially meant to deliver fuel, food, and medicine across South Sudan, disappeared into a maze of international shell companies that never provided any goods or services, leaving people to die as hospitals were gutted of medicine and neonatal ward generators went cold.
The three-year investigation “Cash Grab: How a Billion-Dollar Credit Scam Robbed South Sudan of Fuel, Food, and Medicine” details how massive credit lines provided by banks in Qatar and Kenya were turned into an opportunity to steal by corrupt leaders and their cronies, with the government of South Sudan left on the hook to pay back the loaned money.
John Prendergast, Co-Founder of The Sentry, said: “These massive kleptocratic schemes continue unchecked. Since this letters of credit scheme was launched, corruption in South Sudan has only escalated. Shockingly,
billions of dollars’ worth of contracts continued to be awarded to insiders connected to President Kiir, some of whom have already been sanctioned and involved in bribes and kickbacks. Several individuals spotlighted in our investigation who were paid but did not provide urgent services and supplies are still being awarded government contracts today.”
South Sudanese President Salva Kiir’s children, nieces, and nephews have held shares in at least five companies that received millions from credit-backed contracts, The Sentry found. Multiple individuals exposed in The Sentry’s report for profiting in the complex scheme continue to receive government contracts.
Debra LaPrevotte, Senior Investigator at The Sentry and report author, said: “In South Sudan, opportunities to do a great deal of good are turned into a license to steal by President Kiir and his inner circle. Those involved in this billion-dollar scheme hijacked the ministry in control of the nation’s most valuable resource, mortgaged the economic future of the nation, then simply grabbed the cash for themselves.”
A report on the letters of credit program by the auditor general of South Sudan was presented to President Salva Kiir and the South Sudanese parliament in 2015 but was never made public, no action was taken, and no one was brought to justice or held accountable for the program’s failures—legally or politically. The auditor general’s report, reviewed by The Sentry as part of its investigation, shows that the disbursement process developed into a confusing, disjointed system that corrupt actors circumvented or subverted.
Brian Adeba, Deputy Director of Policy at The Sentry, said: “The letters of credit scandal captured the attention of the South Sudanese people, sparking discussion and speculation, but remaining a mystery for years. We now know that the corrupt profiteers in this scheme were deliberately hidden and protected by the government. With the beneficiaries now exposed, it is time for South Sudanese to hold their leaders accountable not only for this ongoing failure to counter corruption, but for active participation in the cover up.”
The Sentry’s report details how ineffective due diligence by the banks providing the credit facilities—coupled with the government of South Sudan’s lack of transparency and capacity to properly oversee the massive program—failed the people of South Sudan.
Justyna Gudzowska, Director of Illicit Finance Policy at The Sentry, said: “This investigative report should be a reminder to banking compliance officers around the world of the importance of carrying out independent due diligence to prevent financial crime. Effective anti-money laundering measures could have allowed these banks to identify risk indicators for large-scale corruption. When you miss these red flags, it has real world impact. The connection between people sitting in cubicles and the life-and-death implications of their work could not be more stark.”
Denisse Rudich, Senior Advisor at The Sentry, said. “One of the biggest problems with the letters of credit program is that the banks didn’t require physical verification that the promised goods were delivered. The letters of credit were often paid out based on false or misleading documents presented by companies selected by the government of South Sudan. Banks need the right controls in place when offering loans to high-risk clients in high-risk countries, not only to protect themselves, but because the lack of controls can have potentially devastating consequences for millions of people.”
The Sentry’s investigation included the review of hundreds of corporate records and government documents, as well as dozens of interviews with former officials and banking experts with first-hand knowledge of the program.
South Sudan has been ranked for the past two years as the most corrupt country in the world.
Selected excerpts from the report:
Key policy recommendations (complete recommendations are detailed in the report):
Kenya and Uganda
Banks involved in the letters of credit program
World Bank and the International Monetary Fund
Read the full “Cash Grab” report: https://thesentry.org/reports/
For media inquiries or interview requests, please contact: Greg Hittelman, Director of Communications, email@example.com
About The Sentry
(Short descriptor for press use: “The Sentry, an investigative organization that tracks corruption”)
The Sentry is an investigative and policy organization that seeks to disable multinational predatory networks that benefit from violent conflict, repression, and kleptocracy.
Pull back the curtain on wars, mass atrocities, and other human rights abuses, and you’ll find grand corruption and unchecked greed. These tragedies persist because the perpetrators rarely face meaningful consequences. The Sentry aims to alter the warped incentive structures that continually undermine peace and good governance. Our investigations follow the money as it is laundered from war zones to financial centers around the world. We provide evidence and strategies for governments, banks, and law enforcement to hold the perpetrators and enablers of violence and corruption to account. These efforts provide new leverage for human rights, peace, and anti-corruption efforts.
Co-founded by George Clooney and John Prendergast, The Sentry is a strategic partner of the Clooney Foundation for Justice.