South Sudan's ruling elite probed for $1B 'scam'

Cash Grab, a three-year investigation into bank credit lines, alleges that South Sudanese President Salva Kiir's family and his inner circle of military generals benefited from so-called briefcase companies which ultimately deprived children and communities across the country of fuel, food and medicine.

The report claims that funds to the tune of around $1 billion (€1.03 billion) 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 equipment in the neonatal intensive care unit at Juba Teaching Hospital needs a 24-hour power supply," the report states.

"For the day, someone would supply fuel for the generator. It would work for a few hours, but by 8 pm: darkness," a South Sudanese doctor, who requested not to be named due to security concerns, told The Sentry.

"Speaking about the situation in 2012 and 2013, the doctor stated, 'the newborns, you'd have to ventilate them manually. It was horrible. For those who needed constant oxygen, we would just lose them.'" 

"Shortages became a part of daily life for doctors and patients at the hospital. Some surgeons allegedly resorted to performing operations without essential supplies such as sutures, gloves, and anesthetic," the report says. The situation has not improved much since then.

Fuel for treatment

In an interview with DW, Debra LaPrevotte, the lead investigator and author of the report, said: "We talked to people who would go to the hospital for surgery, and the hospitals didn't have any gasoline to run their generators."

"And so if you didn't come to the hospital with gasoline, which you had to buy at inflated prices in the black market, then you couldn't have a C-section to give birth with an anesthetic."

"There were infants in the neonatal unit at the hospital in Juba, and when they ran out of fuel for their generator, they had to hand-ventilate these little infants. They would lose one or two infants to death by being unable to ventilate them," LaPrevotte added.

Boboya James, a South Sudanese economic analyst, told DW that the release of The Sentry's report is very significant in that it deepens conversations to fight corruption in the country.

"This is one report that will add more fuel to the conversation regarding the trust of our South Sudanese people. If they are given money, they end up in this kind of situation [stealing it]," James said.

He added that he expected the government "to take the report seriously and carry out an investigation. Then, those implicated appear in court and later serve jail terms."

Government riled

South Sudanese Information Minister Michael Makuei called the investigation baseless and threatened that his government would take legal steps against The Sentry for tarnishing its image.

Speaking to DW, Makuei said, "these people [The Sentry] have become the enemies of the government and people of South Sudan."

"They have been writing many fake reports against the government, and we have been silent all this time. But this time, we will take them to court," Makuei fumed.

But LaPrevotte told DW that her organization made several attempts to reach out to the Ministry of Information, and "we were unable to find a working email address for them."

"Out of all the people identified in the report as being involved that we contacted, only two people got back to us. We make every attempt that we can because we want to tell the truth and report two sides of the story."

How the alleged scam unfolded

"Between 2012 and 2014, faced with dwindling hard currency and shortages in vital imports, South Sudan's central bank signed several credit facility arrangements with the Qatari government-owned Qatar National Bank (QNB) and CfC Stanbic, a subsidiary of South Africa's Standard Bank Group," the report claims. 

"The agreements allowed South Sudan to borrow $993 million in lines of credit: $793 million from QNB and $200 million from CfC Stanbic." 

The credit lines were "intended to enable local South Sudanese companies to import urgently needed commodities like fuel, food, and medical supplies to sell in the markets at affordable prices," the reported adds.

The loans were to be repaid through the oil production that the country hoped to resume shortly, according to The Sentry.

"The goal was to provide South Sudanese traders with access to US dollars to import essential goods," it claims.

But according to the report, businesses with connections to the ruling class were among those who received contracts worth tens of millions of dollars.

The Sentry said that the 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 borrowed money.

Who was involved in the 'scam'?

According to lead investigator LaPrevotte, several tiers of people were involved, including many with connections to senior politicians.

"Several members of President Salva Kiir's family, that is, his sons and daughters, nephews and nieces, received letters of credit contracts worth $12 million for which there's little proof of delivery of goods. Kiir's children continue to receive government contracts," LaPrevotte said.

"The then governor of South Sudan's Central Bank, Kornelio Koriom, received backed contracts totaling $14.5 million, and again for many of these contracts, there was absolutely no proof of delivery."

President Kiir later in Janurary sacked Koriom due to concerns about high inflation and the depreciation of the South Sudanese pound. The Sentry investigated 13 Ugandan companies contracted to export $20 million in pharmaceuticals to South Sudan and found that none had physical locations or licenses issued by the Uganda National Drug Authority.

Additionally, the government sold three contracts valued at $1.1 million to Denkel General Trading company, owned by a South Sudan-based Eritrean trader Ghebremeskel Tesfamariam Ghidey, LaPrevotte said.

"In South Sudan, opportunities to do great 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 nation's economic future, then simply grabbed the cash for themselves," LaPrevotte said.

According to the investigation, "almost $1 billion effectively walked out of the country, and the human cost remains to be calculated."

At the peak of the letters of credit program, "when hundreds of millions of dollars in goods should have arrived in markets, more than two million people went without food, hospitals and clinics had to treat patients without medicine, and fuel shortages resulted in black market price gouging," the report states.

According to the organization, documents reviewed by The Sentry "showed that contracts intended for local South Sudanese traders were awarded to companies owned by inexperienced middlemen, foreign-owned companies, and companies that existed only on paper."

"The country was saddled with unmanageable debts that continue to constrain the government's ability to devote funds to crucial services. Food, medicine, and fuel shortages persist to this day," according to the report. 

Time to investigate

The Sentry says the credit scam has had "dire and long-lasting consequences for the people of South Sudan, and the program's failure is indicative of government corruption and the ineffective rule of law."

"These were all US dollar transactions, so US correspondent banks should be checking their wire room, seeing what money moved through, and this is a perfect opportunity for either the FBI, Homeland Security to open an investigation if the US wants to help recover some of the stolen money," LaPrevotte emphasized.

"We have the venue and we hope that action will be taken in many jurisdictions to help recover some of the billions of dollars that have been siphoned out of South Sudan."

While the full scope of the fraud might never be uncovered, "there are measures that can be taken to promote transparency and accountability in the allocation of public funds and to help ensure that the people of South Sudan are not cheated on this scale again," the report concludes.

In 2021, for the second year in a row, South Sudan ranked as the most corrupt country in the world on Transparency International's Perception Corruption Index. The United Nations also reported in September 2021 that "more than $73 million was diverted in 2018, including transactions worth almost $39 million in a period of less than two years.

Waakhe Simon Wudu in Juba contributed to this report 

Edited by: Keith Walker