Banks in Qatar and Kenya, Qatar National Bank and CfC Stanbic, Provided Letters of Credit in Exchange for Projected Oil RevenuesNearly a billion dollars vanished in a massive bank credit scam that had devastating, deadly impacts on children and communities across South Sudan, according to areleased today by The Sentry.
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.
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 Bank of South Sudan - the country's central bank - signed several credit facility arrangements with the Qatari government-owned Qatar National Bank and CfC Stanbic, a subsidiary of South Africa's Standard Bank Group. 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 supposed to be repaid through the oil production that the country was hoping to resume shortly.
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.Conduct a rigorous investigation into the allocation of letters of credit backed contracts and those companies that did not deliver products, in line with the auditor general's recommendation, and initiate asset recovery.