New Investigative Report “Loan Wolves” by The Sentry Exposes Schemes Involving Son of Deposed Sudanese President Bashir, Government Officials, and Gulf Middlemen
February 19, 2020 (Washington, D.C.) -- Fertilizers, petroleum products, and other commodities are at the heart of a massive loan scheme that allegedly reaped fortunes for figures connected to deposed Sudanese dictator Omar al-Bashir, according to a new investigative report released today by The Sentry, an investigative and policy team co-founded by George Clooney and John Prendergast.
The Sentry’s report, “Loan Wolves: Debt Scams Threaten Sudan's Democratic Transition and Fragile Economy,” reveals how Badr Overseas Group, an import-export company established by Bashir’s adopted son and his business partner, secured multiple contracts to trade in essential consumer commodities at inflated prices. The Badr deals were financed using lines of credit extended to the country by the Eastern and Southern African Trade and Development Bank (TDB), a multilateral, treaty-based development financial institution with assets of over $5.6 billion.
Dr. Suliman Baldo, Senior Advisor at The Sentry, said: “Under the regime of deposed President Bashir, multiple forms of institutional corruption were allowed to thrive, ultimately devastating Sudan’s economy. The regime granted monopolies to parasitic companies linked to powerful officials and security sector corporations, enabling them to import strategic commodities at inflated prices and with generous tax breaks and customs advantages. Unless there is major institutional reform, the capture of state business for private profit will likely continue, hampering economic reform efforts by the civilian-led government. Governments and banks around the world must press for transparency and accountability in the management of Sudan’s natural resources and revenues.”
John Prendergast, Co-Founder of The Sentry, said: “The nefarious activities of Badr Overseas Group show how regime insiders and their networks amassed fortunes, taking advantage of corruption and impunity under the Bashir regime. The systems that enabled this looting remain largely intact, and the chief profiteers continue to jockey for power today. Countering this entrenched corruption will aid the prospects for sustainable economic development and democratic progress in Sudan. Economic pressure and engagement by the international community can bolster the current government's urgently needed efforts toward reform.”
The Sentry further details in the report an array of business schemes and frauds over many years involving Sudan’s defense, security, and police forces. According to the report, elements within the Sudan Armed Forces, the National Intelligence and Security Services, the National Police, and the Rapid Support Forces, a notoriously violent security force responsible for repeated atrocities against civilians, allegedly developed vast business empires and continue to enjoy exemptions from government taxes and other dues, as corrupt officials stashed their profits abroad.
The report and its findings are based on extensive interviews, documentary research, and financial forensic analysis undertaken by The Sentry.
Selected report highlights:
- Using his connections to Sudan’s kleptocratic regime, the adopted son of former Sudanese President Omar al-Bashir established a business that secured multiple contracts to import fertilizers, refined petroleum products, and other essential consumer commodities at seemingly inflated prices. These deals, financed using lines of credit extended to the country by the Eastern and Southern African Trade and Development Bank (TDB), allegedly diverted much-needed assistance while burdening the country with massive debt.
- The Sentry’s investigation reveals that Badr Overseas Group, initially established only by Ayman Al-Mamoun and another regime insider, appears to have used Gulf middlemen and links to Sudan’s government elite to secure contracts funded from the country’s revolving lines of credit with the TDB between 2012 and 2018.
- The suspected scheme likely helped push Sudan’s debt to the regional bank to $728 million by the end of 2016, a liability greater than that of any of the other member countries of the TDB, the multilateral financial institution of the Common Market of Eastern and Southern Africa (COMESA). TDB executives ultimately froze the lending arrangement.
- Beyond Badr Overseas Group and its owners, various other actors have used their political connections to divert significant portions of trade and development loans meant to ease Sudan’s economic woes. These corrupt schemes allowed insiders to mismanage the economy for their personal benefit, sending it into a tailspin.
- One of the most lucrative practices for regime insiders throughout the three-decade rule of deposed president Bashir was to have their companies serve as intermediaries to supply strategic commodities to Sudan with financing through state loans from the TDB or from Gulf countries such as Kuwait, Qatar, Saudi Arabia, or the United Arab Emirates.
- Exorbitant markups and high financing charges allowed insiders to profit, inevitably inflating the costs of essential goods like fuel, wheat, medicine, and fertilizer while reducing the quantities delivered to the recipient government agency for distribution to the public.
- These widespread and officially tolerated corrupt practices had the cumulative impact of contributing to the aggravation of the severe shortages in essential consumer commodities that Sudan has experienced since 2013.
- The Sentry reviewed documentation that reveals apparent over-invoicing in two separate fertilizer shipment transactions involving Intrade Co., the Agricultural Bank of Sudan, and the Green Revolution Company for Trade and Services Ltd. Shipments of urea fertilizer were traded at prices 75.7% percent higher than the prevailing prices of urea fertilizer on the international market.
Key recommendations from the report:
The Sentry is making the following key recommendations in the wake of its investigation. The complete list of recommendations is detailed at the end of The Sentry’s report.
Government of Sudan:
- Establish a robust and fully independent anti-corruption commission by an act of parliament.
- Task an independent panel to investigate and prosecute corrupt actors, focusing on how politically exposed persons (PEPs) and their companies may skim high profit margins from government loans and contracts.
- Establish an asset recovery commission to return the proceeds of corruption to the treasury.
- Conduct a thorough reform of all laws governing public procurement, public tenders, and financial oversight institutions, such as the reformed anticorruption commission and the auditor general’s chamber. Ensure the independence of the special corruption prosecution office and the anticorruption special court.
Foreign governments and international financial institutions:
- Allocate resources to implement anticorruption reforms prioritized by the government.
- Incentivize the new government with debt relief upon the satisfactory implementation of such reforms.
- Make international development and reconstruction assistance contingent upon the introduction of anticorruption and transparency standards, the formation of independent anticorruption and transparency institutions, and decisive, demonstrable government action to end economic corruption.
- Apply network sanctions as appropriate against former and current corrupt officials and businesses.
- Assist the government in recovering international assets acquired under the Bashir regime by PEPs and their businesses.
- Issue advisories to financial institutions to warn against the risks of money laundering associated with PEPs involved in major corruption cases.
Banks and other financial institutions:
- Work with branches and correspondent banks in the region to make them aware of identified risks and concerns and to ensure that legitimate Sudanese businesses receive facilities and financial services in line with the banks’ risk appetite and policies while protecting the integrity of the global financial system against illicit finance.
- Take measures to identify the Sudanese banking population, focusing on accounts held or beneficially owned by Sudanese PEPs or public officials, including senior members of the military, members of their families, and their business associates. Identify the broader international networks and any related suspicious activity through a comprehensive assessment and take immediate action, as appropriate.
- Report illicit financial activities to relevant regulatory and law enforcement bodies.
- Train relevant staff to identify red flags for money laundering. In particular, train those working in trade finance or commodities trading with Sudan or with countries that trade with Sudan and have a focus on oil, mining, and commodities export industries.
Read the full report “Loan Wolves”: https://eno.ug/loan-
ABOUT THE SENTRY
The Sentry is an investigative and policy team that follows the dirty money connected to African war criminals and transnational war profiteers and seeks to shut those benefiting from violence out of the international financial system. By disrupting the cost-benefit calculations of those who hijack governments for self-enrichment in East and Central Africa, the deadliest war zone globally since World War II, we seek to counter the main drivers of conflict and create new leverage for peace, human rights, and good governance. The Sentry is composed of financial investigators, international human rights lawyers, and regional experts, as well as former law enforcement agents, intelligence officers, policymakers, investigative journalists, and banking professionals. Co-founded by George Clooney and John Prendergast, The Sentry is a flagship initiative and strategic partner of the Clooney Foundation for Justice.
Learn more at www.TheSentry.org.
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