Corruption, Kleptocrats, and Politics: Sudan and Burma

Sadly, money laundering, corruption, and partnerships between violent regimes and willing banks is all too common, even when it's illegal.
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Southern Sudan's vote this week for long-awaited independence from the North comes amidst fresh allegations that President Omar al-Bashir stole an estimated $9 billion of the country's oil wealth and stored it in "illegal accounts."

The source of the corruption claim is no hack. He's the Chief Prosecutor at the International Criminal Court (ICC), Luis Moreno-Ocampo, and he's been working on the ICC indictment against Bashir for war crimes, crimes against humanity, and genocide. His allegations appeared in a 2009 U.S. cable released last month by Wikileaks, and on New Year's Day 2011 Ocampo confirmed the allegations to the New York Times, adding that Bashir is "doing business through third parties" and that the money is in "several places, outside Sudan."

The leaked cable suggests the involvement of Lloyd's Bank in London. Lloyds is no stranger to controversy. In 2009, the U.S. authorities fined it $350 million as a result of criminal charges for disguising wire transfers from Sudan and Iran in order to avoid U.S. sanctions against those countries, and in 2007 the bank faced criticism for insuring vital infrastructure projects for Burma's kleptocracy, pulling out of the military-ruled country in 2009.

In response to Ocampo's claims, Lloyd's did what other banks have done in similar situations and promptly denied the allegations, stating they held no accounts in Bashir's name. This may be true but of course it doesn't rule out that the funds could still be in Lloyd's bank, held by third parties or concealed by other means. Intermediaries are commonly used to conceal beneficial ownership, i.e. cronies are commonly used by kleptocrats to hide their ill-gotten gains.

In a similar scandal involving Equatorial Guinea's President Obiang and his family stealing their country's vast oil wealth - laundering it through banks in the U.S., buying private jets and mansions - America's Wachovia Bank took a similar tack as Lloyds and simply claimed Obiang wasn't a client, despite a mountain of evidence at the U.S. Justice Department that the Obiangs were doing business with the bank through third parties.

At EarthRights International, we've had similar experiences with this variety of convenient blindness in the banking sector. In 2009, we exposed that the Burmese regime earned almost $5 billion dollars from a controversial gas pipeline in the military-ruled country, led by France's Total Oil, America's Chevron, and Thailand's PTTEP. We explained how nearly all of the money was excluded from Burma's national budget through a crude dual exchange rate scheme, and how large amounts were held in offshore accounts in Singapore, some of which are controlled by individuals closely associated with the regime but not on any sanction or watch lists. We named two banks: The Overseas Chinese Banking Corporation (OCBC) and DBS Group. Like Lloyds and Wachovia, the banks in Singapore similarly denied the allegations. "DBS does not have any involvement with the Yadana project," a spokesman of the bank said. We of course hadn't claimed the bank was involved in the gas project, but instead that the bank was a repository of Burma's natural resource-related revenue.

Likewise, OCBC told us "the State Peace and Development Council (Burmese regime) do not maintain any accounts with us," failing to address how Burma's rulers operate through third parties, which of course they do.

In 2010, I went to Paris with a leader of Burma's Shwe Gas Movement to launch another EarthRights International publication, armed with new figures and documentation. This time, we provided updated calculations of gas revenues generated for Burma's dictators - information otherwise outside the realm of public scrutiny in Burma, information the people have a right to know - and we discussed yet another player in the country's financial fiasco. Not from Singapore, London, or the U.S., but France: BNP Paribas, the tenth largest corporation in the world.

We revealed that BNP had distributed the Burmese peoples' gas revenues to each of the Yadana gas pipeline partners - Total, Chevron, PTTEP, and the Burmese dictatorship - and furthermore, that BNP's Singapore branch held Burmese gas revenues in several accounts, some on direct behalf of the military regime. This revelation was colored by fresh reports that the military rulers were illegally buying military hardware from North Korea in violation of U.N. sanctions, while also developing an apparently nascent and illicit nuclear weapons program in violation of international law, all presumably using the peoples' natural resource revenues.

BNP, of course, promptly denied the allegations, saying that they were no longer the project's "paying agent," implying the bank is no longer directly in charge of distributing the gas revenues to the project stakeholders. This of course doesn't rule out that one of its subsidiaries or related entities became the paying agent - which sources close to the bank say is likely. When asked if it was still holding the dictatorship's revenues in accounts in its Singapore Branch, BNP declined to comment.

Sadly, money laundering, corruption, and partnerships between violent regimes and willing banks is all too common, even when it's illegal. Beyond Bashir, let's hope the people of an independent and oil-rich South Sudan don't have to deal with it for years to come. Some are already skeptical.

Note: a version of this post appeared also on EarthRights International's blog.

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