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.
South Sudan's top officials robbed and cheated vulnerable communities of millions of dollars meant for food and medicines. A three-year investigation 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.
Funds 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 ran out of medicine and power.
"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, explained. "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. The country has been 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. 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.
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."
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 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. And the loans were to be repaid through the oil production that the country hoped to resume shortly.
The goal was to provide South Sudanese traders with access to US dollars to import essential goods. But businesses with connections to the ruling class were among those who received contracts worth tens of millions of dollars. 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 loaned money.
Several tiers of people were involved. The ones who stand out are the people who are very well politically connected. 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. 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. 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.
The government also sold three contracts valued at $1.1 million to Denkel General Trading company owned by a South Sudan-based Eritrean trader Ghebremeskel Tesfamariam Ghidey, In addition, 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.
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. $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.
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.
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.
South Sudan′s ruling elite probed for $1B ′scam′ | Africa | DW | 11.10.2022
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