Looted its for­eign re­serves

Mail & Guardian - - News -

In email cor­re­spon­dence, a spokesper­son for QNB in­sisted that the bank “ex­er­cised full due dili­gence ap­pli­ca­ble or re­quired for such deal­ings — in­clud­ing cus­tom­ary check­ing of doc­u­ments”. CfC Stan­bic de­clined to com­ment be­fore the M&G’s dead­line.

To date, it re­mains un­known how much of the nearly one bil­lion dol­lars dis­bursed through the LC scheme was em­bez­zled. In South Su­dan, ar­chiv­ing sys­tems are prac­ti­cally nonex­is­tent, and a visit to the cus­toms head­quar­ters quickly re­veals the fu­til­ity of try­ing to gather re­li­able data: at the time of re­port­ing, the of­fice had no elec­tric­ity on most days, let alone a proper data­base of im­ports.

Yet a peek into the bet­ter-kept records of South Su­dan’s neigh­bours, who were party to the cross­bor­der trans­ac­tions un­der the LCs, of­fers some in­sights. Data ob­tained from the Ugan­dan Bureau of Statis­tics, cor­rob­o­rated with the United Na­tions’ Com­trade Data­base, sug­gests that the bulk of LCs weren’t used to im­port goods.

What, for ex­am­ple, hap­pened to the $10-mil­lion al­lo­cated to the five Eritrean com­pa­nies to im­port cook­ing oil? Ac­cord­ing to trade data, at best one-third was de­liv­ered.

‘It’s a kind of black­mail’

One bil­lion dol­lars could have gone a long way for South Su­dan’s pop­u­la­tion of about 12-mil­lion, a third of whom faced se­vere food in­se­cu­rity at the height of the scan­dal.

But while gov­ern­ment of­fi­cials and their busi­ness as­so­ciates used the coun­try’s dwin­dling for­eign re­serves to en­rich them­selves, cit­i­zens lit­er­ally paid the price.

“The phar­ma­ceu­ti­cals sit­u­a­tion is in a mess,” said John Charles Ladu, the owner of St Joseph’s Phar­macy, one of the old­est and busiest drug re­tail­ers in Juba. “We don’t have a source where you can get the medicine.”

With a turnover of less than $500 000 a year, St Joseph’s should have been in­un­dated with af­ford­able drugs from whole­salers who ben­e­fited from the $38-mil­lion in LCs al­lo­cated to the nascent phar­ma­ceu­ti­cal sec­tor, which in­dus­try in­sid­ers es­ti­mate is only worth be­tween $5-mil­lion and $10-mil­lion a year. But it was forced to rely mostly on black-mar­ket drugs in­stead.

The mis­use of funds in­tended for vi­tal food and medicines in­creased the bur­den on donors to fill the gaps.

“It’s a kind of black­mail,” said one Western diplo­mat. “If you draw your red line and you say: ‘We will only spend this much,’ [the gov­ern­ment] will just say: ‘Okay, don’t fund it then.’ If we don’t do it, peo­ple will die.”

Al­though there is lit­tle hope that the gov­ern­ment will re­form and crack down on cor­rup­tion in its own right, pro-trans­parency ac­tivists say that the in­ter­na­tional com­mu­nity must in­crease the pres­sure by in­tro­duc­ing more aid con­di­tions.

“Donors need to give their for­eign support with bench­marks, among them the com­mit­ment to re­ally fight cor­rup­tion,” said Ed­mund Yakani, who leads civil so­ci­ety group the Com­mu­nity Em­pow­er­ment for Progress Or­gan­i­sa­tion and lob­bied South Su­dan’s Par­lia­ment to re­quest an au­dit of the LCs. “Ev­ery­thing else is a waste of time.”

Lost loot: Since South Su­dan’s in­de­pen­dence in 2011 (above), most of the coun­try’s for­eign re­serves have been squan­dered. The ad­min­is­tra­tion of Pres­i­dent Salva Kiir, pic­tured (be­low left) re­ceiv­ing a re­port from the au­di­tor gen­eral, has failed to stamp out cor­rup­tion. Civil so­ci­ety ac­tivists like Ed­mund Yakani (be­low right) are call­ing for an in­ves­ti­ga­tion into the let­ters of credit scheme, which has made it dif­fi­cult for phar­ma­cists like John Charles Ladu (be­low mid­dle) to stock drugs.

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