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Banks Deny Links to Kleptocrats Again ... and Again

Oil-rich Southern Sudan is voting this week for its long-awaited independence from the North in a referendum that began Sunday. This comes amidst fresh allegations that the North's controversial President Omar al-Bashir stole an estimated $9 billion of his country's oil wealth, storing it in “illegal accounts.”

The source of the corruption claim is Chief Prosecutor at the International Criminal Court (ICC), Luis Moreno-Ocampo, who's been working on the ICC indictment against Bashir for war crimes, crimes against humanity, and genocide. It appeared in a 2009 U.S. cable released last month by Wikileaks, and on New Year's Day 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. Lloyd's did what most banks do and promptly denied the allegations, suggesting they held no accounts in Bashir's name, which may be true but of course doesn't rule out that the revenues could be in Lloyd's bank, held through third parties or concealed by other means. International banks have a sordid history of concealing the source of funds held in their institutions, and international oversight and enforcement has been relatively ineffective despite post-9/11 efforts to track and interdict illicit financial activity.

Lloyds itself is no stranger to controversy. In 2009, the U.S. 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 it faced criticism for insuring vital infrastructure projects for Burma's kleptocracy.

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 international banks that hold Burmese state revenue, and we continue to document this type of convenient blindness in the banking sector. In 2009, we exposed that the Burmese military regime earned almost $5 billion dollars from a controversial gas pipeline in military-ruled Burma led by the French company Total, US-based Chevron, and Thailand's PTTEP. We explained how nearly all of the money, paid to the Burmese state, was excluded from Burma's national budget, and how large amounts were held in offshore accounts in Singapore. Based on confidential sources, we named two banks as holders of much of this foreign exchange – The Overseas Chinese Banking Corporation (OCBC) and DBS Group – which includes accounts controlled by individuals closely associated with the regime, but not on any sanction or watch lists.

Like Lloyds and Wachovia, the banks in Singapore 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 corrupted public money from Burma.

Likewise, OCBC claimed “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 the gas revenues generated for Burma's dictators from gas sales to Thailand – information otherwise outside the realm of public scrutiny in Burma, information the people have a right to know – and at the press conference we discussed yet another player in Burma'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 project's partners – Total, Chevron, PTTEP, and the Burmese dictatorship – and furthermore, that BNP's Singapore branch held gas revenues from Burma in several accounts, some on direct behalf of the military regime. This was colored by fresh reports that the military regime was illegally buying military hardware from North Korea – presumably with the peoples' natural resource revenues – and pursuing an illicit but fledgling nuclear weapons program.

BNP did what the aforementioned other banks have done and promptly denied the allegations, saying that they were no longer the “paying agent,” implying they were 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 assumed the role of paying agent, and when asked if it was still holding the dictatorship's revenues in its Singapore Branch, the bank declined to comment.

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