South Sudan’s Grey Listing: Corruption and Financial Crimes in the Oil-Rich Nation
South Sudan’s placement on the Financial Action Task Force (FATF) grey list raises international concerns about deep-rooted corruption in the nation, which economically and politically destabilizes the country and impedes its development.
Concerns over Corruption in South Sudan
South Sudan’s failure to increased efforts to curb money laundering, terrorist financing, and other illicit financial activities led to its monitoring by the FATF. Since gaining independence in 2011, South Sudan has struggled to tackle financial crimes due to prolonged civil unrest and instability.
Corruption in the Oil and Mining Industries
Corruption in the Oil Industry
The oil industry, which represents almost 100% of South Sudan’s revenue, has been a major source of corruption. Dar Petroleum, the largest oil company in the country, is controlled by Chinese and Malaysian firms with links to high-level politicians and the National Security Service (NSS).
- Corrupt deals and lack of law enforcement attract foreign actors seeking to exploit South Sudan’s natural resources, contributing to the economy’s deterioration.
Corruption in the Gold Mining and Trading
Political, military elites, and foreign actors control gold mining and trading, which has contributed to vast corruption negatively impacting neighboring countries.
- The porous border areas facilitate smuggling of gold to Uganda, Kenya, Sudan, and the Democratic Republic of Congo, finally reaching Dubai and China.
- The gold trade deprives South Sudan of substantial tax revenue, destabilizing its economy and increasing the wealth divide between the political elite and civilians.
The Justice System’s Role in Corruption
The inability of the justice system to prosecute and imprison corrupt officials has eroded public trust in the government and could potentially lead to increased civil unrest and the risk of a larger conflict.
- Few officials have been charged and imprisoned for financial crimes.
- Military officials, who are protected by top government officials like President Salva Kiir, are unlikely to change their activities.
Accountability for International Aid
The World Bank, International Monetary Fund (IMF), and United Nations currently sustain most of South Sudan’s debt. However, there is little accountability for these funds, which are often misplaced in a cycle of corruption and mismanagement.
Recommendations for South Sudan
Engagement with International Organizations
Engaging with these organizations to ensure the recovery effort is not contaminated by corruption is recommended.
Balanced Budget and Legislative Provisions
Implementing a mandatory balanced budget and legislative provisions to strengthen anti-corruption and anti-money laundering frameworks would aid in promoting transparency and accountability in South Sudan.
Adaptation to International Conventions and Regional Cooperation
A gradual adaptation to international conventions and cooperation with regional organizations like Eastern and South African Anti-Money Laundering Group (ESAAMLG) can help South Sudan combat its endemic corruption and enhance its economic development.