Category Archives: economic sanctions

Qatar Bank Sanctions

Yesterday Saudi Arabia, the United Arab Emirates, and Egypt led a handful of other countries including Bahrain, Yemen in severing diplomatic relations with Qatar – and these have now extended to some Qatar Bank sanctions.

  • The three Gulf states gave Qatari visitors and residents two weeks to leave their countries. 
  • Saudi also closed the border and halted air and sea traffic with Qatar, urging “all brotherly countries and companies to do the same”
  • Bahrain’s withdrew its diplomatic mission from the Qatari capital, Doha, within 48 hours 
  • The UAE  ordered Qatari citizens to leave the country within 14 days and banned its citizens from traveling to Qatar.
  • Egypt also announced the closure of its airspace and seaports for all Qatari transportation “to protect its national security”.
  • UAE-based carriers Emirates, Etihad Airways, and FlyDubai said they would suspend flights to and from Qatar beginning Tuesday morning.

Qatar Airways which flies to over 150 destinations was barred from flying over UAE and Saudi Arabia. They have complied, which now leads to some interesting flight radar maps.

Continuing the  onslaught which was apparently green-lit by US President Trump, financial sanctions were now announced today targeting Qatar banks and finance including:

  • Banks in Saudi Arabia, UAE & Bahrain HAVE suspended transactions to banks in Qatar, citing instructions by central banks.
  • Saudi Central Bank told banks not to trade in #Qatari Riyals in addition to foreign exchanges
  • U.A.E. banks not  providing leverage on Qatar bonds
  • Qatari riyal under pressure as Saudi, UAE banks delayed Qatar deals.
  • UAE and Bahraini central banks had asked banks they supervise to report their exposure to Qatari banks
  •  Some Sri Lankan banks stopped buying Qatari riyals, saying counterpart banks in Singapore had advised them not to accept the currency.
  • Commercial banks say that they stopped accepting Qatar Riyal as they have no way of repatriating and clearing them

Other

Older pre-sanction report 

  • Qatari banks have been borrowing abroad to fund their activities. Their foreign liabilities ballooned to 451 billion riyals ($124 billion) in March from 310 billion riyals at the end of 2015, central bank data shows.
  • So any extended disruption to their ties with foreign banks could be awkward, though the government of the world’s biggest exporter has massive financial reserves which it could use to support them. Banks from the United Arab Emirates, Europe and elsewhere have been lending to Qatari institutions.
  • Because of its financial reserves and as long as it can continue exporting liquefied natural gas, Qatar looks likely to avoid any crippling economic crisis. But credit rating agency Moody’s Investors Service said on Monday that if trade and capital flows were disrupted, the diplomatic dispute could eventually hurt the outlook for Qatar’s debt.

Financial Sanctions for South Sudan?

Yesterday, the Sentry Group, whose mission is dismantling the financing of Africa’s deadliest conflicts, released a report on corruption in South Sudan. As the fighting in South Sudan has gotten worse, with the leaders unable or unwilling to pursue peace, it’s been an open secret that thy have economic links, some of which are in Nairobi, especially in real estate and banking.

Excerpts

Findings & Recommendations

  • Even President Kiir and Vice President Machar themselves have acknowledged that corruption is at the core of the country’s current crisis. “An estimated $4 billion are unaccounted for or, simply put, stolen by former and current officials, as well as corrupt individuals with close ties to government officials,” President Kiir wrote in a June 2012 letter to government officials that was leaked to the press.
  • Most of the funds that these kleptocrats have amassed appear to come from the oil, mining, foreign exchange, and banking sectors as well as food procurement and defense supply contracts from the government.
  • South Sudanese leaders have paid lip service to the need for oversight, but public institutions have been transformed from entities that are supposed to safeguard the rule of law and provide social services into predatory entities that do quite the opposite.
  • Top South Sudanese officials and their immediate family members hold stakes in numerous commercial ventures are not actually available to the public…Immediate family members of South Sudanese PEPs should be required to declare their assets.
  • U.S. authorities, as well as their counterparts overseas—in places like Australia, the European Union, Kenya, and Uganda— should open investigations that could lead to the forfeiture of criminally derived assets and to the prosecution of those involved in profiting from corruption in South Sudan.
  • Governments should thoroughly examine whether or not banks involved in these transactions fulfilled their due diligence, reporting, and compliance requirements.
  • The facilitators and enablers of corruption and mass atrocities should be priority targets for sanctions designations. .. been facilitated—knowingly or not—by a wide range of lawyers, brokers, banks, and foreign companies.
  • The U.S. government and U.N. Security Council have already sanctioned a series of mid-level commanders from both sides of the conflict in South Sudan. The failure to follow on these actions with any meaningful scrutiny of higher level targets muted any message these actions may have had, resulting in a perception in South Sudan that the international community is not serious about imposing consequences.
  • Kenya and Uganda, in particular, have relatively solid anti-money laundering legal frameworks on paper that can provide a basis for action against corruption, as well as demonstrate that local laws are being violated by banks that process suspicious transactions on behalf of South Sudanese PEPs. These banks should already be conducting enhanced due diligence on South Sudanese PEPs, according to the FATF Recommendations, and taking other measures required to prevent suspicious transactions.
Pic by @mankangwafo

Pic by @mankangwafo

Kenya links

  • Kenya Commercial Bank processed large payments from multinational companies operating in South Sudan into the accounts of two senior South Sudanese politically exposed persons over a period of several years.
  • “Some of these ministers have bought apartments, have bought very beautiful houses, villas,” President Kiir continued. “They are hiding it in Kenya and they refuse to reveal it.” … A source within South Sudan’s government confirmed to The Sentry that the Kiir and Machar homes in Nairobi were close to one another in Lavington
  •  Violent takeover of KK Security”: One of Machar’s relatives became involved—albeit highly controversially—in KK Security, a Kenya-based company active throughout East and Central Africa.

For KCB, or any other Kenyan banks operating in South Sudan,  they are really without blame. The report does not highlight if the transaction with the leaders were in Kenya or in South Sudan where they have 18 branches.

South Sudan is relatively small for Kenya banks, accounting for just 13% of assets outside Kenya (Tanzania is 39%, Uganda is 30%). In the absence of rules from the (regulator) Bank of Southern Sudan, (unlikely) or Kenya’s CBK, or the Kenya government, to freeze doing business with people who probably are in charge of other South Sudan government accounts at the bank, is asking too much.

Guide to Khartoum

A guest post by @Wiselar   

Getting There: If flying from Nairobi, you have an option of either Kenya Airways (KQ) or Ethiopian Airlines. Kenya Airways operates both a late night (23:55) and a late morning (11:00) flight from Nairobi that costs about $600. For the Ethiopian flight, you will have to connect via Addis Ababa but it’s cheaper at about $450.
I went on the night flight from Nairobi’s JKIA. KQ operates an Embraer 175 on this route (though this changes a lot) and the flight time between Nairobi and Khartoum was about 2.5 hours. 
On Arrival: On arrival in Khartoum (same time zone as Nairobi) at about 3 a.m., there was little activity at the airport other than our arriving flight.
Immigration forms are readily available, and must be filled in duplicate. You must also watch out for the spacing on the form as they are arranged to cater for Arabic which goes from right to left. After filling the forms, processing at the immigration counters is pretty quick. This is followed by a security screening of carry-on luggage before being going to the baggage pickup area where with several baggage carousels around,  luggage was ready for pickup on time. Airport officials require you to have your baggage tag and they counter-check against the one on your checked-in baggage,  so keep it close.
Khartoum Airport road

Sudan requires all visitors of other nationalities to register as aliens on entry to the country and this costs $40. This should ideally be done before you leave the airport but you can also do it the next day if you don’t make it the first time. Most importantly, you will not be cleared to leave Sudan if you don’t register as an alien. This can cause inconvenience you, if you didn’t know about it or and didn’t spare enough time especially on the day of departure, when it can be even more difficult or confusing as most officials only speak Arabic.

Getting Around: I had arranged a pickup with the hotel but a taxi from the airport to my hotel (about 14 kilometers away) would have cost about $10. There was no traffic at this time of the day so these charges may vary. I noticed there were more private vehicles than public means around Khartoum. Still taxis are readily available and they are not too costly, but it’s always better to ask the hotel or a host to arrange the taxi for you and pre-negotiate the rates.
In Sudan, they drive on the right side of the world as does most of the Arab world. Also it can get very hot, and people drive around with the air-conditioner on.
Rickshaws are also a very popular mode of transport in Sudan, and some owner do some extra ‘pimping’ work on them, such as shiny rims, to make them stand out. 
Staying in Touch:  If you’re a Safaricom customer like I am, roaming in Khartoum is via Airtel Sudan, Khartoum. Making calls and texting worked fine as expected but it was still expensive, and data charges while roaming are exorbitant so ensure you have your data turned off to avoid accidental connection. If you have to use your phone a lot, consider buying a local SIM. There are several local providers – Sudani, Airtel, MTN – but the biggest is Sudani. I didn’t get to purchase a local SIM but I’m sure this should be easy. 
Out & About: Sudanese people are generally friendly. Being a Muslim country, the weekend is on Friday and Saturday with the first day of the work week being on Sunday. The locals are pretty easy going and not too concerned about security. This is unlike Nairobi where you always have to be on the look out. Since it is very hot outside, there are very few people walking the streets.
There’s also little or no police presence around town. This is unlike other African cities such as Abuja where there’s quite a heavy military and police presence
Arabic is the most widely spoken language in Khartoum. Hotel staff and officials from the meeting I went to were able to do basic communication in English. A lot of signage is in both Arabic and English so it is easy to get around. All the newspapers and other publications I came across were in Arabic.
Being an Arabic country, food is eaten communally, from a central serving with smaller side dishes to accompany. Bread and meats are common. Pork is not allowed due to religion, and mutton (goat and sheep) is the most common type of meat.
As with many other African countries, politics takes center stage in conversations and to sum it up, the Sudanese people don’t defend Al Bashir as much as Zimbabweans do Mugabe.
I had to change to the local currency of Sudanese Pounds (SDG) as most places outside hotels will not accept US Dollars. With a daily budget of $20 for a meals and $40 for taxis per trip, you can make it around the city.
Outside Khartoum’s Corinthia Hotel 
Where to Stay:  I stayed at one of the better hotels in Khartoum – Corinthia Hotel. A similar classed one would Al Salaam Rotana. A standard room at the Corinthia went for $210 for bed and breakfast before taxes.
Shopping & Sight-Seeing: There aren’t too many shopping spots around Khartoum. I also didn’t get time to go into their famous Afra Mall. You can however get places to buy curios (usually sold by South Sudanese nationals) but with very little variety.
Places for visitors to see include the meeting point of the Blue and White Nile rivers, which is a the sight. I was lucky to stay at a hotel that overlooked that view. My hosts mentioned there are tourist boat rides on the expansive Nile, and I would have loved to go on one, if I had more time.
Odd Points: Due to sanctions, US products have little presence here. My hosts told me they have to purchase computer software via third-parties in places like Dar es Salaam and Dubai. They also prefer to use open source software because of these restrictions which is also the reason credit cards are not accepted in Sudan.
Also, a peculiar habit I noticed was a lady alighting from the lift when a group of men got in and having to wait for the next one.