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South Sudan’s oil company used to fund militia, reports claim
South Sudan's state owned oil company has been captured by 'predatory elites' and oil revenues are being used to fund ongoing civil war, according to two separate reports published by anti-corruption groups.
Global Witness and The Sentry say that millions of dollars from the Nile Petroleum Corporation (Nilepet) have been used to finance the military and militia loyal to the government, possibly making the company complicit in atrocities committed in the conflict.
The NGOs have examined thousands documents - some in the public domain and some leaked - and have both come to damning conclusions about how South Sudan's oil revenue is spent.
The Sentry has documented more than €70 million paid to politicians, military officials and security agencies.
It also claims to have evidence that Nilepet used funds to support a Dinka militia known as the White Army - a group accused of atrocities, including the 2016 attack on the UN compound in Malakal where dozens of civilians were killed.
Nilepet has denied that it is used to fund militia.
“Key individuals within the government and security forces have effectively taken over the company and run it in their own personal interest,” says Michael Gibb, campaign leader for global resources at Global Witness.
“Many of the payments, especially to ethnic militias and to security forces complicit in serious human rights abuses, are receiving their financing routed through Nilepet.”
The structure of Nilepet is at the heart of the allegations.
Although all its shares are owned by the government, it operates as a private company, which allows it to navigate beyond the legal oversight normally intended for government operations.
The international community has been aware of the potential for this ‘capture’ for some time.
South Sudan has Africa’s third largest known oil reserves - some 3.5 billion barrels. And oil is its only significant source of revenue.
“There’s a history of states dependent on oil. The so-called oil curse,” says Ewan Lawson is Senior Research Fellow for Military Influence at the Royal United Services Institute.
“It’s not surprising. The most disappointing thing with South Sudan is that many of us saw the opportunity for a new state to start afresh. But it became apparent fairly early on that oil revenue would find its way, not necessarily into the benefit of the state.”
What is new are the details the nuts and bolts of how South Sudan hides these illicit payments from the scrutiny of international institutions and its own system of checks and balances.
Both reports produce evidence of the money trail - the links between Nilepet and the smaller companies controlled by friends and families of South Sudan’s ruling elite.
The Sentry is calling on the international community to target the networks behind the violence in south Sudan with sanctions.
They say banks and financial services also have a role to play. All dollar transactions, for example, pass through New York and they are calling on regulators to pay more attention to where the money is coming from and where it is going.
There are also suggestions that pressure can be applied to South Sudan's neighbours.
Corporate responsibility can also play a part. A company like Nilepet is dependent on world markets and the international companies who do business with it.
Global Witness is asking is companies working in South Sudan's oil sector to ensure their operations adhere to international standards on transparency and disclosure.
“We certainly hope that international companies, even in the absence of sanctions, will take their responsibility to act in accordance with domestic law seriously,” says Michael Gibb.
“They must use their influence to ensure that the supply chains that they are profiting from are also profiting the people at the other end.”