OFAC Sanctions “Sudanese Oligarch” for Fraud and Corrupt Dealings in South Sudan

Holland & Hart LLP

Holland & Hart - International Compliance Blog

On October 11, 2019, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on Ashraf Seed Ahmed Hussein Ali, a Sudanese national widely known by his pseudonym “Al-Cardinal,” pursuant to Executive Order 13818 and the Global Magnitsky Human Rights Accountability Act, for his alleged involvement in bribery, kickbacks, and procurement fraud with senior government officials in South Sudan.  OFAC’s placement of Al-Cardinal on the Specially Designated Nationals and Blocked Persons (SDN) List for his actions in South Sudan is particularly notable for at least two reasons.  First, the designation of Al-Cardinal illustrates the impact that private actors and public reporting can have in prompting and effectuating U.S. sanctions efforts.  Second, the designation provides confirmation that some of the challenges and problems facing South Sudan originate from outside its borders.    

According to OFAC’s press release, Al-Cardinal served “as an intermediary to deposit and hold a large amount of funds in a country outside of South Sudan” for Benjamin Bol Mel, a senior South Sudanese government official designated by OFAC in December 2017.  Following Mel’s designation, Mel allegedly used a bank account in the name of one of Al-Cardinal’s companies to store his personal funds and evade sanctions.  Moreover, in early 2019, the South Sudanese government paid one of Al-Cardinal’s companies millions of dollars purportedly for food; however, OFAC asserts that the money instead went to senior South Sudanese government officials.   OFAC also asserts that a company partially owned by Al-Cardinal has been publicly implicated in the importation of amphibious armored vehicles that gave the South Sudanese government the ability to extend offensives that included violent attacks on innocent civilians.

OFAC’s designation of Al-Cardinal and five companies owned or controlled by Al-Cardinal on the SDN List come as the U.S. Government pushes South Sudan’s feuding factions to form a power-sharing unity government by their self-imposed November 12, 2019 deadline.  The U.S. Government has warned of possible sanctions on South Sudan if the country fails to meet the deadline.

Al-Cardinal’s alleged conduct as described by the U.S. Government will come as no surprise to anyone familiar with the September 2019 Report “The Taking of South Sudan,” written and researched by The Sentry, an initiative of the Washington, D.C. based non-profit anti-corruption organization, the Enough Project.  The report contains an overview of Al-Cardinal’s influence on promoting corruption and humanitarian abuses in South Sudan. Following the September report, The Sentry published an October 2019 report providing a detailed and documented account of Al-Cardinal’s alleged corrupt activities.  The October report, in particular, highlights the close ties between Al-Cardinal and the Sudanese government, including the Sudanese government’s seizure of Episcopal Church property on behalf of Al-Cardinal and his involvement in a procurement scheme along with a Sudanese major general described as a member of former Sudanese President Omar al-Bashir’s inner circle. 

The Sentry’s efforts in uncovering this corruption have clearly not gone unnoticed by the U.S. Government.  In a rare public acknowledgement of a report by a non-governmental organization, the U.S. State Department on September 28 issued a press release announcing that it would “review the allegations cited in The Sentry report and would carefully consider the recommendations to strengthen efforts to end illicit financial flows to and from South Sudan.”  Two weeks later, the U.S. Government designated Al-Cardinal and his companies under the authorities of the Global Magnitsky Act. 

The recent reports by The Sentry and now the U.S. Government’s designation of Al-Cardinal demonstrate plainly the contributing role of third-parties from outside South Sudan in the corruption in South Sudan, including the alleged role played by some international businesses and banks and Sudanese individuals such as Al-Cardinal.  It is no wonder that the State Department has acknowledged publicly the value of The Sentry’s report.  The OFAC designation of Al-Cardinal and his companies provides an important illustration of the impact that private actors can and do have in the sanctions arena through detailed and documented investigative reports of international public corruption such as revealed through the recent public reporting by The Sentry.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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