How a Bank Linked to DR Congo’s President, Joseph Kabila, Enabled Hezbollah Financiers to Bust U.S. Sanctions
18/10/2017
BGFIBank DRC is headed up by the brother of DRC President
Joseph Kabila Kabange (pictured). The Sentry originally was
investigating the bank for separate allegations that the
banking institution had been used to divert public
funds, including millions in withdrawals by
Congo’s electoral commission.
The same banks used by kleptocratic governments to divert state assets
can also be used by terrorist financing networks. This is what has taken place
at one prominent bank in the Democratic Republic of the Congo (DRC).
Individuals and entities subject to U.S. sanctions, in connection with
Hezbollah, used the bank to move money through the international banking
system, despite several warnings from bank employees that doing so could
violate U.S. sanctions. This was not just any bank. BGFIBank DRC, the institution
that processed the transactions, is run by President Joseph Kabila’s brother
and has been mentioned in a recent scandal in Congo involving the alleged
diversion of public funds from state-owned mining companies and the national
electoral commission.[i]
BGFIBank DRC's headquarter in Kinshasa, capital of the
Democratic Republic of the Congo.
As set out in this report, in 2011
bank employees at BGFIBank DRC raised the alarm with senior officials at the
bank, in writing, about a series of transactions. The concern was that the
transactions involved companies linked to financiers of Hezbollah, a Lebanon-based
terrorist group and political party. The main entities in question were
subsidiaries of Kinshasa-based business conglomerate Congo Futur, a company
under U.S. Department of the Treasury sanctions. Among the recipients of the
warnings was Francis Selemani Mtwale, the bank’s CEO and brother of President
Joseph Kabila.[ii] But the bank’s relationship with Hezbollah-linked companies
continued. BGFIBank DRC even went so far as to request that certain
transactions be unblocked by the U.S. Treasury Department’s Office of Foreign
Assets Control (OFAC) after other banks refused to process them. And BGFIBank
DRC continued to engage in correspondence with Congo Futur-affiliated company
representatives in 2016. This raises major questions about the bank’s ability
and willingness to fulfill its sanctions and anti-money laundering compliance
obligations.
BGFIBank DRC has been reported to
have been used to divert significant public funds in Congo, including millions
of dollars in withdrawals by Congo’s electoral commission, and transfers of $8
million in cash in irregular “tax advances” from Congo’s largest state-owned
mining company, Gécamines.[iii] Published reports raise serious questions about the bank’s
regulatory and compliance regime.
Inadequate anti-money laundering
compliance and sanctions enforcement standards at banks can empower a wide
range of criminal groups and corrupt actors—and ultimately undermine governance
and contribute to instability in Congo and elsewhere. Members of civil society
have suggested that business interests could be part of the reason Kabila, who
has sparked a violent nationwide political crisis by recently overstaying his
presidential term limits, has maintained an iron grip on the presidency.[iv]
A new report alleges that several 2011 transactions at the Congo-based
BGFIBank DRC involved companies that had been linked to Kassim
Tajideen—a Lebanese-Belgian businessman who was designated
by the U.S. Department of the Treasury as a Specially
Designated Global Terrorist.
In the example profiled in this report,
BGFIBank DRC’s approach to enforcing sanctions has allowed Kassim
Tajideen—described by the U.S. government as “an important financial
contributor” who “has contributed tens of millions of dollars to Hizballah”[v]—and his network to maintain access to the global financial system
despite being placed under U.S. sanctions in 2009 and 2010. The documents
reviewed by The Sentry also show links between Congo Futur and other firms
under Kassim Tajideen’s control. These documents indicate that Congo Futur
subsidiaries used BGFIBank DRC to operate accounts and make wire transfers
after both Congo Futur and Kassim were placed under U.S. sanctions, despite
warnings from bank employees that the bank should not do so. This is despite
repeated public assertions from both Kassim and one of his brothers who is not
under U.S. sanctions, Congo Futur General Manager Ahmed Tajideen, that the
Kinshasa-based conglomerate had no links to any of the Tajideens under U.S.
sanctions.
Congo Futur has continued to thrive
in Congo despite U.S. sanctions; it even maintains financial ties to the
Congolese government and has received government contracts. These continued
relations raise serious questions about the Congolese government’s reliability
in the fight against global terrorism, transnational crime, and illicit
finance. Congo Futur has risen and remained prominent despite facing sanctions
and the Kabila regime’s decreasing legitimacy. BGFIBank DRC has been used to
facilitate Congo Futur’s access to the U.S. financial system, despite
sanctions.
I.
Targeted Sanctions. The United States and European Union should urgently impose and
implement three sets of targeted economic sanctions actions:
·
The U.S. government should investigate and act pursuant to Executive
Order 13224, which is the principal authority used for counterterrorism
sanctions, to designate any officials at BGFIBank DRC who the United States
identifies as having knowingly undertaken transactions on behalf of Congo
Futur, as well as to designate any other entities in the Congo Futur network
that the United States identifies as engaged in unlawful activities.
·
The U.S. government should investigate and act pursuant to Executive
Order 13671 and the European Union should investigate and act pursuant to
Regulation (EC) No. 1183 of July 18, 2005 and Regulation (EU) 2016/2230 (2),
which are the principal U.S. and EU authorities used for sanctions related to
the Democratic Republic of Congo, to designate the networks of senior members
of the regime, including financial advisors, Kabila family members, and their
companies that the United States and the European Union identify as having
engaged in unlawful activities.
·
The U.S. government should sanction those responsible for “acts of
significant corruption” in connection with the transactions described in this
report, pursuant to the Global Magnitsky Human Rights Accountability Act
(Public Law 114-328).[vi]
The impact of these sanctions actions would be the same: to freeze the
assets of any designated individuals and entities and block them from the
financial system.
II.
Criminal Investigations. The U.S.
Department of Justice should expand its investigation into the Tajideen network
to evaluate the potential criminal liability of BGFIBank DRC leadership for
knowingly doing business with Hezbollah financiers pursuant to the U.S. Patriot
Act and the U.S. International Emergency Economic Powers Act (IEEPA).
Specialized human rights and transnational crimes units in the United States
and Europe should investigate whether entities within their jurisdiction have
ties to the Tajideen network, with a view toward any financial facilitation of
terrorist activities or human rights violations, including the potential
facilitation of crimes occurring in Congo.
III.
Anti-Money Laundering/Counter-Threat Finance
Actions. The U.S. Treasury Department’s Financial Crimes Enforcement Network
(FinCEN) and financial intelligence units (FIUs) in Europe should immediately
investigate the transactions described in this report and, if warranted, issue
advisories to banks and other financial institutions. FinCEN should issue an investigative
request, pursuant to its authority under Section 314(a) of the Patriot Act, to
request that banks search for records related to the individuals and companies
involved. If FinCEN identifies specific patterns of money laundering or threat
finance, the advisories should state the risk that banks conducting business
with BGFIBank DRC may incur by processing transactions on behalf of
Hezbollah-linked entities. If warranted, FinCEN should also warn of the broader
risks evident in the Congolese banking system, specifically the money
laundering and threat finance risks related to the corruption of the Kabila
regime and business network. This critical step would lead banks to conduct
greater vigilance and reporting and could lead to further FIU actions.
IV.
Bank Due Diligence/De-Risking. Global banks
with commercial relationships in Congo should immediately undertake enhanced
due diligence on those relationships with banks in Congo, including provision
of correspondent banking, trade finance, and other services, while at the same
time being cognizant of and avoiding over-compliance and de-risking.
V.
Public Corporate Registry. The Congolese
government, led by the Ministry of the National Economy and the Ministry of
Foreign Commerce, should create a searchable online public registry of all
corporate entities formed in the country to improve corporate transparency,
public oversight, and accountability.
[i] Xavier Counasse and Colette
Braeckman, “Corruption au Congo: les preuves qui accablent le régime Kabila,” Le
Soir, October 29, 2016, available at http://plus.lesoir.be/66290/article/2016-10-29/corruption-au-congo-les-preuves-qui-accablent-le-regime-kabila;
Jeffrey Gettleman, “As President Joseph Kabila Digs In, Tensions Rise in
Congo,” The
New York Times, December 27, 2016, available at https://www.nytimes.com/2016/12/17/world/africa/congo-joseph-kabila-corruption.html.
[ii] According to the Congo Research Group
and the Pulitzer Center on Crisis Reporting, “Selemani became an adopted son
after his father, one of Laurent-Désiré’s rebel comrades, was killed.” Congo
Research Group and Pulitzer Center on Crisis Reporting, “All the President’s
Wealth: The Kabila Family Business,” p. 7 (July 2017), available at https://allthewealth.congoresearchgroup.org/dist/assets/all-the-presidents-wealth-ENG.pdf.
[iii] Documents obtained and reviewed by
the Sentry; Counasse and Braeckman, “Corruption au Congo”; Aaron Ross,
“Belgium, Congo activists urge probe into Congo corruption claims,” Reuters,
October 31, 2016, available at http://www.reuters.com/article/us-congo-corruption/belgium-congo-activists-urge-probe-into-congo-corruption-claims-idUSKBN12V1ZW;
and Gettleman, “As President Joseph Kabila Digs In.”
[iv] Michael Kavanagh, Thomas Wilson, and
Franz Wild, “With His Family’s Fortune at Stake, President Kabila Digs In,”
Bloomberg, December 15, 2016, https://www.bloomberg.com/news/features/2016-12-15/with-his-family-fortune-at-stake-congo-president-kabila-digs-in;
Kimiko de Freytas-Tamura, “When Will Kabila Go? Congolese Leader Long Overstays
His Welcome,” The New York Times, July 23, 2017, available
at https://www.nytimes.com/2017/07/23/world/africa/congo-joseph-kabila-elections.html?mcubz=1.
[v] U.S. Treasury Department, “Treasury
Targets Hizballah Network in Africa,” Press release, May 27, 2009, available at https://www.treasury.gov/press-center/press-releases/Pages/tg149.aspx.
[vi] S.284 – Global Magnitsky Human Rights
Accountability Act 114th Congress (2015-2016), available https://www.congress.gov/bill/114th-congress/senate-bill/284/text;
Letter from 23 organizations dedicated to the promotion of universal human
rights and the fight against corruption to U.S. Secretary of State Rex
Tillerson and U.S. Treasury Secretary Steven Mnuchin, September 12, 2017,
available at https://enoughproject.org/blog/ngos-call-sec-tillerson-sec-mnuchin-robust-implementation-magnitsky-act
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