Sanctioned Billionaire Finds a Haven in Tiny Congolese Bank
02 Jul 2020

A year ago in June, a group of bankers marched into a U.S. Treasury office in Washington on perhaps the most important mission of their careers: to save a country from financial collapse. Among them was Willy Mulamba, Citigroup Inc.’s top executive in the Democratic Republic of Congo, a resource-rich but devastatingly poor nation in central Africa.

Mulamba, a 51-year-old Congolese banker who had returned home after years abroad, was part of a small team desperate to dissuade Treasury officials from cutting the nation off from the U.S. banking system, even though corruption scandals swirling around recently departed President Joseph Kabila had infected several local banks. Global firms including ING Groep NV and Commerzbank AG had stopped processing most dollar transactions from Congo out of concern about violating U.S. anti-money-laundering rules or sanctions imposed on generals, government officials and, in December 2017, on one of Kabila’s most important financiers: Dan Gertler. The Israeli billionaire, Treasury said, had amassed a fortune “through hundreds of millions of dollars’ worth of opaque and corrupt mining and oil deals.”

By the time of the meeting, Citigroup was handling more than 80% of Congo’s international dollar transactions, an exposure well beyond the bank’s comfort level. Citigroup had come to Congo in 1971 and weathered decades of dictatorship, corruption and war. It would be an unusual twist of fate if this bastion of American finance was forced to close its Congo branch because of sanctions imposed by its home country.

More importantly, Mulamba knew that if Citigroup pulled out, the dollars would stop flowing to Congo. That would be tantamount to a death sentence for an economy where 90% of bank deposits and loans are in dollars. Congo’s 84 million people would face hyperinflation and financial uncertainty, and its businesses could seize up.

Across the table from Mulamba and his colleagues was Sigal Mandelker, then Treasury undersecretary in charge of the Trump administration’s burgeoning roster of sanctions. Mulamba told her the bankers were doing their best to respect the restrictions, even though it exposed them to threats and lawsuits from powerful people in Congo. Mandelker promised to work with the group to help them comply, according to six people who attended the meeting. That was enough for the bankers.

Returning to Kinshasa, Congo’s capital, the bankers felt reassured. They held a press conference stating their intention to toughen controls, and Mulamba delivered a clear warning. “I ask our banks and our monetary and political authorities to focus on the questions of the fight against money laundering and terrorist financing,” he said. “We are a strategic sector, and we have to be protected.” To anyone who knew Congolese finance, it was obvious what he was saying: Stop holding suspect money, because one slip up could ruin all of us.

What the bankers didn’t know was that a mile down Kinshasa’s main boulevard from where the press conference took place, in a two-story building with reflecting windows, one bank had made holding suspect money its business model, according to documents provided to Paris-based anti-corruption group Platform to Protect Whistleblowers in Africa, known by its French acronym Pplaaf, and shared with Bloomberg News.

The bank was the Congolese subsidiary of Cameroon’s Afriland First Bank Group. Citigroup wasn’t processing dollar transactions for the unit, but it serviced the parent company — one of only two so-called correspondent banks doing so, according to Afriland’s website.

In January 2018, a few weeks after the U.S. imposed sanctions on Gertler, a family friend named Shlomo Abihassira had walked into Afriland’s Kinshasa headquarters and opened an account for a newly registered company with the unpronounceable name RDHAGD Sarlu, bank documents show. Over the next five months, Abihassira, who lives in Israel, made 17 deposits totaling $19 million. That August, he transferred the funds in one go to another Afriland account registered to a company called Dorta Invest SAU, according to bank records. Dorta Invest, set up by French businessman Elie-Yohann Berros, sent most of the funds abroad to recipients, most of whom aren’t identified in the documents.

A little more than a year after Abihassira opened the account, whistle-blowers shared with Pplaaf a cache of Afriland documents describing the flow of money. With the help of London-based corruption watchdog Global Witness, researchers spent more than a year making sense of the transactions. They scoured publicly available company registers, statements from firms and social media.

What they found was a network of companies that emerged in Congo after the sanctions went into effect. Although Abihassira and Berros say they have no financial ties to Gertler, their associations with others connected to the Israeli businessman raise questions about whether they were effectively helping him continue doing business after the restrictions were in place.

Whatever conclusions are ultimately drawn about Gertler’s relationship with Afriland, the tangle of undisclosed, informal linkages offers a view into what might be described as the last-mile problem for financial sanctions regimes. Regulators in Washington can impose weighty know-your-customer obligations on banks such as Citigroup. But on the fringes of banking, in corners of the world where corruption runs rampant, rules based on legal concepts like beneficial ownership or majority control can seem ineffectual in the face of personal loyalties, unwritten obligations and impenetrable corporate records. In the end, it’s a system that relies on whistle-blowers to expose the truth.

“This is how, despite being sanctioned, Gertler appears to have continued reaping the vast financial benefits of his business activity in DRC — a country where over 72% of the population lives on less than $1.90 a day,” Pplaaf and Global Witness wrote in a report published on Thursday. The report said the organizations couldn’t prove that the network was used to evade U.S. sanctions and it doesn’t allege any criminal behavior.

By Franz Wild, Michael Kavanagh and William Clowes, Bloomberg, 1 July 2020

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