Testimony of John Prendergast, Enough Project Founding Director and Co-Found of The Sentry, given on May 9th, 2018 before the U.S. Congress’ House Foreign Affairs Committee hearing on “Protecting Civil Society, Faith-Based Actors, and Political Speech in Sub-Saharan Africa.”
Chairman Smith and Ranking Member Bass, thank you for the opportunity to testify on this critical and timely subject.
The ability of civil society to exercise their fundamental rights to self-expression and assembly are increasingly under siege in Sub-Saharan Africa due to the targeted violence and draconian restrictions on communication that allow autocratic rulers to suppress the voices of their people. The two interlocking and primary financial tools of pressure—network sanctions and anti-money laundering measures—can play a key role in creating actual consequences for repression and supporting civil society voices to press for freedoms throughout Africa, despite attempts by officials in those countries to stifle media, religious groups, rights advocates, and other civil society organizations.
The connection between the self-enrichment of elites through corruption and the repression of civil society is clear in the cases of Sub-Saharan African countries rich in natural resources and economic potential but lacking in basic freedoms and respect for human rights. Oil, gold, diamonds, cobalt, copper, and a variety of other mineral deposits and trafficked wildlife provide immense opportunity for those in power to line their own pockets. Brutally repressing all forms of opposition is seen as the only way to maintain control of the spoils, thus hijacking the state by profiting off of total control and unchallenged power. The U.S. government and the broader international community have the tools for financial and diplomatic pressure that can create leverage necessary to stop corrupt actors from using their forces to persecute these groups and commit human rights abuses, and yet these tools have been used sparingly in Sub-Saharan Africa. They have been applied to only a few individuals at a time, with very little enforcement, and are rarely extended to predatory commercial collaborators, both inside and outside the continent, who facilitate and enable official misdeeds.
Serious financial pressure with meaningful consequences is not only possible but critically necessary to protect civil liberties and freedoms in Sub-Saharan Africa. The key ingredients to a more effective cocktail of U.S.-led financial leverage are network sanctions and anti-money laundering measures, working hand-in-glove.
NETWORK SANCTIONS: Those responsible for perpetuating conflict and targeting civil society have come to view sanctions as largely ineffective and an underwhelming challenge to their hold on power when only a handful of individuals without ties to the international financial system are sanctioned. The reason is that sanctions regimes focused on this region lack the necessary ingredients to make this policy tool effective. The idea that sanctions in Africa don’t work is a product of the design, implementation, and enforcement of sanctions, not the tool itself.
Sanctions must be levied against entire networks that enable authoritarian regimes to oppress civil society, not just the individuals committing the abuses. Deploying these “network sanctions” has been a strategy used by the United States in the cases of Iran, Russia, and North Korea in order to drive them to the negotiating table. This strategy has been bipartisan, extended over the last two administrations, and consistently relied on leadership and direction from Congress. The United States deployed extensive sanctions targeting Iran’s leadership and military networks in an effort to disrupt the illicit funding streams used by the country’s ruling elites to maintain their grip on Iran’s government and economy, including by undermining Iranian civil society. In two cases, specifically Executive Orders 13606 and 13628, these sanctions specifically focused on Iran’s targeting of civil society. These are important models to build from in order to ensure protection for civil society in Sub-Saharan Africa.
They are important models because they focus on networks. Sanctions that target full networks in this way are powerful tools for changing behavior and pressuring targeted individuals to alter behavior or come to the negotiating table. Network sanctions work because they affect not only the primary individuals themselves but also those who are acting on their behalf and entities owned or controlled by the primary individuals. By sanctioning these individuals and entities at once, or in close succession, an individual’s network does not have enough time to absorb and adjust to the financial impact of being cut off from the U.S. financial system.
Network sanctions would have a dramatic effect in protecting civil society in countries such as South Sudan, Sudan, the Democratic Republic of the Congo (Congo), and the Central African Republic, all places where interlocking kleptocratic networks involving political and military officials, allied businessmen, arms dealers, and international financial facilitators profit from mayhem and obtain technology from commercial partners that allow them to suppress their populations. The U.S. Department of the Treasury—as well as its counterparts in the European Union and elsewhere—should go further, escalating the financial pressures against entire networks in Sub-Saharan Africa and those around the world that support them.
Fortunately, thanks again to Congress, Treasury has an important new tool in its arsenal. The Global Magnitsky Act, championed by Chairman Chris Smith (R-NJ), is a demonstration of how problems can be successfully addressed in a bipartisan manner when both the House and Senate work together. This groundbreaking legislation empowers the U.S. government with the authority to place sanctions on corrupt public officials and their associates across the world that misappropriate state assets as well as anyone who attacks journalists and human rights defenders.
The legislation provides the president standing authority, which was then enhanced through an executive order, to impose sanctions on non-U.S. citizens responsible for corruption or serious human rights abuse. It also enhances congressional and nongovernmental organization (NGO) involvement in the designation of individuals. The first round of designations announced in December of 2017 demonstrated the robustness of this tool and its ability to address corruption around the globe.
Congress must now build on this great success by continuing to ensure the tool is used, and also by ensuring the Treasury Department has the necessary resources to investigate, implement, and enforce designations. Congress set a critical marker when it focused on corruption and the targeting of civil society for sanctions, and we have all seen the impact of this congressional leadership, particularly when Treasury can impose massive financial penalties for failure to comply.
ANTI-MONEY LAUNDERING MEASURES: Even with Global Magnitsky, sanctions are not the only piece of the puzzle. The increasingly effective use of anti-money laundering measures to focus on corrupt and criminal regimes that are also targeting civil society must also be extended to Sub-Saharan Africa. As also used effectively in dealing with Iran, North Korea, Burma, and others, when corrupt leaders or their business associates take bribes or otherwise divert public funds into their private accounts, then place those funds in the formal banking system, that is money laundering. Our research shows this occurring across South Sudan, Sudan, and Congo, usually routing through neighboring countries, and largely in U.S. dollars. That means the U.S. government can act, whether through such means as public advisories to banks, requests from the Financial Crimes Enforcement Network (FinCEN) to thousands of banks on specific targets of interest, or the designation of countries, institutions, or even classes of transactions as primary money laundering concerns.
In September of 2017, FinCEN took the first step and issued an advisory on the risks of money laundering when conducting business in South Sudan or with South Sudanese officials and their families, even when such activity takes place outside of the country. This move significantly raised the profile of South Sudanese corruption and money laundering, prompting regional and global banks to begin conducting long-overdue investigations and taking action against specific accounts. This action can and should be built upon, with further action on South Sudan and extending to other regimes targeting civil society and using laundered funds to do it.
CONGRESS’ ROLE: As indicated above, in many cases over the last 10 years, whether on Iran, Russia, or North Korea, some of the most effective financial pressure measures have been imposed by Congress. Congress, and in particular this committee led by Representative Smith, has been steadfast in commitment to the people of Sudan, Congo, and beyond. It is time to bring those two elements together and ensure that critical legislation related to those countries, and more broadly to beneficial ownership that can enable implementation of financial pressures, passes during this Congress.
THE SENTRY’S ROLE: Finally, even with new authorities and potentially increased staffing, the U.S. government, like most governments and banks, will only be able to devote the most basic levels of resources to the collection of evidence on Africa’s illicit financial flows, which means that officials and companies benefiting from them may still face little risk of getting caught.
This is where our investigative initiative, The Sentry, comes in. The Sentry is a team with decades of experience in law enforcement, intelligence, investigative journalism, corporate security, and policymaking. With this experience, we follow the money being looted from resource-rich, war-torn East and Central African countries and track where it ends up across the globe. We collect the evidence of illicit financial activity connected to conflict, human rights abuses (including where focused on targeting civil society), and corruption. Then we undertake financial and other investigations and construct dossiers that can be used by regulators, law enforcement, and prosecutors. The unique value of this approach is its precise focus on affecting disruptive action using the tools of financial pressure I have just outlined.
The reality is that there are libraries full of reports—alleging corruption or showing how civil society space is being constricted—that have no impact on policy. Disruptive action is not possible without solid evidence, a direct connection between illicit gains and the crimes they fund, and close relationships with authorities and financial institutions responsible for implementing the tools of financial pressure. We will continue to place the work of The Sentry at the disposal of this committee and other congressional committees seeking to make an impact on these issues, as well as the executive branch and banks.