Kenya sits on the fence over neighbour’s loot amid warning from US

South Sudan's President Salva Kiir.

The revelations about what is happening in South Sudan come at a time when President Salva Kiir and his nemesis Riek Machar continue to drag on with talks as violence persists.

Kenya, whose banks control the financial sector of South Sudan, has continuously rejected the push by the US to seize properties of South Sudanese leaders bought with proceeds from corruption, money laundering and war.

A recent swoop on illegal South Sudan immigrants livingin Kenya ended up in an embarrassing mode when the Juba government flexed its muscles, forcing Interior Cabinet Secretary Fred Matiang’i to beat a hasty retreat.

Illicit proceeds

Hundreds of them had been netted in a operation sanctioned by the country’s top security organs to rid the country of illegal immigrants.

“The Ministry of Foreign Affairs and the State Department for Interior have agreed with the Embassy of the Republic of South Sudan on a solution to cause the expeditious release from police custody of all identified South Sudan nationals who were found without proper documentation,” a government statement said.

Foreign Affairs PS Macharia Kamau maintains that although the country is capable of seizing properties from illicit proceeds, it will only act within the context of international practices through the UN conventions and the Bretton Woods institutions.

“Kenya knows its obligations in regards to corruption and money laundering and is working closely with the international community on the same. However, we work with multilateral platforms and don’t take instructions from other sovereign states,” Mr Kamau said.

The Trump administration has been piling pressure on Kenya to investigate and seize the assets of SouthSudanese leaders who have invested millions of shillings in real estate.

The US has urged Kenya to investigate properties and assets owned by elite families from South Sudan, including its president and his rival, who have enriched themselves in their country’s civil war raging since 2013.

While on a tour of East Africa, Sigal Mandelker, the US Treasury’s under-secretary for terrorism and financial intelligence, said some South Sudanese on a sanctions list have continued to invest illicit money in Kenya’s real estate market.

“I wanna be very clear, those who profit from human rights violations and corruption, preying on the poor and innocent and mothers and children, must heed our warning,” Mandelker told a press conference in Nairobi recently. 

“We will impose consequences, we will cut off your access to the US financial system and we will work with our partners in this region and elsewhere to do the same,” she said, repeating a warning she had delivered earlier in the week in Uganda.

More than half a million refugees fled South Sudan to other countries in the region between 2013 and 2016.

This number exploded in July of 2016, the start of the second civil war in South Sudan.  

It is not just KCB that was named in the report. Equity and Stanbic have also been adversely mentioned.  

Confidential report

A confidential report from South Sudan’s’ auditor general obtained by The Sentry show a picture of, at best, how irresponsible people within the Bank of South Sudanare, or at worst, willful ignorance of banking laws that have benefited banks in the region.

A staggering Sh67 billion was deposited with Stanbic Bank in 2012, which at the time was 95 per cent of South Sudan’s foreign cash reserves.

The bank is only allowed to deposit 15 per cent of its reserves with another bank at maximum.

That same year, interest earned from the Bank of Sudan’s account worth today’s equivalent of slightly more than Sh80 million shillings was not recorded and there was “no evidence that it had been received”.