HIJACKED COUNTRIES

From FIFA to Sudan, Let’s Make the World Unsafe for Kleptocracy

The U.S. Department of Justice has gone after FIFA and the government of Sudan with many of the same tools. It needs to keep ratcheting up the pressure.

The arrest of two FIFA officials last week in Switzerland was an important milestone for soccer’s governing body. The criminals who brought the organization to its knees are finally being removed and paying a price, paving the way for FIFA to begin rebuilding its tattered reputation and legitimacy.

Over the last two decades, FIFA devolved into a kleptocracy. A searing indictment by the U.S. Department of Justice (PDF) paints a picture of an organization hijacked by a dozen or so powerful insiders who abused their power to siphon off millions of dollars in bribes and kickbacks. These men went to great lengths to facilitate, disguise, routinize, and provide cover for their illicit dealings, often using shell companies and secret bank accounts to cover their tracks.

Theft was not simply an objective, however, as critics claim that FIFA President Sepp Blatter and his cronies retained power through “years of unethical patronage, favors and handouts.”

Now, just imagine if crooks like the ones who were running FIFA hijacked an entire government.

This is exactly what is happening in a number of corruption-fueled countries. Take Sudan, for example. Since seizing power through a coup d’état in 1989, Sudanese President Omar al-Bashir has presided over a prototypical authoritarian kleptocracy.

Bankrolled by the country’s oil wealth, a cabal at the top of Bashir’s National Congress Party deftly co-opted political rivals through the provision of government posts and other forms of patronage. Political insiders and well-connected businessmen receive privileged access to state contracts, and senior officials routinely use their positions to advance their personal business interests. According to the U.S. Department of State’s 2009 Human Rights Report on Sudan, the country’s auditor general found that state institutions embezzled $2.3 billion in 2008 alone.

For two and a half decades, Bashir and his cabal had little incentive to develop Sudan’s non-oil economy. Sudan’s gross domestic product per capita is $1,750, classifying the country as lower-middle income. Yet nearly half of Sudan’s citizens live in poverty, youth unemployment is rising steadily, and a fifth of the population is dependent on humanitarian assistance in 2015.

This stark chasm between the powerful and the marginalized in Sudan has, unsurprisingly, prompted a steady stream of demonstrations and armed uprisings throughout Bashir’s tenure. This means that, unlike FIFA’s ruling clique, Bashir cannot hold power through theft and patronage alone. Simply put: Rivals who aren’t co-opted are silenced or countered through brutal military force.

An estimated 70 percent of government spending is channeled to Sudan’s security sector—and Bashir has readily unleashed Sudan’s outsized military on its own citizens, often targeting civilians as an essential part of his war strategy.

Decades-long military campaigns against Darfur and now-independent South Sudan cost millions of lives. In addition, Sudan’s air force has embarked on ruthless aerial bombardment campaigns in the Nuba Mountains and Blue Nile State (PDF). When a wave of protests over austerity measures spread across the country in September 2013, state security forces shot and killed over 170 people and arrested thousands more.

Bashir’s response to dissent reveals weakness, not strength. Sudan’s regime is teetering on the brink of financial crisis. When oil-rich South Sudan seceded in 2011, Khartoum’s primary source of revenue all but vanished. Now, Bashir is scrambling to find new revenue sources to fuel his violent kleptocratic machine.

A recent gold rush in Darfur, South Kordofan, and Blue Nile States is replacing oil as the regime’s cash cow, fueling continued violence and theft of state assets. Several Sudanese gold mines are owned or controlled by infamous Janjaweed death squads. Other analysts have claimed that Bashir’s regime is proactively stoking conflict in order to wrestle control over artisanal gold mines in the affected areas.

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The FIFA prosecution provides important lessons for countering kleptocracies. As with FIFA’s hijackers, Bashir and his henchmen are unlikely to cede power voluntarily, as that would cut them off from their illicit income sources and result in punishment for abuses committed while in office. Bashir, however, shares a key vulnerability with FIFA’s leaders: dependence on the international financial system and corporate backers.

Accordingly, the tools used to spark change at FIFA should be employed to put pressure on corrupt, violent regimes like Bashir’s. Some tools are already being deployed in Sudan, but their effectiveness is diminished due to weak enforcement.

Sanctions on Bashir’s regime, for example, have been evaded routinely, largely with the help of Western banks. Last month, the U.S. authorities levied a $787 million fine against Crédit Agricole, a France-based bank, as part of a settlement agreement for the bank’s role in violating sanctions on Sudan, Iran, Myanmar, and Cuba.

From 2003 to 2008, the bank processed more than 4,000 transactions worth over $317 million for prohibited Sudanese clients, one of whom referred to the Darfur crisis as “an exaggeration in the media” and told bankers that it would be a “great pity” for Crédit Agricole to give up its position as “a serious player” in Sudan’s financial markets during “a period of vastly improved economic prospects brought about by the discovery of oil.”

Crédit Agricole’s punishment came just a little over a year after another French bank, BNP Paribas, was fined $140 million and ordered to forfeit another $8.8 billion by U.S. authorities for violating sanctions placed on Sudan, Iran, and Cuba. The Department of Justice found that the bank had processed over $6 billion for banned Sudanese clients, even as numerous bank employees raised concerns about doing business with a regime that supported international terrorism and committed gross human-rights abuses.

These enforcement actions are steps in the right direction, but, clearly, more needs to be done to properly incentivize bankers to uphold the law. Part of the problem is that, historically, banks have paid hefty fines but individual bankers have faced few consequences for facilitating illegal transactions.

The Department of Justice recently made clear that it’s ready to prosecute individual bankers for financial crimes. It must now make good on its threat by holding bankers and intermediaries who assist in the evasion of the Sudan sanctions regime criminally liable for their actions.

And more can be done to pressure Bashir’s regime to curb its abuses and catalyze reforms. The U.S. Department of Treasury and the United Nations should continue to investigate and sanction perpetrators of abuses within Sudan’s leadership as well as its primary financiers, facilitators, and weapons suppliers internationally.

Ultimately, sanctioning mid-level figures here and there will have no impact, and in fact could be counter-productive. To maximize leverage and impact, going after entire networks of financial support for conflict would make an enormous difference.

Investigators should zero in on Sudan’s gold sector, given its heightened role in funding the regime’s abuses. The U.S. Congress should remind banks and commodity traders that unless it can be traced to a conflict-free mine, all Sudanese gold should be red-flagged and subject to additional due diligence before entering the marketplace. The Justice Department’s Kleptocracy and Asset Recovery Initiative should also investigate Sudanese officials who misappropriate state assets so that the perpetrators of graft and abuse in Sudan never feel secure parking their ill-gotten gains overseas.

Policymakers seeking to counter violent kleptocracies should also mimic the Justice Department’s approach to addressing corruption at FIFA. Prosecutors did not treat FIFA itself as a rogue entity but as an organization captured by a criminal cell, creating an opportunity for soccer’s governing body to turn a new leaf.

Similarly, Sudan isn’t simply a rogue state; it is a hijacked state. Implicit in this approach is an understanding that removing corrupt leaders doesn’t guarantee success. Change at the top must be followed by sustained reforms and the development of accountability mechanisms. Space must be created for journalists and activists to act as watchdogs against abuses and to articulate public concerns.

Armed groups must be disarmed, demobilized, and reintegrated into society, and the formal security sector must undergo a near complete transformation. This process may take decades, but it won’t even have a chance to begin if the thieves bent on maintaining the deadly and corrupt status quo believe they can hold power indefinitely.

Part of the reason kleptocrats like Bashir are willing to rob, repress, and kill their citizens is because the world imposes little cost. Dictators employing the same exploitative governance model as Bashir have wreaked havoc on places like Uzbekistan, Equatorial Guinea, Zimbabwe, and Myanmar. They should be hit in their wallets. Unlike in the FIFA case, though, the stakes are life and death for millions of people.