A Bandit Economy: South Sudan’s Mining Sector

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By Africa Uncensored

The mineral sector in South Sudan is under siege. Powerful elites and government officials are potentially profiting from these resources at the expense of the people of South Sudan, a country that gained its independence in 2011. If this continues, the reality of a better life for hundreds of thousands of South Sudanese, many of whom have already died in ethnic clashes, will remain elusive.

The Involved

President Salva Kiir’s 24-year-old daughter, Winnie Salva Kiir, has held shares in a company that received mining concessions in a conflict-affected area On 23rd March, 2016, when Winne was 20, she and five other people – three Chinese nationals and two South Sudanese – founded Fortune Minerals and Construction Ltd., a private company with the objective of searching for gold, white gold, black gold, silver, brass, iron, coal and all other precious metals, among other activities in South Sudan, according to its articles of incorporation. Little information about the how the company received mining concessions has been disclosed.

The company’s authorized share capital was $1 million at the time of incorporation. The shares were divided as follows: Chen Huiping (26%), Chen Yongqiang (25%), He Yuheng (18%), Winnie Salva Kiir (11%), Rebecca Nyaruach Dhor (10%) and Athil Ayiik Akol (10%). According to registration documents, Chen Huiping, 55, was appointed the managing director.

The Ministry of Petroleum and Mining

The Ministry of Petroleum and Mining approved the incorporation of Fortune Minerals and Construction Ltd., and wrote to the Chief Registrar of Companies in that regard. Five months later, the company obtained two licenses to search for minerals in Central and Eastern Equatoria. Interestingly, the company was also authorized to engage in activities related to quarrying and mining of metals discovered and to market the same within and outside South Sudan. It is not clear whether the company profited from these licenses.

An investigative report on the country’s mineral sector by The Sentry, titled Untapped and Unprepared showed a pattern of giving mining concessions to companies in which important political or military figures and their family members have held shares. Fortune Minerals is just one example of how the relatives of parliamentarians, presidents, vice presidents, and other members of South Sudan’s elite political circles have benefitted from the country’s modus operandi in natural resource development. The report attributed some of the challenges facing the sector to poor transparency in the issuance of mining licenses and the lack of public registers disclosing the owners of mining or other companies.

The involvement of former governor Louis Lobong Lojore

The case of former governor of Kapoeta (now Eastern Equatoria) State, Louis Lobong Lojore, also illustrates major problems and misconduct in South Sudan’s mining sector. Governor Lobong is an influential figure in President Salva Kiir’s SPLM party.  Lobong is alleged to have used his former gubernatorial position to benefit from the state’s immense gold resource. Through a company in which he has held shares, Omega World Wide, Lobong has secured and potentially benefitted from major construction contracts in the region, according to an intelligence brief by The Indian Ocean Newsletter.

Omega World Wide has allegedly been granted rights to explore minerals in areas already licensed to other companies by the National Mining Authority. One such case involved New Kush Exploration and Mining Company Ltd., which has offices in the United Kingdom and South Africa. New Kush reported the incursion to the Ministry of Mining but neither Juba nor Kapoeta acknowledged any wrongdoing. An individual with direct knowledge of New Kush’s operations alleged that New Kush, as well as other mining companies, have been met with demands to make illegal payments to Eastern Equatoria State in order to access land, even after paying the central government for the rights as required by the 2012 Mining Act.

Lobong’s Kenyan links

The Sentry identified an eight-bedroom luxurious house within a gated community in Karen, Nairobi, belonging to the Lobong family, valued at more than US$1 million. It seems unlikely that Lobong could have afforded the house with his public servant salary alone.

An incident in which 15 kilos of gold disappeared last year while in the hands of Lobong’s government perhaps lends credence to his shrewdness. A Chinese firm mined the gold between June and July 2019 and entrusted its safekeeping to the government. “When its directors asked for the gold to be transferred to the Kenyan airport of Lokichogio on the other side, as is standard practice, the local authorities were unable to return the assets to them,” states an intelligence brief by the Indian Ocean Newsletter. It’s still unclear who took the gold and where it ended up.

Lobong’s proxies

Two of Lobong’s wives, Semira Ayen Althaeb and Natalina Leonard Madrawi, and son, Nachek Louis Lobong, have been shareholders in companies established to extract minerals. Semira Ayen Althaeb was listed as a shareholder (11%) in Goldstone Mining Co. Ltd., at the time the company was incorporated on 5th August, 2015. Other shareholders included Shlomo Wolf (69%) of Israeli nationality, Majok Yel Wol (10%), and Lawrence Lual Malong (10 %), the alleged stepson of former Chief of Staff of South Sudan’s military, General Paul Malong Awan.

Natalina Leonard Madrawi was listed as a  shareholder (15%) in Sapphire Limited, alongside a company (Lukiza Limited – 85%) represented by Gideon Moi, a serving Kenyan Senator and son of the late former President of Kenya, Daniel Toroitich arap Moi. Natalina was also a shareholder (15%) in World Focus Mining Ltd., together with three Ethiopians and a fellow South Sudanese. Nachek Louis Lobong has held 10% of shares in Afro Sino Investment Co. Ltd. The company was listed as having four Chinese and two other South Sudanese shareholders.

Other politically-exposed persons and members of their families have held shares in companies dedicated to operating in the mining sector. Current Deputy Defense Minister Malek Reuben Riak Rengu and his four sons have had control of All Energy Investment Ltd., a company they founded in 2016. Former Vice President James Wani Igga’s son, Emmanuel Maring Wani Igga, has held shares

In a press statement published on May 9, 2020, Lobong denied any wrongdoing and claimed the investigative report Untapped and Unprepared was intended to “defame South Sudanese leaders in order to collide them with the citizens and the international community rendering the country volatile and ungovernable.”

The South Sudanese military

The South Sudanese military is also a major player in the mining sector. The Defense Ministry’s Directorate of Military Economic Corporation controls several commercial entities, including MED Construction for Development Co. Ltd. But the involvement of the military in the mining sector raises legal questions. For instance, according to Untapped and Unprepared, while most of the shareholders in MED Construction are senior army officers, the Directorate’s head of military production, Brigadier General Pagan Ocayi Tipo, told The Sentry that the company’s shares ultimately belong to the Ministry of Defense. Tipo explained to The Sentry that “any revenue generated by the directorate’s businesses would serve to purchase uniforms, train troops, and fill other institutional needs.” However, there is no indication that the Ministry has a controlling interest. When MED Construction received three licenses from the Ministry of Mining, the payment curiously was made to a commercial bank account instead of the Central Bank or the Finance Ministry.

Copied and pasted

Scrutiny of the documents on environmental and community impacts MED Construction submitted to the Ministry of Mining shows they were not entirely original. Some sections appear to have been copied from elsewhere. One such document is the Environmental Management Plan, which strongly resembles a document of the same name by Fundudzi Consulting, a South African company. The format, structure and headings used are the same in both documents. It appears that whoever modified the document by Fundudzi Consulting lacked due diligence. According to The Sentry’s report, it referenced “South African laws such as the Mine Health and Safety Act of 1996 and a governance notice from 2011, neither of which is applicable in South Sudan… An examination of document metadata further indicates that both MED Construction’s proposal and the South African Heritage Resources Agency file have been named ‘C Hoek 210.’”

This not only exposes MED’s likely disqualifying shortcomings as a company—and deliberate misrepresentation of itself–but it illustrates deficiencies in the application review process.

Violation of the Mining Act

Just as in the even more lucrative oil sector, South Sudan’s weak regulatory and legal framework and lack of enforcement mechanisms have facilitated the plunder of the country’s mineral resources. Even minors have been listed as shareholders in some companies, contrary to Section 7(2)(a)(i) of the  Mining Act 2012, which provides that no mineral title shall be granted or held by an individual who is under the age of 18 years. Companies that have violated the Mining Act include Jok Bell International Trading Co. Ltd., where a six-year-old was listed as a 35% shareholder in 2016 and Harmony International Company, which also listed a six-year-old as a 31% shareholder. When one of Harmony International shareholders, Ring Bulebuk Manyiel Akier, was pressed by The Sentry for an explanation, he attributed the age to a typing error. According to The Sentry, “When asked why one of the company’s other shareholder, Ajak Abuk, signed on this individual’s behalf on all of the company’s internal documents, Akiel indicated that Abuk was this individual’s aunt and that she acted as his registered agent.”

What should be done

While the children of politically-exposed persons hold shares in mining companies, the capture of the mining sector by elites, as with the oil sector, will inevitably impact the future of hundreds of thousands of other less fortune South Sudanese children. To reverse the current situation, there is need for South Sudan to create a public register disclosing beneficial ownership, and for the government to conduct a retroactive audit of the mining sector. Oversight institutions should also be empowered to enforce existing laws. Foreign governments such as the US, UK and European Union should impose or expand sanctions on actors and associated entities, issue Responsible Investment Reporting Requirements for companies wishing to invest in South Sudan’s extractive industries, and issue a public advisory listing typologies and enhanced due diligence measures.

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Piga Firimbi