South Sudan’s leadership uses state-owned oil company Nilepet to funnel millions into brutal security services and ethnic militias

GLOBAL WITNESS, Tuesday 6th March, London, ssn;

A new Global Witness investigation shows how South Sudan’s state-owned oil company, the Nile Petroleum Corporation (Nilepet), has fallen under the direct control of President Salva Kiir and his inner circle, and is being used to funnel millions in oil revenues to the country’s brutal security services and ethnic militias, with limited oversight and accountability.

“While South Sudan’s population continue to suffer a senseless war and economic crisis of their leaders’ making, Nilepet is failing its true constituents, serving instead the interests of a narrow cabal, and being used to prolong the brutal conflict,” said Michael Gibb, Campaign Leader for Conflict Resources at Global Witness.

Ahead of resumed peace talks, Global Witness is recommending a renewed focus on the economic drivers of South Sudan’s conflict; including its oil sector, and increased engagement with the international companies and traders that connect Nilepet to international markets.

While South Sudan is a producer of crude oil, it lacks capacity and infrastructure to refine this into the fuel its population relies on. As a result, Nilepet is deeply integrated into global oil supply chains, including international refineries and commodity traders, without which it would be unable to raise revenues.

These international trading partners could play a key role in challenging and holding it accountable.

“Nilepet depends on the international oil supply chain,” said Michael Gibb. “The international companies it deals with have a responsibility and opportunity to use their influence to drive reform and transparency at this critical moment in South Sudan’s conflict. Indifference is tantamount to complicity in the face of clear evidence of Nilepet’s role in the war economy.”

Capture on the Nile draws on secret documents and first-hand testimony to detail the means by which one of South Sudan’s most significant economic institutions has been co-opted to serve the personal aims of President Salva Kiir and his inner circle.

This is illustrated most dramatically by the presence of Lt. Gen. Akol Koor — head of South Sudan’s feared Internal Security Bureau— on the company’s board.

Once captured, Nilepet appears to have become the vehicle of choice for connected elites wishing to evade scrutiny of financial transactions worth millions, linking the company directly to arms transfers and the patronage system at the heart of the conflict.

Nilepet’s successful capture has made it a critical component of the war economy. As a private company, Nilepet is able to operate in near total secrecy.

The report details how this secrecy has been used to finance military operations, arms transfers to ethnic militias, and conceal the looting of millions in ‘letters of credit’ intended to help imports of essential goods as South Sudan’s economy deteriorated.

“South Sudan’s security forces are able to operate with alarming impunity, driving cycles of violence and oppression,” said Michael Gibb. “Nilepet’s ability to finance these operations without scrutiny or oversight is critical and must be tackled as a first step towards confronting this rampant impunity while also creating the economic conditions for peace after years of brutal civil war.”

/Ends

Contact: Michael Gibb, Campaign Leader – Conflict Resources, mgibb@globalwitness.org, +44 (0)7808 776 340

Notes to editors:

• The report includes new information on Nilepet’s role in the so-called “Letters of Credit” scandal, one of South Sudan’s largest recent corruption scandals. It details how millions in letters of credit intended to facilitate the import of refined fuel, were diverted to Nilepet with almost no oversight, raising the risk of these borrowed funds lining the pockets of connected elites rather than easing the worsening fuel crisis.

• Global Witness have researched South Sudan’s oil sector since the country’s independence in 2011, producing a number of reports that aim to help the young country make the most of its natural resources through sound and transparency governance of its natural resource wealth. For more information about this work, see: https://www.globalwitness.org/en-gb/campaigns/south-sudan/

• For more information about Global Witness’ work to disrupt conflict financing through improved due diligence on international mineral supply chains, see: https://www.globalwitness.org/en-gb/campaigns/conflict-minerals/

Global Witness investigates and campaigns to prevent natural resource-related conflict and corruption and associated environmental and human rights abuses

3 Comments

  1. Bismark says:

    This is a fact that no one can deny. With no other source of revenue apart from petroleum sale money to government coffers, it stands clear that the prosecution of the war in the country is financed with this income. The people of South Sudan do not pay taxes, the custom duties collected at South Sudan borders go to the pockets of the custom officers. As the country has no cash crops with which to get foreign currency, then the obvious source of foreign currency is from oil sale that the government should not deny that is being used to finance their South Sudanese killing project. Common sense simply tells one this.

  2. loberito says:

    Bismark,
    You said it all. No cash crops in South Sudan, so oil’s money is used to fight unnecessarily civil war. The regime in Juba uses the money to keep the power while civil servants and military soldiers cannot receive the money to feed their families and children. Shame on a regime!

  3. Arabbmoi says:

    Jeing tribe have no peace of mind as long as they are there. Like Abuk and Agouk clans. in former Warap state.. The people of the world come to know them how they are behaving.

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