VZCZCXRO9701
PP RUEHROV
DE RUEHKH #0814/01 0921350
ZNR UUUUU ZZH
P 021350Z APR 06
FM AMEMBASSY KHARTOUM
TO RUEHC/SECSTATE WASHDC PRIORITY 2155
INFO RUCNIAD/IGAD COLLECTIVE
RUEHKU/AMEMBASSY KUWAIT 0002
RUEHBJ/AMEMBASSY BEIJING 0021

UNCLAS SECTION 01 OF 02 KHARTOUM 000814 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PGOV ECON KCOR EINV EFIN SU
SUBJECT:  RUMORS OF CORRUPTION, AND ITS COSTS: AN ANALYSIS 
 
Ref:  A) Khartoum 763, B) Khartoum 490, C) Khartoum 666 
 
¶1.  (SBU) Summary:  Corruption remains an elusive subject in 
Southern Sudan, as it is easy to deny and difficult to 
prove.  A weak media, the secretive instincts of the SPLM/A 
honed by two decades of war, and a flourishing rumor mill 
also make it difficult to winnow speculation from fact. 
Nonetheless, there is ample anecdotal evidence of increasing 
corruption in the South.  The following examples, large and 
small, illustrate the problem.  Some SPLM officials 
acquainted with the devastating cost of corruption to 
surrounding countries have vowed to turn back the rising 
tide, understanding that a failure to do would undermine 
donor confidence, drive off legitimate investors, and 
ultimately alienate the population of the South from the 
SPLM/GoSS.  End summary. 
 
-------------- 
Manifestations 
-------------- 
 
¶2.  (SBU) The following, by no means exhaustive, list of 
alleged incidents of corruption highlights problems with 
GoSS transparency in various domains. 
 
-- Petroleum Revenues:  SPLM backbenchers in the Southern 
Sudan Legislative Assembly (SSLA) are clamoring for full 
public accounting of all petroleum revenue transfers to the 
GoSS from the Government of National Unity (GNU) (ref A). 
Minister of Finance and Economic Development Arthur Akuein 
Chol is the primary target of their wrath for underreporting 
petroleum revenues during the preparation of last year's 
budget and providing inaccurate figures to Vice President 
Kiir and Rebecca Garang before they made public statements 
on the issue.  Chol's misleading remarks about empty coffers 
boomeranged when he suddenly reversed course and stated that 
funds had in fact been transferred, but did not explain why 
the SPLA and civil servants had gone unpaid.  Accurate or 
not, rumor now has it that public funds are missing.  Chol 
and SSLA Speaker Wani Igga successfully reversed acting GoSS 
President Machar's decision to convene the SSLA last week, 
reinforcing the impression that the duo has something to 
hide. 
 
-- White Nile Ltd (WNL):  The struggle between WNL and Total 
over the potential petroleum reserves in Super Block B (ref 
B) continues.  Some SPLM insiders believe that WNL, which 
has dubious business connections abroad, has granted 
commission or stock equity to various GoSS officials.  There 
has been no final resolution of this controversy, but on 
March 30 a WNL official told CG that he was off to Bor by 
April 1 with a Zimbabwean mine removal team and Canadian 
seismological technicians to begin work. 
 
-- Juba Hotel and Port:  A Southern Sudanese resident of the 
U.S. told CG in January that he represented a group that had 
"bought" the Juba Hotel and signed a contract to build and 
run a new port in Juba for thirty years, before returning 
the facility to government management.  A group of Kuwaitis 
recently visited Juba (ref C) to inaugurate the USD 80 
million projects, presumably the same group.  We have since 
learned from GoSS ministers that this project was brokered 
directly by Bahr el Jebel Governor Clement Wani Konga 
without the concurrence of the GoSS.  The GoSS is 
considering cancellation of the deal. 
 
-- Cellular Telephone:  The Mobitel cellular phone system 
works well in the North, but in the South is dysfunctional, 
and the GNU has refused to issue licenses to a new operator 
to work in the South.  The buzz on the street has it that a 
very senior official in the GoSS Ministry of 
Telecommunications have taken no action to resolve this 
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been constructed. 
 
-- Brewery:  A foreign investor proposed construction of a 
small brewery in Juba.  After initial agreement on all 
sides, the investor pulled out when he came under pressure 
to give hefty equity partnership to a well-connected 
Southern official. 
 
-- Customs Duties:  The road between the Ugandan border and 
Juba has become a tax gauntlet for importers.  Fees are paid 
at the border, upon arrival, and often at intermediate 
checkpoints along the way.  Conversely, there is a steady 
flow of new and used automobiles bound for the influential 
of Juba, and often chauffeured by their personal drivers, 
 
KHARTOUM 00000814  002 OF 002 
 
 
that enter Sudan free of charge and end up in Juba, where 
license plates are issued. 
 
-- SPLA Appropriation:  SPLA soldiers continue the wartime 
practice of taking from civilians what they need or want. 
Armed soldiers take food, drink, or merchandise from bars 
and market stalls, and especially from stores owned by 
northerners, and then refuse to pay.  This has led to 
confrontation and, in some instances, violence and at least 
one death. 
 
-- Cars and Renovations for the SSLA:  Line item 
procurements funded by the GoSS have reportedly gone astray. 
MPs in the SSLA have accused the Speaker and his deputy of 
misappropriating funds dedicated to the purchase of vehicles 
and the renovation of the Assembly building.  They are 
threatening to take this issue to the floor when the next 
session begins. 
 
-- Sole Source Contract for the Presidency:  A whispering 
campaign began when a senior official at the Presidency 
granted a lucrative sole source contract for renovation and 
maintenance of the presidential office complex to an 
individual from Aweil who had been charged with fraud and 
other illegal activities in the past.  The facility has been 
plagued by slow and shoddy work, including a long delay in 
installation of a donated generator. 
 
-- Praedial Larceny:  An official of the Norwegian Refugee 
Council NRC) described events in the Nuba Mountains that 
encapsulate the problem of low-level abuse.  Two former SPLA 
soldiers requested the NRC to provide a well to support a 
communal garden producing fruits and vegetables.  The 
project flourished, largely thanks to a trained Sudanese 
agronomist working with the group, until SPLA troops began 
seizing produce without payment.  A senior SPLM official 
then preemptorily instructed that the agronomist be 
transferred to New Site to work on a project in which the 
official had a personal stake.  The Nuba enterprise 
collapsed entirely. 
 
-- Abuse of Due Process:  Legal officials in Rumbek took the 
side of a Sudanese individual fired for cause for having 
defrauded verifiably an international governance contractor. 
The officials menaced the contractor in question and 
confiscated a vehicle to sell, reportedly to compensate the 
discharged Sudanese individual, who had also submitted 
fraudulent documents in support of his case. 
 
-- Refusal to Respect Contracts:  A manager of a tented camp 
along the Nile was detained and threatened with immediate 
deportation after an argument with a SPLA officer who 
resided in the camp over non-payment of food and lodging 
bills.  The manager possessed a valid visa and the required 
work permit. 
 
-------------- 
Final Thoughts 
-------------- 
 
¶4.  (SBU) Southern Sudan has not developed the pervasive 
culture of corruption that exists is some African states, 
and a number of SPLM officials and supporters have vowed to 
prevent this from happening.  The Assembly's attempt to 
force senior officials to publicly defend their actions on 
the floor, and press reports citing alleged abuses, are 
encouraging signs.  When abuses are brought to the attention 
of senior GoSS officials, as happened with the last two 
examples above, the officials have often taken appropriate 
actions to resolve the matter. 
 
¶5.  (SBU) Stakes are high in the struggle against 
corruption.  Failure to address this issue forcefully will 
lead to inevitable conflict with the international donors 
that play an essential role in Southern Sudan's 
reconstruction.  The participation of serious foreign 
investment in the South is also unlikely if commissions, 
insider dealing and behind the scenes partnerships become 
the norm.  And finally, the credibility of the GoSS and its 
institutions is at play.  There is already widespread 
disaffection with slow delivery of the expected peace 
dividend, in stark contrast to the very visible fleet of new 
GoSS Land Cruisers and the renovations underway on official 
residences and government offices.  The perception that the 
GoSS tolerates corruption could undermine the popular 
support and good will upon which the GoSS depends. 
 
STEINFELD