Corruption in Somalia

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A United Nations panel that monitors compliance with U.N. sanctions on Somalia has accused Somalia’s  president, a former minister, and a U.S. law firm of conspiring to divert Somali assets recovered abroad, according to a new report.  The Somalia and Eritrea Monitoring Group, an 8-person committee, disclosed the findings in a confidential report to the U.N. Security Council’s Somalia/Eritrea sanctions committee. Reuters reviewed a copy of the 37-page document.  The U.N. Monitoring Group said the information it has gathered so far “reflects exploitation of public authority for private interests and indicates at the minimum a conspiracy to divert the recovery of overseas assets in an irregular manner.”

Most of the overseas assets were frozen at the outset of the civil war in 1991 and include cash and gold held in banks during two decades of chaos and conflict in Somalia, as well as government properties on foreign soil.  What the monitors describe as a conspiracy involved the U.S.-based law firm Shulman Rogers, President Hassan Sheikh Mohamud and his office, former foreign minister Fawzia Yusuf H. Adam, as well as two other individuals whom the monitors said acted as liaisons between Shulman Rogers and Somalia…

All those accused of involvement in the plan to divert assets have denied any wrongdoing. Several accused the chairman of the Monitoring Group, Jarat Chopra, of dubious investigative methods and making baseless assertions….

A 2013 U.N. Monitoring Group report said individuals in Mohamud’s government used the Somali central bank as a personal “slush fund”, with an average 80 percent of withdrawals made for private purposes. The presidency and the then-central bank governor Abdusalam Omer have strongly denied that accusation..  In its latest report, the Monitoring Group said that “a complex architecture of multiple secret contracts, which defied a separation of powers between the Presidency and the Central Bank, created the opportunity and rationalization for the misappropriation of public resources.”  “‘Pie-cutting’ of overseas assets by those involved in the project entailed retention of excessive percentages and direct payments from recovered assets as well as attempts to circumvent deposits in the Central Bank of Somalia,” it added.

Abrar, the former central bank governor who was also a former Citigroup vice president, quit last October after seven weeks on the job, alleging she had been pressured to sign a contract with Shulman Rogers that she feared could invite corruption at the central bank.According to the new report, she sent her resignation from Dubai after fleeing from Mogadishu out of fear for her safety.The Monitoring Group said it had followed up on a number of Abrar’s allegations and her concerns about the contract and the planned scheme for the recovery of Somalia’s overseas assets. One of her main worries, the monitors said, was a clause in a July 2013 contract with Shulman Rogers that gave the law firm a bonus of 5 percent of recovered assets in addition to its fees and for Shulman Rogers to retain a further 6 percent of recovered assets for undefined costs and expenses.

“Ms. Abrar considered this clause for undefined costs and expenses to be for hidden fees and ultimately understood that it was meant as a side payment to be divided two percent each between Foreign Minister Adam, Musa Haji Mohamed Ganjab and Abdiaziz Hassan Giyaajo Amalo,” the report said…

After consulting with the World Bank, the Somali president’s office said in a statement to Reuters that it revoked a power of attorney it had granted to Shulman Rogers in May and was renegotiating its contract with the law firm.

Excerpts from LOUIS CHARBONNEAU AND DRAZEN JORGIC. Exclusive: U.N. monitors allege ‘conspiracy’ to divert Somali assets, Reuters, July 15, 2014

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