This week produced a mixed bag of financial crime and fintech industry news, as the DR Congo’s ex-president Joseph Kabila, along with family and associates, were implicated in a huge money laundering scandal by Africa’s biggest data leak; the son of Panama’s ex-president was extradited to the US to face corruption and bribery charges; and German digital banking giant N26 announced its imminent withdrawal from the US market.
Find out more on these stories below.
Data leak in Africa alleges former DR Congo president Kabila and allies at centre of money laundering scandal
This week, the former DR Congo president, Joseph Kabila was at centre of a dirty money scandal, as the first wave of Congo Hold-up reports are released.
The leaked documents allege that millions in public funds were laundered through the accounts of family and friends during ex-president Joseph Kabila’s time in office, then withdrawn for their benefit, becoming untraceable.
The data leak, Africa’s biggest ever, involves several million documents detailing millions of transactions through the Banque Gabonaise et Française Internationale (BGFI), a continental finance conglomerate with dealings in ten African countries and France.
One of the allegations stemming from the leak involved suspicious dealings between BGFI’s DR Congo subsidiary, BGFI Banque RDC- in which relatives of Kabila enjoyed high ownership levels or leadership positions- and Sud Oil, a private petroleum company- from 2012 to 2018.
The documents allege that Sud Oil - where the Kabila family was also heavily represented- received almost $86m (£63.7) in public funds from late 2013 to mid-2017, with $46m (£34m) coming from the DR Congo’s banking regulator alone. This occurred with little evidence of the payments, and no evidence of Sud Oil trading in petroleum products during the period.Millions of dollars were then transferred to Kabila-linked BGFI accounts at other companies. Withdrawals from the Sud accounts, often well more than allowed amounts, totalled $50m (£37m) in just four years.
Other allegations point towards Kabila’s brother, Francis Selemani, who took advantage of his position in a senior management position at BGFI to funnel money into real estate investments in the US and South Africa during his nine-year tenure in a senior position.
The Sentry - an investigative and policy team that follows the dirty money connected to African war criminals - published a full investigative report into the scandal, stating that “because many of Selemani’s real estate acquisitions were all-cash purchases, he was able to avoid the standard due diligence performed in connection with bank financing—due diligence that might have raised questions about the source of his wealth.”
John Prendergast, Co-Founder of The Sentry, said: “Rarely is the world afforded such a clear and comprehensive view into the ways a state can be captured -- every theft of public money, backroom deal, and shell company, and every failure along the way to stop the chain of illicit transactions. With this magnitude of evidence in the Congo Hold-up leak, there should be no delay in bringing the corrupt perpetrators, their accomplices, and international enablers to justice.”
Read more on this story at The Sentry.
Son of Panama’s ex-president extradited to US to face money laundering charges
The son of Panama’s ex-president Ricardo Martinelli, Luis Enrique Martinelli Linares has been extradited to New York to face charges by US authorities including money laundering, bribery, and corruption, from Guatemala, where he was detained in transit along with his brother, Ricardo Alberto, in 2020. Ricardo Alberto will soon join his brother in court.
The charges allege their participation in schemes involving bribes to government officials as part of the Odebrecht scandal, which saw around $700m (£521m) illicitly paid to corrupt officials in Panama and elsewhere. The direct involvement of the brothers was to allegedly conspire to launder $28m (£20.7m) in bribes on behalf of Odebrecht, the Brazil-based global construction giant, to a Panama government official who was a relative of the family.
Commenting on the arrests, a United States Justice Department official said “Anyone who facilitates bribe payments to government officials contributes to national security risks, whether overtly or inadvertently, and interrupts the free market system of international trade."
Read more on this story at France24.
N26 announces decision to withdraw its digital banking services from US by early 2022
The Berlin-based company announced the decision to terminate its business activities in the US in a statement released this week. N26 added that although it is shutting down its two-and-a-half-year-old app-based digital banking service in the country, customers will be able to access and withdraw their funds until early January 2022.
N26 noted that the decision is because it wants to build on its digital banking operations in Europe, as well as expand into the Eastern European market. The company withdrew from the UK, also a large English-speaking country, in 2020. It has also faced regulatory pressure at home this year, with Germany’s financial watchdog, Bafin, fining them €4.25m (£3.57m) for delayed suspicious activity reports in the previous two years, which N26 settled in July.
Referring to its US staff, the N26 statement said it was “very grateful to all employees in its US team for their immense contributions to building the business in the US market and intends to support US employees in exploring roles supporting its global business where possible as it looks to the future.”
Read more on this story at Streetregister.