The Sentry Report cover page. (Courtesy).

A new investigative report by The Sentry has exposed corruption in the country’s oil sector by Trinity Energy Limited and a foreign bank with the backing of South Sudan government.

It uncovered corruption involving illicit business practices, including bribery, tax evasion, and trade-based money laundering worth millions of US dollars.

The investigation exposes how laws were broken in South Sudan, sanctions may have been breached, and powerful individuals were enabled to benefit from the manipulation of business worth hundreds of millions of dollars.

The report, titled: “Crude Dealings: How Oil-Backed Loans Raise Red Flags for Illegal Activity in South Sudan” spotlights a 2018 deal in which Trinity Energy Limited entered into a trade finance facility with Cairo-based African Export-Import Bank (Afreximbank).

The deal included a $30 million loans to purchase diesel and gasoline to sell to the South Sudan market.

According to The Sentry, in the deal, the government of South Sudan committed to award cargoes of crude oil to Trinity Energy.

The deal reportedly bypassed scrutiny including legislation on oversight, transparency, and competition and facilitated undocumented government spending.

Mortgaging country’s future

The watchdog said the loan deal also perpetuated a damaging reliance on future oil production to finance current spending, a pattern that has locked the country in a spiral of debts.

It added that the deal contributed to mortgaging the future prosperity of the country and its citizens.

In its key findings, The Sentry said Trinity Energy spent an estimated $2.5 million on what it described as “visits, meetings, travel involving stakeholders” and a further $1.5 million on “lobbyist fees and facilitation fees” to set up the trade finance deal with Afreximbank and the first two $30 million letters of credit under the deal.

Trinity Energy spent 62.7 million SSP ($418,000) on “business acquisition fees” associated with the Afreximbank deal between signing the agreement in April 2018 and shipping the first crude cargoes associated with the deal in July and August 2018.

These “business acquisition fees” according to the investigation, included payment by Trinity Energy of a check for 18.7 million SSP ($125,000) to members of the government’s Technical Loan Committee, the body responsible for approving the Afreximbank deal.

During the period in which the trade finance deal was active, the government called on Trinity Energy for favors, including a $400,000 cash loan to cover expenses for an overseas mission by the then First Vice President Taban Deng Gai and a 100 million SSP ($621,118) loan to the Ministry of Petroleum to cover a shortfall in financing, the investigation has found.

Money Laundering

In the report, Trinity Energy knowingly paid false invoices from Well-done Suppliers, a Uganda-based company, to send hundreds of thousands of US dollars overseas.

The company also moved hundreds of thousands of dollars to companies in South Sudan and Kenya owned by its shareholders and directors.

These related-party transactions, The Sentry said, are red flags for trade-based money laundering, transfer pricing, and possible breaches of the arm’s length principle.

The Sentry reveals that the arrangements between Trinity Energy, Afreximbank, and the government were contrary to South Sudanese law, and that their implementation by Trinity Energy raises red flags for bribery, tax evasion, and trade-based money laundering.

The investigation included interviews with a former Trinity Energy employee and reviews of the trade finance facility, bank statements, emails, internal memos, and ministerial correspondence.

The Sentry revealed that the arrangement gave Trinity Energy, which is alleged to have never before traded crude, privileged access to the market for South Sudan’s oil.

This was after it was awarded more than 40 percent of crude cargoes contracted by the government from June 2018 to May 2019, says the watchdog.

Trading with the government

In the report, the government paid a premium to Trinity Energy for the sale of fuel to the South Sudanese army.

Trinity Energy was then given a dominant role in the market for petroleum and diesel imports, a position that facilitated its secretive provision of fuel to the South Sudanese army at a time when government forces were involved in civil conflict.

The trade finance facility gave Glencore Singapore Pte Ltd, a subsidiary of Geneva-based oil trader Glencore PLC, privileged access to crude contracts.

The agreement also designated the firm as the “original off-taker,” meaning that it bought and shipped the cargoes of oil awarded by the government to Trinity Energy.

According to the investigative report, Glencore shipped South Sudanese crude worth 376 million US dollars in 2019, all of it through deals with Trinity Energy.

The Sentry found out that Trinity Energy spent millions of dollars on “facilitation” and “business acquisition” costs for the deal, including 18.7 million South Sudanese pounds in payments to the government committee responsible for approving the deal.

“During the implementation of the trade finance deal, Trinity Energy changed millions of US dollars on the black market, paid fake invoices overseas to disguise the black market exchange of hundreds of thousands of dollars, and engaged in behaviors indicative of tax fraud,” the investigation uncovers.

At the time of the trade finance deal and during the period of its negotiation, the owners and directors of Trinity Energy had business and family ties with politically exposed persons in senior government positions.

These, according to The Sentry, included two former ministers of finance, the head of the state customs agency, and a senior general in the South Sudanese army.

“According to incorporation documents on file with the Ministry of Justice, the company’s directors also had ties to two colonels in the National Security Service,” quotes the report.

The Sentry said Trinity Energy supplied fuel to Santino Deng Wol, a general in the South Sudanese army who was under European Union, United States, and United Nations sanctions at the time and who is now the Chief of Defense Forces of the SSPDF.

It went on to reveal that the South Sudanese government’s guarantees to award crude cargoes each worth tens of millions of dollars to Trinity Energy may have broken laws on procurement, competition, and transparency.

Government response

When contacted for comment, the Deputy Minister of Foreign Affairs Deng Dau Deng dismissed the report, and termed The Sentry as anti-government and regime change agents.

“Sentry reports are always against the government. There is nothing that we can expect from them,” he said.

“They have been working day and night on the issues of regime change, they have been identifying things that they don’t even know. Where are they? Are they in the field? They should have come first and come and see what the oil production in South Sudan is.”

“We are not surprised that The Sentry has released such kind of report, I have not seen it but we are not amused by any report of The Sentry. They have been you know all along talking about negativity for the last six years, this is what they have been doing.”

Trinity Energy response

The Sentry said it has written to Trinity Energy Chairman Akol Emmanuel Ayii Madut, the company’s director Richard Thadeus Raja, and Trinity Energy chief executive officer Robert Mdeza, on July 28, 2022, giving each of them an opportunity to respond to the findings by August 11, 2022. But none of them responded.

But on February 20, 2023, the evening before the report was to be published, Robert Mdeza wrote to The Sentry on behalf of Trinity Energy to comment on the report for the first time.

While responding to The Sentry’s findings that “Trinity Energy traded at least 4.2 million barrels of crude in the June 2018 to May 2019 financial year,” Mdeza corrected that “in 2018 Trinity Energy sold 1,849,998 barrels of crude oil to Glencore and in 2019 it sold 6,022,153 barrels of crude oil to Glencore.”

Mdeza further stated that the company had not evaded taxes and that it “paid over SSP 82,000,000 ($630,000 USD) in taxes during the period of January 2017 through December 2020.”

He added that “the payments were audited by the Ministry of Finance and Economic Planning’s National Directorate of Taxation.”

According to The Sentry, Mdeza further defended its use of black market to exchange hard currency into South Sudanese pounds.

He said “the truth of the matter for any business operating in South Sudan during the period in question was that no financial institution, not even the Central Bank of South Sudan itself, had sufficient hard currency reserves to facilitate the scale of exchange necessary to manage a credit facility the size of the Afreximbank facility – a facility that was critical to maintaining a supply of fuel to the country as a whole given that there exists no refining capacity in South Sudan for its own crude oil as feedstock.”

Read the full report:

Crude Dealings