A corruption case revealed this week in the United States led to the arrest of the former foreign minister of Senegal while implicating high-level African leaders in two countries – and casting a new shadow on China’s role on the continent as Beijing advances its Belt and Road Initiative.
The United States Department of Justice (DOJ) says that Cheikh Tidiane Gadio, the former Senegalese minister and presidential candidate, violated the Foreign Corrupt Practices Act while allegedly arranging bribes to President Idriss Deby of Chad and Ugandan Foreign Minister Sam Kutesa in exchange for business advantages for China Energy Fund Committee (CEFC), a Chinese oil and gas company, in their respective nations. Gadio and Chi Ping Patrick Ho, a former Hong Kong official representing the Chinese entity, were arrested separately at the weekend in New York City.
In Manhattan, Acting U.S. Attorney Joon H. Kim described “an international corruption scheme that spanned the globe” as Gadio helped Ho to pursue his plans. “As alleged, Ho’s Ugandan scheme was hatched in the halls of the United Nations in New York, when the country’s current Foreign Minister served as the President of the U.N. General Assembly, and then continued unabated upon his return to Uganda.” the DOJ said in a statement.
Fallout from the case has Ugandan MPs demanding Kutesa’s resignation, officials in Chad launching a diplomatic row with the U.S., Chinese entities denying their involvement and the UN distancing itself from wrongdoing.
Details of the U.S. corruption case
Put simply, the U.S. says that Ho offered Deby USD$2 million in exchange for preferentially securing oil rights in Chad, among other things. Ho wired $400,000 through New York in 2015 to pay Gadio, who arranged meetings and negotiations in which Deby provided noncompetitive access to energy opportunities.
The U.S. investigators say the Chad deal dates back to October 2014, when Ho and Gadio first met to discuss a joint venture between CEFC and China National Petroleum Corporation (CNPC). The latter was already operating in Chad and facing a $1.2 billion fine for environmental violations, and Ho hoped that Gadio could persuade Deby to resolve the fine dispute while creating future CEFC oil opportunities. CEFC never completed those deals, but the $2 million was planned as a “charitable donation” with Gadio taking his cut, U.S. officials say.
The Uganda relationship begins at the same time, when Ho met with Kutesa at the UN to facilitate future energy deals. Ho also wired $500,000 to Kutesa in 2016, along with other gifts and a promise of profit-sharing on a future joint venture between CEFC and businesses in Uganda owned by Kutesa as well as President Yoweri Museveni.
The cash sent to Uganda was framed as a “donation” to re-elect Museveni and as “support” for Kutesa as foreign minister. “These payments and promises were made in exchange for assistance from the Ugandan Foreign Minister in obtaining business advantages for (CEFC), including the potential acquisition of a Ugandan bank,” the United States said.
Chad, China, Uganda in a flurry of denials
Gadio and Ho face charges that include bribery and international money laundering, while the nations involved are left to face the music – and the U.S. faces some fury.
N’Djamena responded with a harshly worded statement, calling the U.S. accusation shameful and denying Deby’s involvement. The statement said the U.S. “accused the Chadian president of having benefited from a $2 million bribe in exchange for his benevolence towards the interests of a Chinese company. Faced with this umpteenth false allegation, the Government of the Republic of Chad is keen to make a formal denial.”
Minister of Communication Madeleine Alingué added that Chad “expresses its indignation and wonders about this persecution against the Head of State.” Chad protested the attitude of the U.S. government and its agencies in tarnishing its image, reasserted its sovereignty and questioned if “these agitations hide an agenda.”
On Wednesday, Uganda also denied that their foreign minister is linked to the bribery allegations, while confirming that Kutesa did have a relationship with the Shanghai-based CEFC. That relationship with Ho and the CEFC existed entirely within the context of Kutesa’s role as former president of the United Nations General Assembly, they said, in which a CEFC-funded corporate NGO arm held a consultative role on the UN Economic and Social Council (ECOSOC). In 2015, the CEFC NGO financed a $1 million solar energy grant through the UN Department of Economic and Social Affairs (UN-DESA), just the kind of project Kutesa helped to achieve, Uganda said, and it is “erroneous to insinuate or infer” that Kutesa is guilty of bribery.
The NGO, launched in 2008 by CEFC Hong Kong, also issued a statement. “As a nongovernmental think tank, the Fund has been actively promoting international energy research for many years,” it said, citing among its achievements the UN project to which Uganda referred. The NGO “strictly complies with laws and regulations of different nations,” does not have commercial interests or activities tied to the allegations, and does not authorize Ho or any other persons to conduct such business on its behalf.
For their part, the UN said that with respect to the grant, “the complaint against Dr. Patrick Ho as an individual is unrelated to the Department of Economic and Social Affairs (DESA) Energy Grant, which is managed according to UN financial regulations, subject to a rigorous and transparent selection process.”
Lu Kang, a spokesman for China’s Ministry of Foreign Affairs, said Beijing is aware of the reports but he denied knowing any details. “As a principle, China always requires Chinese enterprises to legally operate their business abroad and abide by the local laws and regulations,” Lu said.
A copy of the complete U.S. court filing is available at this link.