Uganda in sanctions crisis

Targeting of top officials by U.S. puts country in diplomatic minefield

Kampala, Uganda | IAN KATUSIIME | For the fourth year in a row, the Uganda government has been on the receiving end of sanctions from the United States which accuses it of overseeing deteriorating human rights in the country.

In the latest case, on March 17 the U.S. Treasury Department slapped sanctions on Alain Goetz, a Belgian billionaire businessman behind African Gold Refinery (AGR), a Ugandan-based company with an estimated annual turnover of US$500m. This is seen as a widening of the spectrum of the sanctions net to target more actors in Uganda.

Goetz is said to have close ties to President Yoweri Museveni and a host of high profile businessmen and officials in the highest echelons of the Ugandan government.

“Alain Goetz and his network have contributed to armed conflict by receiving DRC gold without questioning its origin,” said Under Secretary of the US Treasury for Terrorism and Financial Intelligence Brian E. Nelson in the statement that shook Uganda’s gold market.

It added that global gold markets, at every step of the supply chain, must engage in responsible sourcing and conduct supply-chain due diligence. The latter part seemed like an indictment of gold trade in Uganda going way back to the 1990s when Ugandan generals and ministers were allegedly involved in looting of the precious mineral during the Congo wars.

The sanctions targeted “a network of companies involved in the illicit movement of gold valued at hundreds of millions of dollars per year from the Democratic Republic of the Congo (DRC). The illicit movement of gold provides revenue to armed groups that threaten the peace, security, and stability of the DRC.”

Almost two weeks after the U.S. issued the sanctions, fighting broke out between M23 and Congolese government troops in the latest flare up in eastern DRC. In the same instance, Ugandan troops are in DRC for purposes of peace, security and stability on a joint mission with the host country to rout out militants of the Allied Democratic Forces (ADF) who have been held responsible for terrorist attacks in Uganda.

In just a space of three years, former Police and Intelligence chiefs have been sanctioned by the U.S. allegedly for their role in human rights violations including torture and kidnaps against government opponents. For many Uganda watchers at home and abroad, attention in light of sanctions, has lately been on Lt. Gen. Muhoozi Kainerugaba, Museveni’s powerful son and the commander of the Land Forces in the Uganda Peoples Defence Forces (UPDF).

From March 21-25, there was an African Land Forces Summit hosted in Georgia, U.S. which Muhoozi did not attend. The Independent could not confirm whether Muhoozi was invited for the summit that took place at the Maneuvre Centre of Excellence at Fort Benning, Georgia. The purpose of the conference was to help strengthen partnerships, advance security, stability, and peace in Africa.

Through his Twitter account, the Ugandan First Son has lavished praise on the UPDF Land Forces which he has headed for ten months now for its capabilities and operations across the continent.

Muhoozi is accused by Kakwenza Rukirabashaija, a writer now in exile, for torturing him after the latter sent out tweets attacking the high ranking officer. The Special Forces Command (SFC), erstwhile commandeered by Muhoozi, has been cited in the torture of those in detention.

Government ministers, army officers and other top officials are not sure where they stand with the U.S. sanctions regime. In April 2021, America’s top diplomat, US Secretary of State Anthony Blinken, announced visa restrictions on unspecified Ugandan officials compounding the suspense of government actors who depend on American largesse for a vast range of operations. Blinken said the restrictions resulted from actions undermining the democratic process in Uganda, including the January 2021 elections.

The sanctioning of Goetz means his Ugandan business associates are easy prey for American law enforcement because of the interconnectedness of business operations in the region that involves DRC, South Sudan, Kenya, Rwanda and Tanzania- all members of the East African Community (EAC) with DRC being the latest addition on March 29.

Okello Oryem, Minister of State for International Affairs, always says the U.S. should be specific with names whenever it announces any travel restrictions on Ugandan government officials so the latest case of Goetz leaves him in a tight corner. Goetz is not Ugandan but his array of associates who are Ugandan have reason to tread carefully.

Early last year, political commentator Mwambutsya Ndebesa told The Independent that President Museveni was in a difficult dilemma on who to ditch and who to keep while forming a new government after the elections.

“He may have to think twice about it, you need people to lobby for aid and those who would be acceptable in partnerships,” he adds, “he needs to deal with it because you need foreign contacts and people to deal with investors but he also wants to show that he is a sovereign.”

Ndebesa also argued that re-appointing diplomatically troubled officials would be a counter strategy by Museveni.  “The president may try to find out those who are on notice but he may also appoint people regardless to reward them for defending the system at all costs.”

Indeed when the visa restrictions were announced in 2021, Museveni was mulling on who to appoint to his new cabinet and there was uncertainty on then-minister of Foreign Affairs Sam Kutesa’s continued stay in cabinet.

For three years, Kutesa carried the baggage of a connection to Patrick Ho, a Chinese government official who was convicted by a U.S. court in 2018 for international bribery and money laundering offences. Kutesa who had held the foreign affairs docket for 16 years was dropped last year from cabinet. It is not clear if this was a move by Museveni to exercise diplomatic leverage with his American partners.

As Kutesa took a low key role on the international stage in his last years in cabinet, Museveni turned to Adonia Ayebare, Uganda’s Ambassador to the UN, as an interlocutor on diplomatic issues with the U.S. Ayebare has attended meetings in Kampala between Museveni and American officials, including U.S. Ambassador to Uganda, Natalie Brown.

Ayebare declined to comment when The Independent asked him about the complications the sanctions on Ugandan officials place on his work.

Zimbabwe case

The latest round of sanctions on Uganda had a regional resonance because in early March, Zimbabwean President Emmerson Mnangagwa was in Kenya to lobby President Uhuru Kenyatta on the matter of U.S. sanctions which have stifled the Zimbabwean economy for years. The two leaders signed several Memoranda of Understanding including one on diplomatic consultations but high up on the agenda of Mnangagwa’s visit was lobbying for sanctions relief.

Kenyatta addressed the matter and called the sanctions “illegal” in a joint press conference with his visiting counterpart at State House Nairobi. Zimbabwe lobbied Kenya because the latter is a non-permanent member of the UN Security Council, the world’s most powerful organ, and a bastion of American interests.

“This we consider to be unfair for these hardships were artificially created and we continue to call on the international community to remove these illegal sanctions,” President Kenyatta said.

The U.S. placed sanctions on Zimbabwe in 2003 for “undermining democratic processes or institutions.” The European Union, U.K., Canada, Australia maintain sanctions on the southern African nation since they were first put in place in 2002.

Seventy three Zimbabwean government officials were sanctioned by the administration of President George Bush. Number one on the list was Zimbabwe’s late former president, Robert Mugabe, and number 34 on the list was then Parliamentary Speaker Emmerson Mnangagwa and Mugabe’s would be successor.

All the Ugandan officials that are under U.S. sanctions are or were close to President Museveni at various points in time. The pattern of sanctions reveal a tightening of the noose around people who have been key to Museveni’s hold onto power for 36 years. The pattern means Museveni could find himself in a more precarious position in a few years as opposition to his rule grows stronger and as succession battles at State House Entebbe get more intense.

Gen. Kale Kayihura who was sanctioned in 2019 allegedly for his role in the torture of Museveni’s opponents was Inspector General of Police (IGP) for 12 years. Kayihura was a close Museveni ally who broke up opposition protests with brute force and put blockades on homes of opposition leaders to Museveni’s satisfaction.

Maj. Gen. Abel Kandiho who was sanctioned in December 2021 was until recently the Chief of Military Intelligence. As Intelligence chief, he was said to be implicated in the kidnap and torture of Museveni opponents before and after the 2021 presidential elections. He is currently Joint Chief of Staff in the Uganda Police Force.

Sam Kutesa was not sanctioned formally by the U.S. but is believed to be persona non grata in America. He is a cousin to Museveni and his daughter is married to Muhoozi, Museveni’s influential son who is the de facto army chief, and appears to be the President’s right-hand man lately.

Museveni’s gold dealer

Goetz, the international gold dealer, meanwhile denies any present connection to AGR stating that he sold all his shares in the firm. However what is undeniable is his close ties to President Museveni including some members of Museveni’s inner circle.

In 2014, Museveni reportedly directed the Ministry of Finance to grant tax-free status to any minerals processed or exported by AGR according to a report by The Sentry, an investigative and policy organisation that seeks to disable multinational predatory networks that benefit from violent conflict, repression, and kleptocracy. The company was registered that year.

In February 2017, Museveni commissioned the AGR amid pomp and fanfare. That same year, AGR ran into trouble as a string of Ugandan authorities including the Inspector General of Government (IGG), the Financial Intelligence Authority (FIA) and the Director of Public Prosecutions (DPP) came after it in relation to a number of irregularities; including money laundering.

AGR ignored most of the written requests from these authorities about compliance with the confidence that it is was protected by President Museveni who has rolled out the red carpet for foreign investors regardless of their reputations. AGR is said to have run into more trouble when it ousted its board chairman, former Energy minister Richard Kaijuka, who attempted to subject Goetz and the firm to corporate governance regulations. Kaijuka is also the chairman of the Board of Trustees of Uganda Chamber of Mines and Petroleum (UCMP) – a lobby of private sector players in the mining and petroleum sector.

There were reports that Museveni came to the defence of Goetz after several accusations from key players in the mining industry. These included the Directorate of Geological Surveys and Mines who award licenses to companies like AGR.

As accusations mounted on AGR in Uganda as a conduit of illicit gold trade, so did international scrutiny on Goetz who oversees a vast network of gold trade across continents.

The Sentry, in a 2018 report titled ‘The Golden Laundromat’ noted that the corporate network controlled by Goetz had refined illegally-smuggled conflict gold from eastern DRC at the AGR in Uganda and then “exported it through a series of companies to the United States and Europe, potentially including Amazon, General Electric (GE), and Sony.”

If the findings of the report were true, it would effectively cease any links between the aforementioned U.S. companies and Goetz.

On the other hand, the U.S. Treasury sanctioned eight entities connected to Goetz; including Agor DMCC, a UAE-based gold refinery that imports gold from AGR. The statement said Goetz companies’ “receive illicit gold from mines in regions of DRC that are controlled by armed groups, including the Mai-Mai Yakutumba and Raia Mutomboki that are involved in destabilizing activities in South Kivu, DRC.”

It added that Goetz’s gold network has extensive refining and transport capabilities and sources gold from DRC, Kenya, South Sudan, and Tanzania. According to U.S. authorities, Goetz acknowledged in 2018 that AGR refines about 150 kilograms of gold from the DRC per week, or approximately 8.5 tonnes per year.

Uganda has not reached the Zimbabwe level where the President and dozens of cabinet ministers are under sanctions but the continued illegal detention and torture of opponents arising out of the deeply contested 2021 election has created a terrifying political atmosphere with consequences on long standing relationships.

A report released on March 23 by Human Rights Watch titled “I only Need Justice” documented unlawful arrests, detention and abuses in safe houses run by Internal Security Organisation (ISO) and other abuses by Police and UPDF. The report recommended Uganda’s international partners like the U.S., UK, and the EU to consider “targeted sanctions” against Col. Frank Kaka Bagyenda, the director general of ISO from 2017 to late 2020.

Uganda maintains a relationship with the U.S., UK and EU that is strong in particular areas like counter terrorism. However the growing number of Ugandan nationals on the Specially Designated Nationals (SDN) list in the US Treasury Office of Foreign Assets Control (OFAC) remains a chink in the armour of this relationship.

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