Issue No. 676

How Somalia’s Corrupt Elite Are Cashing Out

Last week was a rough week for the Somali government. Supporters of the ruling Dam al-Jadid were stunned by news of significant pilfering of food aid by elements in the Danab special forces. This revelation and the US announcement that it was suspending food rations to Danab has elicited wider debate about levels of corruption within the federal government and their serious political implications.

Defence Minister Abdulkadir Mohamed Nur’s subsequent comments on the scandal have failed to mollify the Somali public. His arguments that opponents of the government were using ‘minor’ problems of indiscipline to demoralise Somali forces failed to wash with many Somali observers.

A widely respected humanitarian worker who goes by the username Ahmed Vision on X (formerly Twitter), wrote a post that has generated significant interest: “I am afraid that we are heading towards a situation similar to what led to the emergence of the Islamic courts in Somalia, if not worse. Many might wake up when it's too late, but such a bubble [government] can disappear in a matter of days if not hours. It is time to be self-honest.”

The first Hassan Sheikh Mohamud (HSM) government was believed to have been one of the most corrupt in recent times in Somalia. The second HSM regime now risks a similar indictment as reports of massive misappropriation continue to surface.  

A respected MP recently blew the whistle on two cases of expense-tampering, suggesting they were just the tip of the iceberg. The MP said that on a trip to the US in late 2022, the Somali president spent over USD400,000, and PM Hamza Barre spent over USD 50,000 on a one-day domestic visit to the frontlines in Somalia. Over-invoicing and inflated expense accounts are usually among the commonest forms of ‘petty theft.’

Licensing of fishing companies and oil and gas concessions are also lucrative sources of cash for Somali officials. A report by the UN Panel of Experts on Somalia in 2023 highlighted how the country was losing millions of dollars in fishing contracts through the entrenched practice of ‘under-invoicing’. Officials sell cheap licences to certain bidders who allow them a handsome ‘cut’ – typically hundreds of thousands of USD. 

Petroleum and Mineral Resources Minister Abdirizak Mohamed, a kinsman and close ally of HSM is now in the spotlight. He has been accused of driving ‘grey’ oil and gas deals since he came into office in August 2022. In a recent but rare intervention, PM Hamza Barre actually revoked a concession awarded by the Minister on grounds it was ‘unprocedural’ and violated existing law.

In early 2023 President signalled robust action against corrupt officials and ordered the dismissal of a number of officials suspected of embezzling. Among them were close to a dozen working at the port and the airport of Mogadishu. Some have since fled the country, while others are awaiting trial. 

One primary source of corruption is the massive amount of Gulf money that is regularly shipped to Mogadishu. This cash (received without receipts) is essentially meant to keep the corrupt elite in Mogadishu happy and compliant. Farmaajo used such unreported bilateral Arab ‘grey cash’ to rebuild Somali security services, and to ensure his forces were paid on time.

In recent years, massive amounts of money have also been flowing from Somalia into Kenya’s real estate sector. This sector is itself under probe – accounting for a massive 56.6% of all money-laundering cases in Kenya. It reportedly contributes some 7% to Kenya’s GDP. The culprits are not just from the Chinese real estate mafia, but also among a growing list of Somali ‘businessmen.’. Nairobi was recently grey-listed by the Finance Action Task Force (FATF) for flouting anti-money laundering legislation and practices. A risk assessment by FATF noted that over 10,000 business investments in the sector were ‘dubious’ fronts for powerful individuals, some of them based in Mogadishu. 

There is also a political dimension to corruption. Mogadishu’s elite are now just marking time. Many of them have likely accepted the reality that the government will not prevail against Al-Shabaab. The pivot by Mogadishu to Qatar over the last year is based on this calculation. Doha has long advocated for a political settlement with Al-Shabaab. Assuming that AS will only agree to a settlement if they can assert hegemony over the state, some officials and other politicians who cannot live under Al-Shabaab are believed to be making their get-away plans – putting money into property in other areas of East Africa and cashing out before the violent men in beards take charge.

By the Somali Wire team