Sudan Cracks Up

Meet the Bernie Madoff of Sudan
Notes from different corners of the world.
March 1 2011 10:51 AM

Sudan Cracks Up

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Slide Show: Scenes From the Sudanese Independence Referendum. Click image to launch.

KHARTOUM, Sudan—The Bernard Madoff of Darfur, predictably, doesn't live there anymore.

Adam Ismael, a former police officer who didn't finish secondary school, resides at a villa in Khartoum.

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At a time when hundreds of students, journalists, and pro-democracy activists have languished in prisons and "black site" jails as the unwilling and sometimes tortured guests of Sudan's vast security apparatus, Ismael spends his days under comfortable house arrest, with access to servants, satellite television, and his mobile phone.

He is the leading figure in a Ponzi scheme that helped Sudan's ruling party retain power in Darfur and whose collapse last year pauperized much of the region's middle class, provoked unrest that left 10 people dead, and led to the lengthy abduction of a U.N. peacekeeper.

Ismael, not surprisingly, couldn't be reached for comment. Two potential intermediaries demurred, citing risks to their health and liberty.

"He will never suffer for this," said a person familiar with the scheme, known as the Mawasir Market. (Mawasir is Arabic for pipes, denoting in Sudan a scam in which your money flows away from you, never to return.) "He will not go to prison, but he has to keep the secrets."

It may come as a surprise to some that there's any money to be found in Darfur, much less the $180 million said to have been invested in Mawasir. Sudan's Texas-sized western region is eight years into a complex insurgency whose primary achievement has been the deaths of 300,000 of the rebellion's intended beneficiaries and the displacement of 3.5 million others in a retaliatory campaign of rape and ethnic cleansing by the government.

Despite this, the region still produces grains, tobacco, and livestock and is host to a $1.7 billion peacekeeping operation that hasn't kept much peace but does provide a lot of local employment.

If you want to get a sense of just how far the Darfur crisis is from being resolved, feast your mind on this: In the last year, more than 1,000 Darfur Arab tribesmen have died in battles with rival Arabs, often for control of fertile land plundered from members of the Fur, Masalit, and Zaghawa tribes.

This has been the deadliest aspect of the Darfur conflict for several years now: Landless nomads fighting landless nomads for land stolen from others.

If this makes a poor fit with the "Arab vs. African" meme that's for so long dominated popular perceptions of the Darfur conflict, neither should it obfuscate the crimes that preceded it.

Rather, it is a grim reminder that, even after Sudan's southern region becomes independent later this year, the country will remain a deeply complicated and conflict-ridden charity case—one ruled by men whose power is guaranteed by perpetuating the chaos in Darfur.

Sudan's government has retained the upper hand through a recent upsurge of attacks on rebel strongholds (40,000 people were displaced in December 2010 alone, and 31,000 last month), a divide-and-rule approach to Darfur's restive Arab tribes, and an intensifying campaign of obstruction against U.N. agencies.

The Mawasir Market scheme, which ensnared nearly 50,000 victims, can be seen as an economic front in Khartoum's war on Darfur.

Two people familiar with the scam (including one speculator who lost $30,000) described it this way:

The pyramid scheme began in early 2009 when Ismael, then a police officer who sold used cars on the side, opened an investment fund in Rahma Souk, or Mercy Market, not far from the state police headquarters in El Fasher, the capital of North Darfur state. The fund promised alarming returns. Investors would make in-kind payments of real estate or vehicles and receive, four to six weeks later, a check with a value of 150 percent of their initial investment.

These clumsy transactions were an attempt to evade Islamic law, which officially governs Sudan and prohibits both charging interest and taking profit from interest-bearing accounts.

Indeed, at first, some businessmen and preachers spoke out against the scheme as both risky and un-Islamic. But they and other skeptics, who acidly renamed Rahma Market as Mawasir Market, were quickly intimidated into silence.

The fund's accountant, a police captain (since promoted to major) who also serves as imam of the El Fasher police mosque, said from the pulpit that anyone using the term mawasir deserved to be mutilated. Investigators dispatched from the central bank in Khartoum were sent packing by national security agents.

With the blessing of imams linked to the government, Ismael started accepting cash investments, on which investors invariably received a 50 percent return.

No one with real authority asked where a few policemen would get the capital to start a multimillion-dollar investment fund—perhaps because they already knew.

In a short time, the market opened new branches across El Fasher, a dusty city of 265,000 that is currently off-limits to foreign journalists.

By March 2010, the number of branches in Darfur had grown to 170. All but a few of the branch managers were non-Arabs; most were Zaghawa, who have a reputation for business acumen and whose members form the backbone of two important rebel groups, the Justice and Equality Movement and a once-feared faction of the Sudan Liberation Army. (Ismael comes from a small non-Arab tribe known as the Berti.)

As more people became rich, Ismael was transformed from a lowly patrolman into a benevolent public figure. He was given the customary title sheik after donating $80,000 to local schools in a televised ceremony hosted by the North Darfur governor (and fellow Berti tribesman), Osman Kibir. He began moving with a detail of national security bodyguards.

Campaign banner in El Fasher. Click image to expand.
A 2010 campaign banner hanging in El Fasher, North Darfur. From top: President Omar al-Bashir; North Darfur Gov. Osman Kibir; and state assembly candidate Adam Ismael, the Bernard Madoff of Sudan.

The fund had just a few thousand bold investors until February 2010, when campaign season began for Sudan's April general election. Ismael and one of his partners, a police officer named Musa Siddig, became candidates for the North Darfur state assembly on the ticket of the ruling National Congress Party. Their faces appeared on giant banners alongside those of the governor and of President Omar al-Bashir, who is wanted by the International Criminal Court for war crimes in Darfur.

This implied presidential endorsement set off a frenzy. People across Darfur, in Khartoum, and from as far away as the United Kingdom began liquidating their assets and investing the proceeds in Mawasir. By March 2010, the fund's capital reached 500 billion Sudanese pounds, about $180 million, the vast majority of it from new investors—this in a country with a yearly per-capita income of $2,200.

Everyone wanted a piece. Rebels from a leading faction of the Sudan Liberation Army "neglected the struggle and came to make money," as one Darfuri put it. These dozens of Zaghawa fighters became agents for the fund, working off commission to collect cars, cows, camels, sheep, and even chickens in lieu of cash from would-be investors. "Even women were selling their dishes."

Then the balloon burst. For reasons that aren't clear, regulators froze Ismael's and Siddig's bank accounts, leaving them unable to pay the tens of thousands at the bottom of their pyramid.

The fund was finished, but Ismael didn't appear to know it. At a meeting in El Fasher, he promised investors they would get their money back. One person who was there told me, "It was clear he believed what he was saying."

Quickly, though, political conditions were attached to the investors' survival.

The governor, speaking at a campaign rally for Ismael, told the crowd, "I know people are anxious to know about what they call Mawasir Market—though it's better you call it the Mercy Market. Adam Ismael and Musa Siddig are sons of the National Congress Party who are clean and honest. We support them, and I want to ensure you that everyone will receive his entitlements and that this market will continue—just give the tree water."

It just so happens that the symbol of Bashir's ruling party is a tree. The message couldn't have been clearer. Osman Kibir was re-elected governor, and both Ismael and Siddig were elected to the state assembly in landslides. Tension grew in the weeks after the election as investors waited for their payouts. Ismael and Siddig holed up at the governor's residence, out of public view.

In April, a protest march on the governor's house was broken up by police. In early May, a mob of 1,500 people, some of them apparently armed, tried again and police opened fire. Four officers and six demonstrators were killed.

Perhaps spurred by the bloodshed, Ismael issued a statement that investors' money would be returned on May 27. On that day, however, the governor announced the closure of the fund, the arrest of its managers, and the establishment of an asset-recovery program. As more than 50,000 people signed up for compensation, Kibir said he was shocked to learn of the fund's unregulated and un-Islamic practices.

Sudan's long-embattled media erupted. During a contentious interview on Blue Nile TV, journalist Saddig AlRizegi called Gov. Kibir a liar. "You were not only aware of this market but you were part of it and everything in it," AlRizegi said. Soon after that, the justice ministry banned all reporting on the Mawasir affair.

The government started recovery efforts not dissimilar to those U.S. authorities are using to compensate Bernard Madoff's victims, but with a dictatorial twist. They ordered investors to turn over their earnings; a few were jailed as examples, and that convinced at least some others to come forward. But there's been no compensation, and the biggest winners, who are said to be close to the governor, have little to fear.

Given the fund's connections with the government, state security, and Sudan's ruling party, few believe that many victims will get their money back. Indeed, one insider told me it appeared no more than 15 percent of the principle will be recovered. Those wiped out include thousands of people living in displaced-person camps.

"This is another form of persecution by the government of Sudan and the National Congress Party to deepen the poverty of the people," Ahmed Adam, a spokesman for the rebel Justice and Equality Movement, told me.

The Mawasir fund, and its collapse, benefited al-Bashir's government in several ways. It impoverished members of the Zaghawa tribe, including supporters of the Sudan Liberation Army in Darfur's displaced-person camps. At the same time, it enriched a small group of elites linked with the central government. It ensured the ruling party would win elections in a state where it is deeply unpopular, and it helped the government map the centers of economic power in Darfur.

The Arab Janjaweed tribes who committed so much of the mayhem in Darfur were burned, as well. "Everything they got from the government—the money and the cars—they put it in there, and it collapsed," one Sudanese economist told me.

The implosion sparked a few vigilante incidents in which fund managers were kidnapped and assaulted. In October, a Hungarian disarmament specialist with the United Nations/African Union Mission in Darfur, known as UNAMID, was abducted and taken to an armed camp that was home to hundreds of Arab gunmen.

"In North Darfur there was some scandal, some pyramid game," István Papp told Radio Dabanga from his captivity. "They lost their money, and they want their money back, and it looks like ... I am now the solution." Papp was released unharmed three months later.

On Jan. 6, 2011, nearly 10 months after promising swift action to unravel the pyramid scheme, Hamid Al Faki, chairman of the justice ministry's committee on Mawasir, made a new public appeal for its beneficiaries to come forward.

If he really wants to get to the bottom of this Darfur disaster, his first stop might be a well-guarded villa in Khartoum.

Click here to read a slide show  on the Sudanese referendum.

Dan Morrison is the author of The Black Nile. He writes at danmorrison.net and tweets at @dmsouthasia and @theblacknile.