Yemeni multinational Hayel Saeed Anam Group (HSA) has been accused by the UN Security Council Panel of Experts of making a profit of about US$194 million between mid-2018 and August 2020 from the Saudi-funded letter of credit (L/C) mechanism that was said to have been intended to enable importers to bring foodstuffs and other essential items into the war-torn country.

The panel has also accused Central Bank of Yemen (CBY) of misusing Saudi deposits worth nearly US$2 billion and engaging in money laundering and foreign currency rate manipulation.

Elite capture

The panel's analysis shows that 91 commercial companies benefited from the Saudi L/C mechanism but just nine companies captured 48 per cent of the US$1.89 billion Saudi deposit.

All nine belong to HSA, which received US$872.1 million from the Saudi deposit. HSA benefits from a vast presence in Yemen and has placed ex-employees in key roles in the Yemeni government at the CBY according to the panel's report.

Market position

It says the company's market position gives it a comparative and competitive advantage versus other importers, which explains its ability to capture a large share of the deposit.

The panel says its analysis shows that in 2018-20 HSA made a profit of approximately US$194.2 million from the L/C mechanism alone, excluding profits made from the import and sale of commodities.

Illegal use of public money

The preferential exchange rate given by the CBY to importers resulted in significant "pre-import" profits to the HSA and other traders, reaching nearly US$423 million over the two-year period according to the panel.

Their report says the US$423 million is public money which has been illegally transferred to private corporations.

Money laundering and corruption

The 2021 UN Security Council Panel of Experts Report says the panel views this case as an act of money laundering and corruption perpetrated by government institutions, in this case the CBY and the Yemeni government.

They acted "in collusion with well-placed businesses and political personalities, to the benefit of a select group of privileged traders and businessmen - practices that fit the definition of 'elite capture'", the report concludes.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.