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In Hunt for Funds, Somalia Found Trouble

By Heidi Vogt
WSJ

When Somalia’s government wanted to rebuild the country’s war-shattered economy in 2009, it hired lawyers to recover what it believed was more than $100 million of government funds frozen by foreign countries during two decades of civil conflict.

Things didn’t go according to plan. Over the past five years, the drive to reclaim the missing money has spawned corruption allegations and led to the resignation of two central bank governors. The fragile Somali government is now tussling with American lawyers over the funds.

Ugandan soldier Mog
Ugandan soldiers patrolled in Mogadishu, Somalia, after an attack by suspected militants on Aug. 31. Reuters

So far, the recovery effort has yielded only about $12 million, has imperiled the country’s relations with Western donors, and exposed disarray in the Somali government. After decades of conflict, Somalia is constantly teetering on the edge of chaos. Additional strife could destabilize the fragile country and a region trying to unite to fight a rising terrorist threat.

Somalia needs foreign aid and military support to fight al Qaeda-aligned militants. The corruption allegations have diminished donors’ appetites for funding the government, said Ken Menkhaus, a Somalia scholar at Davidson College.

Somalia is “a sieve for revenue,” he said. “It’s a place where it’s very difficult for external donors to ensure that funds are properly spent.”

Five years ago, few expressed qualms about a nascent Somali government trying to fund its recovery from a long civil war between warring clans. But no one knew exactly how much money was abroad. Somali officials estimated it exceeded $100 million, enough to fund the annual budget at the time.

To spearhead the effort, interim President Sharif Sheikh Ahmed enlisted a trusted ally, Ali Abdi Amalow, who had been central bank governor when fighting broke out in 1991. Mr. Amalow turned to American law firm Shulman Rogers Gandal Pordy & Ecker PA. Jacob Frenkel, a partner at Shulman Rogers, said the firm has expertise in international asset recovery. “This is not a bunch of street-corner lawyers,” he said. “This really is the kind of sophisticated work that we do.”

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Source: WSJ

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