May 25, 2022

US government warns against conducting business with Sudanese state-owned enterprises

The US Departments of State, Treasury, Commerce, and Labor recently issued an advisory, “Risks and Considerations for US Businesses Operating in Sudan” in an effort to warn US businesses and individuals of the growing risks associated with doing business with Sudanese State-Owned Enterprises (SOE), which includes all companies under military control.  The US government emphasizes that the risks discussed in this advisory only relate to business conducted with SOEs and military-controlled companies and is in no way aimed at discouraging investments or business arrangements with civilian-owned businesses in Sudan.

The advisory reports that, since the military’s seizure of power in Sudan in October 2021, the economic reforms that the US had supported following President Omar al Bashir’s removal from power were upended along with the nation’s transition to a more democratic form of government. As a result, Sudan’s civilian-led transition government was unable to significantly improve Sudan’s legal and commercial framework, and the current government continues gives preferential treatment to SOEs and military-owned businesses, including “lax transparency and oversight compared to private companies,” allowing SOEs to dominate Sudan’s economy.  According to the advisory, Sudan is Africa’s third largest gold producer, and Sudan’s military is currently in effective control of all SOEs, most of which control the gold trade in the country and its exports abroad. The same military that controls SOEs has also suppressed peaceful demonstrations calling for a return to a civilian-led government with violence and human rights abuses.

The advisory warns US businesses and individuals operating in Sudan and the surrounding region to be on heightened alert regarding human right issues and the potential reputation risks associated with conducting business and engaging in transactions with SOEs and military-controlled companies.  In addition, special care should be used to avoid interactions with persons and entities in the region that are already subject to US sanctions. 

Department of Treasury Recent Action | Risks and Considerations for US businesses operating in Sudan