Criminal networks are using Iran as a transit point for illicit Somali charcoal exports earning Islamist militants al Shabaab millions of dollars annually in tax, UN sanctions monitors said in a report seen by Reuters.
In the unpublished annual report to the UN Security Council, the monitors said domestic revenue generation by al Qaeda-affiliated al Shabaab “is more geographically diversified and systematic” than that of Somalia’s federal government.
The report says since March the main destination for shipments – using fake country of origin certificates from Comoros, Ivory Coast and Ghana – are ports in Iran, where charcoal is packaged into white bags labelled “Product of Iran”.
“The bags are then reloaded onto smaller, Iran-flagged dhows and exported to Port Al Hamriya, Dubai, UAE, using certificates of origin falsely indicating the ‘country of manufacture’ as Iran,” the monitors wrote.
Iran became a transit point for the shipments — which breach a UN ban on Somali charcoal exports — after Oman tightened customs procedures, said the report.
The monitors, who track compliance with UN sanctions on Somalia and Eritrea, said Iran and the United Arab Emirates (UAE) did not “substantively engage” when concerns were raised about transhipment of Somali charcoal.
The report estimates the wholesale value of illicit Somali charcoal to be $150 million a year in the UAE, where it is widely used for cooking and smoking shisha water pipes, also known as hookah or nargile. They also estimate about three million bags of charcoal were exported from Somalia in the past year.
“The charcoal trade continues to be a significant source of revenue for al Shabaab, generating at least $7.5 million from checkpoint taxation,” they wrote.
UAE Ambassador to the UN Lana Nusseibeh could not comment because the report was not yet published.
“That being said, the UAE is aware of all Security Council resolutions and is in full compliance with sanctions imposed,” she told Reuters. “We also reaffirm our continued co-operation with the Monitoring Group throughout its mandate.”
The Iranian mission to the UN did not immediately respond to a request for comment.
The UN Security Council banned charcoal exports from Somalia in 2012 in a bid to cut off funds for al Shabaab, an al Qaeda-affiliated group trying to topple Somalia’s Western-backed central government and impose its own rule based on its strict interpretation of Islam’s sharia law.
The Security Council imposed an arms embargo on Somalia in 1992 to cut the flow of arms to feuding warlords, who ousted dictator Mohamed Siad Barre and plunged the country into war.
“SOPHISTICATED ACCOUNTING SYSTEM”
In addition to earnings from charcoal, al Shabaab makes millions of dollars annually via tolls on vehicles in areas where they man checkpoints and through taxes on businesses, agriculture and livestock.
All this “generates more than enough revenue to sustain its insurgency”, the monitors wrote.
Despite controlling far less territory than it did at the height of a decade-long insurgency, “the group’s “ability to carry out complex asymmetric attacks in Somalia remains undiminished”, the monitors wrote.
Al Shabaab’s most lucrative checkpoint is about 160 km north-west of Mogidishu on the road to Baidoa, the monitors said, citing an al Shabaab defector who reported the location earns the group approximately $30,000 per day — $10 million a year.
“Employing mafia-style tactics, the group is able to levy taxation via a network of hinterland checkpoints, with collection of taxes enforced through violence and intimidation,” said the monitors, adding truck drivers risked execution if they tried to avoid checkpoints.
Earlier this year monitors obtained ledgers belonging to al Shabaab recovered after one of the group’s senior accountants was killed in an attack by the Somali National Army and African Union peacekeepers.
They wrote the ledgers detail al Shabaab’s revenue and expenses in one region, Hiran, in central Somalia, from October 2014 to March 2018 and “display a sophisticated accounting system” in which the militants transfer funds using the mobile money system operated by mobile network Hormuud Telecom.
The monitors said the militants’ tax generation system “is more geographically diversified and systematic” than that of the federal government and due to the militants’ provision of receipts, the taxation system is “accountable and predictable”, in contrast to the network of checkpoints manned by the government’s armed forces in some parts of the country.
Under an International Monetary Fund programme, the government in Mogadishu is implementing public finance reforms and domestic revenues quadrupled since 2012 to the end of 2017 according to the finance ministry.
Reuters reported last year the United States suspended food and fuel aid to most of Somalia’s armed forces over corruption concerns.