RPT-WITNESS-Battling to borrow money in sanctions-hit Sudan
KHARTOUM, July 5 (Reuters) - The United States achieved at least three things when it stepped up economic sanctions on Sudan: it banned most trade between the two countries, froze Sudanese assets and closed the door on my British mortgage.
Trade sanctions are presented as sophisticated instruments -- ways of forcing change in foreign governments without resorting to war. But in today's inter-connected world, economic penalties designed to hit one country can quickly spread beyond their original target.
"We can't open a mortgage account with your address in Khartoum," the officer from Bank of Scotland International told me over the crackling phone line. "It's on our list of sanctioned countries."
A journalist from Britain, I was trying hard not to sound too desperate. We had already been turned down by two other lenders without explanation. My family's dreams of buying a little semi-detached corner of England -- somewhere to spend our holidays back home from Khartoum -- were fading.
"But I'm British and I want to buy a house in Britain," I told the bank official, with the slightest note of pleading in my voice. "We haven't imposed any trade sanctions on Sudan. It's only America."
The bank official was sympathetic, but there was nothing he could do. "If there are sanctions imposed from another country, from a risk point of view we can't get involved either."
FALL FOUL
The key word there was risk.
In theory, the United States and its organs only have the power to stop U.S. citizens and companies doing business with another country.
In practice, non-U.S. companies can still fall foul of the sanctions administered and enforced by the U.S. Treasury's Office of Foreign Assets Control (OFAC).
Take the tale of Lloyds TSB, part of the London-based group which also owns one of the banks that turned me down, Bank of Scotland International.
In January Lloyds agreed to forfeit $350 million to U.S. authorities in connection with charges its staff had faked records so clients from Sudan and other sanctioned countries could do business with the U.S. banking system.
According to a research note from international law firm Cleary Gottleib, it was the first case of its kind, involving the U.S. Department of Justice punishing sanctions violations by "a non-U.S. person".
Lloyds spokeswoman Sara Evans confirmed Bank of Scotland had a policy of not providing mortgage accounts to customers who live in Sudan, and other banks have been quick to follow the precedent.
An OFAC report in January said it was aware of a number of "third country" banks that had started cutting ties with Sudan and shutting down accounts of customers living in Sudan. Continued...
