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Blackwater USA – Daily Brief 6/19/19

Mining & Energy

  • Cobalt 27 said it would sell all of its cobalt assets to a shareholder (Pala Investment Ltd) and focus on nickel instead. It’s a weird time to sell—they could’ve gotten a much better deal by holding out for cobalt prices to recover.
  • Anadarko approved the construction of a $20 billion LNG liquefaction and export terminal in Mozambique—the largest LNG project ever approved in Africa. However, Anadarko is in the process of being acquired, and the new buyer—Occidental Petroleum Corp.—plans to sell the Mozambique project to Total after the deal closes.

Migration

  • Pres. Trump fulfilled his threat to cut $550 million in aid to Guatemala, El Salvador, and Honduras, who he says aren’t doing enough to stop migration. However, another $432 million in U.S. projects in the region will go ahead.

Venezuela

  • The WSJ published an excellent expose on Venezuelan gold laundering via Uganda. Pasted below.

Guyana

  • The Caribbean Court of Justice upheld Guyana’s no-confidence vote, which means Guyana will have to hold a new election. Pres. Granger said it will be planned for late November to allow time for a new voter registry—though his critics say that’s too long.

DRC

  • The UN estimates that 300,000 people have fled their homes in Ituri, northeast DRC during the latest round of Hema-Lendu fighting, and worries that their displacement is going to make it much harder to contain Ebola in the region (that said, only ~10% of the current outbreak’s cases are in Ituri).

Iran

  • Iran said it exposed and dismantled “one of the most complicated CIA cyber espionage networks” and arrested several agents—however, the announcement was really vague, and said the incident happened “a while ago,” so it’s probably just bluster.

Hezbollah

  • Foreign Policy had a decent article on what we’ve learned about Hezbollah’s activity in the U.S. from a senior operative’s trial in New York—pasted below.

Afghanistan

  • NSA Mohib told a conference audience that “at least 50 people” die fighting terrorism in Afghanistan each day. That caught analysts’ attention because it’s a little higher than other public estimates.

U.S.

  • Acting SecDef Patrick Shanahan withdrew his nomination for the official role and resigned as deputy SecDef to “spend more time with family,” after a 2010 domestic violence allegation resurfaced. Army Secretary Mark Esper will replace him as Acting SecDef.

UK

  • Conservative lawmakers will vote today and tomorrow for the two names that the rest of the party will consider for PM. Boris Johnson has secured one of those spots, and dark horse Rory Stewart—who theEconomist called “the most interesting candidate”—made surprising gains to second place in the most recent vote.

How 7.4 Tons of Venezuela’s Gold Landed in Africa—and Vanished (WSJ)

Secret deliveries to a refinery in Uganda expose a global underground economy many suspect is helping Nicolás Maduro cling to power

The government of Venezuelan President Nicolás Maduro is selling off his country’s gold reserves. Some of it has passed through a secretive operation in East Africa, a gambit that evades U.S. sanctions.

On two early-March flights, at least 7.4 tons of gold with a market value over $300 million moved from Venezuela to a refinery in Uganda, say officials in Venezuela and Uganda, a foreign diplomat and Venezuelan opposition lawmakers, who have concluded Mr. Maduro’s government exported the ingots.

The gold arrived on a Russian charter jetliner in two shipments at the international airport in Entebbe, says Ugandan national-police spokesman Fred Enanga. The accompanying paperwork identified the ingots, some with stamped labels partially scratched off, as Venezuelan central-bank property, says a senior Ugandan police officer who saw the bars and documents. Flight records show the trips originated in Caracas, Venezuela.

The shipments expose one link in a global underground economy many suspect is helping Mr. Maduro cling to power by bypassing the U.S.-dominated international finance system. Washington has recognized opposition leader Juan Guaidó as Venezuela’s legitimate president, slapped financial and other sanctions on Venezuelan officials and institutions, and threatened penalties for others doing business with the regime.

The standoff between the two leaders is reverberating beyond Venezuela, with some 50 countries joining the U.S. in backing Mr. Guaidó while others side with Mr. Maduro. What was once Latin America’s richest economy is starving, its oil sales have dwindled and citizens are suffering through dayslong power outages and shortages of basic goods.

Gold sales, U.S. and other officials say, are one of the government’s final financial lifelines.

The gold that arrived in Entebbe passed through African Gold Refinery Ltd., or AGR, in a compound about 500 yards from the old runway before being exported to the Middle East, Ugandan police say.

The refinery started operations in 2015. Some of the gold it processed was allegedly smuggled from conflict-torn eastern Congo and other African nations, according to officials with Ugandan police, the country’s Financial Intelligence Authority and regional smugglers.

Gold from AGR has made its way into supply chains at U.S. companies including General Motors Co. , General Electric Co. and Starbucks Corp. , the firms’ filings for 2018 with the Securities and Exchange Commission show, despite U.S. measures to discourage use of so-called conflict minerals from Congo.

GM prohibits suppliers from using forced or involuntary labor or engage in corrupt business practices, a spokesman says. GE declined to comment. Starbucks didn’t respond to requests for comment.

AGR General Manager Cherry Anne Dacdac says the company hasn’t processed smuggled or conflict gold and declines to comment on the March shipments. She says all AGR’s business is legal and that in a March 26 management meeting it agreed it won’t accept transactions related to Venezuela.

AGR has processed and exported more than 38 tons of gold since it started operations, Ms. Dacdac says. The scale of its operation helped drive gold in 2018 to overtake coffee as the leading export from Uganda, which mines little of it.

The refinery appears to act with support from Ugandan President Yoweri Museveni, court and other documents reviewed by the Journal suggest. A spokesman for Mr. Museveni says the president “backs the plant just as he does all other investors” in his quest to transform Uganda’s economy.

The Maduro government’s prior gold sales have been an open point of contention. Between late 2017 and Feb. 1, 2019, the central bank sold at least 73.3 tons of gold, with a market value of around $3 billion, to companies in the United Arab Emirates and Turkey, the National Assembly’s finance commission announced in February.

The White House on Nov. 1 announced sanctions intended to stop Venezuelan gold sales. Since then, several dozen more tons have been removed from the central bank and secretly exported, say opposition lawmakers and a person familiar with the bank’s reserves. The bank for weeks was left without power and water.

“It’s a fire sale,” says one of the lawmakers, Ángel Alvarado, who is on the finance commission. “The regime is scraping the barrel, selling off anything of value to keep itself afloat.”

A U.S. Treasury Department official says: “Treasury is committed to holding accountable those operating corruptly in Venezuela’s gold sector.”

Spokesmen for Venezuela’s central bank and Information Ministry didn’t respond to requests for comment. The Maduro government has said little publicly about its gold sales and routinely dismisses sanctions and accusations of wrongdoing as part of an international campaign to besmirch Caracas.

Gold is almost impossible to trace to its origin once refined. The United Nations says gold is the primary mineral financing militias and parts of the military in eastern Congo, funding a conflict that has killed millions.

Even before the Venezuelan shipments, AGR had drawn the scrutiny of Ugandan authorities for processing gold allegedly smuggled from conflict zones in Congo, as well as from South Sudan and Zimbabwe, much of which later leaves the country as Ugandan gold, according to Ugandan police, the country’s Financial Intelligence Authority, regional smugglers and Congolese mining officials.

Sydney Asubo, executive director of the Financial Intelligence Authority, Uganda’s government body in charge of combating money laundering, says the agency reported the smuggling activities to authorities and requested prosecution. No charges have been filed, he says, pending the conclusion of an investigation of AGR by Uganda’s Inspectorate of Government over suspicions of tax evasion, smuggling and money laundering. Ali Munira, a spokeswoman for the Inspectorate, which is charged with investigating corruption and other abuses, confirms there is an investigation but declined to comment on details.

Mr. Goetz and AGR’s Ms. Dacdac say they have complied with Ugandan and other laws. Mr. Goetz denies there are probes. Ms. Dacdac says she isn’t aware of any investigations by the Financial Intelligence Authority or Inspectorate.

America’s 2010 Dodd-Frank Act included provisions to discourage companies from using raw materials that finance the Congolese conflict by tracing what they buy. The act doesn’t make buying these materials illegal. AGR appeared in supply chains of 237 publicly traded U.S. companies in their filings for 2018.

Mr. Goetz says he has sold AGR and retains control of Goetz Gold LLC, a Dubai trading company. Goetz Gold still handles the gold coming from AGR, he says. AGR’s Ms. Dacdac didn’t respond to requests to comment on whether Goetz Gold handles the company’s gold. Uganda’s company registry shows Mr. Goetz’s AGR shares were transferred in February 2018 to Seychelles-based AGR International Ltd. Ms. Dacdac says that company is owned by individuals and companies originating from the Middle East.

Secretive shipment

On March 2, the red-tailed body of a Boeing 777 owned by a Russian charter company, Nordwind Airlines, touched down at Entebbe at 6:35 a.m. after taking off more than 13 hours earlier from Caracas, plane-tracking website Flightradar24 shows. Nordwind didn’t respond to requests for comment.

Police and private security gathered on the tarmac to receive the cargo from the jetliner, which carried no passengers, says a person who witnessed its arrival.

Airport handlers removed heavy parcels wrapped in brown cardboard, which didn’t pass through the airport’s regular customs procedures, says Mr. Enanga, the Ugandan police spokesman. Less than an hour after landing, the packages under a private-security escort reached the AGR compound just across the airport access road, he says.

Inside the cardboard were 3.8 tons of Venezuelan gold. Another 3.6 tons on the same airliner from Caracas arrived at the refinery two days later, Mr. Enanga says. By the time the police’s minerals unit, tipped off over the unusually large consignments, raided AGR on March 7, the first lot was gone, exported to the Middle East with its final destination listed as Turkey, he says.

The senior Ugandan police officer and Mr. Goetz say the gold was sent to Goetz Gold in Dubai. AGR’s Ms. Dacdac didn’t respond to requests for comment on whether the company exported the gold to Goetz Gold. Mr. Goetz says Goetz Gold didn’t send it to Turkey.

Ugandan police seized the other 3.6 tons, ingots stamped with labels identifying them as Venezuelan central-bank property, says the senior officer who saw them. Some labels appeared scratched, as if someone had tried to disguise their origin, the officer says. Paperwork with the bars showed they were from the 1940s.

Mr. Goetz and AGR’s Ms. Dacdac say police never raided the refinery and never seized any gold. Ms. Dacdac says: “AGR presented all the necessary documentations as proof that the particular transactions have been declared and captured by the Uganda Revenue Authority.”

It wasn’t the first time authorities identified Venezuelan gold handled by Mr. Goetz. Last year, Venezuela’s central bank was selling gold to three trading firms in Turkey and the United Arab Emirates, according to the February announcement by the Venezuelan parliament’s finance commission, including to Goetz Gold, which bought 21.9 tons.

Mr. Goetz says some of that particular Venezuelan gold passed through Goetz Gold but that it came from a company outside Venezuela and didn’t break U.S. sanctions because contracts were signed before Nov. 1.

After U.S. sanctions, the central bank’s buyers were drying up. In late January, as another Nordwind 777 sat at Caracas airport, Venezuelan opposition lawmaker José Guerra, a former economist at the central bank, alleged in parliament that the plane was there to fly out 20 tons of the bank’s gold.

The U.S. publicly pressured the bank’s buyers in Turkey and the U.A.E. “My advice to bankers, brokers, traders, facilitators, and other businesses,” a tweet from national security adviser John Bolton’s account warned on Jan. 30: “Don’t deal in gold, oil, or other Venezuelan commodities being stolen from the Venezuelan people by the Maduro mafia.”

Two days later, Abu Dhabi-based Noor Capital, which had previously bought 27.4 tons of Venezuelan gold, according to the Venezuelan parliament’s finance commission, announced it was stopping such purchases. Flightradar24 shows the Boeing 777 returned to Moscow.

Noor Capital declined to comment beyond a Feb. 1 statement confirming it had bought 3 tons of gold from Venezuela’s central bank on Jan. 21 and denying engaging in illegal actions.

Two months later in Uganda, as police say that the seized Entebbe gold shipment sat in custody, relief came from President Museveni. In a letter dated March 26, a copy of which the Journal reviewed, Uganda’s attorney general, William Byaruhanga, ordered the police minerals-protection unit to release the gold and withdraw officers from AGR.

Police complied, says Mr. Enanga, the police spokesman.

The order to release the gold, Mr. Byaruhanga wrote in the letter, came from President Museveni, whom he said he had met the day before at State House in Entebbe. “AGR is instructed henceforth,” the letter said, to “cease and desist from any further importation of gold from Venezuela, until further notice,” citing U.S. sanctions.

Pressure on Uganda and AGR was rising from U.S. diplomats who had gotten wind of the shipments, says a person familiar with the pressure.

The spokesman for Mr. Museveni says the president directed the attorney general to release the seized gold after investigators cleared the imports. Mr. Byaruhanga didn’t respond to requests for comment. AGR’s Ms. Dacdac says the company didn’t seek Mr. Museveni’s intervention.

From there, the Venezuelan gold’s trace fades. Some time in March, two tons of gold were put up for sale in Turkey at a steep discount to market prices, say people familiar with the matter. The origin was listed as Uganda, but customs documents showed it came from Venezuela’s central-bank vault, one of them says.

Unable to find a buyer, a second attempt was made to sell the gold at a steeper discount, one of the people says, adding that it isn’t clear if anyone bought it. Mr. Goetz says Goetz Gold didn’t offer the Venezuelan gold for sale in Turkey.

There is a twist in the Venezuelan gold’s tale, says the person familiar with the central bank’s reserves: The bars almost certainly came from America in the 1940s, the person says, in payment to Venezuela for oil supplied during World War II.

Hezbollah Isn’t Just in Beirut. It’s in New York, Too. (Foreign Policy)

The trial of a senior operative reveals the extent of the terrorist organization’s reach in the United States and Canada.

In recent years, Hezbollah has stepped up its activities beyond Lebanon’s borders. This uptick has been clearest in the Middle East—in Iraq, Yemen, and especially Syria—but plots have also been thwarted in South America, Asia, Europe, and now, possibly, the United States.

Reports of Hezbollah activity in North America are not new, though such reporting tends to focus on the group’s fundraising, money laundering, procurement, or other logistical activities from Vancouver to Miami. But last month, the criminal prosecution and conviction in New York of the Hezbollah operative Ali Kourani revealed disturbing new information about the extent of Hezbollah’s operations and activities in the United States and Canada.

The criminal prosecution and conviction in New York of the Hezbollah operative Ali Kourani revealed disturbing new information about the extent of Hezbollah’s operations and activities in the United States and Canada.

Taken together, the arrests in 2017 of Kourani and another Hezbollah operative, Samer el-Debek, led the U.S. intelligence community to revisit its longstanding assessment that Hezbollah would be unlikely to attack the U.S. homeland unless the group perceived Washington to be taking action threatening its existence or that of its patron—Iran. Following Kourani and Debek’s arrests, the director of the U.S. National Counterterrorism Center said in October 2017, “It’s our assessment that Hezbollah is determined to give itself a potential homeland option as a critical component of its terrorism playbook.”

At the time, little of the underlying information leading to this new assessment had been made public, but on May 16, a New York jury returned guilty verdicts on all counts in the indictment against Kourani, including terrorist charges related to his surveillance of FBI and U.S. Secret Service offices, as well as a U.S. Army armory, all in New York City. (Debek has yet to stand trial.)

Kourani carried out other operational activities as a long-term sleeper agent, acting on behalf of Hezbollah’s external attack-planning component, the Islamic Jihad Organization (IJO), such as identifying Israelis in New York who could be targeted by Hezbollah and finding people from whom he could procure arms that Hezbollah could stockpile in the area.

Most of his activities occurred in the United States, but Hezbollah also sent Kourani to China, where the group had previously procured chemicals used to make bombs of the kind the group built in Bulgaria, Cyprus, and Thailand. The 2012 bombing in Burgas, Bulgaria, left seven people dead including the bomber and 32 wounded, and bomb-making chemicals of the same type were found in Thailand in 2012 and in Cyprus in 2012 and 2015, when plots were thwarted there. Hezbollah also sent Kourani on operational assignments to Canada. Kourani described himself in interviews with FBI agents as being part of a “sleeper cell.”

“While living in the United States, Kourani served as an operative of Hezbollah in order to help the foreign terrorist organization prepare for potential future attacks against the United States,” said U.S. Assistant Attorney General for National Security John Demers. These included buildings housing the FBI and U.S. Secret Service in Manhattan, as well as New York’s John F. Kennedy International Airport and a U.S. Army armory.

Kourani comes from a family that’s well known in Hezbollah circles—he described them to the FBI as the “bin Ladens of Lebanon”—and he first attended a Hezbollah training camp as a teenager. But the group only recruited him into its elite IJO—Hezbollah’s external operations unit, also known at Unit 910—in January 2008, a month before the assassination of the IJO commander and longtime wanted Hezbollah terrorist Imad Mughniyeh in what was later revealed to be a joint U.S.-Israeli operation.

The timing is significant: It shows that that even before Mughniyeh’s death, Hezbollah was looking to rebuild its international terrorist networks. It is also significant because it put Kourani in the right place at the right time. In a video broadcast at Mughniyeh’s funeral, Hezbollah Secretary-General Hassan Nasrallah issued a not-so-veiled threat that attacks abroad would follow, saying, “With this murder, its timing, location and method—Zionists, if you want this kind of open war, let the whole world listen: Let this war be open.”

Shortly thereafter, Kourani’s secret work for Hezbollah’s IJO abroad began. Hezbollah was “desperate because they were looking to exact revenge for [Mughniyeh’s] death,” Kourani told the FBI.

Kourani held several meetings with FBI agents once they approached him in September 2016 saying they knew he was working for Hezbollah.Kourani held several meetings with FBI agents once they approached him in September 2016 saying they knew he was working for Hezbollah. Kourani claimed to seek a deal in return for being reunited with his wife and children, who had left him and were residing in Canada. No such deal was offered. Moreover, Kourani withheld key information and tried to use these meetings to elicit information from the agents interviewing him. The evidence at trial also included material from Kourani’s laptop, his email and Facebook records, and notes and other materials seized from his apartment.

His first step was to obtain U.S. citizenship and secure a U.S. passport, which he did at Hezbollah’s direction in 2009. Of course, he neglected to mention the circumstances on the form where it asked if he had ties to any terrorist organization. Kourani already had legal residency, obtained through his father. Later, in 2013, he applied for a passport card allowing him to cross the U.S.-Canadian or U.S.-Mexican border with an I.D. that fit in his wallet. This way, if authorities ever seized his U.S. passport while he was traveling abroad, he could still sneak back into the United States by flying to Canada or Mexico on his Lebanese passport and crossing back into the United States by land using the card.

Kourani warned FBI agents that Hezbollah’s IJO is “even more active in Canada than they were in the United States,” one of the FBI agents who interviewed him said during his trial. Indeed, Canada loomed large in Kourani’s operational plans. In 2012, he had married a Canadian-Lebanese dual citizen. Kourani later became estranged from his wife and children, but at the time, the FBI explained, he and his Hezbollah handler specifically discussed the operational utility of having family ties to Canada because “it wouldn’t appear suspicious or odd if he were to make travel to Canada with some regularity or frequency.”

Prosecutors concluded Kourani and his handler saw distinct advantages to Kourani having ties to Canada “so he could travel back and forth to Canada to conduct operations.”Prosecutors concluded Kourani and his handler saw distinct advantages to Kourani having ties to Canada “so he could travel back and forth to Canada to conduct operations.” The two discussed the possibility of Kourani transporting correspondence or operatives into Canada, which Kourani insists he never did. But the two did specifically discuss the spy tradecraft Kourani would employ to pass along messages for Hezbollah, using dead drops so he and local Hezbollah operatives would not be able to identify one another according to what Kourani described to the FBI as “the golden rule” of Unit 910: “the less you know the better it is”

Kourani was well schooled in the ways of Unit 910, given that his Hezbollah IJO handler was none other than Fadi Kassab, the man FBI agents said Kourani had described as “responsible for IJO operatives in both the United States and Canada.” Even as he was running Kourani as an agent in New York, the Lebanon-based Kassab played hands-on roles in the Hezbollah attack in Bulgaria in 2012, according to Kourani’s statements to FBI agents.

One of the missions Hezbollah assigned to Kourani was to collect detailed information about two international airports: New York’s JFK and Toronto’s Pearson International Airport.One of the missions Hezbollah assigned to Kourani was to collect detailed information about two international airports: New York’s JFK and Toronto’s Pearson International Airport. Based on documentation of his travel, U.S. prosecutors showed that Kourani traveled through JFK 19 times and through Pearson seven times.

Kourani told the FBI that he provided Hezbollah with details about security procedures, the uniforms worn by security officers, and whether the officers were armed. His surveillance, Kourani told the FBI, focused on exit points, security checkpoints, camera locations, baggage claim procedures, and what questions airport screeners asked passengers.

Aside from carrying out surveillance himself, Kourani also plied airport employees for information, some of whom understood they were providing information for Hezbollah while others were unwitting. For example, Kourani told the FBI about one airport employee in Canada, who appears to have unwittingly provided Kourani information about Canadian airport security. The two would smoke a hookah together, and the airport employee would casually answer Kourani’s questions about the locations of cameras and magnetometers. Kourani said he could ask the man to carry a bag onto an airplane for him, and he would do it.

According to a U.S. prosecutor’s statement during the trial, Hezbollah was “thinking about how to get terrorists, and weapons, and contraband through airports, from Lebanon into Canada, from Lebanon into the United States.”Hezbollah was “thinking about how to get terrorists, and weapons, and contraband through airports, from Lebanon into Canada, from Lebanon into the United States.”

During one of Kourani’s meetings with the FBI, an interviewing agent recalled, Kourani “sat back in his chair, squared his shoulders [to the interviewing agents] and stated, ‘I am a member of 910, also known as Islamic Jihad or the Black Ops of Hezbollah. The unit is Iranian-controlled.’” Within Hezbollah, the unit reports directly to Nasrallah, according to Kourani, but Iran oversees the unit’s operations.

In the 1990s, U.S. intelligence agencies downplayed the likelihood of Hezbollah attacking U.S. interests, unless Washington directly threatened Hezbollah. In the wake of 9/11, increased U.S. counterterrorism efforts began to impact Hezbollah. A year later, the FBI reported to Congress in 2002 that Hezbollah operatives “have reportedly been tasked with surveillance of potential targets in the United States.” But in those past cases, FBI investigations determined that “such taskings to date appear to have been intended as a vetting tool to establish the individual’s loyalty to Hezbollah and Iran.” Six years later, Mughniyeh was assassinated, just after Kourani’s IJO recruitment. By then, IJO preoperational surveillance missions took on much more practical implications because of Hezbollah’s desire to avenge Mughniyeh’s death.

The group’s goals changed considerably between 2002 and 2008. Kourani informed the FBI that “there would be certain scenarios that would require action or conduct by those who belonged to the cell.” Kourani said that in the event that the United States and Iran went to war, the U.S. sleeper cell would expect to be called upon to act.Kourani said that in the event that the United States and Iran went to war, the U.S. sleeper cell would expect to be called upon to act. And if the United States were to take certain unnamed actions targeting Hezbollah, Nasrallah himself, or Iranian interests, Kourani added, “in those scenarios the sleeper cell would also be triggered into action.”

The United States has, of course, taken actions adverse to Iranian and Hezbollah interests—withdrawing from the Iran nuclear deal, reimposing sweeping sanctions on Iran, sanctioning Hezbollah, and participating in the assassination of Imad Mughniyeh, to name a few—and IJO operatives have never carried out a bombing or shooting in North America.

Hezbollah plots have been foiled over the past few years in Peru and Bolivia, but the revelation that Hezbollah conducted extensive surveillance activity in the United States and Canada over the past few years—explicitly tied to the group’s intent to exact revenge for the death of Mughniyeh—is deeply disturbing. Hezbollah has crossed a threshold and is, at a minimum, developing North American networks capable of executing attacks should the group’s leadership deem them necessary.