Banks accused of 'financing' genocide.

According to a team of European and North American financial experts, the World Bank and some European banks might have inadvertently financed the genocide that took place in Rwanda. Calls for compensation and a freezing of Rwanda's debt repayment are now being made. FRANCOIS MISSER examines the evidence.

The international storm generated by the disclosure of the 'Nazi gold' extracted from Jews during World War II and deposited in Swiss banks, had hardly died down when a team of European and North American financial experts handed over a confidential report, whose contents could prove to be just as explosive to the Government of Rwanda.

The team had been commissioned to do nothing more than work out a formula to alleviate the country's debt burden but when it began to dig into the country's finances in Kigali, it came to the startling conclusion that the issue was less about Rwanda's repayment of the debt than the international bankers' 'moral obligation to pay compensations for the genocide'.

Elaborating on this grim discovery, the Belgian economist, Mr Pierre Galand, a member of the group, said the Rwandan debt, worth around $1,000m, is 80% owed to multilateral institutions such as the World Bank, the IMF and the African Development Bank. Documents found at the Banque Nationale du Rwanda (BNR) and at the Finance and Planning ministries show that most of these amounts consist in balance of payment support and quick disbursements to the State of Rwanda during the 1990-1994 period.

During this time, while the internal political crisis in the country was escalating, the World Bank had maintained its classical list of items, such as weapons, gold and nuclear products which Rwanda was prohibited from importing using such funds. However, according to Mr Galand, the World Bank failed to pay enough attention to the fact that these funds were being "merged" with other resources and that more than half were used by the Government to purchase military equipment; among the items purchased were the machetes used by the authors of the 1994 genocide.

Mr Galand admits that the World Bank did express, on several occasions, its concern over the excessive amount of military expenditure to the Government of Rwanda, but the Belgian economist also points out that neither the World Bank nor the other donors took any steps to sanction such purchases. That there was room for sanctions is revealed by the World Bank's own audits which lists a catalogue of fund mismanagement by the then Government of Rwanda, ranging from double invoicing, over invoicing and embezzlement at the expense of Rwanda's National Bank (BNR).

Apart from the World Bank and the other multilateral institutions, private banks also carry "co-responsibility" in the massacres, alleges Mr Galand. He states that despite the fact certain countries, like Belgium, impose very strict controls over money transfers made by the local banks, breeches took place. Belgian law, for example, prohibits the financing of arms supplies to countries at war. Yet, despite the fact that the UN Security Council had recognised, in May 1994, that a genocide was being perpetrated in Rwanda, a transfer was made by the Rwandan Embassy in Tokyo on 4 July, three months after the beginning of the genocide, by the Belgolaise Bank according to Mr Galand.

Hate broadcasts

African Business has found out that the Arusha International Penal Tribunal set up to examine the genocide has evidence that funds for Radio Television Mille Collines, which sent out a constant steam of hate broadcasts, were channelled through BBL account No 350-4208559-42 belonging to the leader of the Hutu extremists in Belgium, Mr Papias Ngaboyamahina. Funds were also collected through account No 070-2700820-34/307 at the BACAR (Banque Continentale pour l'Afrique au Rwanda, a subsidiary of the Banque Continentale du Luxembourg), whose Director, Mr Pasteur Musabe, was arrested in Cameroon in March 1996 with his brother, Colonel Theoneste Bagosora, considered one of the masterminds of the genocide.

However, more investigation is needed to establish whether transfers took place before or after the Radio broadcasts calling on Hutu citizens to kill their Tutsi compatriots and whether BBL had knowledge of what use money had been put to.

French and German banks are also mentioned in Mr Galand's report. In its January 1994 report titled Arming Rwanda: the Arms Trade and Human Rights Abuses in the Rwandan War, the US-based Human Rights Arms Watch had already mentioned the case of an arms deal signed on the 30 March 1992, between the Rwandan Defence Ministry and the Republic of Egypt for the supply of mortars, howitzers, ammunitions, rocket propelled grenades and rifles. The deal, worth $6m, was guaranteed by the French nationalised bank, Credit Lyonnais, claims the American organisation which published facsimiles of the contract.

Again, it will be difficult to prove either that Credit Lyonnais or even the Egyptian and the Rwandan Defence Ministries could imagine at that time that two years later, these weapons would be used to try and prevent the Rwandan Patriotic Army put an end to the genocide.

There are also questions about the final use of money from Rwandan private banks. These banks were ordered by a letter of the ex-governor of the Rwandan Central Bank, dated 5 May 1994, just one month after the beginning of the genocide, to transfer all their funds to the Belgolaise in Brussels, to the Deutsche Bank and to the Banque Nationale de Paris. The current Minister of Finance, Mr Marc Rugenera's guess is that "the money was probably used to purchase weapons". He could well be right: The UN International Commission of Enquiry on arms supplies to the ex-Rwandan armed forces revealed last year that massive amounts of weapons had been acquired by those who carried out the genocide and later took refuge in Zaire.

In any case, "responsibilities must be established, and from there, the donors should meet to negotiate compensations for the victims of the genocide," says Mr Galand. It would be a cruel irony to force Rwanda to pay the $55m of arrears owed in 1997 to repay loans which were used to purchase weapons used in the genocide, argues the Belgian economist, especially at the very moment that Rwanda is staggering under the weight of the return of more than half a million refugees from Zaire and Tanzania.

Mr Galand says that the all the evidence, ranging from bills of lading, account numbers and other documents that he and his colleagues have collected from the Central Bank be handed over to the Arusha International Penal Tribunal. The question is: Will any banker be summoned to appear in front of the court? "It's up to international law experts to answer such questions," says Mr Galand. At any rate, in his view, international aid to Rwanda should no longer be used to repay Rwanda's debt - which should be frozen and the debt interests and arrears should be allocated for reconstruction programmes in the country. But can Rwanda afford to confront the international financing community?