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A Macedonian bank released $48 million in frozen funds after Uganda’s chief prosecutor gave assurances that the payments in question were above board.

But documents recently obtained by the Sentry, a branch of a nonprofit group that investigates corruption in East Africa, appear to show that the funds were embezzled from South Sudan’s public coffers and should have remained in the lender’s custody.

Nearly a decade ago, on the verge of their country’s formal secession from Sudan, South Sudan’s government in waiting decided to buy a mobile radar system and, in the absence of robust financial controls, transferred $65 million to a Ugandan firm reportedly owned by one of their highest-ranking generals, Bior Ajang Duot, to manage the purchase.

On Dec. 23, 2009, Duot’s company, Cascade Construction, wired $30 million to Airservices, a Macedonian aviation firm, ostensibly to pay for the radar, and sent another $25 million the following February, according to a report published by the Sentry this month.

Most of the funds moved through New York and other jurisdictions before arriving in Macedonia, where the aviation firm’s bank froze them, only to unfreeze them a year later after Kiddu Makubuya, who at the time served as Uganda’s justice minister as well as its attorney general, intervened in a letter obtained by the nonprofit.

The Sentry’s report, which cites Makubuya’s letter, interviews and other official correspondence, does not identify the banks involved in the alleged scheme.

On Feb. 14, 2011, a day after the bank unfroze another $18 million, South Sudanese officials notified Macedonia in a letter of their own that the radar equipment they bought more than a year earlier never arrived.

Makubuya left the Ugandan government in 2012 amid allegations of his involvement in a separate corruption scandal.

There is no indication that Macedonian authorities knew of Makubuya’s alleged corruption at the time of the transactions, but the red flags raised by the deal on their own should have precluded any order to unfreeze the funds, J.R. Mailey, director of investigations at the Sentry, told ACAMS moneylaundering.com.

“It involves a senior politically exposed person operating from a country known for public corruption, and in a high-risk sector,” Mailey said, adding that several questions tied to the case remain unanswered. “For example, why did a company owned by a senior South Sudanese general receive $65 million in the first place?”

The funds that arrived in Europe originated from the Ugandan branch of “a major international bank,” Mailey said.

Many of the transactions that underpinned the scheme showed the same originators and beneficiaries, occurred over a short period of time and in round-dollar amounts, and did not appear consistent with Cascade Construction’s business model, according to the report.

The Macedonian bank appears to have released only $48 million of the $55 million it received from Cascade Construction. The report does not indicate what happened to the remaining $7 million in Macedonia nor account for the $10 million that Cascade Construction appears to have kept in Uganda.

South Sudanese authorities suspect that some of the funds were used to buy vehicles and property in Uganda and that other portions were withdrawn in cash, according to the Sentry.

When the deal reportedly occurred, the EU maintained an embargo against South Sudan that barred Europeans from selling military equipment to the country or providing “brokering services, financing or financial assistance, whether directly or indirectly” to facilitate those sales.

Questions over the source of funds and potential use of the radar system for military purposes alone should have compelled the Macedonian bank and government to trace the previous legs of the transfers and learn more about the originators, or at least wait for confirmation of delivery, said Nathalie Baudry, founder of ComplHigher, a consulting firm in Paris.

“Relying on a letter, even when accompanied by telephone discussions, is a mistake,” Baudry said. “Such a document is clearly not sufficient to put an end to the suspicion, even if it had been written by the attorney general of a country considered safe in terms of financial crime.”

Contact Gabriel Vedrenne at gvedrenne@acams.org