Background

A new federal advisory is advising U.S. businesses and individuals operating in Sudan and the surrounding region to undertake increased due diligence related to human rights issues and be aware of the potential reputational risks of conducting business activities and/or transactions with state-owned enterprises and military-controlled companies. U.S. businesses and individuals should also take care to avoid interaction with any persons on the Specially Designated Nationals and Blocked Persons List.

The advisory notes that the U.S. government is not seeking to curtail or discourage responsible investment or business activities in Sudan with civilian-owned Sudanese counterparts.

The advisory, issued by the departments of the Treasury, State, Commerce, and Labor, highlights risks associated with conducting business with Sudanese SOEs, which includes all companies under military control. SOEs and military-controlled companies play an unusually large role in the Sudanese economy, the advisory states, and are currently involved in a range of commercial activities, including fuel storage, natural gas projects, solar panel manufacturing, infrastructure, the railroad sector, cotton and textiles, and food, including flour milling, bread production, and animal husbandry. SOEs and military-controlled companies also control much of the gold trade in Sudan, which is linked to child labor and the use of mercury for refinement, as well as gold exports.

Though Sudan’s military has long controlled a network of entities, the advisory states, following its seizure of power in October 2021 it is in effective control of all SOEs. Further, Sudan’s military is increasing its direct control of Sudan’s many SOEs and plans for civilian control over SOEs has been abandoned.

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