Ask the Expert: Q&A with Grand Corruption and Financial Crime Investigator John Dell’Osso

The Sentry is an investigative and policy team that follows the dirty money connected to African war criminals and transnational war profiteers and seeks to shut those benefiting from violence out of the international financial system. As part of our ‘Ask the Expert’ series, we ask senior investigator John Dell’Osso about The Sentry’s recent investigation, Overt Affairs, which uncovered sanctions busting in North Korea.

What is it like working for an organisation like The Sentry?

In two words: thrilling and dispiriting. I say thrilling because that’s what it is for me to trace financial crimes and uncover secrets. It’s dispiriting because at times you’re finding things that are demonstrative of unchecked corruption. That kind of behavior should result in consequences for the persons committing the acts in question, but that isn’t always the case. That’s why we do this kind of work: to expose wrongdoing and push those with the requisite power and authority to act.

How did you become a lead investigator?

In brief, through persistence and a thoroughgoing focus on facts. In my experience, you also need a good sense for where to direct your efforts. That would be like an instinct, if you want to call it that. For example, you might discern a pattern in the information you have and then use that pattern as a means of obtaining yet more information.

Can you tell us a little bit about the latest Overt Affairs investigation?

With pleasure! We identified a North Korean company that was operating in the Democratic Republic of Congo that had obtained a US dollar account and won contracts from government authorities, all while brushing past some powerful political figures in the country. Those activities constitute apparent violations of sanctions implemented by the European Union, the United Nations, and the United States. In the context of the international community’s stringent pressure campaign on North Korean government finances, it was compelling to see that this company could engage in many types of prohibited behavior without employing any real subterfuge.

How long did the Overt Affairs investigation last?

This was not a typical case in more than one way. First, it was trickier than we anticipated to track the North Korean firm in question. Some of the usual tools and tricks we’ve employed when investigating shell companies and fronts just didn’t pan out. We took a lot of long pauses to think about how to proceed, which also gave us time to work on other projects. Second, the pandemic created serious disruption for us. Between those two factors, we probably spent about ten months working on Overt Affairs in an episodic way.

How were The Sentry’s recommendations received after the investigation?

I would say they were received quite well. The actions we proposed are not controversial and would only serve to strengthen previously identified diplomatic, security, and counter proliferation objectives. We’re confident that the recommendations—and the findings more broadly—are being taken seriously, and we hope that governments, banks, and law enforcement take concrete action.

Do you believe sanctions are successful in acting as a deterrent?

Well, that’s an interesting question. I would propose that, instead of acting as a deterrent, perhaps we should see them as one part of a host of financial and diplomatic pressures that help build the leverage needed to exact concessions or changes in behavior from adverse actors. Too often, sanctions are used as a policy unto itself, instead of as one part of a multi-pronged, multilateral strategy. Sanctions are often only as strong or effective as the policies they intend to support.  

For some designated individuals and entities, and this has certainly borne out in a number of investigations, sanctions probably just serve as a starting point for devising new methods of doing business. I think it’s better to look at the other end of the equation: enforcement. My colleague at The Sentry, Megha Swamy, wrote a really interesting piece for Just Security about that subject. How effective can “maximum pressure” sanctions be if there’s an entire segment of the front line against financial crime that isn’t effectively enforcing them? The sanctions become a lot of sound and fury signifying something less than the maximum.

Which countries do you think use sanctions most effectively?

The United States has the most potent tools of financial pressure and the most sophisticated ability to impose sanctions. It has been at the cutting edge of using these tools as a key component of foreign policy. The recent unilateral, politicized use of the tool, however, is concerning and could undermine the credibility and effectiveness of sanctions more broadly.

In the end, sanctions are often only as effective as their implementation. So it is important to pay attention to these other actors in third countries who are really at the front line of sanctions enforcement. They may just need some technical assistance to reduce the manoeuvring space available to would-be sanctions evaders. It’s a much better approach than getting mired in the sanctions enforcement variant of the streetlight effect. That is, you end up only focusing on the sanctions evasion activities that you can observe directly while all this other behavior is playing out in your blind spots.

What are the main loopholes in sanctions you see exploited?

One of the benefits of this report is that it highlights discrete gaps in enforcement, some of which can be addressed with basic fixes. For example, government agencies can ensure that corporate registration documents differentiate between South Korean and North Korean nationalities, each of which clearly has a completely different profile in terms of sanctions risk. As we note in our report, the primary dramatis personae—the two North Korean businessmen—had their nationality marked down in registration documents as “Korean” or using the generic identifier “KR,” which may also be applied to South Korean nationals.

About John Dell’Osso, Senior Investigator at The Sentry:

John is a senior investigator at The Sentry where he focuses on grand corruption and financial crime linked to the Democratic Republic of Congo. His background is in investigating illicit financial flows, auditing, market intelligence, and the national security implications of corruption. John led The Sentry’s recent investigation, Overt Affairs, exposing how North Korean businessmen busted sanctions in the Democratic Republic of Congo.