Earlier this year, the Houston Chronicle reported that Kase Lawal, a rich Houston businessman appointed by Barack Obama to a FTC committee, had become enmeshed in an illicit scheme to smuggle several tons of gold out of the Democratic Republic of the Congo in 2011. What caught the eye wasn't so much the smuggling—people have plundered Africa's mineral resources for centuries—but the name of the guy doing the enmeshing: Dikembe Mutombo. The former NBA star brought the gold proposal to Lawal and convinced him to put up millions of dollars for what looked like an easy flip job. Get the gold on the cheap. Get it out of Africa. Sell it for three times the price. Things didn't quite go as planned.
The Chronicle did a fine job reporting the story, but Armin Rosen has now written a top-notch account of the incident for The Atlantic with some new details. I've extracted the most interesting bits.
On December 2, 2010, Mutombo gathered a small group of men in a New York City hotel. He told them of an opportunity that could earn up to $20 million in a matter of weeks. His main audience was Kase Lawal, the CEO of Houston-based energy company CAMAC, and Carlos St. Mary, a former West Point football player and a trader in West African diamonds. Mutombo asked them to put together $10 million to buy, from dealers in Kenya, an unusually large amount of gold: 4.5 tons. That haul could be worth three times as much if Mutombo, Lawal, and St. Mary could arrange for it to be transported out of Africa and re-sold on the international market.
Mutombo, though a humanitarian, presented this purely as an investment. The retired basketball star is also the titular CEO of the Mutombo International Group, a small outfit that mostly invested in retail around Atlanta. The gold must have seemed like an irresistible opportunity.
Mutombo told Lawal and St. Mary that the Congolese gold was in a village in Kenya, where members of his wife's family were watching over it. To bolster his pitch, Mutombo even brought a powerpoint presentation, which The Atlantic obtained. I don't know about you, but if a former NBA star came to me asking for $10 million to buy nearly five tons of gold in Africa and he showed me even one of the following slides, I would run as fast as I could out of the room. I would run, most likely, to an attorney. Because this is nothing but a 419 scam with clip art:
Good lord:
No, just, no:
Good enough for some, apparently:
Lawal immediately sent St. Mary to Nairobi on a private jet, where David Kapuadi introduced him to the mysterious "partners" from Motumbo's PowerPoint presentation: Eddy Michel Malonga, who was named as the gold's owner on a Kenyan export form, and a man who introduced himself only as "Benoit."
Ah, Benoit. You know Benoit. He was the get-rich-quick guy in high school. Except that in Africa, he might also be a counterfeit gold smuggler named Yusuf Omar, according to the UN report that prompted the Houston Chronicle's original story. The same report said that Malonga is part of a Kenya-based counterfeit gold ring. The gold, it turned out, wasn't even in Kenya. It was still in eastern Congo. No problem. St. Mary gave Malonga and Benoit $5 million in Lawal's money. To help with procurement, St. Mary also had export forms given to him by Mutombo's nephew, Reagan Mutombo. The forms stated that the gold came from the Goma region of eastern Congo. That's not where you want your gold to come from:
In September of 2010, DRC President Joseph Kabila had imposed a domestic ban on mineral exports from the Congo's eastern provinces, the point of origin for so-called "conflict minerals," natural resources extracted from squalid mines whose mineral yields fund militia activity in the region. [...] It is also possible that Mutombo and Lawal either didn't know about the ban, or knew about the ban and simply didn't care. And it's possible that all the documentation, which also included a Kenyan "certificate of ownership" establishing Malonga as the gold's true owner, was simply forged. "Every damn thing they had was fake," St. Mary claims. "But it looked official."
Lawal sent St. Mary to Goma with the rest of the $10 million. When he arrived, he was met by soldiers from the Congolese army under the control of General Bosco Ntaganda, an infamous warlord indicted by the International Criminal Court for using child soldiers. Ntaganda runs eastern Congo like a mafia fiefdom. He summoned St. Mary and his group to a hotel:
"When we get to the hotel the yard is littered with soldiers and [Ntaganda] comes in looking like Crocodile Dundee with a bolo collar and a leather hat and vest on," recalls St. Mary. Ntganda announced that he was the actual owner of the gold they had come to buy, and that the exchange would take place at the Goma airport the following morning.
St. Mary realized that his chances of leaving the country with four tons of gold were fading. "I told Bosco, you took almost five million from us in Nairobi. We don't have one gold bar. Give me just one reason to trust any of you in this room," says St. Mary. "And he looks me in the eye and says, 'We didn't kill you this morning.'"
Anyone starting to wonder if this deal is on the level? But wait, there's more: Ntaganda sent his men to Lawal's plane and took a suitcase filled with $3 million of the remaining $5 million. The next day, customs officials seized Lawal's plane and took the other $2 million. When asked to produce the suitcase a few days after that, Ntaganda gave the customs officials a bag with $3 million in counterfeit bills, "printed on yellow copy paper, with all bills having the same serial number."
Huh. How'd those get in there?
Neither Lawal nor Mutombo has really commented on this episode. And it's hard to assess the culpability of the parties involved. Lawal was clearly the mark. Benoit, Malonga, and Ntaganda appear to have been orchestrating the con. Was Mutombo's family helping? It seems so. How about Mutombo? At best, he looks like a dupe. But such is the price of greed. In a rather fitting twist, the legal expenses associated with the snafu have cost Lawal nearly $30 million, which is right around the amount for which Mutombo said the group could sell the gold once they'd whisked it out of Africa.
The Warlord and the Basketball Star: A Story of Congo's Corrupt Gold Trade [The Atlantic]