Lesson Learned: What Equatorial Guinea's Minister of Forestry Has Taught the World

February 3rd, 2012

This week, the lawyers of Teodoro Nguema Obiang, the son of Equatorial Guinea’s longtime President, released a statement calling the Obama administration’s seizure of $71 million worth of assets a “character assassination.”

In October of last year the U.S. Department of Justice (DoJ) unsealed an asset forfeiture claim against many of Obiang’s U.S. held assets, including a $38 million Gulfstream private jet, a $35 million Malibu mansion, a Ferrari, and dozens of pieces of memorabilia of pop singer none other than Michael Jackson, which are worth about $2 million. Authorites seized many of these items, although they still haven’t been able to get custody of the plane. The DoJ filing claims Obiang derived the assets from “the misappropriation, theft, or embezzlement of public funds by or for the benefit of a public official.”

Given Obiang’s salary of $82,000 as Equatorial Guinea’s Minister of Forestry, it seems rather unlikely that the funds could have come from anywhere else. Obiang himself has vaguely—and insultingly—explained “I have been very lucky in business…and I like to live well.” His lawyers, who are perhaps a bit more astute, have claimed he “was granted a 20-year concession to harvest timber in the country in the mid-1990s and that made him a ‘very wealthy man’ by 2005 when he bought most of the assets.” I’d like to see the data on those numbers.

Here are some facts. Equatorial Guinea is a coastal Middle African nation that is simultaneously one of the continent’s smallest and wealthiest countries, in large part because it holds Africa’s largest oil reserves. Yet the country’s enormous wealth is concentrated in the hands of the government and the ruling elite. As a result over 75% of the population lives below $2 per day, 35% of its citizens do not live past the age of 40, and nearly 60% do not have access to safe drinking water.

It is laudable that the DoJ and the Obama administration have taken such a hard line with Obiang. As Raymond Baker, director of Global Financial Integrity, has pointed out “[T]he United States is sending the message that it will no longer harbor the illicit assets of corrupt foreign officials.” I’m quite sure Obiang, and kleptocrats across the world, heard DoJ’s message very loudly and very clearly when officials seized $70.8 million in real and personal property.

But unfortunately the seizure does not address some of the systemic deficiencies in the international—and indeed, even the U.S.—systems that allow foreign officials to hide and launder the proceeds of corruption. The deficiencies in the international system are many. Some are broad and enormously complex, like international energy markets, which of themselves encourage corruption through opacity and politics. Some analysts suspect the U.S. government ignored corruption in Equatorial Guinea for so long because “Chevron, Marathon Oil and Noble Energy have substantial interests in Equatorial Guinea, onshore and off.” Other deficiencies include financial opacity in offshore jurisdictions, which facilitate money laundering, and the failure of our own banks to perform due diligence when handling the assets of foreign leaders.[1]

As Mark Vlasic, a law professor at Georgetown University, and the former head of operations of the World Bank’s Stolen Asset Recovery Initiative, has pointed out: “Grand corruption isn’t just a local problem, it’s an international one, and oftentimes involves multiple jurisdictions.” I hope Obiang can continue to be a lesson to us. If any good has come of all this, it’s that his high-profile corruption case has exposed the severe limitations of our international system. But it is the people of Equatorial Guinea who continue to pay the price of the world’s collective failure.

[1] Take this case. In the mid-1990s Riggs National Bank opened and handled 60 accounts for Obiang and his family members.  The bank handled six cash deposits to the president’s account, totaling $11.5 million.  The senior Riggs official overseeing Obiang’s account even hauled suitcases stuffed with cash into the bank for deposit.  At no point did this bank file a Suspicious Activities Report, as required by law. Finally, in 2004, a Senate panel caught on and Riggs Bank was fined more than $25 million for its crimes and several of the bank’s directors were criminally prosecuted.

Despite the fact the State Department is legally obligated to deny visas to foreign officials for whom there is credible evidence of corruption, Obiang’s family continued to travel freely to theUnited Statesfor nearly two decades.

Written by Ann Hollingshead

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