The U.S. Department of Justice filed a 118-page lawsuit this week regarding the alleged corrupt practices of Teodoro Nguema Obiang, son of the President of Equatorial Guinea. The lawsuit, among other things, requested that a U.S. judge confiscate many of Obiang’s lavish possessions because they were obtained using the proceeds of alleged corruption. The DOJ’s investigation discovered strong evidence that the Obiang family participates in an array of illicit activities, such as accepting and requiring bribery payments, logging public forests for personal profit, and laundering money through U.S. financial institutions and shell companies.
Four NGO’s, including Human Rights Watch, Oxfam America, Open Society Foundations and Global Witness, met with President Obiang to discuss the allegations June 15th. In response to the allegations as well as widespread national corruption and human rights abuses in Equatorial Guinea, the four organizations unanimously pushed for the President to reform the country’s weak laws, subsequently closing the door on future abuses comparable to those alleged of him and his family. The following is taken from an article from The Independent on the lawsuit,
As recently as last year, when the US government launched a very public bid to claw back money laundered through its financial system by crooks and corrupt foreign politicians, Obiang was able to spend some $7,620,452 on himself. Purchases chronicled by the lawsuit include a $1.2m Piaget watch, a $532k Ferrari, and $494k on dozens of items of Jackson’s former belongings, which were sold at auction in California.
Between 2004 and 2011, his combined expenditures totalled $314m, the lawsuit claims. That’s more than four thousand times his official salary. “This document is a potential smoking gun, which suggests that systemic corruption has been occurring for nearly two decades,” said Joseph Kraus of EG Justice, an international human rights group which campaigns for reform in Equatorial Guinea.
“It details the names of companies that were allegedly asked to pay bribes or other illegal ‘fees’ for the right to do business in the country. And it implicates Teodorin [Mr Obiang’s nickname], who many believe is being groomed to succeed his father as president, in brazen corruption and money laundering schemes designed to finance an extravagant lifestyle.”
So how could Teodorin live the high life in America for so long under the radar? With his abnormally high expenditures, low official income, and huge cash deposits into U.S. bank accounts, one would expect more red flags to pop up.
Teodorin was able to stay afloat in the States for a long time prior to the investigation because of his use of shell companies. According to a report by the U.S. Senate Subcommittee on Investigations, Obiang was able to launch dozens of these shell companies in the U.S. to launder the illicit proceeds from Equatorial Guinea’s timber and oil industries, with the help of two pricey Beverly Hills Lawyers. In the mean time, the people of Equatorial Guinea have been suffering abject poverty with no signs of getting better.
This should not be allowed to happen. The United States boasts a strong reputation of global stewardship, helping nations with governance improvements, peace keeping efforts, and developmental aid assistance, among other things. But the U.S. has fallen short within its own borders. Creating shell companies in the U.S. should not be an option.
Senator Carl Levin introduced the Incorporation Transparency and Law Enforcement Assistance Act in 2009 which, if passed, would require information about the beneficial owners of all U.S. companies be available in public registries. This would eliminate the anonymity (the key ingredient for shell companies) that can currently exist by not listing who the actual financial beneficiary of the company is.
The United States has no reason not to take the lead in curtailing these illicit activities. Being enablers for people like the Obiang family (who are a small portion of a very large problem) allows bad things to happen. Good governance and rule of law are undermined, countries are stripped of their resources, and global corruption thrives. This is certainly not the American way.
Disclaimer: Unless specifically stated to be the views of the Task Force, the opinions expressed on this blog are solely the opinions of the individual blogger and are not necessarily those of the Task Force on Financial Integrity & Economic Development.