Equatorial Guinea - Corruption
Teodoro Nguema Obiang’s latest legal battle took place 02 January 2017 in Paris, with the opening of a graft trial against him. The Equatorial Guinea vice president was not expected to be present and he pled not guilty to charges of corruption, money laundering and embezzlement of public funds. Still the trial was considered groundbreaking in France, a favorite haunt for African leaders with questionable fortunes.
On 13 June 2016. Yesterday the Republic of Equatorial Guinea instituted proceedings against the French Republic before the International Court of Justice (ICJ), the principal judicial organ of the United Nations, with regard to a dispute concerning “the immunity from criminal jurisdiction of the Second Vice-President of the Republic of Equatorial Guinea in charge of Defence and State Security [Mr. Teodoro Nguema Obiang Mangue], and the legal status of the building which houses the Embassy of Equatorial Guinea in France”
Equatorial Guinea lodged a formal complaint against France before the International Court of Justice (ICJ) in The Hague to halt the case against the Vice President on grounds of diplomatic immunity. The denial of this request by the ICJ on 08 December 2016 allowed France to pursue the case, which has already led to the seizure of assets in Switzerland, while the recognition of the property in Paris was binding under international law. The Vice President, who is accused of money laundering in France, has denied any wrongdoing and says that his wealth was acquired legitimately.
On 19 December 2016 the Republic of Equatorial Guinea has detained three employees of the French bank Société Générale de Banques en Guinée Equatoriale (SGBGE) for transferring confidential banking information to third parties outside the country. The information involved the private data of several high-ranking members of the Government of Equatorial Guinea, including the Vice President, Teodoro Nguema Obiang Mangue. Société Générale is a French multinational banking and financial services company based in Paris, where the Vice President has been accused of money laundering.
Wealth and power are in the hands of family kleptocracy. Or more precisely, a small group of about 200 people, including the president, his many children and parents, and from the Fang ethnic group, ruled the country since independence in 1968. The Fangs dominate all key positions in the country. Equatorial Guinea is consistently ranked among the world’s most corrupt, closed, and undemocratic societies in the world. It occupies the 168th position in Transparency International Corruption Perception Index, while Freedom House ranks it among the worst of the worst in terms of basic freedoms.
The low level of institutional development and peculiar financial management mechanisms may inflate perceptions of corruption in Equatorial Guinea (EG). Suddenly rich, the country's over-reliance on now-defunct Riggs bank, a lack of conflict-of-interest rules and a legacy of moonlighting further complicate EG's record. As in many other areas, Equatorial Guinea has a bad reputation when it comes to transparency and corruption. Numerous IOs/NGOs rate the country as one of the world's worst performers.
The lack of resources in its early days often led the government to compensate officials with in-kind transfers. Land, operating licenses and import concessions were common forms of "payment" to ministers and other ranking officials during a period when "there was often no money to pay salaries." The practice began with EG government seizure of "abandoned" Spanish colonial holdings -- and their subsequent redistribution to officials as a means of compensation. During the period of the "skinny cows," officials were only expected to be in the office three days a week. The remainder of the time they worked their farms or businesses in order to feed their families. During that period -- when local markets sold onions by the quarter, tomato paste by the spoonful, and the handful of taxis in circulation in Malabo required advance booking for use -- many Equato-Guineans energetically sought to avoid poorly-compensated government jobs. Some could not; especially those close to the president. Having himself come to power in a coup (one likely supported by outside forces) and constantly under threat of overthrow, he purchased loyalty by any means available.
Those private entrepreneurs who mocked their poor public officials now see the tables turned. Once oil money started to flow in the mid '90s, many officials found themselves in improved positions. Money and power accumulated within the government. In addition, the once-meager returns from the earlier in-kind compensation for officials mushroomed as the economy expanded at one of the world's fastest rates. For one example, the single license to import cement into country has become extremely lucrative. This license belongs to ABAYAK, a company partially owned by the president and first lady). In another, the only person authorized to provide notary services in Malabo became one of the country's wealthiest men.
In November 1993, a decree signed by President Teodoro Obiang Nguema Mbasongo, deposed the Ambassador of Equatorial Guinea in Spain, Bruno Esodo Ondo. The latter's wife, Anita Mbegono Asu Alene, head of the cousin of the State, had been found in possession of 32 kilos of cocaine in a suitcase as she tried to take, Brazil, a plane to Nigeria . The first secretary, in charge of press and the military attaché of the embassy were also dismissed. Members of the diplomatic mission had indeed been an extensive international network acting under the cover of diplomatic immunity, including the head, which was not worried him, Armengol Ondo Nguema is the brother of the president. According to the Spanish police the 32 kilos of cocaine were shipped by plane or boat from Nigeria to Gabon. The cocaine would then wins on light boats Equatorial Guinea to be embedded on the weekly flight Iberia Malabo connecting to Madrid. From there it is redistributed throughout Europe. Spanish police also reported that embassy officials have personally visited Thailand and Colombia to take delivery of drugs and other diplomats were arrested on the New York airports, Las Palmas and Lagos.
The list of diplomats of that country took the hand in the bag is long. To stick to the years ninety, October 8, l990, the Ambassador of Equatorial Guinea in France, Jesus Ela Abeme, was arrested for heroin trafficking, Santa Isabel airport in Malabo . His wife wore a bag containing 15 million CFA francs (300,000 FF). In 1991, Lieutenant Colonel David Eyama Angüe Osa, military attaché to Nigeria was caught with the cargo of a plane of Brazil's Varig, with 30 kilos of cocaine hidden in batteries for cars. After that Nigerians requested the waiver of diplomatic immunity, the President Nguema sent his eldest son, Teodoro, to negotiate with the Nigerian head of state himself, who was then General Babangida, for the release of his protege. Drug Police of Nigeria (NDLEA) then protested by insinuating that the military attaché in fact worked for the president of Equatorial Guinea.
In general, executives of Foreign Affairs were expelled from Spain, the Canary Islands and Nigeria for drug trafficking, are then appointed to important posts by the president. It seems that Equatorial Guinea is also a laundering center. Following the investigation into the trafficking of cocaine from Brazil, a French lawyer was jailed in December l992, for creating unauthorized bank (International African Bank), whose headquarters was to be installed in Equatorial Guinea. On July 20, l993, the Swiss police repressed the country, Guy Lansol, the French economic adviser to President Teodoro Obiang.
On July 15, 2004, the Senate Permanent Subcommittee on Investigations held a hearing entitled, "Money Laundering and Foreign Corruption: Enforcement and Effectiveness of the Patriot Act". This investigation into Riggs Bank exposed the truth about how Equatorial Guinea’s oil revenues flowed directly into the foreign bank accounts of President Obiang, his relatives, and a few government officials. The hearing and an accompanying report detailed how President Obiang and his family had been personally profiting from US oil companies operating in his country, established offshore shell corporations to open bank accounts at Riggs Bank here in Washington, and made large deposits, including cash deposits of as much as $3 million at a time, in transactions suggesting strongly that the funds were the proceeds of foreign corruption. In addition, over $35 million in oil proceeds were transferred to suspect offshore accounts. This misappropriation of oil revenues allowed one of the world’s most corrupt and nepotistic governments to monopolize the country’s businesses and service industry. As a result, the government or those closely aligned with it control the services that the oil and gas industries demand, including property rentals and sales, local employment, and the marketing of oil and gas inside the country.
The 2005 collapse of venerable Riggs Bank in Washington D.C. continued to hang over EG like a cloud. At the time of the Senate/OCC investigations, EG was discovered to have the largest cumulative balance in the bank. Yet study of the record shows the bank itself to have been at fault with regard to its reporting responsibilities, while the accounts associated with EG can be reasonably explained. Based on our conversations here, Equatoguineans readily accepted Riggs' advice regarding accounts and accounting -- assuming the bank was "acting properly." As the increasing flow of dollar-denominated oil revenues built up, and attractive interest income streams ensued (which was not always the case with EG funds held in the BEAC -- the Central African central bank), individuals associated with the EG government began to open private accounts. Both the amounts in the government accounts and those in individual accounts are easily in line with amounts generated respectively by oil revenues and private activities of those concerned. Recognizing the crippling human capacity challenges in the country and the need for western (particularly U.S.) education, the EG government even worked with the bank to set up accounts for two separate scholarship funds, which the bank (poorly) administered. EG leaders were "surprised" to learn U.S. government investigators took a dim view of this arrangement. After it was revealed that Obiang misused U.S. financial institutions to launder suspect funds, the State Department actually intervened on behalf of his regime in order to convince U.S. banks to open accounts for the Equatorial Guinean Government. After Riggs shut down the accounts used by him and his regime, the State Department approached reluctant U.S. banks and asked them to open accounts for the Obiang regime.
The president proudly notes he is the paymaster general for even routine expenditures. This mechanism probably helps constrain corruption, but it also creates suspicion and an obvious bottleneck. The quality of life for the average citizen in EG has seen a great leap forward in the past decade and, though surpassed by the gains of a greedy few, appears to promise enough to inspire continued patience. Also, as is demonstrated to the delight of the average citizen, heads occasionally roll when the president catches (or perhaps finds reason to catch) someone red-handed. For example, "el Jefe" has just changed a number of Justice system leaders while complaining that not enough is being done to constrain greed and corruption among officials.
President Obiang's oldest son Teodorin is alleged to have used his position to divert funds, with the help of several anonymous shell companies in the US, to purchase numerous luxury cars and a private jet, as well as a $30 million, 12-acre mansion in Malibu, where he incurred $100,000 in monthly maintenance and upkeep costs. Teodorin also owned a 101-room, six-story mansion in Paris, estimated to be worth $180 million, complete with a Turkish bath, a hair salon, two gym clubs, a nightclub, and a movie theater. Teodorin’s spending habits caught the attention of the U.S. Department of Justice (DOJ) and the French authorities, which believe that these items were obtained from the proceeds of corrupt activities in Equatorial Guinea.
It is not uncommon for a uniformed member of the police or security forces to stop motorists on the pretext of minor or nonexistent violations of the local motor vehicle regulations in order to extort small bribes. Visitors are advised not to pay bribes, and to request that the officer provide a citation to be paid at the local court or a receipt stating the violation, amount due, and the officer’s name.
Equatorial Guinea is almost exclusively a cash economy. The country has very few hotels that accept credit cards. Generally, credit cards and checks are not accepted, and credit card cash advances are not available. Most local businesses do not accept travelers' checks, dollars, or euros. However, dollars can be exchanged at local banks for Central African Francs (CFA). Cash in CFA is usually the only form of payment accepted throughout the country.
In recent years families made large down payments to the government to obtain affordable social housing. When completed, such homes were not released to many of the families who had made down payments, nor were their funds returned. The government instead provided the most desirable housing to families with strong political connections. Some families who made deposits were offered alternative housing, and others still awaited housing, with no means to reclaim their deposits or information on when or whether they might be granted a home.
Equatorial Guinea has not acceded to the United Nations Convention against Corruption, but at the interministerial meeting of 18 December 2013, the Government authorized the completion of the procedures and formalities related to the ratification of that Convention. Mechanisms derived from the Convention have nevertheless been set up at a national level, and serve as valid instruments in the fight against corruption. Since 2012, corruption has been considered a constitutional offence under article 15.2 of the Constitution. Many civil servants have, however, been tried and sentenced for their involvement in acts of corruption and corrupt practices defrauding the public purse for a number of years. Decree No. 131 governing national economic and financial policy stipulates the requirement to “put an end to illegal tax collection”, which is in the process of being achieved. The order is effectively self-explanatory: to eliminate ministerial accounts that are outside the purview of the public treasury, as well as the once widespread behaviour of certain civil servants, which involved receiving contributions, taxes and excise duties not provided for by the legislation in force.
In April 2014, the Government had decided to send the United Nations Convention against Corruption to the national Committee on Political Affairs in order to obtain its opinion. The Commission of Jurists had already decided to suggest that that instrument should be signed, but had reservations regarding the Rome Statute of the International Criminal Court.
During the year 2015 President Obiang dismissed all presidentially appointed members of the government in an effort to reduce corruption; he made new appointments and urged an end to corrupt practices. Nevertheless, the president and members of his inner circle continued to amass personal fortunes from the revenues associated with oil exports. In January 2015 a member of parliament was found guilty in a foreign court for bulk cash smuggling. Media reported bulk cash smuggling by high-level members of the government, including an attempt to send containers of cash to Sao Tome and Principe. There were no reports of any official investigations.
During the year 2015 police officers and military personnel increased neighborhood sweeps and checkpoint and traffic stops to demand bribes, primarily from foreigners. Authorities seldom investigated such incidents, and the government had no mechanism to denounce police misconduct. Individuals feared filing complaints, especially foreigners whose applications for residence and work permits remained pending. In June 2015 the president swore in an ombudsman to take such complaints, but the Office of the Ombudsman was not operational at the end of 2015.
France continued to pursue seizure of real and personal property of Obiang Mangue, the president’s eldest son and second vice president, as the result of a 2010 investigation into suspected concealment and laundering abroad of embezzled public funds. In an October 2014 settlement with a foreign government, Obiang Mangue was forced to sell a $30 million mansion, a Ferrari automobile, and various items of Michael Jackson memorabilia. The settlement required that an estimated $20 million of the proceeds be given to a charitable organization for the benefit of the country’s citizens and the forfeiture of $10.3 million to the foreign government.
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