Obiang’s American Enablers

For more than a decade, the dictator of Equatorial Guinea and his family members have spent enormous sums of money in the United States on real estate and extravagant purchases at stores like Dolce & Gabanna and Louis Vuitton. In late October, the American government finally acted to halt the collective shopping spree of President Teodoro Obiang Nguema’s inner circle when it filed a civil asset forfeiture complaint seeking to take possession of tens of millions of dollars in assets owned by his son and heir apparent.

The complaint, filed by the Justice Department and U.S. Immigrations and Customs Enforcement (ICE), said that the son, Teodorin, who is the country’s minister of forestry, had used money laundered into the United States to buy a $30 million estate in Malibu, a private plane and assorted Michael Jackson memorabilia, including a “white crystal covered ‘Bad Tour’ glove.”

It further alleged that high officials in the Obiang regime had “gained enormous wealth” through methods that included “extortion and misappropriation, theft, and embezzlement of public funds.” In announcing the action, Assistant Attorney General Lanny Breuer said, “We are sending the message loud and clear: the United States will not be a hiding place for the ill-gotten riches of the world’s corrupt leaders.”

The basis of the Obiang regime’s wealth is oil, most of it pumped by American firms like ExxonMobil and Amerada Hess. With an estimated output of about 300,000 barrels per day, Equatorial Guinea has emerged as the third-largest energy producer in sub-Saharan Africa. The Justice Department’s action – which comes after two U.S. Senate reports since 2004 that detailed the Obiang clan’s wholesale theft of oil revenues — confirmed the regime’s reputation as one of the world’s most corrupt.

What’s less often noted is that the regime’s corruption has been facilitated and explained away at every step of the way by enablers in the United States: energy firms that enriched Obiang by cutting him in on sweetheart deals; bankers and accountants who helped the clan launder its money; highly-paid lobbyists who crafted propaganda aimed at winning political support in America; and even dubious pro-democracy groups that — with oil company funding – sent observers to Equatorial Guinea and vouched for rigged elections.

Most of the regime’s enablers didn’t do anything illegal, as far as what’s known, but they were all happy to provide the Obiang regime with political protection. Obiang’s financial intermediaries, however, face potential legal as well as  ethical scrutiny.

“Grand corruption isn’t just a local problem, it’s an international one, and oftentimes involves multiple jurisdictions,” said Mark Vlasic, a law professor at Georgetown University, who previously served as the head of operations of the World Bank’s Stolen Asset Recovery Initiative.

“Corrupt officials don’t use PayPal accounts to move large sums of money,” Vlasic said. “They need people to assist them, and their facilitators should also be held accountable for any crimes they may have committed.”

Even today, Teodorin is still able to get top-notch help in the United States to guide him through his thicket of problems. Attorneys from such blue-chip firms as Cleary Gottleib are on hand to sort out his legal problems.  He and his father’s government retain a leading Washington PR firm to burnish their image. And court papers and interviews conducted by 100Reporters show that Teodorin employs American intermediaries to establish companies for him, handle financial transactions and act as straw buyers on his behalf.

Until the 1990s, neither the U.S. government nor anyone else paid much attention to Equatorial Guinea. It was one of the most isolated, impoverished countries in the world and Obiang, who seized power in a 1979 coup, was an international pariah.

That all changed early in the decade when Walter International, an independent Texas-based firm, began operating a small natural gas field. To win favor with the regime, Walter (which scored a cool $46 million when it later sold its stake in the country) paid for Teodorin to attend an English as a Second Language course at Pepperdine University in Malibu. To its subsequent regret, Walter agreed to cover Teodorin’s living expenses, which over five months – at which point he dropped out – came to roughly $50,000 and included shopping excursions in Beverly Hills and a rented suite at the posh Beverly Wilshire Hotel.

Walter International’s entry into Equatorial Guinea was negotiated by then-U.S. Ambassador Chester Norris, who maintained a friendly relationship with the Obiang regime. After retiring as ambassador in 1991, he took a job as the personal representative of Walter International’s president.

The Obiang government was so fond of Norris that it named a street for him in an exclusive suburb for foreign oil executives. Despite Obiang’s well documented record of political repression, Norris  told 100Reporters that he believed that Obiang to be a “well-intentioned” leader at the time. He acknowledged that Obeying had not done enough to help the poor, and “should be building houses, schools and hospitals.”

The real feeding frenzy at the Obiang trough began in the mid-1990s, after American companies discovered large oil reserves in Equatorial Guinea’s offshore waters. The timing was unfortunate from a diplomatic standpoint because just months earlier the U.S. had closed its embassy in Malabo, the country’s capital. That step was taken in part because Norris’s successor, John Bennett, had been far less indulgent of the regime’s excesses and had received death threats due to his criticism of its human rights abuses.

Oil companies went to bat for Obiang in the hopes of improving ties with the U.S. In 1996, prior to its merger with Exxon, Mobil helped pick up the costs for a team of election observers sent by the International Foundation for Election Systems (IFES) to attend the first presidential balloting under Obiang. IFES’s board at the time included Peter G. Kelly, a lobbyist who represented the Obiang regime. IFES criticized the election – Obiang claimed about 98 percent of the vote — but not as harshly as independent foreign observers. The following year it sent a team to Equatorial Guinea, which concluded that even though there were problems in the country, there existed “opportunities for the government, the political parties, and the international community to work together to increase the democratic space.”

Four years later, Mobil hired a non-profit group called the Institute for Democratic Strategies to send observers to municipal elections. Independent monitors harshly criticized the results, but the oil-industry backed team reported it to be basically free and fair.

Also in 2000 Louisiana Representative William Jefferson led the first-ever congressional delegation to Equatorial Guinea, where he was greeted effusively by the government and given a key to the city of Malabo. Nine years later, Jefferson (popularly known in his home state as “Dollar Bill”) was sentenced to thirteen years in prison on counts that included bribery and conspiracy to violate the Foreign Corrupt Practices Act, and which were tied, in part, to his efforts to help companies win oil concessions in Equatorial Guinea.

It was around this time that American oil companies began producing large amounts of oil in Equatorial Guinea, and the country emerged as an important energy ally of the U.S. This led to a slow but steady political thaw in Washington-Malabo relations, prompted by an intense lobbying campaign paid for by Amerada Hess. The campaign’s coordinator was K. Riva Levinson, who had previously worked for the Obiang regime along with Kelly.

“Most of the oil and gas concessions awarded in Equatorial Guinea to date have been awarded to U.S. firms,” Levinson said in a 2001 memo to the Bush administration. “This is in stark contrast to neighboring countries in the region, where the United States has consistently lost out to … [European] competitors.” Soon afterward the administration announced it would reopen the embassy, a process concluded in 2003.

Meanwhile, Equatorial Guinea was depositing hundreds of millions of dollars in oil revenues at Riggs Bank in Washington, in a state account that was effectively controlled by Obiang. Riggs also opened up dozens of personal accounts for the president and his relatives, some of them offshore. “Riggs …turned a blind eye to evidence suggesting the bank was handling the proceeds of foreign corruption, and allowed numerous suspicious transactions to take place without notifying law enforcement,” concluded a 2004 Senate investigation.

Riggs assigned senior vice president Simon Kareri to the Obiang family as its private banker. As part of his duties he raised the daily limit on the first lady’s debit card to $10,000 to accommodate her shopping plans when visiting the U.S. “The $2,500 limit is insufficient for her needs,” the banker wrote in a memo obtained by the Senate.

Kareri, now deceased, helped the president buy two mansions in Potomac, Maryland for about $4 million in cash. . He also assisted Obiang’s brother, Armengol Ondo Nguema, in buying a $349,000 Virginia townhouse in 2000.  A State Department report on human rights violations in Equatorial Guinea the previous year said that Ondo Nguema, who at the time headed the country’s security apparatus, had directed his men to urinate on prisoners, slice their ears with knives and smear oil over their naked bodies to attract stinging ants. “Mr. Armengol Ondo Nguema is a valued customer of Riggs Bank,” Kareri wrote to the seller’s agent in the townhouse deal, in a letter that guaranteed that the security chieftain had sufficient funds to pay for the property.

The Senate also found that American oil companies made millions of dollars in payments to Equatorial Guinea’s inner circle, which “may have contributed to corrupt practices.” ExxonMobil gave President Obiang a fifteen percent stake in an oil trading business for a mere $2,300. Within six years his holding had increased in value by 280 times. Both ExxonMobil and Amerada Hess hired Sonavi, a private security firm headed by Ondo Nguema, the torturer. Amerada Hess paid government officials and their relatives more than $2 million to lease properties in Equatorial Guinea, of which about one-quarter went to a 14-year-old boy, who was a relative of Obiang’s, in a deal signed in 2000.

The Senate report proved to be highly embarrassing to Equatorial Guinea and its American friends. Riggs was later hit with a $16 million fine for violations of the Bank Secrecy Act and was sold to PNC Financial Services. Oil company executives were called to testify at a hearing about the report, where Senator Carl Levin told them, “I don’t see any fundamental difference between dealing with an Obiang and dealing with a Saddam Hussein.”

Andrew Swiger, and ExxonMobil executive, told the committee that in Equatorial Guinea, “many businesses have some family relations with a government official, and virtually all government officials have some business interests of their own” and that it was “virtually impossible to do business…without doing business with a government official or a close relative of a government official” ExxonMobil and Amerada Hess told Senate investigators that Sonavi had a monopoly on security services, leaving them no choice but to employ the firm.

The Senate report didn’t prevent the Obiang clan from recruiting additional American enablers, especially Teodorin. Though some banks refused to open accounts for him, he hired Michael Berger and George Nagler – a Los Angeles-area bankruptcy lawyer, and Beverly Hills attorney specializing in estates and trusts, respectively — to set up shell companies and bank accounts that Teodorin controlled but in which his name was hidden. He used one of these companies, Sweetwater Malibu, Inc., to buy his Malibu estate. For another short-lived shell company, Sweet Pink, he appointed as president and CFO the rapper Eve, whom he dated for a time.

Teodorin hosted an annual party at his estate that he called the “Nguema Summer Bash,” which Berger attended in 2007. “Thank you very much for inviting me to your party and for being so nice to me,” the attorney wrote in an email to Teodorin the next day. “The food was great, the drinks were better than great, the house, the view, the DJ, the white tiger were all SO COOL!”

The following month Teodorin arranged for Berger to attend the “Kandy Halloween Bash” at the Playboy Mansion, which advertised “Body-Painted Models,” “Go-Go Dancers,” and “1,000 hand-picked Kandy Girls in the sexiest costumes.” This prompted another fawning email from Berger to Teodorin. “I had an awesome time,” he wrote. “I met many beautiful women…If the word gets out that you are looking for a bride, women all over the world will go even more crazy for you.”

Nor did Obiang’s flagrant corruption and violations of human rights keep Washington lobbyists and PR handlers from working for him, just so long as they were paid well. One of the regime’s hires was Lanny Davis, the former special counsel to President Bill Clinton and preeminent Washington bottom-feeder, whose other clients have included supporters of the 2009 military coup in Honduras and Laurent Gbagbo, who was forced from power earlier this year in the Ivory Coast.

In an amusingly ironic recent development Davis, who had an annual contract for $1 million, sued his former client for stiffing him for fees and expenses.

The initial U.S. Justice Department/ICE investigation into Teodorin’s American activities was made public, through a story I wrote in 2009. Documents from the investigation alleged that he had supplemented his modest ministerial salary of $5,000 per month with a “revolutionary tax” on timber, which he demanded international logging firms pay to a forestry company he owned. Last year another Senate report detailed the activities of Berger, Nagler and other professionals who worked for Teodorin, and showed how he had funneled more than $100 million into the United States through his shell companies.

Even now,  100Reporters has discovered,  Teodorin is still able to employ Americans to help him handle his financial and corporate affairs. In addition to the high profile firms still at his beck and call, Obiang fils retains the services of a little known Los Angeles area accountant named  James McCaleb.  According to his website, McCaleb – who operates out of a business center in Pasadena and also has an office in Honolulu – and his firm help clients “concentrate all of your resources on what matters most; increasing revenues and reducing taxes.” McCaleb, who has incorporated several limited liability companies used by Teodorin, failed to return a phone call or email seeking comment for this story.

The government’s asset forfeiture complaint alleges that an unnamed intermediary in Los Angeles helped Teodorin buy his Michael Jackson memorabilia by registering for him to bid at live auctions in Beverly Hills and China.

In the case of the latter, the intermediary sent an email to the auction house that said, “Please make sure that Teodorin’s name does not appear anywhere, he should be invisible.” The intermediary subsequently submitted winning bids on several items that sold for a combined $1.4 million. The goods were invoiced to “Amadeo Oluy” and shipped to Equatorial Guinea.

Teodorin has hired numerous attorneys to handle his legal problems in the United States, which range from the current effort by the U.S. government to seize his assets to multiple lawsuits filed by former employees at his Malibu estate, who charge that he cheated them out of wages and overtime pay. (In their complaints, the former workers provide extensive information about Teodorin’s lavish lifestyle and outlandish personal conduct.)

Teodorin’s recent crew of lawyers include a number of small fry, but also attorneys at blue chip firms like Duane Lyons of Quinn Emanuel (who as a government attorney helped prosecute the Los Angeles police officers involved in the Rodney King beating) and Juan Morillo of Cleary Gottlieb, who ranks on American Lawyer’s list of “Top 50 Litigators Under 45.”

Teodorin and his father’s government separately employ the Washington PR firm of Qorvis Communications, which has made as much as $70,000 a month in fees from its twin clients. As I detailed in a recent piece at Salon, Qorvis, which also represents the governments of Bahrain and Saudi Arabia, doesn’t seem to do much other than try to game Google’s algorithm by putting out a steady stream of uplifting press releases in hopes of burying the inevitable bad tidings that news searches normally produce about its clients.

Back in 2009, Attorney General Eric Holder said at the Global Forum in Doha, “When kleptocrats loot their nations’ treasuries, steal natural resources, and embezzle development aid, they condemn their nations’ children to starvation and disease. In the face of this manifest injustice, asset recovery [of that loot] is a global imperative.”

So is self-restraint.

Update:

On December 15, President Obiang got a hand from another enabler, when he received the “Beacon for Africa” award at a Leon H. Sullivan Foundation dinner at Washington’s Marriott-Wardman Park Hotel. The event was held to honor recipients for their “exemplary contributions to improving the lives of Africa’s most vulnerable  people.”

In a press release it said that Hope Masters, head of the foundation, praised him “for his exemplary leadership and contributions to rebuilding Equatorial Guinea.” The government’s Flickr page features several photos of Obiang at the ceremony — including one with Masters — with the caption “President Obiang Wins Sullivan Award” beneath each.

The foundation says it “empowers underprivileged people worldwide,” which it seeks to achieve mostly, judging from its website, by holding webinars, Happy Hours and Black Tie awards dinners.  Incidentally, for her diligent efforts to help the world’s underprivileged, Masters was being paid as of 2006 an annual salary and benefits package of about $194,000. Her husband, Carlton, who is affiliated with the foundation, runs a consulting firm that does business in Africa.

The foundation’s chairman is Andrew Young, the former U.S. Ambassador to the United Nations and mayor of Atlanta. He now runs GoodWorks International, a consulting firm that has worked with a number of famously corrupt African governments. His partner at GoodWorks, Carlton Masters, is married to Hope Masters.

In October, activists complained to the foundation after it issued a press release that included Obiang on a list of people who would be honored at the dinner. The foundation published a series of apologetic tweets denying that it was honoring Obiang and claiming that the confusion was the result of an “unfortunate error in the release” and a “HORRIFYING mistake.” The foundation, went another of its tweet, would “NEVER make such a faux pas.”

In response to e-mailed questions, Aly Ramji, special projects coordinator at the Sullivan Foundation, specifically denied that President Obiang or his government had ever made donations to the foundation. Yet in a transcript of his remarks at the dinner, Obiang said, “Equatorial Guinea contributes today in the financing” of the foundation “as [it] has been doing in the past.”

I have repeatedly asked Ramji and Masters to clarify whether Obiang has given money to the foundation, as he clearly stated. I also asked  how much his government paid to attend the dinner. Thus far, I have not received a reply to those queries. If I do I’ll update this story.

Ken Silverstein is an Open Society Foundation fellow and a contributing editor at Harper’s Magazine.

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