(Washington, DC) - The Obama administration should adopt recommendations in a report issued today to help stop the flow of stolen money into the United States, Human Rights Watch said. The report is the result of a detailed investigation by Senators Carl Levin and Tom Coburn into corruption in abusive, resource-rich states and the “enablers” that allow officials to funnel money out of their impoverished countries to spend lavishly abroad.
The 330-page report “Keeping Foreign Corruption out of the United States: Four Case Histories,” details how officials in Angola, Equatorial Guinea, Gabon, and Nigeria funneled millions of dollars into the US with the help of a network of facilitators, including lawyers, realtors, banks, and other individuals and institutions. The Senate investigation exposed the infrastructure that allows corrupt officials to steal their countries’ wealth, denying their populations vital resources that should be used to secure basic rights, Human Rights Watch said.
“It’s time for the US to stop allowing corrupt officials to use their countries as personal ATMs and the US as a shopping mall,” said Arvind Ganesan, business and human rights director at Human Rights Watch. “Kleptocrats need to know that the US is not open for business.”
The report was released in conjunction with a hearing today by the Permanent Subcommittee on Investigations of the US Senate, which Levin, a Michigan Democrat, chairs and of which Coburn, an Oklahoma Republican, is the ranking minority member. Many of the subcommittee’s findings reinforce investigations into corruption and mismanagement that Human Rights Watch has carried out in some of these countries. The Senate report made several key recommendations to help curb kleptocracy and the use of US financial institutions to facilitate it, including new laws, better use of existing statutory authority, and more demanding professional standards.
In one case the Senate report detailed how Dr. Aguinaldo Jaime, Angola’s former central bank governor and deputy prime minister, attempted to transfer $50 million from the central bank to private accounts in the US on two occasions in 2002. According to the Senate report, “[t]he transfer of the Angolan funds was characterized at the time as an investment to produce humanitarian aid for the people of Angola, but other documents indicate the transfer was part of a fraudulent ‘prime bank’ investment scheme that likely would have resulted in the funds being lost or stolen.” Those efforts failed because US banks found the transactions suspicious and returned the funds.
In another case, the Senate investigation highlighted how Teodoro Nguema Obiang, son of the president of Equatorial Guinea, was able to spend almost $70 million for luxury houses and a luxury jet in the US with the help of lawyers, real estate agents, and escrow agents. The report says that lawyers helped circumvent anti-money-laundering bank controls. An escrow agent facilitated the purchase of a $38.5 million jet even after another agent refused due to money laundering concerns. The Senate report noted that the real estate agents did not do any due diligence to determine how Obiang obtained the funds for a multi-million-dollar purchase because they had no legal obligation to do so.
The investigation also revealed how Atiku Abubakar, Nigerian vice president at the time, and his wife managed to bring $40 million in “suspect funds” into the US between 2000 and 2008. It also uncovered the fact that American University, in Washington, DC, accepted $14 million from offshore corporations in return for consulting with Abubakar on his plans to establish a university in Nigeria. American University accepted the payments even though it did not know the identity of the corporations or the source of their funds. University officials told the subcommittee that they believed all of the funds came from the vice president’s personal wealth. Under current US law the university had no obligation to inquire further.
The Senate subcommittee has the power to subpoena and compel evidence for its reporting. Several of the individuals identified in the report were called under oath in front of the subcommittee today, although some invoked their fifth amendment right against self-incrimination and refused to testify.
However the evidence gathered during the investigation reveals much about the respective roles and the compensation received by several individuals, Human Rights Watch said. For instance the report alleges that Michael Berger, a California lawyer who worked for Teodoro Nguema Obiang, helped his client circumvent US anti-money laundering controls. The report documents that along with other compensation for his services, Berger sometimes enjoyed being a member of Obiang’s entourage. In emails obtained by the subcommittee he thanked the president’s son for ensuring that he received “VIP treatment” at exclusive parties, including one at the Playboy mansion, where he claimed to have met “many beautiful women.”
Human Rights Watch research supports many of the findings of the Senate report. Human Rights Watch detailed massive mismanagement and corruption by the Angolan government in a January 2004 report that detailed how the Angolan government could not account for approximately $4.2 billion between 1997 and 2002, a sum almost equal to all of the social and humanitarian spending in the country during the same time. For that report, Human Rights Watch extensively interviewed Dr. Jaime in his capacities as central bank governor and deputy prime minister.
Human Rights Watch has also documented widespread patterns of government corruption and mismanagement in Nigeria as well as the links between these problems and pervasive political violence and the collapse of government services in the country.
Most recently, in July 2009, Human Rights Watch released a report detailing widespread human rights abuses and corruption in Equatorial Guinea. For example, Human Rights Watch documented that between 2004 and 2006, the president’s son spent almost $44 million on luxury houses and cars in the US and South Africa, while the entire education budget of the country was $43 million in 2005.
The government should adopt the recommendations in the Senate report, Human Rights Watch said.
“For too long abusive and corrupt leaders have benefitted from secrecy and lax regulation,” Ganesan said. “The reforms proposed in the Senate report would make things much more transparent and make corrupt officials and their collaborators more accountable.”