Not a Bang but a Whimper
U.S. Justice Department Settles in Signal Graft Case
In 2006, while most of his people lived on less than a dollar a day, Teodoro Nguema Obiang Mangue bought a 12-acre Malibu estate with a putting green overlooking the Pacific Ocean and a Gulfstream V, the kind of jet that operates at $3,000 an hour and can fly non-stop from Moscow to Rio de Janeiro.
Under the terms of a kleptocracy settlement announced Friday with U.S. Justice Department, Nguema, 45, the second vice president of Equatorial Guinea, will keep the jet.
But he will be forced to sell the 15,000-square-foot mansion, its guest and gate houses, its ocean-viewing pools and tennis court. (Oh, and the 2011 Ferrari 599 GTO he parked there. And up to seven life-sized statues from Michael Jackson’s Neverland Ranch.)
After a three-year legal battle with Washington, the $30 million haul announced Friday is less than half of what prosecutors had originally hoped to confiscate as the proceeds of gross corruption and crime. The expected $20 million proceeds from the sales will be given to a charitable organization benefitting the people of Equatorial Guinea. The recipient will be selected jointly with the U.S., giving Nguema a say in who benefits from his penalty.
No Victory Lap
Nguema floated for a decade atop a $300 million fountain of unending riches and cash allegedly embezzled, extorted, stolen and laundered from Equatorial Guinea, one of the poorest nations on earth. His lavish spending made him a natural target for a new campaign begun four years ago by the Justice Department to seize the ill-gotten gains of the world’s corrupt leaders.
Still, much of the booty was gone — seized by authorities in France or spirited out of U.S. grasp by Nguema. Some witnesses were likely unavailable. And federal judges in two cities had frustrated prosecutors by demanding proof that Nguema’s lavish purchases were tied to specific crimes.
Attorneys for both sides revealed in July that they would settle out of court.
For the kleptocracy initiative’s signature case, there would be no trial or testimony, no verdict, no unalloyed victory.
And Nguema admits no wrongdoing.
If the kleptocracy initiative outlives the Obama administration, the Nguema cases may be a signal to other leaders of just how far the Justice Department is willing to go — or not go — when it faces resistance from a host government and pushback from U.S. courts.
In announcing the settlement on Friday, Leslie R. Caldwell, chief of the Justice Department’s Criminal Division, told reporters that by agreeing to forfeit $10.3 million to the United States, in addition to selling the seized property, Nguema had tacitly admitted his involvement in criminal conduct.
She said the absence of some witnesses had not led prosecutors to steer clear of a jury trial, with its unpredictable outcome.
“I would say no,” she said. “I think we have ample evidence to do the money trail.”
Witness Lock Down
At least one witness identified by prosecutors, Nguema’s Italian ex-business partner Roberto Berardi, remains in prison in the port town of Bata, where he has smuggled out mobile phone pictures of his back criss-crossed with red lines, seemingly the result of his own torture.
According to Roberto’s brother Stefano, Roberto was also able to smuggle out a recording made surreptitiously on June 21 this year, which allegedly captured the sound of another detainee’s torture.
After more than five minutes, a voice, which Stefano says is his brother’s, offers a comment in accented French.
“This is what we hear every day.... I can record it but I have difficulty taking photos because if I’m caught I’ll be beaten. But I hope this message will reach you,” says the voice.
Berardi and Nguema were joint owners of Eloba Construcción, a building contractor created for public works in Equatorial Guinea which prosecutors claim was looted by Nguema.
According to the Justice Department, on just one occasion, Nguema used an Eloba account to wire $872,112 to the United States to pay for Michael Jackson memorabilia he had bought at auction in December of 2010.
This included a $275,000 crystal-covered glove from Michael Jackson’s “Bad” tour of 1987, which Nguema will also get to keep in Equatorial Guinea along with other auction items so long as he pays $1 million to the United States.
According to Human Rights Watch, Berardi was himself sentenced last year to two years in prison in Equatorial Guinea for theft and fraud in what appeared to an effort to prevent him from revealing information about Nguema. Medical records indicate that in prison he has developed pulmonary emphysema and typhoid fever but he has been denied medical care, according to the organization. Family members now fear for his life.
Another potential Eloba witness, the employee Alessandro Corbara, was reportedly killed in a car crash in Equatorial Guinea as recently as July under circumstances that Italian Senator Luigi Manconi has publicly described as suspicious.
Requests for comment submitted to the Equatoguinean embassy, to Nguema’s Los Angeles attorney Duane R. Lyons and to the Washington publicity firm Qorvis were not answered.
However in a Facebook announcement carried by The Wall Street Journal, Nguema said he was glad to end a “long and costly ordeal.”
“I agreed to settle this case despite the fact that the U.S. federal courts had consistently found that the Department of Justice lacked probable cause to seize my property,” he was quoted as saying.
The so-called “Kleptocracy Asset Recovery Initiative” has wracked up notable successes — seizing a Manhattan condo held by the son of the disgraced former Taiwanese leader Chen Shui-bian and taking in a half billion dollars stashed in accounts around the world buy the ex-Nigerian dictator Sani Abacha and his cronies.
But the Nguema action is the only one taken so far against a senior official still in power. And it has wound up less than a triumph.
Ken Hurwitz, an anticorruption legal officer at the Open Society Justice Initiative in New York, described the outcome as "a mixed result."
“I think they got the entirety of everything that was in the United States and that was all they would have gotten anyway.”
“They unearthed a huge amount. They exposed in thousands of pages of documents the extortion, the embezzlement, what everyday business is like for the ruling clan,” said Hurwitz. “They may have felt there were problems in the case. A number of the witnesses were anonymous which suggests there may have been concerns about security,” he added.
The Best Toys
In apparent violation of an agreement with the Justice Department, Nguema began shipping his Jackson memorabilia and luxury cars out of the United States. Prosecutors say they do not know where the jet is. But federal judges in Los Angeles and Washington, where the two separate cases were brought, had repeatedly insisted that prosecutors re-state their allegations with greater specificity, tying Nguema not merely to suspicious wealth but to specific crimes and victims.
During pretrial arguments in 2012, George H. Wu, a federal judge in Los Angeles, described purchases inventoried in the prosecution’s complaint as “spender’s porno,” but said that the case faced the “major problem” of tying the assets to dirty money.
“When viewed in tandem with other details suggesting illegal behavior, Nguema’s wealth might allow an inference of illegal activity — but standing alone, it does not,” wrote Rudolph Contreras, a federal judge in Washington, as he initially threw out the government’s case for the Gulfstream last year.
Nguema has long pointed to logging concessions granted him by his father, President Teodoro Obiang Nguema Mbasogo, as a source of potentially legitimate wealth.
His lawyers accused the government of “character assassination,” focusing on Nguema’s lifestyle rather than tying purchases to money and the money to actual crimes in Equatorial Guinea. However, in refining their allegations over several years, prosecutors accused Nguema of serial criminality in voluminous detail.
They said Nguema extorted fees from timber companies and misappropriated and stole hundreds of millions dollars in public funds in Equatorial Guinea. Witnesses, some anonymous, described bribes paid for timber export licenses, logging permits, foreign companies allegedly required to pay Nguema personally for permission to operate in Equatorial Guinea and death threats delivered against those who refused to cooperate.
Prosecutors also said that no legitimate source of income could possibly account for the pharaonic sums that Nguema had spent.
In 2008, Nguema spent $290,000 commissioning designs for a German yacht that was to have cost $380 million. He abandoned plans after word of the pending purchase became public.
For every year between 2000 and 2011, Nguema’s spending dwarfed both his official salary of less than $100,000 and the “fraudulent income” he claimed from his companies, prosecutors said.
Stefano Berardi, the brother of imprisoned witness Roberto Berardi, told 100Reporters he was “disgusted” by the settlement.
“The proof, they have it. It’s very obvious,” he said from his home in Berlin. “This is a political choice. I am ashamed for Mr. Obama.”
Rolling Up the Goods in France
In France, things are turning out differently.
In March, Nguema was formally placed under investigation as part of a criminal money laundering and fraud case lodged — not by prosecutors, but by activist non-profit organizations. As part of the case, French police in August of 2012 seized Nguema’s five-story, $180 million mansion at 42, Avenue Foch, a garden-lined street that adjoins the Arc de Triomphe and is one of Paris’s most prestigious addresses.
With 101 rooms, it has a Turkish bath, a hair salon, a nightclub and a movie theater, The New York Times reported. Inside the house, according to the French investigative journalism site Médiapart, was “a veritable private museum” comprising $104 million in artworks by Toulouse-Lautrec, Renoir, Chagall, Degas, Matisse and Monet.
Police had already seized a $2 million wine collection and 11 supercars – several of them shipped from California — including at least one Bugatti Veyron, which can reach speeds of up to 400 kilometers per hour.
The French state sold the cars at auction last year. The seizures were part of a larger case brought in 2008 by the French chapter of Transparency International against the ruling elites in Gabon, the Republic of Congo and Equatorial Guinea.
Paris prosecutors had initially rejected the complaint, finding that it failed to describe the underlying crimes adequately.
Under French law, however, members of the public may bypass prosecutors and launch proceedings by complaining directly to investigating judges.
William Bourdon, the Paris attorney for Transparency France who brought the case, said that this had been key in allowing for a different outcome in France.
“In corruption cases, there is sometimes an inaction on the part of prosecutors,” he said. For four years, Bourdon said, two judges assigned to the case have worked hard to "establish the reality of fraudulent financing of the real estate and the cars by various witnesses," adding that he expected the trial would take place within the next two years.
Mark V. Vlasic, former head of operations at the World Bank’s Stolen Asset Recovery Initiative, said that whatever the setbacks faced by the Justice Department, the Nguema case showed results were possible.
“For most of human history, if you were a dictator or just a senior minister who wanted to line your pockets, you got away with it,” he told 100Reporters. “We’re working on a continuum where little was happening to a stage where things are happening.”
“These are hard cases and I admire the prosecutors who are taking these challenges on," Vlasic said. Other countries, he noted, had begun to adapt their laws to make the confiscation of ill-gotten wealth easier.
In 2010, for example, Switzerland adopted the Restitution of Illicit Assets Act — also known as the Lex Duvalier in honor of the former Haitian dictator Jean-Claude “Baby Doc” Duvalier, who died this month. The law reverses the burden of proof onto foreign officials who are now required to demonstrate that their suspicious wealth in Switzerland is in fact legitimate.
Twin Faces of U.S. Policy
While the Justice Department of late has been fierce in its condemnations of corruption in Equatorial Guinea, U.S. relations with the country have verged on schizophrenic.
From dire poverty, the country surged into international relevance in the 1990s with the discovery of large offshore hydrocarbon deposits, making it Sub-Saharan Africa’s third-largest oil producer at 320,000 barrels per day in 2012. U.S. companies, such as ExxonMobil, Noble Energy, Hess, and Marathon Oil are the largest investors in the country’s oil and gas sector, which provides 99 percent of export earnings, according the Energy Department. It shipped 41,000 barrels per day to the United States in 2012. Former U.S. Ambassador Chester E. Norris had a street named after him in recognition of his warm relations with the government.
But in 1994, after Norris’s successor John E. Bennett criticized human rights conditions, he received a note tossed from a passing official vehicle which read, “You will go to America as a corpse,” according to the investigative reporter Ken Silverstein.
The following year, the U.S. shuttered its embassy in the capital, Malabo, and did not reopen it until 2006.
However, American diplomatic officials posted to Equatorial Guinea quickly adopted a conciliatory tone, downplaying accusations of corruption and human rights violations in favor of engagement with the local government, according to State Department cables released by WikiLeaks.
In early 2009, the embassy cabled Washington to say it had seen “no smoking gun of outright corruption” and that Nguema’s wealth had apparently legal sources in timber.
“The accounts associated with Equatorial Guinea can be reasonably explained,” said the cable signed by Deputy Chief of Mission Anton K. Smith, who was then acting in the ambassador’s absence.
At other times, Smith attacked Malabo’s critics in high dudgeon as a “rapacious diaspora,” “oppugnant NGOs” and “Europeans with colonialist perspectives and memories of lost empire.”
Their views, he said, were “largely fiction” and Equatorial Guinea, however troubled, was on the right track.
However, the embassy did acknowledge outside views.
“Our policy of gradual engagement with EG went off the rails late last year following the November 2008 visit and resulting press statement by UN Special Rapporteur Nowak,” the embassy told Washington in May of 2009.
An Austrian lawyer, Manfred Nowak at the time was the roving United Nations torture investigator.
“Nowak indicated the EG's use of torture was systematic, and ‘the worst he had seen,’" the embassy said.
Nguema’s father, President Obiang, seized power in a bloody 1979 coup from his uncle and has ruled Equatorial Guinea ever since.
Later in 2009, the transparency organization Global Witness revealed that the State Department had routinely allowed Nguema to visit the United States, despite federal rules intended to deny entry visas to foreign officials believed to be corrupt.
Justice Department and Homeland Security documents the group obtained showed that law enforcement believed “most if not all” of Nguema’s wealth came from corruption.
At a cost of hundreds of thousands of dollars, the Equatoguinean government and Nguema personally began to hire Washington publicists at Qorvis and at Cassidy and Associates to stem the tide of negative publicity.
Two years later, the Justice Department filed its first action seeking the forfeiture of Nguema’s U.S.-based assets.
Stefano Berardi said the Justice Department compromise resolved matters for Washington, but not others.
“For your information," he said, "my brother at this moment is still in isolation, cell number 13, Bata prison.”