Posted on October 15, 2019

African Dictators Losing Luxury Lifestyle amid Money Laundering Crackdown

Adrian Blomfield, Telegraph, October 6, 2019

Judging by the fleet of supercars parked in the grounds of Geneva’s Bonmont Golf and Country Club last Sunday, Teodorin Obiang was not overly fussed by the size of his carbon footprint.

There were 25 in total, representatives of every luxury model conceivable, from Aston Martin to Bugatti and Ferrari, just a portion of the automobile collection amassed by the president of Equatorial Guinea’s pampered son.

Their sale represented “a highlight of the international motoring calendar,” enthused James Knight of Bonhams, the presiding auction house.

It was an understatement. By the end of the day, the collection had gone for nearly £22m. Mr Obiang’s Lamborghini Veneno Roadster, sold for £6.8m, would go down in the record books as the most expensive Lamborghini ever auctioned.

Not a penny, however, will go to Mr Obiang. The entire collection had been seized by Swiss authorities investigating him on suspicion of looting his country’s treasury and laundering the proceeds.

In a deal reached in February, Mr Obiang agreed to allow the cars to be sold and the profits given to charities working with the poor of Equatorial Guinea, ruled by his autocratic father Teodoro for the past 40 years.

The forced sale represents the latest blow struck in an unprecedented effort by Western states to stop corrupt African politicians using their territories to hide and spend cash stolen from the treasuries of the world’s poorest continent.

Switzerland has not been alone in investigating Mr Obiang. In 2014, US authorities forced him to surrender £24m in assets, including a mansion in Malibu and one of Michael Jackson’s crystal-covered gloves, which he had bought for £223,000, after a senate investigation concluded he had smuggled £90m of suspect money into the country.

France, too, has got in on the act. After he was convicted in absentia on money-laundering charges, French authorities seized his 100-room house in Paris and yet more cars.

Mr Obiang, who denies all allegations against him, is not the only target. The families of four more present and past African heads of state are under investigation in France.

Elsewhere in Europe, San Marino last month confiscated £17m stashed in 36 separate bank accounts by relatives of Denis Sassou Nguesso, the president of the Republic of Congo, also known as Congo-Brazzaville.

It is all a far cry from how things used to be. European governments were once all too ready to turn a blind eye to African kleptocrats.

Valéry Giscard d’Estaing, the former French president, was said to be a regular guest at soirées in the various châteaux Jean-Bédel Bokassa, the late “emperor” of the Central African Republic, owned around France.

Bokassa even claimed to have given Mr Giscard gifts of diamonds in gratitude.

It was not just politicians. Western bankers, lawyers and middlemen were happy to help Africa’s looters first hide their money in shell companies and tax havens and then splurge it on super yachts, private jets, luxury cars and multi-million pound properties across the rich world.

But a change in attitudes has slowly been brought about by pressure from campaigners and a realisation by Western governments that there was an inherent contradiction in doling out aid to Africa only to see vast quantities of stolen cash seep back to the West.

The United States, Britain and Switzerland — some of the favoured destinations for the stolen cash — have led the way, tightening up laws to make it easier to seize suspect assets and search properties.

Britain’s introduction of “Unexplained Wealth Orders” has allowed investigators to shift the burden of proof towards the suspect. Foreign politicians and their families may now be required to show good reason for any discrepancy between the value of assets they hold in the UK and the often meagre official salaries they earn at home.

Already efforts are leading to an increase not just in the amounts of cash frozen and seized from dubious bank accounts but also in returning some of the stolen loot.

Last year, Britain’s National Crime Agency (NCA) oversaw the return of £405m prosecutors in Angola say was purloined from the country’s central bank by, among others, its former governor.

Investigations have begun to turn up startling details revealing the extent of some African politicians’ wealth. French prosecutors found that that Gabon’s ruling Bongo family owned 39 properties in and around Paris.

Such excesses may be eye-catching, but the scale of the plunder in Africa often runs much deeper. One case in Nigeria has served more than any to highlight both the scale of the theft and a renewed determination in the West to fight it.

The name Deepwater OPL245 was not designed to get the layman’s pulse racing. For those in the know, however, it is the Eldorado of Africa, a 617-square mile stretch of territory that contains within it a potential half-a-trillion pound fortune.

The size of the bounty contained within its confines is staggering: an estimated 9bn barrels of recoverable oil as well as significant quantities of natural gas buried under the sea off Nigeria’s coastline.

For a country with the highest rates of extreme poverty in the world, it should have been a huge windfall. Nigeria may be Africa’s biggest oil producer, but this single field carried within it a quarter of the country’s reserves, making it arguably the single biggest energy prize on the continent.

Instead, according to prosecutors in Nigeria and Italy, the block was essentially stolen, the proceeds of the theft divvied up among a cabal of powerful politicians who attempted to stash their ill-gotten gains abroad.

It began in 1998, when the country’s then oil minister, Dan Etete, allegedly awarded the rights to OPL245 to himself, via a shell company called Malabu Oil & Gas that had been created just five days earlier.

The scandal would eventually go all the way to the top. Court papers filed in London in May by Nigerian government lawyers accuse Goodluck Jonathan, the country’s president from 2010 to 2015, of using his office to enable a second theft of OPL245 in exchange for a share of the loot. Mr Jonathan has not commented on the allegations.

The OPL245 affair united Western states as never before in their determination to expose the scandals. Investigations followed in the United States and Switzerland.  Bank accounts were frozen in Britain and the Crown Prosecution Service returned £59m seized from them to Nigeria.

Most significantly, a criminal trial is now underway in Milan (with a second likely to follow in the Netherlands) against Eni, the Italian energy giant, and its even bigger Anglo-Dutch counterpart, Royal Dutch Shell. The two firms secured the rights to OPL245 in 2011.

Prosecutors accuse the companies of being aware that the vast majority of the £1.1bn they paid would end up not in the Nigerian treasury but in accounts run by Mr Etete’s shell company and senior politicians. Mr Etete denies owning Malabu, saying he was merely a consultant for the firm, work for which he says he was paid £200m

The trial could lead to jail sentences for Claudio Descalzi, Eni’s chief executive officer, and a raft of other executives, including four former Shell employees, among them Shell’s former chief explorations officer Malcolm Brinded, a British national.All the accused deny the charges, as do Eni and Shell.

Yet even with all the cases that have been exposed, investigators say there is far more that has not and may never be uncovered.

“We have had successes but we may just be scratching the surface,” says a Swiss prosecutor. “Money is moved around the world in such a complicated way that it is very difficult to follow the trail.”

Even big breakthroughs can feel inconsequential, given the huge sums of money that have flowed illicitly out of Africa and remain unaccounted for.

In one success, investigators in the United States and Europe have successfully confiscated more than £1bn from bank accounts connected to the Nigeria’s late dictator Sani Abacha. In the latest seizure Jersey confiscated £210m in June.

Yet researchers believe nearly £540bn has been stolen from Nigeria since independence from Britain in 1960, enough to fund the English NHS for nearly five years.

And often it is only the careless who have been caught. Mr Obiang came to the attention of campaigners because he posted photographs of his cars and yachts on Instagram under the hashtag #luxuryliving.

He also boasted of how he would give girlfriends a daily shopping allowance of $80,000 in 100-dollar bills, enraging many in a country that, at independence from Spain in 1986, had more hospital beds per capita than its colonial master but where most now live in squalor.

American officials at the Department of Justice were able to uncover a scandal related to another Nigerian oil minister, Diezani Alison-Madueke, after her associates splashed out on an £65m yacht which they reportedly hired out to pop stars, including Beyonce and Jay-Z, for parties.

The yacht was seized by US officials and sold in July. Nigeria, meanwhile, says it is trying to extradite Mrs Madueke, who lives in London, from Britain to stand trial. British officials declined to comment on the extradition request.

Other African politicians are thought to be more cautious. They stay several steps ahead of investigators by creating shell companies, most notably in secretive British offshore territories like the British Virgin Islands, and moving the money from jurisdiction to jurisdiction with such speed that investigators struggle to keep up.

Britain is spearheading an effort to counter the problem by creating an agency, the International Anti-Corruption Co-ordination Centre, to allow law enforcement agencies across the rich world to cooperate in cross-border investigations.

Its efforts are starting to bear fruit, leading to the arrest of five senior African officials in four African states since the centre was launched in July 2017, Rupert Broad, its head, told the Daily Telegraph. Mr Broad did not name the officials involved.

Steps have been taken to end the secrecy that surrounds shell companies. Britain and other EU states have forced financial institutions to publish registers to reveal the identities of those who really own companies.

But offshore tax havens are dragging their feet, while a number of US states have resisted efforts for greater transparency.

Even in Britain, campaigners worry it is far too easy to open a shadowy company with few questions asked. It remains possible to register a firm online in Britain in just three hours at a cost of only £20.

It is a sign, says Steve Goodrich, leading UK researcher at Transparency International, a watchdog, that although progress has been made, Britain and others still have a long way to go.

“It is still far too easy for those trying to engage in criminal activity to flout the law with impunity,” he said.

Even if African kleptocrats do fail to cover their tracks, most can afford expensive lawyers adept at dragging out and often even defeating Western law enforcement agencies seeking to seize their assets.

James Ibori, former governor of a Nigerian state, was convicted in Britain in 2012 after admitting to plundering more than £200m from the public purse and stashing much of it in the UK.

Yet, nine years after he was first arrested and more than two years since he completed his prison sentence, Ibori’s lawyers have been able to frustrate efforts to confiscate most of the £80m frozen in his British bank accounts.

And even Mr Obiang, for all his setbacks, may manage to have the last laugh. His lawyers have succeeded in getting an order from the UN court to prevent France selling his Parisian mansion by arguing that the property belongs to the Equato-Guinean embassy and is therefore diplomatically protected.

Meanwhile, having managed to fly his Gulfstream jet out of the United States under the nose of American officials, he also succeeded last week in getting the Swiss to return his yacht, the £100m, 250-foot Ebony Shine, after arguing it belonged to his country’s navy.

Mr Obiang, who seems destined to become president of one of the world’s most unequal countries on his father’s death, looks set to continue travelling in luxury for a while to come.