U.S. Government Documents Crime Spree by Dictator’s Son: Why no action by the feds?

In 2004, George W. Bush issued Presidential Proclamation 7750, which barred corrupt foreign officials from entering the United States and ordered the State Department to compile a list of banned individuals. Three years later Congress approved a complementary measure that said the State Department should take special heed to bar officials when there was “credible evidence” to believe they were involved the theft of natural resources revenues. Last July, the State Department issued a report noting that corruption eroded “confidence in democratic institutions” and that fighting it was a central tenet of American foreign policy. The report also stated that the Obama administration would “vigorously” enforce 7750, better known as the Anti-Kleptocracy Intiative, and give particularly close scrutiny to visa requests from individuals involved in corruption involving natural resources.

Why, then, is a notoriously crooked official from oil-rich Equatorial Guinea allowed to enter the country and to hold vast millions in assets here? It’s certainly not because the U.S. government is unaware of the scandalous activities of Teodoro Nguema Obiang Mangue. Previously undisclosed documents — obtained by London-based Global Witness and provided to Harper’s Magazine — reveal an extensive federal investigation of Obiang Mangue was underway at least two years ago. Global Witness’s report on the U.S. investigation into Obiang Mangue is available here.

Obiang Mangue, often called Teodorin, is the son and potential successor to Equatorial Guinea’s long-ruling dictator. The investigation, led by the Justice Department and Immigration and Customs Enforcement (ICE), identified a list of Teodorin’s American assets. They include an estate in Malibu, which sits on sixteen acres of land and boasts a swimming pool, tennis courts, and a four-hole golf course. Teodorin paid $35 million in cash for the property three years ago. He also owns a $33.8 million Gulf Stream V private jet, millions of dollars worth of sports cars, and at least two luxury boats, and has used money laundered through shell corporations to finance his American shopping sprees, according to the documents.

A Justice Department memorandum from September of 2007 noted that Teodorin’s salary as Minister of the Agriculture and Forestry paid only $5,000 per month. “[I]t is suspected that a large portion of Teodoro Nguema OBIANG’s assets have originated from extortion, theft of public funds, or other corrupt conduct,” said the document, which also detailed how between 2005 and 2007 Teodorin had funneled into the United States at least $75 million — nearly twice the amount allocated by Equatorial Guinea for its yearly national education budget.

A PowerPoint prepared by ICE’s lead investigator on the case identified the inquiry’s goals as being to “identify, trace, freeze, and recover assets within the United States illicitly acquired through kleptocracy by Teodoro Obiang and his associates,” and to “deny safe haven in the United States to kleptocrats.”

In September 2007, an American delegation met investigators in France, where Teodorin has also lived (quite well) and been the subject of law enforcement inquiry. At the meeting it was agreed that the U.S. would submit to French authorities a “commission rogatoire internationale,” or a formal request for cross-border legal assistance.

Yet two years later the investigation into Teodorin is stalled, according to two sources that spoke about the case off the record. And though the State Department will not publicly disclose the list of foreign officials barred under Bush’s Proclamation 7750, Teodorin is not on it. An official at Equatorial Guinea’s embassy in Washington, who asked to remain unidentified, said he had traveled to the United States as recently as late-September, when he helped officially inaugurate his country’s consulate in Houston.

I requested an interview with Teodorin through the embassy of Equatorial Guinea and through Qorvis, a Washington public relations and lobbying firm that works for the government, and provided a detailed account of the charges in the U.S. documents. I received no reply other than for this comment from the embassy: “We have not been contacted by any Government Agencies and are not aware of any ongoing investigation into the Government of Equatorial Guinea or any of its representatives.”

Jack Blum, an attorney and former Senate counsel who played a key role in investigations into BCCI and the Lockheed Corporation’s overseas bribery scandal, suspects that the lack of action against Teodorin may be tied to Equatorial Guinea’s energy wealth and close ties with American oil firms, such as ExxonMobil and Chevron, who have major investments in the country. “The least they could do is cut off his shopping privileges by denying him entry into the United States,” he said. “Where the hell is the U.S. government?”

Teodorin’s father, Teodoro Obiang Nguema Mbasogo, has ruled Equatorial Guinea since 1979, when he overthrew and executed his uncle. Since taking the reins of power, Obiang has squashed political opposition and crushed dissent. He has been “elected” three times in balloting marred by fraud (in 1989 with 99 percent of the vote, in 1996 with 97.8 percent, and in 2002 with 97.1 percent).

The State Department’s 2009 global human rights survey, released in February, cited abuses in Equatorial Guinea that included “unlawful killings by security forces; government-sanctioned kidnappings; systematic torture of prisoners and detainees by security forces; life threatening conditions in prisons and detention facilities; impunity; arbitrary arrest, detention, and incommunicado detention.”

Until the mid-1990s, Equatorial Guinea was a pariah state with few international allies. Then American energy firms discovered vast reserves of oil and gas in the waters off Equatorial Guinea. Since then, the country has become the fourth-largest producer of crude in sub-Saharan Africa. Between 1993 and 2007, annual oil revenues shot from $3 million to $4.8 billion.

Equatorial Guinea now enjoys a per capita income of about $37,000, on par with Denmark. Yet a report released earlier this year by Human Rights Watch noted that 77 percent of the population still lives in poverty, 35 percent die before the age of 40, and 57 percent lack access to safe water. “The government of Equatorial Guinea has set new low standards of political and economic malfeasance in handling its billions of dollars in oil revenue,” the report stated. “The dictatorship…has used an oil boom to entrench and enrich itself further at the expense of the country’s people.”

The Obiang family has not been terribly discreet about its plundering of the national treasury. In 1999, Obiang bought a $2.6 million mansion in the Maryland suburbs that has 10 bathrooms and an indoor pool. The following year he bought a second Maryland property for $1.15 million. In 2008, a Spanish civil rights group filed a complaint charging that Obiang and eleven relatives and associates had used laundered money to buy homes and other real estate in the country. An official investigation into those charges is now underway.

A 2004 report by the Senate Permanent Subcommittee on Investigations found that Obiang had control over some $700 million in state funds, deposited at Riggs National Bank in Washington, D.C. by American oil companies active in Equatorial Guinea. Riggs opened multiple personal accounts for Obiang, his wife and other relatives, which held at least $13 million, and helped establish shell corporations overseas for the president. Riggs, said the report, “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.” (Subsequent to the investigation, Riggs Bank paid $41 million in fines for lax oversight, a senior vice president pled guilty to fraud and money laundering, and it was bought by PNC Financial Services.) According to the report, American oil companies “contributed to corrupt practices” by entering into business ventures and making substantial payments to government officials in Equatorial Guinea.

The Obiang regime’s awful record on corruption and human rights has not prevented the United States from cozying up to it. In 2003, following an intense lobbying campaign by the oil industry, President Bush decided to reopen the American embassy in the country, which had been shut down eight years earlier for budgetary reasons and human rights violations. In 2006, Obiang met with then secretary of state Condoleezza Rice, who called him “a good friend” to the United States.

Teodorin has had ties to the Los Angeles area since at least 1991, when he attended an English as a Second Language course at Pepperdine University in Malibu. Elisa Wax, director of the course during that time, recalled Teodorin arriving to campus in sports cars or limousines. “He was there to party,” she said. “He rarely came to class.”

Teodorin’s tuition of $3,400 for the non-degree course included boarding at Pepperdine, but he shuttled between the Beverly Wilshire Hotel and a house he rented in Malibu. Wax received a steady stream of phone calls from the hotel as well as shops in Beverly Hills trying to track down Teodorin to settle outstanding bills. She would direct these calls to a representative at Walter International, a Houston-based firm that then had a stake in Equatorial Guinea’s offshore fields and that financed Teodorin’s “studies” at Pepperdine. The woman assigned by Walter to handle these complaints was “pulling out her hair,” Wax said. “There were people trying to locate him from all directions.”

After five months, Teodorin dropped out of the program. John Bennett, the American ambassador in Equatorial Guinea at the time, said that Walter International covered $50,000 in expenses racked up by Teodorin during his brief stay.

Teodorin has owned several estates in Los Angeles. Before purchasing his current property, he bought a house for $5.8 million in Bel Air, where he lived across the street from Farrah Fawcett. For a time he owned and operated a hip-hop label called TNO Entertainment, which produced two albums before going out of business. In an effort to woo the rapper Eve, Teodorin reportedly rented a 300-foot yacht from Microsoft founder Paul Allen for about $700,000. News accounts said Eve dated Teodorin for a time but dumped him after learning that his father had been accused of being a cannibal who ate his political rivals. (A request for comment sent to Eve’s publicist was declined.)

In France, a TV crew filmed Teodorin driving down the Champs-Elysees in a Bentley and on a shopping spree during which he bought 30 designer suits in a single afternoon. A Western businessman who had dealings with Teodorin recalled meeting him in Paris, where he was staying at the Plaza Athenee, one of the city’s most luxurious hotels. Teodorin had commandeered three of the biggest suites there – the current rate for such suites runs to thousands of dollars a night — and booked a number of other rooms for his entourage, including bodyguards and girlfriends.

Teodorin also invited this person (who asked not to be identified in this article) to a large dinner party at La Maison du Caviar. “He had a private room and he ordered a lot of champagne and so much caviar you could have scooped it with a shovel,” the source said. “All he knows is how to spend money, that’s how he measures success.”

A 2007 French police investigation uncovered tens of millions of dollars worth of assets belonging to the rulers and family members of Equatorial Guinea, Congo, and Gabon. The investigation showed that Teodorin controlled multiple accounts at blue chip banks such as Barclays, BNP Paribas, and HSBC, and that his car purchases alone had come to $6.3 million over the prior decade.

In South Africa, Teodorin bought two estates in Cape Town in 2004 for $7 million. The Times of South Africa reported that he spent millions more on renovations, including a home-theater sound system and spa baths and marble surfaces for the bathrooms. An unnamed security guard who had worked for Teodorin told the newspaper that his employer was never without a briefcase full of cash and spent thousands of dollars on champagne for his female companions.

On September 4, 2007, Stewart C. Robinson, deputy director of the criminal division at the Justice Department’s Office of International Affairs, sent French investigators an urgent “Request for Assistance” in an investigation of “suspected criminal conduct of Teodoro Nguema OBIANG and his associates.” It asked that “the subject of this request and the existence of a U.S. investigation on this subject be kept strictly confidential.”

In addition to Teodorin, the “targets of the investigation” were Michael Jay Berger, a Los Angeles-based attorney who “serves as an intermediary for funds wired from Equatorial Guinea,” and Somagui Forestal, a forestry company “beneficially owned by [Teodorin] from which large money transfers to the United States have originated.” Teodorin’s home in Malibu was purchased in the name of a shell corporation, Sweetwater Management, Inc., of which he is the president. His Gulfstream jet was purchased by another of Teodorin’s shell corporations, Ebony Shine International, Ltd., which is registered in the British Virgin Islands.

The U.S. investigation of Teodorin and his associates, wrote Robinson, had “identified numerous suspicious transactions”:

—In April 2005, Teodorin “was the originator on at least five separate wire transfers,” each for $5.9 million. The money moved from a bank account in Equatorial Guinea, through a French bank and then “to a correspondent account at Wachovia Corporation Atlantic to [an account] at First American Trust FSB in the name of First American Title.” Investigators believe he used those funds to purchase the mansion in Malibu.

—In April 2006, Teodorin “was the originator on three wire transfers” that moved through the same banks, except the final destination now was a Bank of America account in the name of McAfee & Taft. Through those three transfers, Teodorin moved $10.3 million into the United States.

—From May to June 2006, Teodorin and his associates executed six wire transfers from a French bank to a correspondent account at Wachovia Atlantic and then to a UBS account in New York, in the name of Insured Aircraft Title Service Correspondent. The funds, $33.8 million in all, were used by Teodorin to purchase his luxury jet.

—Between November 2006 and June 2007, the “suspected money laundering continued …through the use of an intermediary,” identified as Michael Jay Berger. He was said to be the recipient of at least four wire transfers totaling about $800,000. The evidence suggested that the wires originated from an account for Somagui Forestal bank in Equatorial Guinea and were transferred through French banks to Berger’s attorney/client trust account at Union Bank of California. (Berger declined multiple requests for comment.)

Walter Moran, then Special Agent in Charge of ICE’s Miami bureau, sent the French a PowerPoint presentation in support of the request for assistance. It said that Teodorin’s Malibu mansion was “undergoing multi-million dollar renovation,” and that he had “multiple luxury vehicles stored at the Peterson Automobile Museum in Los Angeles,” including two Rolls Royce Phantoms worth $350,000 each; two Maybachs worth $350,000 each; four Ferraris worth $250,000 each; and one Rolls Royce Park Ward.

It identified other American assets of Teodorin’s, including two speedboats of unknown value. Furthermore, two independent sources had told investigators that Teodorin was building a 200-foot custom luxury yacht, complete with a shark tank. He had also recently sought to purchase an apartment at the Ritz Carlton in New York for $20 million in cash and was looking to purchase residential property in Miami.

The PowerPoint said further that Teodorin:

—was a “Recreational drug user (3 to 4 day binges with friends).”

—frequently traveled to the United States as an A-1 diplomat, “although he is seldom on official business.”

—“allegedly received large wire transfers weekly through a ‘fictitious’ corporate account at Union Bank in California.”

—was the target of multiple Suspicious Activities Reports for suspected money laundering from financial institutions including Bank of America and Wachovia. “As a result of his activities, both banks have closed all accounts associated with Obiang and his associates,” the document said.

After being informed of the contents of the government documents, Lawrence Barcella, a former federal prosecutor, said:

“To build a case like this you have to prove that his money comes from the proceeds of corruption. That would generally require the cooperation of the foreign government in order to gather sufficient evidence, and in this case Equatorial Guinea is obviously not going to cooperate. It looks like they [prosecutors] have grounds for probable cause, which would be enough to get a warrant and an indictment, but they have to get over the hump of probable cause to beyond a reasonable doubt and that’s a lot tougher. Justice Department guidelines say you should not seek an indictment unless you believe you can meet the reasonable doubt standard.”

However, Barcella said that even if Justice could not prosecute Teodorin, the State Department could bar him from entering the country. “Traveling into the United States is not a right, it’s a gift. He could very easily be declared PNG and denied entry. For years, John Lennon couldn’t enter the United States because he smoked marijuana. You can deny a visa for any reason.”

Jack Blum shared much of Barcella’s assessment. “Gathering the evidentiary material to prove the illegal origins of [Teodorin’s] money would not be easy and [bringing a case] would turn the U.S. relationship with Equatorial Guinea on its head, and that’s of some interest given all the oil.” However, barring Teodorin from the country would be a simple matter, adding, “That is a sensible step that would have real impact, as it would put off limits to him all of his assets in the United States,” he said.

Blum believed the failure to take action against Obiang could be politically motivated. He noted that several other Justice Department cases involving oil kleptocracies — including the so-called “Kazakhgate” scandal, in which the president of Kazakhstan allegedly received tens of millions of dollars in payoffs from an American businessman representing U.S. oil companies – have been mysteriously bogged down for years. “It’s quite possible that there is high-level political interference,” he said. “As U.S. citizens, we have the right to know what’s going on here. If they are going to drop the cases, they need to lay out the facts and explain why.”

Alexandre Wrage, the president of TRACE, which advises multinational companies on compliance with anti-bribery laws, offered this comment: “To deny a visa under 7750, the State Department needs to determine that there is ‘reason to believe’ a public official has misappropriated public funds. That’s a very low standard to meet. Teodorin Obiang owns real estate and cars valued in excess of $80 million. That certainly gives me reason to believe that the funds have come from some source other than his official salary. There’s a second part to the test [of denying a visa under 7750]: has the misappropriation had serious adverse effects on the national interests of the United States? Massive theft by the kleptocrats of the world undermines U.S. long-terms interests; it undermines democratization efforts and poverty alleviation, and contributes to the collapse of some states, making the world less safe. I would hope that it is this standard that applies, and not the short-term national interest of access to oil.”

Barring a coup d’etat, it is likely that President Obiang, age 67, will rule until his death and then hand off power to a chosen successor. Teodorin is widely considered to be the leading candidate to succeed him. “The guy knows how to play politics,” says Bennett, the former American ambassador. “He’s seen as the junior Big Man.”

One can argue about the legal obstacles involved in prosecuting Teodorin or seizing his assets. There is no doubt at all, though, that he is ineligible to enter the United States under 7750. Despite the U.S. government’s public commitment to keeping corrupt foreign officials out of the country, the State Department appears to be reluctant to make use of 7750. The list of those banned under the proclamation is classified, but two confidential sources I spoke to said there are only about three dozen names on it. These include, according to a few foreign press accounts and my sources, officials from Cambodia, Kenya and Nigeria.

Could the lack of action against Teodorin stem from political pressure to ignore the crimes and corruption of a possible future president of an oil-friendly ally? It’s impossible to say with certainty, and the Department of State declined comment for this article. Both the Justice Department and ICE also declined comment, saying they could not confirm or deny the existence of any investigation.