Study: West facilitates African corruption

When the son of Equatorial Guinea's president wanted to steal money from state coffers, he hid it in European banks. And he's hardly the only one. 

•A version of this post originally appeared on the blog A View From the Cave. The views expressed are the author's own. 

Last week, the French government sold off nine luxury cars at an auction in Paris, raising $3.6 million. Luxury names took the stage including Porsche, Bugatti, and Bentley.

The luxurious fleet once belonged to Teodorin Obiang, son of Equatorial Guinea’s President Teodor Obiang. The cars were seized in 2011 when the younger Obiang was charged with embezzling public funds in France.

It is quite the collection for someone who earned an official salary of $7,000 a month during that time. He has also managed to purchase a $30 million home in Malibu and liberated a $23.5 million art collection from the walls of fashion designer Yves Saint Laurent.

The money comes largely from the oil that the tiny west African country produces, whose profits have mysteriously made their way into the smooth rides and stylish suits worn by the Obiang family.

Corruption may feel like a problem in a far off nation, but it is also much closer to home than one expects, said Charmain Gooch, co-founder of the international NGO global witness, which studies corruption, in a recent TED Talk.

“Corruption is made possible by the actions of global facilitators,” said Ms. Gooch.

Banks and business in the United States and France, for instance, played a role in Mr. Obiang’s purchases.

He did business with global banks. A bank in Paris held accounts of companies controlled by him, one of which was used to buy the art ,and American banks, well, they funneled 73 million dollars into the States, some of which was used to buy that California mansion.

And he didn’t do all of this in his own name either. He used shell companies. He used one to buy the property, and another, which was in somebody else’s name, to pay the huge bills it cost to run the place.

Corruption is a worldwide problem. The Global Corruption Barometer 2013 asked 114,000 people from 107 countries questions about corruption, finding that some 1/4 of people say they paid a bribe when accessing public services and institutions. It is roughly the same rate as last year.

More than two-thirds of Americans say that corruption is a problem in the public sector. Nearly the same amount of people also said that corruption has increased over the past two years. 

“Bribe paying levels remain very high worldwide, but people believe they have the power to stop corruption and the number of those willing to combat the abuse of power, secret dealings, and bribery is significant, “ says Huguette Labelle, chair of Transparency International. “Too many people are harmed when these core institutions and basic services are undermined by the scourge of corruption.”

To do so requires more transparency from governments about the money collected and how it is spent, says the report. Governments should also support rule of law, provide stiff punishments for corruption, and clean up the democratic process.

One way that countries can reduce corruption is by taking on shell companies. Gooch cited a World Bank study that found shell companies were used in 70 percent of the 200 corruption cases it studied. These companies are set up in countries like the UK and the US. She remains optimistic that corruption can be defeated. A transparency campaign launched in 1999 and aimed at the oil and mining sectors has led to an increase in the number of transparency laws for companies, for instance.

“So this is change happening. This is progress. But we’re not there yet, by far. Because it really isn’t about corruption somewhere over there, is it? In a globalized world, corruption is a truly globalized business, and one that needs global solutions, supported and pushed by us all, as global citizens, right here,” she said.