How Many Investigators Does It Take to Catch a Kleptocrat?

How Many Investigators Does It Take to Catch a Kleptocrat?

View a slide show of the surreal playboy life of Teodorin Obiang.

For the past four years, two U.S. government agencies have led a meandering investigation into charges of corruption and money-laundering involving Teodoro Nguema Obiang Mangue, son of the oil-rich, Exxon-friendly dictator of Equatorial Guinea. As I reported in the most recent print edition of Foreign Policy, internal documents from a joint probe by the U.S. Justice Department and the Immigration and Customs Enforcement (ICE) agency detail how Obiang has amassed an enormous fortune, despite earning an official salary as Equatorial Guinea’s minister of agriculture and forestry of only about $5,000 per month.

And yet, federal investigators have displayed remarkably little enthusiasm for bringing a case against Obiang, who is known as Teodorin and has spent millions of dollars in the United States over the last decade living a life of Hollywood debauchery, according to exclusive interviews with his employees, federal investigators, and documents from several international probes I have reviewed. Indeed, U.S. investigators from the Justice Department and ICE have failed to locate or contact important potential witnesses. And recently, some investigators have suggested that they are frustrated with the case and are thinking about whether to shut it down this spring, sources familiar with the probe told me.

It is not as if the U.S. government is unaware of Teodorin’s apparently ill-gotten gains. A Senate Permanent Subcommittee on Investigations report last year alleged that Teodorin has laundered more than $100 million into the United States. According to the report — the subcommittee’s second about the Obiang clan — he used that money to buy a $30 million estate in Malibu, California, a $38 million private plane, and a fleet of luxury sports cars. Global Witness, the London-based anti-corruption group, recently reported that Teodorin had commissioned plans for a custom-built $380 million superyacht.

“The evidence of corruption in this case is overwhelming,” said Jack Blum, a former Senate investigator who worked on major cases such as the Bank of Credit and Commerce International affair and is now a Washington attorney specializing in money-laundering and corruption. “We know that the money being tossed around by young Obiang is not coming out of his official salary, but the U.S. government isn’t interested in taking him down because there’s oil involved. You can’t run a pretend investigation when the problems are this acute. It’s outrageous.”

Equatorial Guinea would be of little international consequence if it didn’t have one thing: oil, and plenty of it. The country is sub-Saharan Africa’s third-largest producer of oil after Nigeria and Angola, pumping around 346,000 barrels per day, and is both a major supplier to and reliable supporter of the United States. Energy revenues have flowed into the pockets of the country’s elite, but virtually none has trickled down to its citizens, who by and large are desperately poor. Under the rule of his father, who has run the country for 32 years since taking power in a coup, Teodorin has been given his own fiefdom to exploit — timber, the country’s second most valuable resource. Justice Department and ICE documents I reviewed from the fall of 2007 noted that a large chunk of Teodorin’s assets were likely derived from “extortion, theft of public funds, or other corrupt conduct” and that he made huge sums by imposing a large “revolutionary tax” on timber that went into his pocket.

The inquiry’s goal, according to one ICE document, is to “identify, trace, freeze, and recover assets within the United States illicitly acquired through kleptocracy by Teodoro Obiang and his associates.” Yet four years later, Teodorin still comes and goes into the United States — plane records indicate that in late February he flew into Washington, D.C. (which a source confirms) on his private jet before heading to California and from there on to Rio de Janeiro to celebrate Carnival with his father — and federal officials have taken no steps to seize his Malibu mansion.

Legal experts contend that Teodorin shouldn’t have been allowed to enter the United States since 2004, when President George W. Bush issued Proclamation 7750, which bars corrupt foreign officials from receiving U.S. visas. President Barack Obama reaffirmed this message, pledging to “vigorously” enforce the proclamation and saying, “We have a responsibility to support those who act responsibly and to isolate those who don’t.” Meanwhile, as the investigation plods along, a source has informed me that Teodorin has arranged to ship his luxury cars and other assets out of the country.

The Justice Department and ICE declined to comment for this story, as did Teodorin (through Qorvis Communications, the Washington lobbying and public relations firm to which he pays $55,000 per month).

At many points, researchers and journalists have seemed to be several steps ahead of the federal investigators. It was only last year — after they belatedly read a small item I wrote for the Harper’s Magazine website — that investigators apparently learned that former employees at Teodorin’s Malibu estate were suing him for cheating them out of wages and that they possessed damaging information about his finances and personal lifestyle.

The investigators contacted the plaintiffs’ attorney, Jim McDermott, but they haven’t bothered going to Malibu to interview him or his clients. “They asked for stale information that they could have found on the web,” McDermott told me by phone recently. “It looked like they just wanted to check off a box showing they had called me. Any law firm would fire a first-year associate for doing that level of work.”

According to sources familiar with the probe, federal investigators have repeatedly complained in private that they are hamstrung because they need to prove that the wealth accumulated by Teodorin and his family is the fruit of corruption. But documentation about the nature and extent of the family’s corrupt rule of Equatorial Guinea has been in the public domain for decades, at least since the 1990 publication of Robert Klitgaard’s Tropical Gangsters, the seminal work on Equatorial Guinea’s modern economy.

Klitgaard, who worked in Equatorial Guinea for the World Bank in the 1980s, described how the Obiang family plundered cocoa farms and other state resources after seizing power in 1979. In describing one confidential 1984 memo written by two members of an English cocoa-importing firm active in Equatorial Guinea, which detailed the company’s corrupt deals with President Obiang, Klitgaard wrote, “Even though I had written a book about Third World corruption, seldom had I seen such blatant, almost casual evidence of graft.”

Klitgaard also wrote about a World Bank project approved in 1983, which was to give credits to owners of cocoa farms: “And so in 1984 there were draconian nationalizations of farms…. Most had been owned by Spaniards and Portuguese; now government ministers held title to the choicest farms. The Prime Minister had a beauty near Luba, and the President himself seized nearly four thousand acres near the Malabo airport.”

Tropical Gangsters contains many such details and leads, as well as the names of potential witnesses who could be located and interviewed. And yet, as of a few months ago, U.S. investigators had not sought to talk to Klitgaard — nor did they appear to even know about his book. When they finally realized they should reach out to him, the investigators, I learned, struggled to locate his contact information even though it can be found with a two-second Google search.

Indeed, a great deal of information about Teodorin’s disastrous and corrupt stewardship of the Agriculture and Forestry Ministry is easy to find online. Logging in Equatorial Guinea has declined in recent years, which the government attributes to its conservation efforts. More impartial observers say this decline stems from the fact that there are simply not that many trees left: Teodorin’s ministry has facilitated the rapid depletion of forest resources in the country. “Enforcement of legal requirements is virtually non-existent regarding commercial logging,” concluded a 2001 assessment by a group called World Rainforest Movement. In 2005, Allan Thornton, president of the Environmental Investigation Agency, testified before a U.S. House subcommittee that virtually all of Equatorial Guinea’s timber exports to China were illegal.

Diligent investigators should be able to find evidence of how Teodorin operates. After my Foreign Policy story was published I was contacted by a foreign timber executive who lived in Equatorial Guinea in the 1990s, before oil revenues began pouring in and when the timber industry was still the country’s primary cash cow. According to this person, even before Teodorin became the minister of agriculture and forestry, he had acquired a notorious reputation among the country’s logging companies. He quickly earned the nickname “El Nino” from foreign timber executives, due to the storms that he would kick up when he flew back to Equatorial Guinea from lengthy vacations abroad. “He would call emergency meetings of all the logging company heads in which he would announce some new tax on logging operations,” the source said.

This person also said that Teodorin slapped an extra “tax” — payable directly to him — on wood harvested from Equatorial Guinea. “Each company paid a royalty to the state treasury for each cubic meter of log shipped. This might be $100 per cubic meter,” the source explained. “Above that, each company also had to pay an amount per cubic meter directly to Teodorin.”

I later spoke with a French national named Jean Michel (he asked that I omit his last name) who worked for a French logging company that Teodorin seized. By his account, it was impossible for timber companies like the one he worked for to operate in Equatorial Guinea without paying off Teodorin. According to this person, it was when his firm refused to pay further bribes that Teodorin sent the military to shut down its operations and kick its employees out of the country.

Shakedowns like this aren’t the exception. They’re the rule — and it’s only gotten worse since the country happened upon a glut of offshore oil. Why Teodorin and his father’s regime have thus far escaped sanction from U.S. authorities is a mystery.

Perhaps the U.S. federal investigators are making more progress than I am aware of, but that certainly doesn’t appear to be the case. What accounts for their hapless investigation? Is it due to political interference from the Obama and Bush administrations in order to protect friendly relations with an American oil partner? Is it a result of ineptitude and incompetence? I’m not sure; but what certainly is clear is that the evidence is out there, and investigators seem largely uninterested in obtaining it, not to mention prosecuting the case against Teodorin.