On October 10, 2014, the U.S. Department of Justice announced a civil settlement with Teodoro (“Teddy”) Nguema Obiang, Vice President of Equatorial Guinea and eldest son of the country’s current President, under the DOJ’s Kleptocracy Asset Recovery Initiative. Through a combination of forfeiture and divestment, Obiang agreed to turn over $30 million in U.S.-based assets purchased in a “corruption-fueled spending spree,” according to the DOJ. Those assets include a Malibu mansion, Ferrari, and $1 million for life-size Michael Jackson statues Obiang had expatriated from the United States to Equatorial Guinea. He gets to keep a Gulfstream jet and most of his other Michael Jackson paraphernalia, however, including the red leather jacket MJ wore in “Thriller” and the white crystal-covered glove from the king of pop’s “Bad” tour. The settlement dollar-value represents less than half of what the DOJ sought; Obiang managed to send a bulk of his U.S.-based assets outside the United States, including several luxury cars. But the case still represents significant progress in the U.S. government’s anti-corruption efforts, particularly because this action was brought against an official still in power, and most of the settlement amount will be used for the benefit of the people of Equatorial Guinea.
The Obiang settlement comes at the end of a decade-long probe into the crooked leader’s corruption and money-laundering activities. Obiang “shamelessly looted his government and shook down businesses in his country to support his lavish lifestyle, while many of his fellow citizens lived in extreme poverty,” said Assistant Attorney General Leslie Caldwell. According to the DOJ, Obiang’s annual government salary was around $100,000, but he amassed over $300 million through bribes, kickbacks, embezzlement, and extortion. Obiang acquired significant assets in the United States through corporate entities and third parties. The settlement terms require that Obiang disclose other assets he owns in the United States, and provide that certain assets now outside the United States will be subject to seizure and forfeiture if they return to the United States. Obiang will probably be advised not to plan a trip to Las Vegas in his Gulfstream jet any time soon.
The United States is not alone in its pursuit of Obiang. The French government had filed money-laundering charges against Obiang pursuant to its own investigation. France has already seized a multi-million dollar Paris mansion and a fleet of expensive cars.
In the Obiang action, DOJ paired with Immigration and Customs Enforcement (ICE) to conduct the investigation and bring Obiang to justice. Specifically, Homeland Security Investigation’s (HSI) Foreign Corruption Investigations Group (FCIG) and HSI Asset Identification and Removal Group in Miami conducted the investigation with assistance from several HSI attachés stationed in Rome, Madrid, London and Paris. The FCIG works with representatives of victimized foreign governments to prevent corrupt proceeds from entering the United States, seize assets secured through ill-gotten gains, and repatriate those funds to the victimized governments.
Unlike most anti-corruption enforcement efforts, like the FCPA, which focus on punishing bribe-payers, the Kleptocracy Initiative targets the bribe-taker. Among the Initiative’s goals are to “prevent the U.S. from becoming a haven for corruption proceeds” and to “help return the stolen assets to the people harmed.” According to the DOJ, the U.S. government has seized approximately $600 million of the $1.2 billion it has sought in kleptocracy cases ($402 million of which was recovered in the Sani Abacha action, which we wrote about here).
The Obiang settlement stakes out some new territory for the U.S. government’s pursuit of kleptocrats. This action appears to be the first time the DOJ has initiated an action against a sitting government official; an official whose family is still in power and who has been slated as the heir-apparent to his father’s presidency.
The settlement documents also reflect the first time the U.S. government has clearly assigned dollar amounts for the benefit of the real victims of high-level corruption: the citizens of the country whose coffers that corrupt leaders loot. As part of the agreement, $20 million will be provided to a charitable organization in Equatorial Guinea, and another $10.3 million forfeited to the U.S. government will be used for the benefit of Equatorial Guinea’s people.
Some say the settlement reflects a missed opportunity. The Open Society Justice Initiative, a human rights organization, opined that taking the case to trial would have revealed important facts with “inestimable value to expose the nature of the corruption system in Equatorial Guinea as well as the role of lawyers, bankers and other professionals who grease the wheels of abuse.”
While the settlement might be seen as a missed chance, and the amount may seem low in light of Obiang’s apparent massive misuse of public funds, the Obiang action still reflects a victory for DOJ’s Kleptocracy Asset Recovery Initiative, which has suffered from setbacks in years past due to the highly complex and political nature of these cases. The action also highlights the U.S. government’s commitment and aggression to impose penalties against corrupt actors from many angles: through huge monetary penalties levied on bribe-payers and recovery of significant assets hidden in the U.S. by bribe-takers.