Despite national and international outcry, the Egyptian government has begun to demolish the 30 remaining historic houseboats on the riverside ... of the Nile in Giza, Cairo, citing a lack of registration. The move has angered residents and activists who accuse the state of erasing an important part of the country’s identity from its Golden Age era.
The bizarre dispute that played out inside a Los Angeles courtroom last month was the culmination of a decade-long legal saga that set the precedent for subsequent US anti-kleptocracy efforts.
It all began when the US justice department filed a lawsuit with the eye-popping title “United States vs. One White Crystal-Covered ‘Bad Tour’ Glove and Other Michael Jackson Memorabilia” in April 2011.
The US spent the next three years making its case that EG’s vice-president Teodoro Nguema Obiang Mangue (aka “Teodorin”) – the first son and presumptive heir of President Teodoro Obiang Nguema Mbasogo – was a money-laundering kleptocrat.
In October 2014, Teodorin agreed to relinquish $30m worth of US-based assets, including Michael Jackson memorabilia, a Malibu mansion and a 2011 Ferrari 599 GTO. Returning the proceeds to EG, however, has proven a bigger challenge.
Since 2011, the US has repatriated more than $1.5bn in laundered foreign corruption proceeds to a dozen countries around the world. However, getting Malabo to agree to a deal to help its own people has proved impossible – until now.
With the Joe Biden administration finally running out of patience after years of a stalemate, on 8 July, US prosecutors turned to George Wu, the federal judge who has been working the case for the past decade. They asked him to enforce a proposed settlement to fund COVAX – a global vaccine alliance – citing “repeated actions” by Teodorin to “thwart multiple desirable programs”.
Judge Wu sided with the US position in a tentative ruling on 8 July, subject to further arguments from both parties scheduled for 20 September.
Ideal test case
In many ways, EG was exactly the kind of regime the Barack Obama administration had in mind when it launched its Kleptocracy Asset Recovery Initiative just over a decade ago.
While officially making less than $100,000 a year as minister of agriculture and forestry at the time, Teodorin was reportedly spending tens of millions of dollars a year on yachts, jets, high-end cars and luxury homes.
Meanwhile, his country’s impoverished population of about 1 million suffers from some of the worst health and education outcomes on the continent despite an explosion of wealth from oil discoveries in the 1990s. That record was an open secret in Washington, where the Obiang family’s spending habits had caused a financial scandal.
It’s kind of like ‘I can get away with this and I’m going to do it’.
In 2004, a US senate report had found that the capital city’s largest bank had opened more than 60 accounts for Equatorial Guniean government officials and their family members, worth up to $700m. The revelations brought an inglorious end to Riggs Banks, the so-called ‘bank of presidents’ that had handled the finances of US leaders dating back to the 1830s but was unceremoniously sold off in 2015 after getting hit with $41m in fines.
The Riggs fiasco sparked calls for the US government to make fighting money laundering a priority. In July 2010, attorney general Eric Holder chose the African Union summit in Uganda as the forum to announce the initiative that would soon ensnare EG, promising that it would “deter corruption, hold offenders accountable, and protect public resources”.
Teodorin “in many ways is the poster child” for kleptocrats who capture state finances for their personal gain and go to the West to “enjoy this looted wealth,” says Casey Michel, an investigative reporter and author of an upcoming book on money laundering in the US. “It is difficult to overstate the importance of this case,” Michel says, terming it the “proof of concept that the US’s Kleptocracy Asset Recovery Initiative … can actually be effective.”
Delay and sabotage
By April 2011, the new unit had filed its first complaint, with Teodorin as its first target. Prosecutors sought to recapture more than $70m, but had to settle for less than half after Teodorin defied them by taking what he could out of the country, including a Gulfstream G-V jet valued at $38.5m, several luxury vehicles and the Swarovski crystal-studded glove that the case was named after.
“Once in EG, he displayed it at the EG cultural centre for everyone to come and look at what the Americans didn’t want him to have,” says Tutu Alicante, the founder and director of the nonprofit EG Justice in Washington. “It’s kind of like, ‘I can get away with this and I’m going to do it’.”
US prosecutors continued to build their case, however. By the fall of 2014, EG had agreed to relinquish $30m, with two-thirds going to a charitable organisation that would benefit the country and the rest of the funds forfeited to the US government.
However, getting across the finish line has proved elusive. Over the years, EG dangled several settlement options, including support for UNICEF and the education programmes that Philadelphia’s Drexel University has in the country, only to backtrack at the last minute.
For years, Teodorin has been “delaying and sabotaging the process,” Alicante says. “He feels it is his money.”
Out of patience
This year, the US finally ran out of patience. The settlement agreement called for a three-member panel to come up with a solution in case a bilateral deal couldn’t be worked out. The panelists are Susan Stevenson and Miguel Ntutumu Evuna (ambassadors for the US and Equatorial Guinea respectively) and Alberto Fernandez (former US envoy to Malabo), who serves as the court-selected chair.
After the panel agreed with the COVAX proposal on 4 May, Evuna emailed the two other panelists 10 days later expressing “concerns” and instead offered to go through a US nonprofit: Medical Care Development International.
Stevenson emailed him back less than an hour later to insist that COVAX would provide enough vaccines for everyone in the country. “There is simply no reasonable justification for delay,” the US diplomat bluntly told her counterpart.
…the US is no longer seen as this open, welcome destination for all of this illicit wealth tied to these regimes.
In late May, US prosecutors went to Judge Wu to enforce the settlement and “end the almost seven-year stalemate caused by Mr. Obiang Mangue”. Wu tentatively agreed.
The judge also ordered the transfer to the US of $6.35m from the settlement proceeds of a lawsuit against the real estate agent who sold Teodorin’s Malibu mansion.
The US government had allowed EG’s lawyers to hold the money during settlement talks, but its misuse improbably came to light when Simeon Oyono Esono Angue – minister of foreign affairs and cooperation – showed Stevenson a $1.4m check written to Teodorin as part of the resolution from the sale and asked her to “investigate what was preventing” him from being able to cash it, the US ambassador told the court.
It’s not clear if EG plans to fight the judge’s decision if it becomes final, as expected. The EG embassy did not respond to a request for comment, and the state department declined to comment citing “pending litigation”.
Still, anti-kleptocracy activists are buoyed by the court action. “It’s fantastic that the Biden administration seems to have hit the ground running on this,” Michel tells The Africa Report. “It obviously fits within the broader rhetorical framework we’ve seen from the Biden administration of prioritising efforts to combat corruption and kleptocracy, to make sure that the US is no longer seen as this open, welcome destination for all of this illicit wealth tied to these regimes.”
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