Kleptocracy #3 | How corruption is reshaping politics and security
The latest global news, research and analysis from Hudson Institute
Welcome to the third edition of Kleptocracy, the Substack from Hudson Institute on how corruption is reshaping global politics and security. Casey Michel here, with all the latest news, research and analysis compiled below by Nate Sibley.
Earlier this week, the US Department of Justice announced the resolution of one of its most prominent efforts to seize ill-gotten gains from a foreign kleptocrat. As the DOJ revealed, the US will be distributing nearly $27 million in seized monies to purchase Covid vaccines for citizens of the African country of Equatorial Guinea.
“Wherever possible, kleptocrats will not be allowed to retain the benefits of corruption,” said Assistant Attorney General Kenneth A. Polite Jr. “The department’s tenacity in ensuring that these funds be returned for the benefit of the people of Equatorial Guinea demonstrates our commitment to making sure a nation’s resources are used to benefit the people of that nation and are not siphoned off inappropriately.”
The move brings to a close the saga of American efforts to go after the illicit assets tied to Teodorin Obiang, the son of Equatorial Guinea’s decades-long dictator – the longest-serving dictator in the world.
For anyone involved in covering and analyzing kleptocracy, Obiang is a familiar face. Not only were he and his family subject of multiple high-profile Senate investigations into how brutal regimes rely on American (and other) financial secrecy tools to launder their funds, but Obiang is, as one federal investigator told me, the “poster child of kleptocracy.” In many ways, he’s the clearest case study in how despotic and kleptocratic figures use a whole range of Western financial secrecy tools, and Western enablers, to move and hide their ill-gotten gains. From mansions to luxury cars, from banks to auction houses, from private jets to escrow agents, from lawyers to real estate professionals, Obiang’s financial network in the US touched nearly the entire range of tools and services we associate with modern kleptocracy.
Which is why, in the early 2010s, the US opted to launch its Kleptocracy Asset Recovery Initiative – meant to freeze and seize assets linked to kleptocratic figures coming to the US – against one figure in particular: Obiang.
It hasn’t been unmitigated success; not only did the case take years to finalize, but Obiang managed to whisk a range of assets out of the US before American authorities could seize them. (Which is why Michael Jackson’s famous crystal-studded glove has a new home in Equatorial Guinea.) And the case hasn’t stopped Obiang’s rise back home. Not only is he now a vice president under his father, but the dictator appears to be grooming him as a potential successor.
Still, the case is proof that efforts like this can, and should, succeed. It’s also proof that there are novel means of returning assets to pillaged populations – and other means of making sure the money looted from them and their public coffers can find a successful home.
And it’s further proof that, no matter how much he may believe otherwise, Obiang is hardly untouchable. Indeed, the decision comes after the UK recently sanctioned Obiang, and after French courts once more found him guilty of gargantuan corruption.
He may still enjoy the fruits of his and his family’s bloody reign elsewhere. But the days of Obiang escaping unscathed are far behind him – and the days of finding a better home for his ill-gotten gains are, finally, here.
For more on the investigations into Obiang and his network, please pre-order AMERICAN KLEPTOCRACY, out this November from St. Martin’s Press. And be sure to join us at Hudson Institute next week for an online discussion with the DOJ officials and civil society leaders who led the hunt for Obiang’s assets.
- Casey Michel
New from KI
Making a Killing, Ep.22: Kleptocracy With Chinese Characteristics
On this week’s podcast, Matt Schrader and Paul Massaro examine the inner workings of corruption within the Chinese Communist Party; how it shapes China’s governance and economy, and undermines rule of law worldwide as Beijing continues to push for global influence.
The Emerging Artistry of Hunter Biden | Casey Michel, The Atlantic
His upcoming solo show is a headache for the White House—and a window into the murky finances of the international art market.
“At some point in the coming weeks, hundreds of thousands of dollars will be funneled to the son of the sitting American president—and none of us will know anything about who sent the money, or where it originally came from, or why anyone chose to send it in the first place…”
Virtual Event: Obiang’s Kleptocracy in Equatorial Guinea | Hudson Institute | September 30, 2021
Most Equatoguineans live on $1 per day but Teodorin Obiang, son of the country’s authoritarian ruler, pursues a hedonistic lifestyle in the West. Next week, KI will host the US Department of Justice for an update on latest developments in the case. We’ll also be joined by Tutu Alicante of EG Justice and Sara Brimbeuf of Transparency International France to learn about civil society’s critical role in delivering justice for Equatorial Guinea.
Insights: Research and Analysis
Regulating the Enablers | Josh Rudolph, GMF/Alliance for Securing Democracy
This brilliant new report sorts through the various professions that facilitate transnational corruption and other illicit finance, with recommendations for how the US Treasury Department should prioritize its plans for reform.
Assets Abound: Tracking the Assets of Congo-Brazzaville Kleptocrats | Collectif Sassoufit and C4ADS
Denis Sassou-Nguesso’s family members have been connected to property assets in Florida, New York City, and elsewhere. This investigation tracks $32.5 million tied to politically exposed people linked to the president.
Four experts will discuss how professional gatekeepers facilitate and incentivize transnational corruption, and what to do about it.
News
Ukraine's Parliament Approves 'Oligarch Law,' Day After Attack On Presidential Aide | RFE/RL
“The draft law, which must still be signed by Zelenskiy, would introduce a legal definition for an oligarch, create a register of tycoons, and impose limitations on their activities such as blocking them from financing political parties.”
President Biden highlights corruption at UN General Assembly 2021 | The White House
“Corruption fuels inequality, siphons off a nation’s resources, spreads across borders, and generates human suffering. It is nothing less than a national security threat in the 21st century.”
ONE TO WATCH: Congress is quietly building major bipartisan counter-kleptocracy measures into the next must-pass National Defense Authorization Act. There’s a long way to go - but their early inclusion is promising.
KI’s Paul Massaro posted the amendments so far on Twitter: sanctioning Russian oligarchs known as the “Navalny 35”; preventing INTERPOL abuse; mandate country-by-country reporting on anti-corruption compliance; and mandatory sanctions on Nord Steam 2 and Russian sovereign debt among many others.
Hunter Biden Allegedly Demanded $2 Million to Try Help Lift Libya Sanctions | Business Insider
German Finance Minister Grilled Over Irregularities at Anti-Money Laundering Agency | Financial Times
The IMF is Growing More Picky About Who It Funds | The Economist
“Recent events in west and central Africa suggest it is being forced to find some of its old mettle, at least in private, as it tries to balance the sometimes competing goals of getting emergency pandemic money out quickly while also fighting corruption.”
The Mysterious Scottish Shell Companies Linked to an Uzbek Business Empire | OpenDemocracy
Donors Pledging Billions in Aid to Afghanistan Face a Challenge: Navigating the Taliban | CNBC
Does Lebanon Finally Have a Government That Can Fix the Mess? | Zinya Salfiti, Foreign Policy
“With a ruling class stacked with wealthy businesspeople and politicians, too many familiar faces—whose corruption and negligence are what many blame for the current situation—are still dominating Lebanon’s political scene.”
Corruption in Chinese Infrastructure Projects in Sudan: Report | ANI
“Official complicity in the narco trade, a trend echoed elsewhere across Honduras and Central America, has exacerbated an already long history of inequality in the region, further impoverishing much of the working class while enriching corrupt officials and wealthy elites who control most of the land, capital and government.”
Myanmar Court Sets Oct. 1 for Suu Kyi Corruption Trial | Washington Post