Crude World (7 page)

It all came crashing to the ground when Senate investigators, reacting to stories about Obiang and Riggs by investigative journalist Ken Silverstein, launched their probe. In 2004 the Senate released a report entitled “Money Laundering and Foreign Corruption: Enforcement and Effectiveness of the Patriot Act, Case Study Involving Riggs Bank.” A sexier but no less accurate title might have been “How a Despot Looted His Country with the Help of American Bankers and Oilmen.”

American oil companies were involved in far more than ordinary royalty payments to Obiang’s regime. They were also making a variety of payments that seemed geared toward rewarding important figures in Equatorial Guinea. The Senate report got straight to this point: “Oil companies operating in Equatorial Guinea may have contributed to
corrupt practices in that country by making substantial payments to, or entering into business ventures with, individual E.G. officials, their family members, or entities they control, with minimal public disclosure of their actions.” Among the payments were more than $4 million that various firms, including Exxon, Chevron, Marathon and Hess, provided for tuition and living expenses of Equatorial Guinean students abroad. These are the sorts of scholarship programs that companies like to portray as shining examples of their enlightened and generous charity. But according to the report, most of the students appeared to be “children or relatives of wealthy or powerful E.G. officials.” These are akin to bribes in kind; instead of slipping $50,000 to a government official, a company pays the college expenses of the official’s son.

Between 1995 and 2004, millions of dollars from these oil firms were deposited into Riggs accounts for what appeared to be real estate or business deals. Payments were made to, among others, the president’s wife, the interior and agricultural ministers, and at least one well-placed general. For several years Exxon paid between $
135,000
and $175,000 to Obiang’s first wife, Constancia Nsue, to rent a compound that houses its workers and offices. (I asked to visit the compound while I was in the country, but Exxon officials refused my requests. I showed up at the compound one day but was turned away by security guards. I noticed, behind them, an expanse of well-tended lawns, finely paved roads and neatly ordered cottages—a contrast to the shacks most local people live in.) Exxon also paid $236,160 to a firm owned by the interior minister; it is unclear what the payments were for. The prize for the most unusual deal went to Amerada Hess Corporation, which rented property for $445,800 from a fourteen-year-old relative of Obiang’s.

The oil companies say these contracts were not bribes but, rather, payments for necessary goods or services provided by people who just happened to be the president’s relatives and ministers. And it has to be said that if the oil companies were indeed looking to purchase goods or services, other than from friends in important places, they may not have had much choice. The Senate report noted that in Equatorial
Guinea, as in most kleptocracies, the ruling family, the government and the business elite are one and the same. If an oil company needed to hire security guards for a warehouse in Malabo, there was only one local company licensed to provide guards: it was called Sonavi, and it was owned by Armengol Nguema, the president’s brother and the director of national security. “How oil companies can and should respond to this situation raises a number of difficult policy issues,” the Senate report acknowledged.

There is little doubt that the local firms American oilmen dealt with were fronts for enriching the elite. The president’s playboy son Teodorin admitted in an affidavit that he and other ministers routinely collected kickbacks on government contracts. The affidavit was filed in response to a lawsuit that sought to deprive Teodorin of two houses he had purchased in South Africa for $7 million. Teodorin needed to prove that the money with which he’d bought the houses was his own rather than the state’s. He noted that he was a minister in his father’s government, and that “cabinet ministers and public servants in Equatorial Guinea are by law allowed to own companies that, in consortium with a foreign company, can bid for government contracts.” The affidavit went on to explain that once the contract is awarded, the “cabinet minister ends up with a sizable part of the contract price in his bank account.” This affidavit was almost surreal—an honest account of dishonesty.

These were equal-opportunity rip-offs because the companies that funneled back-channel money to Obiang’s regime were, in return, receiving special benefits from the regime. This takes us back to the fact that oil companies tend to get better terms from lesser-developed governments. According to an International Monetary Fund assessment, oil companies in Equatorial Guinea received “by far the most generous tax and profit-sharing provisions in the region.” The government received only 15 to 40 percent of the revenues from the sale of its oil and gas; the rest went to the companies that extracted the resources. The norm in sub-Saharan Africa was for host governments to receive 45 to 90 percent of the revenues from oil and gas sales. And often, in Equatorial Guinea, the companies failed to pay the government what
they owed: the IMF said that oil and gas companies underpaid the government by $88 million between 1996 and 2001. It would seem that the companies and the Obiang family had a wink-wink understanding: You give us extra money here and we’ll give you extra money there. The only losers in this understanding, of course, were the destitute people of Equatorial Guinea.

To see, on a transactional level, how plunder is achieved, and how an oil firm might funnel a bribe to a president, it’s useful to look into the affairs of Abayak S.A., a mysterious company that was widely believed to be owned by Obiang and that even a Riggs memo described as “a significant earner of income for the President.” Was this the conduit through which American companies slipped money into Obiang’s already bulging pockets? The Senate report found a number of unusual payments to Abayak. For example, Marathon negotiated a deal to purchase land from Abayak for more than $2 million; a partial payment was executed with a check for $611,000 made out to Obiang himself. Marathon was involved in a joint venture to operate two natural gas plants with GEOGAM, an obscure company in which Abayak held a 75 percent stake. And so on.

But nobody seemed to know what Abayak did. Were these payments for actual goods and services?

I thought the answer might be found in Bata, the largest city on the mainland portion of Equatorial Guinea. Like Malabo, Bata retained a sense of postcolonial languor, with ramshackle Spanish architecture of the one-story variety and semiderelict streets with potholes a mule could disappear into. The pool at the town’s finest hotel, which was not fine, was filled with a foot of greenish murk, and even the hotel’s name—Pan-Africa—was a throwback to another era. Yet the biggest office building in the country at the time, reaching to seven stories, had just been completed there, and because it was known as Abayak’s headquarters—the company’s name was emblazoned at the top—I visited it in the hope of talking with an executive or two.

At the ground-floor reception area, I was told that the firm’s offices
were on the top floor. When I went there, I found that four of the six offices were vacant and unfurnished. Doors to the two remaining offices were locked and unmarked. If this was Abayak’s headquarters, it seemed unfathomably modest for a firm that had been selected as a strategic partner by the largest oil companies in the world.

Perhaps the receptionist was wrong; maybe Abayak’s offices were on another floor. I checked every floor and saw that the offices were either empty—most were—or occupied by other entities. Even the Ministry of Information official who accompanied me was flummoxed. Where was Abayak? And, more to the point,
what
was Abayak?

There were answers in Malabo. A British businessman told me that as far as he knew, Abayak functioned as a vehicle through which payments were made in exchange for the president’s approval of business projects. An African banker I talked with called Abayak a “holding company” that, he confirmed, had no offices. Indeed, there was no Abayak office in Malabo that I could locate. It was not possible to ask the president to solve the mystery—my requests for an interview were declined—so I went to the next-best source, his son Gabriel Nguema Lima, who, in the fashion of family regimes, was vice minister of mines, industry and energy. Nguema was in his twenties.

His office was in the ministry headquarters, a modest two-story building where a rooster was pecking around the front yard. His office had a flat-screen computer but was not large; in most governments it would house a midlevel civil servant. It was air-conditioned by a wheezing wall unit that belonged in a junkyard. Adorning the wall was Nguema’s diploma from Alma College in Michigan and his varsity soccer letter from a Michigan prep school, Cranbrook Kingswood. Odd as it seemed, this presidential son was a pseudopreppy, and odder still, given the ways of his tennis-playing father and his Malibu-dwelling half brother, he didn’t seem ostentatious. He was, nearly everyone said, the best hope for the country’s future. Once his father passed from the scene, and if Teodorin could be kept from power, perhaps Nguema could take charge.

Nguema initially described Abayak as a business with operations in
the cement and cocoa sectors. His pretense did not hold up for very long. I told him I had tried to locate its headquarters and had found nothing in Malabo and had come up empty at the building that bore its name in Bata.

The president’s son scratched his head.

“Um, headquarters of Abayak, that’s a good question,” he said, pausing uncomfortably. “I don’t think they have a headquarters. The headquarters would be”—he paused again and looked at his feet—“maybe my father’s house.”

How did American companies defend their dealings with Obiang? When its report was published, the Senate held a hearing at which the head of Riggs testified, as did senior executives of Exxon, Marathon and Hess. Oil companies tend to be quite adept at avoiding uncomfortable questions—they routinely refuse to make their executives available for interviews on controversial topics—but a summons from Congress cannot be refused.

Lawrence Hebert, president and chief executive of Riggs, expressed regret that his bank did not “fully meet the expectations of our regulators.” He blamed the absence of suspicious activity reports—which are supposed to be submitted to regulators when large cash payments are made—on a subpar computer system.

Senator Carl Levin was amazed.

“Mr. Hebert,” he said, “you don’t need a computer system to realize suspicious activity when you’ve got sixty pounds of cash there being walked into the door with a suitcase.”

Senator Levin was just warming up. He noted the effusive letter Hebert wrote to Obiang after their lunch in 2001.

“How do you write that stuff to a man as abominable as this guy?” Levin asked. “How do you basically live with yourself?” Levin also said, “After this information became ever more public, you continued to do business with him.”

“Well, we watched him closely,” Hebert replied. “We took prudent steps to be very careful with this gentleman.”

“Who you calling a gentleman?” Levin shot back. “Let’s call him a dictator.”

Later came the oil executives. Andrew Swiger, then an executive vice president at ExxonMobil, was the first to testify.

“The business arrangements we’ve entered into have been entirely commercial,” Swiger said. “They are a function of completing the work that we are there to do, which is to develop the country’s petroleum resources and, through that and our work in the community, make Equatorial Guinea a better place.”

“Make it what?” Levin asked.

“A better place,” Swiger replied.

Levin concluded, “I know you’re all in a competitive business. But I’ve got to tell you, I don’t see any fundamental difference between dealing with an Obiang and dealing with a Saddam Hussein.”

It will not come as a revelation that with the exception of Senator Levin and a few other voices in Congress, the U.S. government was as pliable a friend to Obiang as Riggs and Exxon. Grand theft—
national
theft—cannot be accomplished without the involvement of a lot of institutions, including foreign governments. The arc of U.S. relations closely followed Equatorial Guinea’s oil production: the more Equatorial Guinea exported, the more that was taken from its people, the better its relations with Washington. It did not matter that Obiang was a dictator and that his foreign minister had threatened to kill the American ambassador in the 1990s and that the American embassy had been closed after that. One of oil’s darkly magical properties is that it erases inconvenient memories.

In February 2001, Obiang was guest of honor at a private Washington luncheon organized by the Corporate Council on Africa, a lobbying group composed of American companies with investments in Africa. The council hailed Obiang, in a bio handed out at the luncheon, as the “first democratically elected president” of Equatorial Guinea. (In his most recent election, which even the State Department had described as flawed, Obiang won 97 percent of the votes.) According to
Ken Silverstein, the luncheon was held at the Army and Navy Club, and Obiang was seated at the head table with fawning oil executives and senior State Department officials, including Assistant Secretary of State for African Affairs Walter Kansteiner. After hearing speeches that praised his country as “fabulous” and “the Kuwait of Africa,” Obiang returned the kindness by declaring that “we can promise American companies that their investments are guaranteed.”

Soon after, the Bush administration decided to reopen the embassy in Malabo. Though Obiang’s regime was no less odious than before, Secretary of State Colin Powell and Energy Secretary Spencer Abraham each met with Obiang in 2004. Those sessions were private, but in 2006, as oil prices climbed higher and West Africa emerged as a crucial supplier, Obiang met with Secretary of State Condoleezza Rice, who described him, during a press conference, as “a good friend.” The Obiang family was delighted with its new relationship with Washington. As Gabriel Nguema, the president’s preppy son, told me, “The United States, like China, is careful not to get into internal issues.”