Economy of Equatorial Guinea - 2004 US Senate Report

2004 US Senate Report

A Senate report in 2004 found that Riggs Bank helped top officials of Equatorial Guinea steal hundreds of millions of dollars in oil revenues. The Senate Permanent Subcommittee on Investigations probed the corruption case involving Equatorial Guinea and its oil revenues for much of the past year.

The panel's report found that Riggs Bank helped government leaders in Equatorial Guinea siphon oil revenues to accounts set up for them in Washington. Equatorial Guinea has been cited by the U.S. State Department for human rights abuses, corruption, and diversion of oil revenues to government officials.

Beginning in 1995 until 2004, Riggs oversaw as many as 60 accounts containing as much as $700 million, making Equatorial Guinea its largest single customer. Some were government accounts, while others were the private accounts of President Teodoro Obiang Nguema, other government officials, and their families.

The Senate report says millions of dollars in the government accounts, which should have gone to help impoverished Equatorial Guineans, were instead funneled to off-shore tax shelters, with help from Riggs officials.

At a hearing on the matter at which current and former bank officials appeared, Senator Carl Levin, a Michigan Democrat, was clearly outraged. "Somehow there has to be a conscience here. Aren't you troubled?," he said.

The report describes one incident in which the bank manager of the country's accounts, Simon Kareri, brought a 27 kilogram suitcase with $3 million in plastic-wrapped cash to Riggs's Dupont Circle branch to make a deposit into President Obiang's account. Mr. Kareri, who was fired in January, refused to testify at the hearing," he said. "Mr. Chairman, there is nothing I would like to do more than answer your questions today. However, I must heed the advice of my counsel and invoke my fifth amendment rights under the Constitution and refuse to answer the question," he said.

Senators were angered that bank officials never reported any suspicious financial transactions involving Equatorial Guinea.

Lawrence Hebert, president and chief executive officer of Riggs Bank, blamed a lack of an internal system to monitor and identify such suspicious activity. It is an assertion that Senator Levin found ridiculous.

"First of all Mr. Hebert, you do not need a computer system to realize suspicious activity when you have sixty pounds of cash that are being walked into the door with a suitcase," he said.

Mr. Levin criticized bank regulators for not doing enough in their oversight responsibility.

Riggs was fined a record $25 million by federal banking regulators for allegedly failing to report suspicious transactions made to the Equatorial Guinea accounts, but that didn't happen until May 2004.

Senator Levin also took aim at oil companies that are doing business in Equatorial Guinea, many of which have secret contracts with firms that have ties to President Obiang.

The London-based organization Global Witness notes that the Senate committee report found that oil companies made payments into the personal accounts of Equatorial Guinean officials that were used for land purchases, office leases, and even education for the children of the country's leaders.

With oil money stashed away in Riggs Bank for the ruling elite of Equatorial Guinea, argues Sarah Wykes of Global Witness, oil companies cannot make the case that they are a force for positive change in the country.

"Equatorial Guinea is now the third largest producer of oil in sub-Saharan Africa," she said. "It has been called the 'Kuwait of Africa' But it is clear that since oil came on stream, the human development indicators of the country have actually gone backward, so we can say the oil money is not contributing to development at all," she said.

Equatorial Guinea responded with an 82-point report claiming that the Senate had been "duped" by "pressure groups", naming specifically a $40,000 contract between a lobbying group and Severo Moto Nsa, an EquatoGuinean living in self-imposed exile who uses his website to make wild accusations against Obiang. The rebuttal also claims that the payments to government members were disclosed in the government accounts and were not illegal.