U.S. Department of Justice/Civil Society — 1; Kleptocrats — 0

October 10, 2014, deserves mention in any future history of the anticorruption movement, for it was on this date that a ruling kleptocratic family (colloquially known as thugs in power) conceded the obvious: that the money to fund a kleptocratic lifestyle — in this case a mansion in Malibu, a Ferrari 599 GTO, and Michael Jackson memorabilia – did not come from the family’s hard work on behalf of the citizens they rule.  Rather, it came the easy way: from the wholesale theft of the nation’s patrimony.

This startling, if obvious, concession came in the settlement of a civil suit filed by the U.S. Department of Justice, with the support and encouragement of civil society, against an unlikely group of defendants.  In the order listed in the complaint, they are: 1) One White Crystal Covered Bad Tour Glove and Other Michael Jackson Memorabilia, 2) One Gulfstream G-V Jet Airplane Displaying Tail Number VPCES, 3) Real Property Located on Sweetwater Mesa Road In Malibu California, 4) One 2007 Bentley Azure, 5) One 2008 Bugatti Veyron, 6) One 2008 Lamborghini Murcielago, 7) One 2008 Rolls Royce Drophead Coupe, 8) One 2009 Rolls Royce Drophead Coupe, 9) 2009 Rolls Royce Phantom Coupe, and 10) the Ferrari 599 GTO.

Although defendants stood mute before the court, their owner, Teodoro Nguema Obiang Mangue, Second Vice President of Equatorial Guinea and (surprise?) son of the country’s president, was anything but.  Through the mouths of expensive American legal talent he complained loudly and bitterly that the ten named defendants were innocent.  But in settling the case, he agreed in effect that three – the mansion, the Ferrari, and some of the Michael Jackson memorabilia, were indeed guilty.  Guilty? Of what?

Guilty of being acquired with the proceeds of corrupt acts Obiang committed while an officer of the government of Equatorial Guinea.  That was the theory under which the Justice Department launched its lawsuit, to be forever known in the annals of American law as United States v. One White Crystal Covered Bad Tour Glove and Other Michael Jackson Memorabilia et al.  Similar to cases brought against the assets of the deceased ruler of Nigeria and other corrupt officials, the Department sought in the complaint to seize the ten items listed as defendants and return them to their rightful owners, the citizens of Equatorial Guinea.  What makes One White Crystal Covered Bad Tour Glove and Other Michael Jackson Memorabilia different from previous actions, and thus precedent setting, is that it is the first time the Department has won, or at least favorably resolved, an asset seizure case where a sitting ruling family appeared and contested the claim.

Under the terms of the settlement, young Obiang must sell his Malibu mansion, estimated to be worth $30 million, the Ferrari automobile, and some of the Michael Jackson memorabilia he bought with the proceeds of corruption.  From the sale of these items $20 million will go to a charity to benefit the people of Equatorial Guinea and another $10.3 million will be forfeited to the United States which will direct how it will be used to benefit Equatorial Guinean citizens.  While on the “Friends of Teo” Facebook page the youngster denies the items were bought with stolen money, the settlement speaks loudly and authoritatively to the contrary.

The hardcore anti-Obiang crowd may be disappointed that the Department didn’t try “to convict” all ten defendants, and in an earlier post this writer too urged the Department to hang tough.  But civil society organizations close to the case acknowledge the Department faced an uphill battle in prevailing against the ten.  As my friend and colleague Ken Hurwitz of the Open Society Foundations observed when the settlement was announced, what is more important than how much was seized was the message sent:  other kleptocrats will now know that cultivating close ties to Washington, as Equatorial Guinea’s have, will not protect their assets  from seizure. As Ken aslo notes, the case should also “set a standard that other developed countries around the world should seek to meet or exceed.”  Let us hope that indeed they do.

8 thoughts on “U.S. Department of Justice/Civil Society — 1; Kleptocrats — 0

  1. Rick,

    Like you, my main response to this news is to celebrate this (partial but significant) victory against kleptocracy. But I did want to highlight one aspect of the case that may be worth some more critical reflection:

    The reason the case has such a funny name — and the reason the US was able to press ahead with the seizure despite the absence of a conviction of Obiang’s son or anyone else — is that this was a civil forfeiture proceeding. As the Stolen Asset Recovery initiative (StAR) pointed out (approvingly) in its recent “Few and Far” report (http://star.worldbank.org/star/publication/few-and-far-hard-facts-stolen-asset-recovery), civil forfeiture proceedings are an increasingly common tool for going after the proceeds of corruption, particularly in the international context. Their appeal is precisely that they do not require a criminal conviction of the asset’s owners, and so have a lower burden of proof for the government and fewer procedural safeguards. StAR, and many civil society activists pushing for more aggressive action on asset recovery, have called for even more widespread use of civil forfeiture.

    I’m basically supportive of these calls, but I do think it’s worth sounding a cautionary note. In the domestic context, at least in the US, many have raised serious concerns about the abuse of civil forfeiture laws. (For example, there have been extensive critical discussions of these laws in the Washington Post (http://www.washingtonpost.com/sf/investigative/2014/09/06/stop-and-seize/) and the New Yorker (http://www.newyorker.com/magazine/2013/08/12/taken).)

    The abuses described in these and other discussions wouldn’t seem to apply in a case like that of the Obiang family’s luxury possessions, and the legitimate concerns about civil forfeiture laws can be addressed, I think, through fairly simple reforms. But perhaps, as the international community moves towards more aggressive use of these laws in the asset recovery context — especially once we move beyond the kleptocrats to more mid-level people — it’s worth thinking about how to make sure there are appropriate safeguards built into the system. After all, even though the fight against corruption should be a high priority for law enforcement, the rights of defendants — even defendants accused of corruption — are also important, and the idea that these rights can be circumvented by going after the property rather than the person is a bit troubling, even if in the end it may be justified under the right circumstances.

    • @Matthew Totally agree with your comment. Thanks for making this point. I read those civil forfeiture articles that you mentioned with horror — also because more vulnerable segments of US society seem to be the target. Something to watch out for. @Rick: Great post. Wow, that Facebook Friends post is the height of cynicism.

    • I agree that we should be cautious about the use of civil forfeiture for the reasons you mentioned, but I wonder if the abuse of civil forfeiture by local police departments is an instructive example for the use of civil forfeiture in this context by the DOJ.

      It seems like there are perverse incentives at play, identified by Sarah Stillman and others, when it comes to local police departments that we don’t need to worry about here. Local police directly benefit from civil forfeiture as a source of funding. By contrast, Raj wrote on the blog (https://globalanticorruptionblog.com/2014/03/10/doj-freezes-nigerian-dictators-458-million-in-largest-u-s-kleptocracy-forfeiture-action/) about a DOJ initiative to repatriate assets seized in civil forfeiture proceedings, with strings attached to benefit the people of the affected country.

      I am also wondering what safeguards you think would be appropriate. Would the DOJ have to carry a higher burden to seize assets, or did you have something else in mind?

      • Anna, I think that this is a really good point and agree that many of the factors that appear to have led to the abuse of civil asset forfeiture domestically may be less prevalent in these types of cases. Interestingly, it appears that one of the reasons why we may not be as concerned that asset forfeiture is being abused when targeting kleptocrats –the fact that the funds in question will be returned to the citizens of the country from which they were taken rather than enriching the individuals/entities which assisted in the kleptocrat’s prosecution– may present its own issues in this case. Obiang’s father remains in power in Equatorial Guinea and while the settlement specifically notes that these funds must be given to charity it will be interesting to see if any complications arise regarding the return of these assets to a country whose government is still controlled by the father of the man they were taken from.

        Matthew, I’d also be interested to hear what safeguards you think might serve to provide greater protections for defendants, while still encouraging states to adopt this method as a means of targeting kleptocrats.

  2. The Obiang settlement is certainly encouraging, and I echo Ken Hurwitz’s hopes that this case will push other countries to set higher standards in the future. The story is of particular interest to me given recent reports about the Philippine Vice President Jejomar Binay’s 850 acre property (which, to continue along the theme of absurdity, includes a replica of the Royal Kew Gardens, a 40-car garage, man-made lagoons, a cock-fighting farm, and an air-conditioned piggery).

    The Philippine Senate heard testimony concerning the property this week, and while I remain skeptical of the government’s ability to prosecute the VP with the same success as the U.S. Department of Justice, I’m still hopeful that external pressure might push for more transparency as investigations move forward. Apparently, Binay’s lawyers have defended the property by stating that most of the land itself has since been sold to corporations, which they claim could not possibly be dummy corporations because foreign investors are involved with them. Depending on where those foreign investors are based, I can only hope that this could open up some avenues of external prosecutorial pressure.

    For now, I’ll join Rick in celebrating this win over one more kleptocrat.

  3. I am generally, like the rest of you, glad of there being some accountability here. To sound one small, discordant note, though, although there will be a message sent to individuals in a position like Obiang and there may be something to learn/model via how the settlement funds are distributed, I think it’s unlikely that most of the people of Equitorial Guinea will have any sense of this settlement is a check on corrupt abuse of power–I just don’t know how much that message will be able to infiltrate the limited international media coverage there. As I said, that’s not to say this result shouldn’t have occurred, that we shouldn’t be happy about it, or that there’s even anything else the U.S. can or should have done–just a reminder that this is more a message directed towards elites (which is admittedly an important component of an anticorruption campaign!) than it is to the general public of Equatorial Guinea, whose opinion of Obiang, let alone sense of government accountability, may not be much shifted by this.

  4. Pingback: U.S. Department of Justice/Civil Society — 1; Kleptocrats — 0 | Looking for it

  5. Pingback: Policing Private Parties: How to Get Kleptocrats’ Seized Assets to their Citizens | GAB | The Global Anticorruption Blog

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