As Rick has pointed out, it is exciting to see the successful forfeiture of U.S.-based assets owned by sitting Vice President of Equatorial Guinea, kleptocrat and international playboy Teodoro Nguema Obiang Mangue (“Obiang”). The Department of Justice estimates that the assets are worth an estimated $30 million. Also encouraging is the fact that the bulk of the settlement funds will be returned to the people of Equatorial Guinea. This is the first case in which the assets of a current leader’s cronies will be seized and repatriated to the country of origin by the U.S. Disbursing millions of dollars transparently in country that ranks 163/177 on Transparency International’s Corruption Perception Index will be challenging.
In stolen asset repatriation cases, the debate over disbursement typically boils down to whether to channel reclaimed cash through the government or through private actors. In Equatorial Guinea, returning the money directly to the government is a non-starter: the Obiang family has an extensive record of human rights and corruption abuses and a tight grip on power. The DOJ settlement accordingly cuts the government and its henchmen out of the forfeiture proceeds and channels repatriated funds through a private charity. But simply relying on private actors will not eliminate corruption challenges; there are pitfalls in channeling aid through private NGOs as well.
The DOJ should keep the following risks in mind as works out a disbursement plan for the Obiang settlement funds:
- Political reprisal against aid recipients: Obiang’s father, President Teodoro Obiang Nguema Mbasogo, has silenced dissent, tortured opposition leaders, and shut down or coopted all independent media organizations in Equatorial Guinea. Bearing the dubious distinction “world’s longest-ruling, non-royal head of state,” Obiang may be tempted to act vengefully toward aid recipients, and so the DOJ should do what it can to prevent such retaliation. This will be especially challenging since there are few independent voices within the country that could raise the alarm should intimidation occur.
- Ingrained corruption in non-governmental organizations: In an environment where exploiting power and money for favors is common, local NGOs may be susceptible to the same pressures that have fostered corruption in other sectors. As a 2010 Transparency International report highlights, even when local NGOs do not themselves engage in corrupt activities, they may outsource certain pieces of development projects to intermediaries that make the “facilitation” payments necessary to proceed. DOJ’s settlement in the Obiang case provides some safeguards against this, including by prohibiting the government, public officials, their relatives or legal entities controlled by them from receiving payments or other consideration from the funds. Nevertheless, ensuring that all local partners operate bribe-free will be a another tough challenge.
- Weak infrastructure: Equatorial Guinea has weak infrastructure and few trained personnel with the administrative capacity to manage large capital inflows or development initiatives. This significantly increases the risk of corruption. Afghanistan provides a cautionary example: Local Afghan organizations proved incapable of effectively absorbing, utilizing, and monitoring the massive aid disbursements that followed the U.S. invasion, and corruption burgeoned. Ensuring that funds reach the intended beneficiaries will likely require building disbursement systems from the ground up, tapping local resources but also relying heavily on external expertise.
These challenges, though particularly pronounced in Equatorial Guinea, are present in other nations as well. So what can the DOJ do here—and elsewhere—to mitigate these risks?
One encouraging example is the DOJ, Swiss, and Kazakh government settlement in the Giffen case. The US and Swiss governments seized the assets of an American businessman who had been giving and taking kickbacks from Kazakh officials to secure business deals. The Giffen agreement, which has been widely hailed as a success in transparent, private disbursement, laid out clear guidelines for the repatriation of the funds to ensure that they actually reached needy Kazakhs.
The settlement (and MOU it incorporated) required the establishment of a new, private charity—the BOTA Foundation—to oversee the conveyance of seized funds to poor Kazakh children and youth for specified purposes like improving nutrition, education, and child safety. The settlement clearly delineated the scope of the program, external monitoring mechanisms, and selection procedures for key BOTA Foundation officers. It also conditioned later disbursements on proof of appropriate use of earlier funds, and created two anticorruption initiatives within the Kazakh government to be overseen by the World Bank.
By contrast, the Obiang settlement avoids such specifics. It notes merely that the funds are to be used “for the benefit” of the people of Equatorial Guinea through a private charity, which must publish its accounts and expenditures annually, and provides a charity-selection mechanism. As the Justice Department hammers out the details of a disbursement plan and selects a charity, it should insist on stringent oversight and reporting mechanisms like those embraced in Giffen, and clear, measurable goals. (The settlement terms require input from both the US and Equatorial Guinea in selecting a charity, but gives the US the upper hand in case of persistent disagreement.) In addition, DOJ should secure specific guarantees against political reprisal for aid recipients; with the kleptocrats still in power, Guinean citizens face greater risks than those in Kazakhstan did.
These safeguards are no silver bullet–America’s ability to monitor and redress problems in another sovereign nation are limited, and ruthless dictators may flout even the most carefully designed procedures. But the BOTA Foundation’s success suggests that with the appropriate safeguards, there are reasons for optimism.