GAB is pleased to publish this account and analysis by Shirley Pouget and Ken Hurwitz of the Open Society Justice Initiative of the decision in the criminal trial for money laundering of Equatorial Guinean Vice President Teodorin Nguema Obiang. Their earlier posts on the trial are here, here, here, here, here, here, here, and here.

In the first ever peacetime conviction of a high-ranking, incumbent office holder by the court of another state, a Paris criminal court has convicted Equatorial Guinean First Vice President Teodoro Nguema Obiang Mangue of laundering monies from corruption in Equatorial Guinea in France.  The historic decision, announced by the 32nd Chamber of the Tribunal Correctionnel de Paris on Friday, October 27, was tempered by the reality the court faced in finding a senior official of another country guilty of violating French law.  While it unconditionally awarded Transparency International – France, which as a “civil party” helped investigate the case, €10,000 in moral and €41,081 in material damages, and ordered seizure of much of the €150 million in assets Teodorin holds in France, it suspended (sursis) the three- year prison sentence and €30 million fine it imposed on Teodorin so long as the VP stays out of trouble for five years.   It also stayed the part of the asset seizure order confiscating the obscenely extravagant 101-room property on Avenue Foch Teodorin owns pending the outcome of proceedings before the International Court of Justice where, as explained in a previous post, the EG government is claiming the assets belong to it rather than to Teodorin.

The President of the Tribunal, Mrs Benedicte de Perthuis, detailed the reasoning supporting the ruling in a 45 minute oral explanation accompanying the judgement.  She explained that the three judge court rejected all Teodorin’s procedural and substantive defenses, including a claim asserting Teodorin’s immunity from criminal prosecution on the basis of his position as  First Vice-President of Equatorial Guinea.  She noted on the latter that his nomination as First Vice-President had conveniently occurred after his indictment by the French Courts, and the Tribunal ruled that his new functions could not be equated to those of a Head of State or Minister of Foreign Affairs (officials who, under ICJ precedent, would indeed enjoy immunity from this kind of a prosecution).

The verdict sends a clear message that grand corruption and the related offense of money laundering are no longer risk-free enterprises in France.  Pointing to France’s longstanding hands-off approach to the fight against grand corruption, the President of the Tribunal explained that “the transnational nature of the offense of money laundering calls for a globalized repression.” Mrs De Perthuis did not shy away from addressing the responsibility of banks and financial institutions — notably the Bank of France and the SGBGE, a subsidiary of the French bank Societe Generale — which failed to report the accused’s suspicious transactions.

The sentence is less harsh than what the Public Prosecutor initially sought.  The “suspensions” (sursis) of the three years’ imprisonment and the €30 million fine means that those two sanctions will not be imposed unless the accused is convicted of a new criminal offense within five years following the judgment. The Presiding Judge stressed that kleptocrats in general and Teodorin in particular should understand the verdict as a warning. The ruling presages that France will no longer tolerate the laundering of dirty money on French soil.

Tutu Alicante, a prosecution witness and founder of an EG Justice, an NGO dedicated to fighting grand corruption in Equatorial Guinea, praised the verdict: “This is a big win for the people of Equatorial Guinea; this is a big win for the people of Africa; this is a big win for a lot of victims who have seen resources gone towards palaces, luxury cars, Michael Jackson memorabilia, instead of going towards addressing healthcare and education.” As William Bourdon, counsel for the civil party, said, the decision is only the first step in holding Teodorin, his family, and other kleptocrats to account.  It is not over yet, he said. It is in fact the beginning: there will be ongoing fights in France. And it is the beginning elsewhere too: There are other corrupt African leaders who have assets in other countries.

If the French court’s verdict marks a milestone in the global struggle against grand corruption, there is still a long way to go before the stolen assets are repatriated to the people of Equatorial Guinea. In addition to resolution of the ICJ challenge by Equatorial Guinea, the forfeiture decision is final only once all domestic remedies are exhausted. The defense is virtually certain to appeal the decision, and, in the meantime, Teodorin’s Avenue Foch townhouse and other French assets will remain frozen until they can be legally confiscated. Under French law Teodorin has ten days from October 27 to file an appeal.

Corruption costs African states billions of dollars a year. It is a significant part of the illicit financial flows out of developing economies, depriving populations of the resources required to eradicate poverty and fulfill human rights. It also corrodes social life and undermines the rule of law, as corrupt and powerful political leaders often resort to repression and brutality to defend their ill-gotten offices and wealth. For decades, kleptocrats have been able to siphon off public funds for personal purposes and launder corrupt proceeds throughout the world with virtually no fear of being investigated or held accountable. Prosecutors are often reluctant to open judicial or prosecutorial investigations and bring charges against senior public officials because of the technical difficulties and expense of such cases, and politically or economically driven pressure to back off.

When they go forward in the face of these obstacles, it takes years of work to trace and intercept the looted wealth – frequently hidden behind massively complicated global structures of opaque shell corporations, trusts and foundations – all shielded by bank secrecy laws.  Freezing those assets, litigating to conclusion, and returning the proceeds of such corruption to the populations whose wealth has been stolen or abused take many years more. Statutes of limitations – the time limit within which legal actions may be brought –- are generally very short, and by the time investigators locate the stolen funds and gain access to bank accounts, it is often too late to prosecute. Witnesses are often unwilling to testify against their national rulers out of fear of reprisals. In civil law countries — where private parties are often allowed to initiate criminal actions either in their own capacity or by prompting prosecutorial or judicial investigations – NGOs face a wide array of legal impediments to bringing proceedings on behalf of victims of grand corruption, such as standing, jurisdictional and forum related issues.  The world community owes a great deal to the many French public servants who pursued the case against Teodorin in the face of all these obstacles.

French efforts to curb corruption – albeit belated – came in response to growing concerns about the disastrous impact of corruption, particularly on developing societies — concerns that have long been growing within the international community. In recent years, the French legislature has taken  initial steps to comply with international anti-corruptions standards (the UN Convention against Corruption (UNCAC) (effective 2005) and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions) (effective 1999).  It has also begun to erect the statutory framework necessary to permit the confiscation of stolen assets. (See Law of 9 July 2010 and the 2005 Parliamentary report on the fight against corruption.)

A gap remains, however.  There is no provision of law that allows for the repatriation of assets to either the technical legal victim (the state) or the real victims (the people) of corruption. Under current French law, if Teodorin’s assets are confiscated, they will go to the French Treasury. (For more information on the legal framework applicable to confiscated assets in France, and proposals for change to vindicate the rights of victim population, see the just-issued report of Transparency International – France, Le sort des “biens mal acquis” et autres avoirs illicites issus de la Grande Corruption:  Plaidoyer pour une procédure adaptée, au service des populations victimes). To make real headway in the fight against grand corruption, the French government must take seriously the need to enact legislation that will allow for responsible asset repatriation to victims of corruption. As the Presiding Judge explained: “France should take steps to enact a legislative framework on repatriation of assets, in line with Article 51 of the UN Convention on Corruption. This is a pre-requisite to the efficacy of the confiscation order.”

The government must create a mechanism through which the funds are temporarily transferred to a special account, and not the Treasury, and the repatriation process must incorporate victim-centered principles for managing and disposing of recovered and returned stolen assets.

Despite all these limitation, the “ill-gotten gains” case remains the leading example of how strategic litigation driven by civil society groups can, alongside advocacy and campaigning, be powerful tools to fight senior officials who loot the wealth of their countries. The ruling sets an important precedent for associated judicial proceedings investigating Teodorin in Switzerland and other allegedly corrupt Equatoguinean officials and cronies in Spain.