When a country seizes assets that a foreign public official stole from his or her own government, the usual next step is to return those assets to the foreign government from which they were stolen–in much the same way that if I were to steal a computer belonging to Harvard University, and the police caught me and recovered the computer, they should give it back to Harvard (assuming it wasn’t needed as evidence in my trial). But of course in the context of countries beset by systemic corruption–or outright kleptocracies–things are not so simple. Returning the money that the corrupt foreign official stole from the national treasury back to that national treasury may be tantamount to giving the money back to the person who stole it in the first place. So what to do?
One possibility, increasingly popular in some quarters, is to use the money to fund charitable activities in the country where the public funds were stolen, on the logic that doing so does return the money to the “victim country,” but does not return it to that country’s government (which is most certainly not a “victim,” whatever its formal legal claim on the assets in question). This mechanism was employed in the 2014 settlement between the U.S. Department of Justice and Teodoro Nguema Obiang Mangue, the son of Equatorial Guinea’s (extremely corrupt and dictatorial) President Teodoro Obiang Nguema Mbasogo. According to the settlement agreement, the proceeds from the sale of the illicit assets the US had seized would go to a charity that would use the funds to benefit the people of Equatorial Guinea. The charity was to be jointly selected by the US and Obiang, or, if they could not agree on a charity within 180 days of the sale of the assets, the proceeds would be controlled and disbursed by a three-person panel, rather than an existing charity. That panel would consist of one member selected by the US government, one member selected by the government of Equatorial Guinea, and a chair jointly selected by the US and Obiang. As a backstop, the settlement stated that if, 220 days after the sale of the assets, the US and Obiang could not agree on a chair, the court that approved the settlement could force the parties to enter mediation or simply appoint a panel chair itself.
My post today is not a commentary on this arrangement, but a question about it: What ever ended up happening with this? I spent a fair amount of time searching online, and I couldn’t find any information about whether a charity had been selected, or whether a panel was formed, and if so how it was formed and who was/is on it. I also can’t find any information about how the charity or panel disbursed the money from the proceeds of the sale of Obiang’s assets. It’s been over five years since the settlement, so I assume whatever was going to happen has happened already. But strangely, though there are lots of references in various recent publications and articles to the provision of the 2014 settlement that calls for the money to be used for charitable purposes in Equatorial Guinea rather than returned to the government, I can’t find any sources that discuss what actually ended up happening. This is not a trivial question, since several people (including on this blog) expressed skepticism that it was possible for a model like this to work in a country like Equatorial Guinea, where there isn’t much/any space for a genuinely independent civil society to operate.
I’m sure there’s a simple answer to my factual question, and I’m probably just not looking in the right place. So I’m hoping someone out there in reader-land can help me. What ended up happening to the proceeds recovered from the sale of Obiang’s assets? Did the parties agree on a charity? If so, which one, and what did it do with the money? Or was the three-person panel formed to handle the money? If so, how was it formed, who was on it, and what did it do with the money? Anyone have any idea?
GAB | The Global Anticorruption Blog 
Excellent questions in the blog post. It is important for the participants in the settlement to provide oversight and governance with respect to the proper use of money, especially since the establishment of a charity to ensure that the money is properly used for the indigenous people of Equatorial Guinea is somewhat of a novel settlement in transnational corruption case in the U.S. Returning money to developing countries where the corruption partly occurred is important. Novel mechanisms such as the one used in Obiang are important. People need to have information to know how it is working, especially so they can make any modifications to future arrangements.
Bruce Zagaris
Dear Professor Stephenson,
You raise a very pertinent and timely question; one that Equatoguineans and victims of highly kleptocratic regimes have also been pondering since the USDOJ-Nguema Obiang settlement was signed. …And it’s a well-timed questions whose answer should hopefully inform the considerations of French and Swiss law enforcement authorities who must decide how to ensure that million of dollars in stolen assets are repatriated for the benefit of people in Equatorial Guinea.
While US-DOJ prosecutors have taken some important steps, for example, they have collected the proceeds from the sales of the Malibu mansion and other lux items; and while Equatoguinean and international civil society actors have submitted a number of proposals and mechanisms for the judicious repatriation of the assets, very few people can conjure up a satisfactory answer to your question. We certainly lack one.
That judicial settlements—like the one in question—rarely, if ever require the parties to inform victims about ongoing developments is part of the problem. Similarly, a drastic move towards more opacity from the current US Administration, and a Congress with little bandwidth to inquire about compliance with the Kleptocracy Asset Recovery Initiative, means that unless more concerned global citizens in the USA ask their elected representative and prosecutors for answers, it might take many more years before there is a satisfactory answer to your question.
Now, more than ever, collective action can bear positive fruits. France, Switzerland, and possibly Brazil, which have also seized assets belonging to Vice President Nguema Obinag, would benefit from a positive example by the USA.
Yous Truly
EG Justice
Thanks for the reply. I take it from your comment that, to the best of your knowledge, nothing has yet happened with the plan outlined in the settlement for using the seized assets for the benefit of the people of EG? No funds have been distributed to an existing charity, nor has a three-person panel been formed to oversee the distribution of the money? Should we assume from this that the money is still sitting in some account somewhere, under US government control?
For the sake of the people from Equatorial Guinea, we hope the money is still under the custody of the US Government, and not in an account controlled by the Equatoguinean government. But, clearly, delay or inaction only benefits the Equatoguinean government. Teodoro Nguema Obiang and other government officials in Equatorial Guinea have now set up a number of charitable NGOs that could attempt to position themselves as potential recipients of funds.
Proceeding with caution is advised.
Great, good to know. Does anyone out there know if the money is in fact still in the custody of the U.S. government? I’m assuming the answer is yes, but it would still be nice to get confirmation from a reliable source!
Thank you for raising this, I have also wondered the same. This is a matter of public interest, particularly for the people of Equatorial Guinea, as Tutu notes. It is very unfortunate that this information is exempt from FOIA (under exemption 7).
Are you sure about that? Have you or anyone else attempted to submit a FOIA request for this information? Frankly that thought hadn’t occurred to me. It’s true that Exemption 7 does exclude from FOIA disclosure certain law enforcement records, but only in specific categories that I don’t think would apply to something like this. I particular, Exemption 7 shields information related to law enforcement proceedings that, if released “(A) could reasonably be expected to interfere with enforcement proceedings, (B) would deprive a person of a right to a fair trial or an impartial adjudication, (C) could reasonably be expected to constitute an unwarranted invasion of personal privacy, (D) could reasonably be expected to disclose the identity of a confidential source … (E) would disclose techniques and procedures for law enforcement investigations or prosecutions, or would disclose guidelines for law enforcement investigations or prosecutions if such disclosure could reasonably be expected to risk circumvention of the law, or (F) could reasonably be expected to endanger the life or physical safety of any individual.” None of those conditions would seem to apply to a simple question like, “Where is this money now?” Indeed, I’m a bit surprised one would need to submit a FOIA request. Has anyone tried just contacting someone at the DOJ to ask? I fully admit that I haven’t–I haven’t had the time–but maybe I should…
That’s a fair question. I haven’t FOIA’d this specifically, but having unsuccessfully tried to FOIA other aspects of this case, I tend to assume that DOJ would likely argue that this too is exempt. And more generally, beyond the Obiang case, I know that the DOJ takes a very broad view of this particular FOIA exemption. Just to cite a couple of recent high-profile examples: they argued that James Comey’s memos were protected by this exemption (DC District court disagreed); similarly the Mueller report was very heavily redacted mostly on the grounds that disclosure would cause “harm to ongoing matter” (not FOIA context but somewhat analogous). So I fully expect DOJ would make a similar argument here (I’d love to be proven wrong on that). That’s not to say that they should or will prevail, just that whoever submits this FOIA request (I hope someone does!) should be prepared to litigate it.
Whatever Happened with that Charity That the Obiang Settlement Was Supposed to Fund?-A response
Kleptocracy and stolen wealth is a major problem for developing countries. Stolen assets from developing countries often find their way through serpentine money laundering channels into the financial systems and real estate markets of developing countries. There is little doubt that a small percentage of elites from developed counties hold a significant portion of the wealth of their nations in private assets in developed countries. Kleptocracy and stolen assets blithes development, undermines democracy and good governance, impoverish nations, exacerbates poverty, generates insecurity, and is a contributory factor to migration from developing countries to developed countries. The return of stolen wealth and deployment to projects and policies that can positively affect the lives of citizens is in reality a legal and moral duty of both victim countries and developed countries whose financial systems hold and benefit from stolen wealth. In the realm of stolen asset return practice is however far from principled or settled.
Scholars have provided justifications and analogies of stolen assets as deodand (colloquial practice), piracy, customs offences, seizure of illicit wealth or property as evidence, to take away the profit of offending, to constructive trust. The Obiang Settlement in Equatorial Guinea is a case study of the U. S. DOJ’s much vaunted Kleptocracy Initiative, a policy initiative whose initially declared objective was to return stolen assets to its original owners, the very people from whom it was stolen in the first place. However, Jennifer Shasky, the first head of the Kleptocracy Initiative, or “KI” was quoted in 2011 as saying “there is no legal requirement to return the funds at all…” However, the laws of some provide for the return of assets or proceeds of crimes to the victims of crimes. For example, section 38(3) (b) of Nigeria’s Corrupt Practices and Other Related Offences Act 2000 and section 331 (2) of the Administration of Criminal Justice Act 2015 provides for the return or delivery of any property to a person appearing to be entitled to the possession of the property. With respect to stolen assets from developing countries, one perspective is that returning the asset backs would enable the agnate or participants in state capture to re-loot the asset.
The DOJ Kleptocracy Initiative has been used in number of cases to transmit title to stolen assets to the United States Government. The KI was used to transfer full legal title a property valued at over a quarter of a million dollars illicitly acquired by Diepreye Solomon Peter Alamieyeseigha (“DSP”), former governor Bayelsa State in Nigeria to the United States Government. More $115 million in a frozen Swiss bank account property of the Government of Kazakhstan was also recovered under the KI policy. More than $458 traced to General Sani Abacha, former military ruler of Nigeria was also confiscated under KI initiative.
The actual terms of the Obiang Settelement stipulated that roughly $20 million of the recovered funds will be designated to a charity to benefit the people of Equatorial Guinea, and $10.3 million forfeited to the United States Government. In the Kazakhstan case, the United States Government and Switzerland agreed to transfer more than $115 million to the BOTA Foundation, which was specifically created by the governments of Kazakhstan, the United States, and Switzerland to administer the funds in a manner that will positively impact the citizens of Kazakhstan who were the victims of corruption by their public officials. The BOTA Foundation used Conditional Cash Transfer Program, Social Service Grant Program, Tuition Assistance Program and other schemes to disburse the recovered sum to citizens of Kazakhstan. BOTA Foundation is said to have exceeded the expectations of its founders by efficiently and effectively returning the amount stolen with interest “to efficiently and effectively return the vast majority of its resources (US$115 million—the original US$84 million plus accrued interest) to poor Kazakhstani children, youth and their families.”
The United States Government also transferred significant assets to South Korea over Chun Doo Hwan. In contrast, in the Obiang Settlement, no asset return vehicle was named and there is no evidence in the public space that there is no duplicity of treatment in the Obiang matter and how the United States Government has dealt with similar recovered stolen wealth. The opacity surrounding the administration of the assets seized in the Obiang case is worrying.
The amounts seized from General Sani Abacha and Alamieyeseigha, both of Nigeria, have not been returned to Nigeria for various reasons such as identification of beneficiaries, return to federal or state coffers. It is disturbing that no genuine attempts have been made to return or repatriate to Nigeria what rightfully belongs to Nigeria. It is understandable that the DOJ would want reimbursement for the cost of recovery, but that is beside the point. DOJ is not ignorant of serious efforts being made to fight corruption in Nigeria, and the existence of a free and vibrant media and civil society that can assist any monitoring initiative that is required.
It is understandable that when money and resources are expended to recover stolen asset, that the expenses would be defrayed. It is equally understandable that there may be reluctance to return stolen assets to a government that may return such assets to those who stole the assets in the first place, or a government that is unwilling or unable to prevent such assets from being stolen again. Where a democratic government evince proof that it is fighting corruption and committed to prevention of theft of state resources there can be little justification for reluctance to return recovered stolen wealth to the government, or rendering assistance to such government to recover, repatriate, and restitute stolen assets that are needed to touch the lives of citizens. It is equally not excusable not to return stolen assets to countries where trusted CSOs and free media exist that can assist to monitor and track how returned assets would be used.
The DOJ’s Kleptocracy Initiative, and the United States Government is a key partner in tracing, recovery and return of stolen assets albeit that the KI policy and other initiatives of the U.S. Government should be transparent and benefit the direct victims of kleptocracy.
The frustration of the planned return of the Obiang assets possibly due to lack of agreement on the appropriate vehicle to use in the asset return initiative underlines the need for an internationally accepted asset return framework well recognised and known to all stakeholders from requesting and requested States.
In 2017, the GFAR held in the USA organised by U.S and U.K with other partners to come up with a 10 point framework which is yet to be popularly adopted and applied.
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