and 2004, millions of dollars from these oil firms were deposited into Riggs accounts for what appeared to be real estate or business deals. Payments were made to, among others, the president’s wife, the interior and agricultural ministers, and at least one well-placed general. For several years Exxon paid between $ 135,000 and $175,000 to Obiang’s first wife, Constancia Nsue, to rent a compound that houses its workers and offices. (I asked to visit the compound while I was in the country, but Exxon officials refused my requests. I showed up at the compound one day but was turned away by security guards. I noticed, behind them, an expanse of well-tended lawns, finely paved roads and neatly ordered cottages—a contrast to the shacks most local people live in.) Exxon also paid $236,160 to a firm owned by the interior minister; it is unclear what the payments were for. The prize for the most unusual deal went to Amerada Hess Corporation, which rented property for $445,800 from a fourteen-year-old relative of Obiang’s.
The oil companies say these contracts were not bribes but, rather, payments for necessary goods or services provided by people who just happened to be the president’s relatives and ministers. And it has to be said that if the oil companies were indeed looking to purchase goods or services, other than from friends in important places, they may not have had much choice. The Senate report noted that in EquatorialGuinea, as in most kleptocracies, the ruling family, the government and the business elite are one and the same. If an oil company needed to hire security guards for a warehouse in Malabo, there was only one local company licensed to provide guards: it was called Sonavi, and it was owned by Armengol Nguema, the president’s brother and the director of national security. “How oil companies can and should respond to this situation raises a number of difficult policy issues,” the Senate report acknowledged.
There is little doubt that the local firms American oilmen dealt with were fronts for enriching the elite. The president’s playboy son Teodorin admitted in an affidavit that he and other ministers routinely collected kickbacks on government contracts. The affidavit was filed in response to a lawsuit that sought to deprive Teodorin of two houses he had purchased in South Africa for $7 million. Teodorin needed to prove that the money with which he’d bought the houses was his own rather than the state’s. He noted that he was a minister in his father’s government, and that “cabinet ministers and public servants in Equatorial Guinea are by law allowed to own companies that, in consortium with a foreign company, can bid for government contracts.” The affidavit went on to explain that once the contract is awarded, the “cabinet minister ends up with a sizable part of the contract price in his bank account.” This affidavit was almost surreal—an honest account of dishonesty.
These were equal-opportunity rip-offs because the companies that funneled back-channel money to Obiang’s regime were, in return, receiving special benefits from the regime. This takes us back to the fact that oil companies tend to get better terms from lesser-developed governments. According to an International Monetary Fund assessment, oil companies in Equatorial Guinea received “by far the most generous tax and profit-sharing provisions in the region.” The government received only 15 to 40 percent of the revenues from the sale of its oil and gas; the rest went to the companies that extracted the resources. The norm in sub-Saharan Africa was for host governments to receive 45 to 90 percent of the revenues from oil and gas sales. And often, in Equatorial Guinea, the companies failed to pay the government whatthey owed: the IMF said that oil and gas companies underpaid the government by $88 million between 1996 and 2001. It would seem that the companies and the Obiang family had a wink-wink understanding: You
The oil companies say these contracts were not bribes but, rather, payments for necessary goods or services provided by people who just happened to be the president’s relatives and ministers. And it has to be said that if the oil companies were indeed looking to purchase goods or services, other than from friends in important places, they may not have had much choice. The Senate report noted that in EquatorialGuinea, as in most kleptocracies, the ruling family, the government and the business elite are one and the same. If an oil company needed to hire security guards for a warehouse in Malabo, there was only one local company licensed to provide guards: it was called Sonavi, and it was owned by Armengol Nguema, the president’s brother and the director of national security. “How oil companies can and should respond to this situation raises a number of difficult policy issues,” the Senate report acknowledged.
There is little doubt that the local firms American oilmen dealt with were fronts for enriching the elite. The president’s playboy son Teodorin admitted in an affidavit that he and other ministers routinely collected kickbacks on government contracts. The affidavit was filed in response to a lawsuit that sought to deprive Teodorin of two houses he had purchased in South Africa for $7 million. Teodorin needed to prove that the money with which he’d bought the houses was his own rather than the state’s. He noted that he was a minister in his father’s government, and that “cabinet ministers and public servants in Equatorial Guinea are by law allowed to own companies that, in consortium with a foreign company, can bid for government contracts.” The affidavit went on to explain that once the contract is awarded, the “cabinet minister ends up with a sizable part of the contract price in his bank account.” This affidavit was almost surreal—an honest account of dishonesty.
These were equal-opportunity rip-offs because the companies that funneled back-channel money to Obiang’s regime were, in return, receiving special benefits from the regime. This takes us back to the fact that oil companies tend to get better terms from lesser-developed governments. According to an International Monetary Fund assessment, oil companies in Equatorial Guinea received “by far the most generous tax and profit-sharing provisions in the region.” The government received only 15 to 40 percent of the revenues from the sale of its oil and gas; the rest went to the companies that extracted the resources. The norm in sub-Saharan Africa was for host governments to receive 45 to 90 percent of the revenues from oil and gas sales. And often, in Equatorial Guinea, the companies failed to pay the government whatthey owed: the IMF said that oil and gas companies underpaid the government by $88 million between 1996 and 2001. It would seem that the companies and the Obiang family had a wink-wink understanding: You
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