Seizing Equatorial Guinea's Future: Punishing Foreign Kleptocracy With Civil Asset Forfeiture

• Publication year: 2015
• Author: By Donna R. Cline*

Seizing Equatorial Guinea's Future: Punishing Foreign Kleptocracy with Civil Asset Forfeiture

By Donna R. Cline*

Grand corruption, also known as political corruption, is the abuse of political power for private gain.¹ It differs from "administrative" or "petty" corruption, which involves the payment of small-scale bribes to low- or mid-level government officials (for example, paying a police officer to get out of a speeding ticket).² Grand corruption generally involves the exchange of much larger bribes for much larger favors than in petty corruption. A government in which grand corruption has permeated the highest levels in a way that distorts the entire society is usually referred to as a kleptocracy, from the Greek words for "thief" and "rule."³

In a kleptocracy, the kleptocrat controls both the economy and important government functions, like the judiciary and legislature. This control makes it impossible to stop corruption and hold offenders accountable, removing any check on the kleptocrat's use of power for self-enrichment.⁴ Grand corruption, and kleptocracy in particular, devastates a developing country by diverting funds from social programs to which impoverished citizens desperately need access, and from other development and infrastructure projects.⁵ It can also frustrate and discourage international aid efforts by siphoning off money and goods intended for the kleptocracy's citizens into the coffers of privileged rulers.⁶

Fighting kleptocracy when that country's justice system is unable - or unwilling - to take the necessary steps to enforce laws designed to prevent or punish corruption has vexed United States policymakers for quite some time. This article examines one tool the U.S. legal system has to punish and deter kleptocracy - civil asset forfeiture - and presents a case study of how the U.S. Department of Justice ("DOJ") used it to secure a $30 million settlement against property owned by a sitting foreign kleptocrat—Teodoro Nguema Obiang Mangue, the Second Vice President of Equatorial Guinea—who made California his second home.

I. CIVIL ASSET FORFEITURE AND THE DEPARTMENT OF JUSTICE KLEPTOCRACY ASSET RECOVERY INITIATIVE

Civil asset forfeiture is a legal mechanism by which federal and state law enforcement agencies can confiscate property that they suspect is either being used for criminal purposes or is the proceeds of criminal activity. Asset forfeiture is an in rem proceeding, meaning that it is "against the thing" (the property being seized), rather than in personam, or "against the person" of the property owner.⁷ The Supreme Court has explained that in rem forfeitures are civil actions, are separate from any parallel criminal case against the property's owner, and serve a remedial and deterrent purpose rather than a punitive one - seizure prevents the subject property's further use in crime.⁸The owner's conviction for a criminal offense is not a prerequisite.⁹

18 U.S.C. section 981 authorizes civil asset forfeiture. Under 18 U.S.C. section 981, the government need not prove the guilt of the underlying criminal activity. It has to prove only that the property at issue was involved in a criminal transaction.¹⁰ Property that was used for criminal purposes abroad, or that represents the proceeds of foreign criminal activity, may be forfeited if it is located in the U.S.¹¹ In addition, property located outside the U.S. may be forfeited if the government brings an asset forfeiture action in the U.S. District Court for the District of Columbia.¹²

Civil asset forfeiture's popularity as a law enforcement tool has grown over the last 40 years, mostly due to the war on drugs.¹³ Congress has expanded its scope by statute several times. For example, after the September 11, 2001 attacks, Congress authorized asset forfeiture for terrorist-owned property, regardless of whether the property was traceable to a crime or used to facilitate the commission of a crime.¹⁴

In 2009, the DOJ announced that kleptocracy would be the new target for U.S. asset forfeiture laws.¹⁵ Recognizing the need to end impunity for corruption, the DOJ initiated a new "Kleptocracy Asset Recovery Initiative" ("Kleptocracy Initiative"), intended to combat large-scale foreign official corruption by recovering and returning the proceeds of such corruption to the victims.¹⁶ With the goal of ensuring that corrupt officials do not retain the proceeds of their criminal actions, the Kleptocracy Initiative soon targeted Equatorial Guinea's kleptocrats.

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II. COMBATING KLEPTOCRACY IN EQUATORIAL GUINEA

A. Kleptocracy in Equatorial Guinea

Corruption has plagued Equatorial Guinea throughout its short history. The tiny country in sub-Saharan Africa, with a population of about 700,000, gained its independence from Spain in 1968, but has had only two presidents since: Francisco Macias Nguema, and his nephew and current president, Teodoro Obiang Nguema Mbasogo ("President Obiang"). President Obiang took the office from his uncle after a coup d'etat in 1979, and holds the office to this day.

Although oil was discovered in the 1990s - and the GDP generated by Equatorial Guinea's oil, timber, and other natural resource wealth places it among the world's "high-income" countries¹⁷ - the country's living standards remain among the world's lowest.¹⁸ This disparity directly results from corruption. President Obiang and his immediate family members have squandered the nation's natural resource revenues on "showcase" projects such as an $800 million luxury resort where most Equatoguineans cannot afford to stay¹⁹ rather than reinvesting these revenues in the country's health and education infrastructure. Evidence also exists showing that President Obiang and other government officials exploited their positions to divert the country's resource revenues to amass personal fortunes.²⁰

The U.S. government first became aware of the extent of corruption in Equatorial Guinea in 2004, when a Senate report on money laundering in connection with the Riggs Bank scandal noted money flowing out of the country.²¹ The report outlined how Riggs Bank opened dozens of bank accounts for both the government of Equatorial Guinea and senior Government officials (and their family members) without first conducting the required anti-money laundering checks, and ignored evidence those accounts likely held the spoils of foreign corruption.²² The estimated combined worth of these accounts totaled almost $700 million.²³

The Senate again noted the corruption plaguing Equatorial Guinea in a 2010 report on foreign corruption.²⁴ This report went further than the 2004 report, delineating how President Obiang's eldest son, Teodoro Nguema Obiang Mangue ("Teodorin"), moved over $100 million of "suspect" funds through U.S. financial institutions using attorneys, real estate and escrow agents, and shell companies.²⁵ Teodorin is the Second Vice President of Equatorial Guinea.

Yet, despite the increased awareness of the pervasive nature of corruption in Equatorial Guinea, the corruption continued with impunity. Even with evidence and witness statements demonstrating crimes under its own laws...