Thursday, New York Times columnist Gail Collins spent significant time mocking New York City councilman Larry Seabrook, who is charged with doctoring a receipt for a bagel sandwich from $7 to $177.
Most people around the country aren’t too surprised (but remain disgusted) by such behavior in politicians. Gail Collins should see what I see. When I think about energy and natural resources, I look at Councilman Seabrook and think, why that simple-minded sweet potato, look how small he thinks! Why, anyone in a resource country with any government position — sometimes even those who don’t have one — can find a way to pilfer a thousand times that amount and never get caught. Globally, we are losing ground in education, economic clout, political capital, and now even our corruption.
This brings me to a new report, by the Investigations subcommittee of the US Senate Committee on Homeland Security and Government, on international corruption and how it makes its way into the US. The 330-page report details only a few examples, but of course, it could, if it had wanted to, found thousands. But then the report would have been much, much longer than it already is. Money laundering is illegal under several US laws; international bribery and corruption is illegal under the Foreign Corrupt Practices Act. The NGO Global Witness has been harping on problems in the banking system for years.
It isn’t an accident that the individuals come from oil-rich countries: Gabon, Equatorial Guinea, Nigeria, and Angola. And in these cases, US lawyers, bankers and other financial persons aided the money laundering. After the UBS scandal, I don’t know why anyone would be surprised at the idea of bankers in bed with the corrupt, but Washington likes to fulminate. According to the Senate announcement,
The report presents four case studies exposing how politically powerful individuals –known internationally as “politically exposed persons” or PEPs – are taking advantage of the U.S. financial system. In each case, weaknesses in our financial regulations have allowed these PEPs to move millions of dollars into or through U.S. bank accounts, often by using shell company accounts, attorney-client accounts, escrow accounts, or other accounts, or by sending wire transfers that shoot through the system before our banks react.
Case 1: Teodoro Obiang, son of the President of Equatorial Guinea, uses US lawyers, bankers and others to bring $110 million into the country and buy planes and palaces in Malibu.
Case 2: Omar and Ali Bongo (father and son leaders) of Gabon buy a lobbyist. With $18 million, the lobbyist launders some of the money and transfers it to an account in Malta, and also buys armoured cars and cargo planes. (Gee, why would the Bongos want those???) Omar Bongo also brings in $1 million, shrink-wrapped, into the US under diplomatic immunity.
Case 3: Jennifer Douglas, the American fourth wife of former VP of Nigeria, Atiku Abubakar, brings $40 million laundered through offshore corporations, into the US for her husband. She is also supposed to have been bribed $2.8 million by the German company, Siemens AG.
Case 4: Aguinaldo Jaime, the head of the Angola Central Bank, tries to transfer $50 million into private accounts in the US. This is just too much money and is stopped when US banks become suspicious. Citibank decides to close all Angolan government accounts.
The report offers some recommendations: PEP controls as per a recent WB report, requiring US corps to identify the real “beneficial” owners of shell companies, rnding exemprions on money-laundering (real estate and escrow agents have to identify and reject suspicious would be clients) as per the Patriot Act, tightening visa and immigration laws, and stronger international banking procedures.
But crooks will always find a way. It’s what they do. Next week, I will write on the NGO/anti-corruption vs. energy security conundrum Washington faces. In the meantime, I wish Gail Collins was here.
