The taproots of those plunderable public funds were the wells Western majors had planted off the coast of Equatorial Guinea. This was oil money. Spigoted into the Obiang accounts by Marathon, Hess, and Rex Tillerson’s ExxonMobil, among others.
Silverstein augmented this reportage on Teodorin by contributing to a thirty-two-page four-color pamphlet published that same month by Global Witness, titled “The Secret Life of a Shopaholic.” Silverstein added some People magazine-ish detail to Teodorin’s spending sprees, like the time he rented a three-hundred-foot private yacht for $680,000 “in an effort to woo the rapper Eve.” The pamphlet went on to explain the simultaneous decline in the fortunes of the overwhelming majority of Teodorin’s fellow Equatoguineans in the years since American oil companies had discovered more than a billion barrels of oil reserves just off their coast. “Between 1993 and 2007,” the Global Witness report read, “annual government oil revenues shot up from $2.1 million to $3.9 billion.” No typo. That’s $2.1 million to $3.9 billion. The gross domestic product of the country had increased by about 8,400 percent in those years. “Equatorial Guinea now enjoys per capita income of about $37,200, one of the highest in the world,” the Global Witness report continued. “Yet 77 percent of the population lives in poverty, 35 percent die before the age of 40, and 57 percent lack access to safe water. Between 1990 and 2007 the infant mortality rate actually rose from 10 percent to 12 percent.” If a country’s GDP is going up by multiple-thousand percent, wouldn’t you expect its infant mortality rate to drop?
In February 2010, the U.S. Senate’s Permanent Subcommittee on Investigations released its own 323-page bipartisan report titled “Keeping Foreign Corruption Out of the United States: Four Case Histories.” The case study on Equatorial Guinea ran nearly a hundred pages, focusing entirely on Teodorin. This was the third headline-grabbing Senate investigation featuring Equatorial Guinea in five years, following on 2004’s “Money Laundering and Foreign Corruption: Enforcement and Effectiveness of the Patriot Act,” and 2008’s “The Petroleum and Poverty Paradox: Assessing U.S. and International Community Efforts to Fight the Resource Curse.” By the beginning of 2010, Teodorin—“an unstable, reckless idiot,” according to one U.S. intelligence official—had become the poster boy for a phenomenon known as Dutch Disease, the Paradox of Plenty, or, most widely among academic circles, the Resource Curse.
By any name, the phenomenon is simple and demonstrable. The discovery of oil, you’d think, would be a Beverly Hillbillies–style windfall for any country. Next thing you know, Old Jed’s a millionaire—swimming pools, movie stars, the whole thing. But what actually happens is that many if not most countries that discover oil end up poorer and in worse shape specifically because they’ve found themselves in possession of that remarkably remunerative tradable commodity. Here’s how it reads in academia: “Proponents of oil-led development believe that countries lucky enough to have ‘black gold’ can base their development on this resource….To the contrary…countries dependent on oil as their major resource for development are characterized by exceptionally poor governance and high corruption…often devastating economic, health and environmental consequences at the local level, and high incidences of conflict and war. In sum, countries that depend on oil for their livelihood eventually become among the most economically troubled, the most authoritarian, and the most conflict-ridden in the world.”
The basic problem is that oil doesn’t happily coexist with other industries upon which you might build a reasonably stable national economy. That’s true in the third world, the first world, and even in the world in between, e.g. Russia. It creates such large, up-front, sweat-free gains for connected elites that no one wants to do anything else but chase the oil jackpot. And as oil crowds out other industries, the profits don’t ever seem to end up redounding to the nation at large. Extracting oil takes a lot of up-front capital investment, but that expensive initial, physical investment doesn’t create anything utile for any other purpose. The technology and infrastructure of pumping oil and gas out of the ground don’t transfer usefully to any other follow-on industry. Worse, oil infrastructure is often environmentally destructive, which thereby screws up other economically productive things that could be done with that same land.
Oil extraction is much more capital-intensive than it is labor-intensive—which means it doesn’t produce a lot of lasting jobs. But in the end, it does produce big revenues when it’s sold on the global market. That sets the stage for grand-scale corruption of the political class: people who can maneuver themselves into getting a cut of that sale price of oil will find themselves quickly rich, whether or not they actually expend any effort to pump the stuff out of the ground. Political elites that can get themselves in the catbird seat when it comes to oil revenues will have every reason to curry favor with the oil companies doing the drilling, and every reason to fight anyone else who might take political power and thereby edge in on the financial teat they’ve stuck themselves to. Even with less rapacious political elites, there’s still the baseline problem that oil is a tradable commodity subject to wild international winds; with big swings in the price of oil, any effort at long-term, sane budgeting and investment for the population’s basic needs is impossible in a country newly dependent on oil revenues for its cash.
It’s not an inescapable curse; countries with oil do okay if they’ve got strong small-d democratic institutions that won’t buckle under pressure and are capable of responding to citizens’ needs and desires. But in countries that lack strong, legitimate democratic governance, the discovery of oil generally leads to more trouble and more inequality. Back in 2002, around the time that Equatorial Guinea was being identified as a key potential supplier of U.S. oil imports, Dr. Terry Karl, the American professor at the vanguard of these studies, explained to a group of government officials and oil executives, “Without intervention of some sort,” they should expect “a reduction of the welfare of people in oil exporting countries. It will provoke violence and unrest. It will lead to the violation of rights. It will lead to the destruction of the environment. It will buffer authoritarian rule.”
Karl would sometimes tell people the story of how she began the study that led to her first book, The Paradox of Plenty: “A long time ago when I was looking for a dissertation topic, I went down to Venezuela to interview the founder of OPEC, a man named Juan Pablo Pérez Alfonzo, and I asked him some questions about the founding of OPEC….
“And he said to me, ‘Teresita, you know, you’re such a bright young person. Why are you studying OPEC? Why don’t you see what oil is doing to us, the oil exporters?’
“And I said, ‘What do you mean?’
“And he said, ‘Oil is the excrement of the devil.’ ”
So began Dr. Karl’s decades of study into why the citizens in big oil-producing countries such as Venezuela and Angola and Iraq live in hot messes, while some others, such as Norway and the United States, do well. Professor Karl remained neutral on the properties of the commodity itself. “Oil in itself means nothing,” she would say. “It’s just a black viscous liquid.” But it was hard to forget the OPEC founder’s words, or those of a former minister of oil for Saudi Arabia, a country that had, on paper, financially benefited from its vast oil reserves more than any other on the globe. “All in all,” Sheikh Ahmed Zaki Yamani, whose position made him one of the most powerful men on earth, had told Professor Karl, “I wish we’d discovered water.”
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Equatorial Guinea was hardly the first country to fall under the spell of the Resource Curse, but the stark lifestyle contrast between Teodorin and the mass of Equatoguineans made for compelling new fieldwork. Teodorin’s primary residence was the oceanside estate in Malibu, but he also spent a few months a year surrounded by his $22 million worth of artwork (including paintings by Degas, Gauguin, and Renoir) at his $100 million six-story mansion on L’Avenue Foch in Paris’s 16th arrondisse
ment. And a little time at his modest $7 million property in Cape Town, South Africa. Resource Curse scholars could comb through the recent Senate report for highlights of Teodorin’s spending in the previous five years: $330,173.96 for a Lamborghini Roadster (one of his three dozen luxury cars), $102,053.29 for home security, $82,900 for furnishings, $58,500 for a Bang & Olufsen home theater (installation included), $3,221.31 for a portable car wash machine, and—are they dishwasher safe?—$1,734.17 for two wineglasses. Two. These expenditures hardly seemed beyond the family budget considering that Teodorin’s father, President Teodoro Obiang Nguema Mbasogo, ranked eighth on Forbes magazine’s list of the wealthiest world leaders. He was just ahead of Queen Elizabeth II. This was public record after all.
What wasn’t a matter of public record at the time was that Teodorin had signed a contract for the construction of his most extraordinary and costly toy, what promised to be the world’s second-largest yacht. The Russian oligarch Roman Abramovich’s Eclipse would still dwarf Teodorin’s floating palace, but the $380 million price tag would far outstrip the total annual spending of his father’s government on education and welfare programs in Equatorial Guinea. And it showed. Peter Maass, the journalist who had profiled the head of Russia’s Lukoil, went on assignment in Equatorial Guinea more than a decade into the country’s oil bonanza and returned with a grim report: “Nearly half of all children under five are malnourished. Even major cities lack clean water and basic sanitation….The main hospital is a place for dying, not healing. The wards are dingy rooms with soiled mattresses and no medical equipment except for a couple of IV drips.”
Equatorial Guinea’s president, Obiang the Elder, had paid no real electoral price for the accelerating degradation of living standards alongside the astronomical growth of state revenue. Teodorin’s father had just won a fourth term, with a little more than 95 percent of the vote. But Professor Karl’s prediction that this sort of oil boom would provoke violence and unrest was dead-on. President Obiang, whatever his political prowess, was prey to insecurities and always on the lookout for the next coup. The entirety of his armed forces—army, navy, and air force—was only about 1,500 men, poorly trained and untrustworthy in his eyes. The president’s chosen personal guard was, instead, a cadre of 350 soldiers hired from Morocco, armed with the latest in German assault rifles. But the increasing necessity of safeguarding all the new oil production facilities was well beyond the capacity of the Equatoguinean military and President Obiang’s rented security guard.
That recognized fact had attracted an American mercenary firm led by a group of retired Pentagon officers. “The greatest corporate assemblage of military expertise in the world,” the mercenary’s publicity team claimed. In February 2010, Military Professional Resources Initiative—which had been acting as the Equatoguinean Coast Guard off and on for about a decade—was surreptitiously awarded a new $250 million contract to provide added assistance to the Obiang administration. The contract, as explained by one defense industry trade publication, was to “establish a network of surveillance sites and operation centers at different points along the country’s coast to protect against piracy and other maritime concerns that exist in the region.” The deal had to be approved by the U.S. government. And it was. Because, as President Obama’s State Department explained, it was “consistent with our foreign policy goal of ensuring maritime security in the Gulf of Guinea.”
Even with the increased sense of security that comes with American-trained firepower, President Obiang continued to live by that old saw: keep your enemies close. And by his own corollary to that old saw: and under guard. Many of his political opponents over the years had ended up in Black Beach prison, an interrogation and detention center just a few miles down the road from the presidential palace. The happenings at Black Beach included stringing up prisoners “like a marlin at the weight scale,” waterboarding, electric shocks to the genitals, isolation, routine beatings, and starvation, according to an American economist working in the country early in Obiang’s reign. The leaders of one failed coup were reportedly handcuffed around the clock, deprived of food, drink, sleep, and medical attention, and beaten relentlessly for ten days straight—until one tight-mouthed conspirator died of a heart attack.
In 2010, around the same time the United States granted the new license to the corporate mercenaries at MPRI, the State Department also itemized President Obiang’s activities in its annual report on human rights: “increased reports of unlawful killings by security forces; government-sanctioned kidnappings; systematic torture of prisoners and detainees by security forces…arbitrary arrest, detention, and incommunicado detention…judicial corruption and lack of due process; restrictions on the right to privacy; restrictions on freedom of speech and of the press; restrictions on the rights of assembly, association and movement;…violence and discrimination against women; suspected trafficking in persons; discrimination against ethnic minorities; and restrictions on labor rights.”
That said, the State Department assured reporter Ken Silverstein separately, the MPRI contract “includes an important human rights component and anti-trafficking provision and we believe this training is a strong tool for tangible improvement in human rights and transparency.” Yes, let’s definitely invest our hopes in improving human rights and transparency in Equatorial Guinea to a contract with an armed mercenary group. Why not? Sounds bulletproof.
Whether training in human rights and proper penal practices was high on President Obiang’s list of priorities was hard to say, but he was certainly motivated to up his public relations game in the United States. In 2010, the government of Equatorial Guinea signed a million-dollar-a-year contract with Lanny Davis, an old Friend of Bill Clinton turned lobbyist (the Dems were back in power), to “promote Obiang’s interests in the United States.” At press events designed to reintroduce President Obiang and smooth his global image, Davis tried humor—“I’ve kidded him he’d do better to win with 51 percent than 98 percent”—and pathos—“[President Obiang] feels very vulnerable, without any friends.” Aaaaah, sad. Obiang also hired Qorvis Communications, an up-and-coming public relations firm specializing in lipstick-on-a-pig operations for unsavory dictators and potentates around the world, like helping the Saudi royal family clean up all that bad press after 9/11.
Qorvis didn’t have a lot to work with where Obiang’s reputation was concerned. There was a little sound bite from a 2006 event in Washington where then secretary of state Condoleezza Rice called President Obiang “a good friend.” There was the photo Obiang and his favorite, er, senior wife managed to get with President and Mrs. Obama in a receiving line at the Metropolitan Museum of Art in September 2009. There was also a recent State Department cable noting, inexplicably, President Obiang’s “mellowing, benign leadership.” The Qorvis flacks could maybe point out Teodoro Obiang’s exemplary tennis game, his valiant ongoing battle with prostate issues, his $3 million donation to fund the UNESCO–Obiang Nguema Mbasogo International Prize for Research in the Life Sciences, and his new public promise to begin investing more of his country’s oil revenue in the general welfare of his people.
When a pair of young aces from Qorvis sat down with Ken Silverstein in the summer of 2010 to make the case for President Obiang, they insisted the talk of human rights abuses was greatly exaggerated. The capital city of Malabo was as safe a place as you’d want to visit, they suggested, in a head-spinning non sequitur. “We could walk around at night and talk with people and no one interfered with us,” Qorvis’s Matthew J. Lauer told Silverstein over cocktails at a downtown Washington bar. “No one is saying there are no problems, but it’s not North Korea.” You play the hand you’re dealt. If It’s Not North Korea is one of your best cards, play it.
The Shopaholic Son of President Obiang was also tough to explain or excuse, but since Teodorin was reportedly paying Qorvis an added $55,000 a month to polish his own personal reputation in the wake of the recent bad press, they played
his hand too. The Qorvis fellows reminded Silverstein that Teodorin’s lifestyle was similar to that of dozens of other public officials and scions from oil-rich countries such as Nigeria and Saudi Arabia. As the pitch went, Teodorin was being “unfairly singled out.” Qorvis reminded Silverstein that Teodorin was still a young man sowing his wild oats—kind of like George W. Bush before he got serious about life and governance. President-in-waiting Teodorin, Qorvis execs assured Silverstein in the summer of 2010, “is at the point where he’s thinking about his legacy.”
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Actually, what Teodorin was mostly thinking about just then were his upcoming plans for serious, high-end retail therapy, which took some special doing in the summer of 2010. Having been tagged by U.S. financial regulators as a Politically Exposed Person from a notoriously corrupt country, Teodorin had to take extra precautions. He employed a special agent to do his bidding anonymously. “Please make sure that [Minister Obiang’s] name does not appear anywhere,” the intermediary explained to Julien’s Auctions. “He should be invisible.” Then Teodorin, wearing this cloak of invisibility, executed an enthusiastic shopping spree at three separate live celebrity-memorabilia auctions. Before 2010 was over, Teodorin had made winning bids on millions of dollars’ worth of things his lost would-be friend, the King of Pop himself, had touched, worn, or maybe at least gazed upon. Among the items Teodorin bought for his personal amusement were sculptures and porcelain figurines from Michael Jackson’s Neverland Ranch, a Jackson 5 gold record ($1,500), a bag signed by Jackson and Paul McCartney ($3,000), a football signed by Jackson and Troy Aikman ($4,000), Jackson’s gold record for “Beat It” ($10,000), Jackson’s personal MTV Moonman ($50,000), a pair of Jackson’s crystal-studded socks ($80,000), four of Jackson’s fedoras—one of them signed and two of them “stage worn” ($187,500)—a basketball signed by Jackson and Michael Jordan ($245,000), and the coup de grâce, the Rosebud of the lot: that Swarovski Lochrose crystal-covered glove worn by Mr. Jackson on his 1987 Bad tour ($275,000). He won them all!
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