When the first invoices from Julien’s Auctions arrived in Malibu, Teodorin instructed they be returned to sender and revised to reflect the billing party and address as one Amadeo Oluy, Malabo, Equatorial Guinea, a.k.a. definitely not Teodorin. The payment of $1,398,062.50 to settle the bill from the first auction was promptly paid from a bank account in Equatorial Guinea. The total of Teodorin’s 2010 Julien’s Auctions bill, it is worth noting, would have covered the living expenses of about thirty-three hundred of his fellow countrymen for a year, given the fact that three-quarters of the population of Equatoguineans lived on $2 a day, just as they had five years earlier, and ten years earlier, and even twenty years earlier, when their vast and valuable oil and gas reserves were still tucked away, unknown and unrealized, well below the ocean floor.
Equatorial Guinea’s main landmass is a little square the size of Vermont on the west coast of Africa, just north of the equator, that looks to have been carved out of the larger nation of Gabon. The national capital, Malabo, is actually on Bioko Island, which is about the size of Maui and sits 150 miles across the Gulf of Guinea from the country’s biggest mainland coastal city.
Equatorial Guinea won its independence from Spain in 1968 and thereafter found itself at the tender mercies of the extended Obiang family. Francisco Macías Nguema, the country’s first president, guarded his new position with a fierce and lethal jealousy. His security team is estimated to have killed or driven away more than a third of the country’s citizenry during his eleven-year reign. President Macías, who billed himself as the “Leader of Steel,” the “Implacable Apostle of Freedom,” and “Divine Miracle” (and “woe be to anyone who snickered on hearing it,” remarked one foreign diplomat), made examples of some of his political opponents by having them crucified in public view. Macías was also notorious for a mass murder of his political foes in a soccer stadium, in which the public address system blared the song “Those Were the Days” to drown out the dying screams of the victims. The CIA’s World Factbook is typically terse on the subject: in the eleven years after independence, Equatorial Guinea’s first autocratic ruler “virtually destroyed all of the country’s political, economic, and social institutions.”
Teodorin Obiang’s father, Teodoro, served out most of those years at the pleasure of his uncle, President Macías. Among other things, Lieutenant Colonel Obiang had been in charge of the notorious Black Beach prison and its torture-happy “Black Beach Parties.” One German publication described Lieutenant Colonel Obiang’s cruelty thus: “Prodded with red-hot iron bars, prisoners were forced to dance around a fire for hours singing songs of praise” to President Macías, a.k.a. the Leader of Steel.
In 1979, Lieutenant Colonel Obiang ran a bloody coup against his uncle and took over the presidency for himself. President Obiang has operated since, according to international consensus anyway, as a less malevolent figure than Mr. Divine Miracle, but force and terror still have reigned. In 1994, when John Bennett, the American ambassador in Malabo, called out President Obiang on his ugly human rights record, the diplomat received a very distinct reply from Obiang’s crew, tossed at the ambassador from a moving car: “You will go to America as a corpse.” The Obiang regime started tailing Bennett around the capital and officially accused the ambassador of employing witchcraft against President Obiang. The Clinton administration hastily pulled up diplomatic stakes and closed the U.S. embassy in Malabo. On his way out of town, in his farewell address, Bennett named the Obiang regime’s top torturers, one by one.
But neither Obiang nor the handful of international oil companies already operating in Equatorial Guinea were much concerned. One oil executive had already screamed at Bennett, as the ambassador remembered it, for “making it difficult for his company to do business.” By the early 1990s, Western oil companies were ramping up production at the Zafiro oil field off the country’s coast. With or without any “political, economic, and social institutions,” tiny Equatorial Guinea was about to take a cannonball leap into the international commodities market.
Whatever the challenges were that President Obiang found so insurmountable when it came to providing potable water or education or roads or basic democracy to his citizens, he found all the authority and organization he needed to make it easy for oil producers to do business in his country. There was a very clear path to winning the right to drill off the coast of Equatorial Guinea, and it ran right through the Presidential Palace in Malabo. “In a place like Equatorial Guinea,” that longtime industry watcher, Ken Silverstein, explained in an interview with Mother Jones magazine, “it’s whoever figures out how to give the president and his inner circle the most money, gets the contract.”
And that is how the black gold, the excrement of the devil, the natural resources—whatever you want to call it—the giant pots of oil under the seabed in Equatorial Guinea ended up producing giant pots of money for the Obiang family. Start with an already ruthless dictator divorced from international norms and unmoved by opprobrium for his human rights record. Now add oil company bribes and oil revenues to make that dictator suddenly wildly wealthy, with billions of dollars’ worth of new incentives to not just hold on to power but hold on to every single lever of power in the country, to ensure the continued flow of oil revenue directly to and through him, with no political competitors horning in on the action. And bingo, the God-given resources of an entire nation become the private wealth of one family.
From the oil companies’ perspective, that kind of arrangement is no muss, no fuss: if all decisions on oil development are made by the president, all the bribing is a one-stop shopping experience. There was no government body in Equatorial Guinea capable of checking Teodoro Obiang, or even questioning him. And he did not feel a compelling need to press Western oil companies for good deals on behalf of his citizenry; it’s not as if he were looking to fund universal pre-K. Where the ministers in most oil-producing countries in Africa might demand anywhere from 50 to 90 percent of a foreign company’s locally generated revenue, Obiang was happy to settle for a third, or a quarter, or even 15 percent. Equatorial Guinea has “by far the most generous tax and profit-sharing provisions in the region,” according to a 1999 report from the International Monetary Fund.
Despite the “going home as a corpse” threat to the allegedly witchy last U.S. ambassador, President Obiang ended up being especially friendly to representatives of American business. And he had even more reason to be after the 9/11 attacks, when the United States—which produced a bit fewer than six million barrels of oil a day in 2001 and consumed a little more than nineteen million—was suddenly parched for imports from anywhere that was not the Middle East. This was the time, remember, when the Bush administration started wooing President Putin with promises to build Siberian pipelines and other infrastructure so the United States could buy more oil from Russia. Latin America might be good for more. And Africa, too, was a big, barely tapped newcomer on the horizon.
“It’s occurred to all of us that our traditional sources of oil are not as secure as we once thought they were,” Congressman Ed Royce (R-Calif.) explained to a symposium of oil executives, U.S. government officials, academics, and envoys from several African countries four months after 9/11, in January 2002. “Oil is where you find it. Oil companies cannot always invest in democratically governed countries. It would be ideal if it could be guaranteed that the head of an African country where a U.S. oil company invested was, in fact, an advocate of democracy and always respected human rights. Unfortunately, that is not a realistic expectation.”
His colleague Congressman William Jefferson (D-La.) concurred, but he saw possibility: “While there may be strivings and failings in Africa over democracy, in the Middle East there’s not even talk of it. Talk about democracy does not even part the lips of those who are in charge in those countries. So in Africa there’s at least a chance for the kinds of things we talk about here: rule of law, for transparency. There’s a chance for us
to overcome some of the issues of bad governance through democratic influences.” Jefferson’s personal democratic influence would include soliciting hundreds of thousands of dollars’ worth of bribes from companies seeking to do business in Africa; $90,000 cash was discovered wrapped in aluminum foil in the congressman’s icebox. That most notorious case of freezer burn in national history would ultimately send Congressman Jefferson to federal prison for five years.
Just two weeks after that January 2002 African oil colloquy, a group of fifty men and women, including investors, oil company executives, and a handful of State Department officials, hosted President Obiang at a luncheon at the Army and Navy Club in Washington. This was a far cry from his visit to Washington a year earlier, when Obiang had found it difficult to get an audience with an assistant secretary of agriculture. At the club that day, according to contemporaneous reporting by Silverstein, one oil executive raised a toast to the future of Equatorial Guinea. “It will be the Kuwait of Africa,” he said. “It’s a fabulous country.” Another presented Obiang with a wooden letter box and then thanked the officials from the State Department for “pressing” their bosses to reopen the U.S. embassy in Malabo. President Obiang knew what was expected of him that day. He told the gathering that he hoped for an even larger and more energetic presence of American oil companies in his country, and he rolled out the welcome mat for businessmen and investors from the oil-hungry United States. “We can promise American companies,” he said, “that their investments are guaranteed.”
The floodgates opened after the general bargain was struck. “The United States wouldn’t openly criticize the regime,” as the authors of a Pulitzer Center study would succinctly put it, “and the regime guaranteed the U.S. oil industry near-exclusive access to the country’s national oil reserves.” Every Saturday morning, a Houston Express flight arrived in Malabo (nonstop from Texas!), carrying a new cadre of oil workers. The gated and guarded residential areas, whose amenities included company-provided water, electricity, and cell phone service, swelled with Americans. The roughnecks drove their trucks over to local bars like La Bamba and Shangri-La where they could buy Budweiser or Michelob or Coors, just like back home. Equatorial Guinea’s Independence Day parades suddenly featured lines of American flags and a host of banners and placards festooned with the names and trademarks of Halliburton, Chevron, Marathon, and ExxonMobil.
The country’s annual oil production nearly quadrupled in just five years. ExxonMobil was the biggest player in the Equatoguinean offshore oil game by far; its take from Equatorial Guinea grew to represent nearly 10 percent of ExxonMobil’s total production worldwide. In thanks, and in return, CEO Tillerson and ExxonMobil made sure President Obiang, his family, and his cabinet were well compensated. Very well.
What happened to the money after ExxonMobil wrote the checks was not of particular concern to anybody at the company. “We are private investors,” said an Exxon spokesman in 2005, “and it is not our role to tell governments how to spend their money.” What the execs at ExxonMobil did know, and did bear in mind at all times, was that Obiang owned the tollbooth all oil companies had to go through in Equatorial Guinea. But it was the only tollbooth, and his price was not particularly onerous, given the amount of money they were sucking up onto those offshore platforms. Why look that gift horse in the mouth? “Their concern is getting oil out of the ground with as little trouble as possible,” Frank Ruddy, who had been an attorney for Exxon in the 1970s and ambassador to Equatorial Guinea in the 1980s, told Silverstein. “Their first priority is not going to be that there is a democratic government. That’s not their business. And it shouldn’t be.”
But somebody was, thankfully, following that money. Most of it was flowing into Riggs Bank, headquartered right around the corner from the White House in Washington. President Obiang’s other favored son, Gabriel, would sometimes explain that the State Department recommended the bank as a safe spot to keep the money. “We wanted to make sure,” Gabriel told Peter Maass, “that American companies feel comfortable.”
Well, Riggs certainly felt comfortable. At one point, the bank was holding as much as $700 million in various accounts controlled by Obiang, his handpicked government officials, and family members like Gabriel and Teodorin. The primary account, into which ExxonMobil, Marathon, Hess, and others deposited their royalty payments, was controlled by President Obiang himself. The source of other deposits was not always easy to trace. On two separate occasions, the Riggs Bank vice president managing the Equatoguinean accounts hied himself to the country’s embassy a mile away, where he received suitcases full of $3 million in shrink-wrapped $100 bills, and then hauled the sixty-pound package back to the Riggs bank vault. “Where is this money coming from?” another Riggs vice president wrote to colleagues. “Oil—black gold—Texas tea!”
A U.S. Senate investigation, sparked largely by Silverstein’s early reporting, uncovered some financial transactions that looked to be uncomfortably close to the boundaries of the Foreign Corrupt Practices Act, a 1977 law that makes it illegal for Americans doing business abroad to bribe officials of other countries. ExxonMobil was by no means the only oil company that faced these kinds of accusations at the time, but the firm did stand out among its peers for what appeared to be its remarkably generous application of emoluments. According to the Senate investigation and follow-up reporting, ExxonMobil cut President Obiang in on an oil-distribution joint venture that enriched him by about $640,000 on a $2,300 investment; the company paid Obiang’s senior wife at least $365,000 in questionable rental fees; it paid Obiang’s brother about $700,000 for security (an ExxonMobil spokesman explained to Senate investigators the company was pretty sure this was “market rate”); it paid Obiang’s interior minister $236,160 on a labor contract and the minister of agriculture $45,000 for a rental house. ExxonMobil was unable (or maybe unwilling) to promptly deliver to the committee the complete list of payments made to Equatoguinean officials or Obiang family members. There were, after all, five hundred separate “contracts” to comb through. “The business arrangements we’ve entered into have been entirely commercial,” Andrew Swiger, ExxonMobil executive vice president, explained to a roomful of senators at a public hearing. “They are a function of completing the work that we are there to do, which is to develop the country’s petroleum resources and, through that and our work in the community, make Equatorial Guinea a better place.”
Answereth Senator Carl Levin to that statement: “Make it what?”
“I know you’re all in a competitive business,” Levin said. “But I’ve got to tell you, I don’t see any fundamental difference between dealing with Obiang and dealing with Saddam Hussein.”
Riggs Bank took the big bullet, or more like the bunker buster. The venerable old financial institution that had dated from the President Andrew Jackson era and took a measure of credit for funding the Mexican-American War, the construction of the Capitol dome, and the purchase of Alaska is no more. After paying enormous fines in the aftermath of the Equatorial Guinea bribery, corruption, and money-laundering investigation, it was sold on the cheap. The once glorious forty-two-thousand-square-foot marble Riggs Bank building (constructed in 1902, when Teddy Roosevelt was president, with regal Ionic columns and a view of the White House) was bought just a few years ago by the family foundation of the junk-bond felon Michael Milken and will soon be part of a conference center and a museum dedicated to, you guessed it, finance and entrepreneurship.
The Senate’s final 2004 report on the Riggs Bank money-laundering episode did oh-so-gently rebuke ExxonMobil and its brethren: “Oil companies operating in Equatorial Guinea may have contributed to corrupt practices in that country.” But even with the scandal and the implosion of Riggs Bank, five years later, things were still pretty much business as usual in Equatorial Guinea. President Obiang continued to hold power and control the money. And, the shopaholic president-in-waiting had refused to trim his sails. “Lesser kleptocrats mi
ght have turned tail and fled,” Ken Silverstein wrote, “but not Teodorin. He employed two lawyers to set up [new] shell companies and associated bank accounts that he controlled but on which his name never appeared.”
And while Teodorin luxuriated in Michael Jackson’s fedoras and socks and crystal-sequined glove and porcelain figurines, ExxonMobil kept on doing what it had to do to keep the oil pumping out of the Gulf of Guinea. The world’s most profitable corporation was still at pains to, as Rex Tillerson would say, “communicate to the public and policymakers the complexities of the energy business in ways that help them better understand some of the issues involved and why things are how they are.”
When Human Rights Watch asked for comment on business practices in Equatorial Guinea in 2009, the other oil companies were quite circumspect. They explained their “rigorous Foreign Corrupt Practices Act compliance program” and their well-circulated Business Conduct and Ethics Code and their “highest standards of ethical conduct” and their “compliance with the letter of and spirit of applicable laws in the countries where we operate.” ExxonMobil, like the man at the helm of the corporation, was merit-badge calm and happy to explain in greater detail exactly why things are the way they are. “The practical realities of doing business in developing countries are challenging,” Kenneth P. Cohen, vice president of public affairs, wrote to Human Rights Watch. “Equatorial Guinea, like many developing nations, has a limited number of local businesses and a small population of educated citizens. As a result, there is a small community of government officials and business owners. Not unexpectedly, many of those persons are connected by a network of social and family relations. Many businesses have some family relations with a government official, and virtually all government officials have some business interests of their own, or through a close relative….
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