Rooting out seen and unseen corruption

A dapper Teodorin Obiang emerges from his luxury car.
A dapper Teodorin Obiang emerges from his luxury car.
AFP

Nine cars were sold off at an auction in Paris raising $3.6 million. Luxury names took the stage including Porche, Bugatti and Bentley.

The owner: Teodorin Obiang, son of Equatorial Guinea’s President Teodor Obiang. The cars were seized in 2011 when the younger Obiang was charged with embezzling public funds in France to buy real estate in Paris.

It is quite the collection for someone who earned an official salary of $7,000 a month during that time. He has also managed to purchase a $30 million home in Malibu and liberated an €18 million art collection from the walls of fashion designer Yves Saint Laurent.

The money comes largely from the oil that the country produces. The sale of oil makes it way into the smooth rides and stylish suits worn by the Obiang family.

Corruption may feel like a problem in a far off nation, but it is much closer to home than one expects, says Global Witness co-founder Charmain Gooch.

“Corruption is made possible by the actions of global facilitators,” says Gooch.

Banks and business in the United States and France played a role in Teodorin Obiang’s purchases.

He did business with global banks. A bank in Paris held accounts of companies controlled by him, one of which was used to buy the art ,and American banks, well, they funneled 73 million dollars into the States, some of which was used to buy that California mansion.

And he didn’t do all of this in his own name either. He used shell companies. He used one to buy the property, and another, which was in somebody else’s name, to pay the huge bills it cost to run the place.

 

Corruption is a worldwide problem. The Global Corruption Barometer 2013 asked 114,000 people from 107 countries questions about corruption.  More than one in four people say they paid a bribe when accessing public services and institutions, finds a new survey from Transparency International. It is roughly the same rate as last year.

More than two-thirds of Americans say that corruption is a problem in the public sector. Nearly the same amount of people also said that corruption has increased over the past two years. The survey also showed that people are not OK with corruption.

“Bribe paying levels remain very high worldwide, but people believe they have the power to stop corruption and the number of those willing to combat the abuse of power, secret dealings and bribery is significant, “ said Huguette Labelle, the Chair of Transparency International.

Problems make it to health programs. One example is a scheme in Nepal to encourage women to give birth in hospitals. Using medical facilities can improve the chances that the mother and child survive any birth complications. The Nepalese government offered mothers a small cash allowance if they gave birth at a hospital.

The district officials who were supposed to promote the program decided to keep the money. Fake mothers filled the lists and the money ended up in the hands of the officials. Transparency International supported a whistleblower who called attention to the corruption. The officials returned the money to the state and the program is now trying to reach real mothers.

Do you think corruption has increased

Transparency looks to politicians as leaders against corruption while Gooch makes the case that it international actors have a role as well.

“Governments need to make sure that there are strong, independent and well-resourced institutions to prevent and redress corruption,” says Labelle. “Too many people are harmed when these core institutions and basic services are undermined by the scourge of corruption.”

Do so requires more transparency from governments about the money collected and how it is spent, says the report. Governments should also support rule of law, provide stiff punishments for corruption and clean up the democratic process.

One way that countries can reduce corruption is by taking on shell companies. Gooch cites a World Bank Study that found shell companies were used in 70% of the 200 corruption cases it studied. These companies are set up in countries like the UK and the US. She remains optimistic that corruption can be defeated. It can work, she says. A transparency campaign launched in 1999 and aimed at the oil and mining sectors has led to an increase in the number of transparency laws for companies.

“So this is change happening. This is progress. But we’re not there yet, by far. Because it really isn’t about corruption somewhere over there, is it? In a globalized world, corruption is a truly globalized business, and one that needs global solutions, supported and pushed by us all, as global citizens, right here,” concludes Gooch.

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About Author

Tom Murphy

Tom Murphy is a New Hampshire-based reporter for Humanosphere. Before joining Humanosphere, Tom founded and edited the aid blog A View From the Cave. His work has appeared in Foreign Policy, the Huffington Post, the Guardian, GlobalPost and Christian Science Monitor. He tweets at @viewfromthecave. Contact him at tmurphy[at]humanosphere.org.