Senate committee calls for tighter regulations on property, bank accounts of foreign politicians
In a hearing on Feb. 4th, the Senate Permanent Subcommittee on Investigations questioned lawyers, a realtor and representatives of financial institutions and government agencies about money laundering activities by foreign politicians.
The subcommittee’s 325-page report found that U.S. bankers, lawyers, real estate agents and escrows overlooked foreign political officials moving millions of dollars into the country. For years, Teodoro Nguema Obiang Mangue, the 40-year-old son of Equatorial Guinea’s president was using U.S. banks to move $110 million into the country. Obiang Mangue, also the Minister of Agriculture and Forestry of the oil and timber rich western African country, used U.S. financial institutions, including Wachovia Bank, Citibank, Union Bank of California and Bank of America to move money through five shell companies and other accounts.
One of Obiang Mangue’s real estate agents, bought a Malibu residence without a mortgage with $30 million funds wire transferred from Equatorial Guinea to escrow agents. According to the report, presently “U.S. real estate and escrow agents operate without any legal obligation to know their customers, evaluate the source of their funds, or exercise special precautions when dealing with Politically Exposed Persons.” At the hearing, Senator Carl Levin called for a Senate bill, which would require high risk U.S. corporations to disclose beneficial owners in order to be transparent.
The Republic of Equatorial Guinea is represented by the lobbying firm Cassidy & Associates which has worked with U.S. officials on anti-corruption legislation and banking issues, according to filings under the Foreign Agents Registration Act.
In another case, the former President of Gabon, Omar Bango hired a U.S. lobbyist, Jeffrey Birrell to purchase armored vehicles with over $18 million wire transferred from Gabon to U.S. bank accounts. Birrell held the money under a U.S. corporation, the Grace Group LLC, which has not filed under FARA. However, the company he previously co-owned, Barron-Birrell, Inc., provided public relations services to President Omar Bongo and acted as a policy consultant to the Republic of Gabon, according to FARA filings and the Senate hearing report.
Some of the subcommittee’s recommendations are that Congress should pass a law requiring banks to use reliable databases to screen clients, use account ownership forms that ask for personal information and conduct annual reviews of account activity. It also recommended that the Patriot Act require U.S. real estate and escrow agents to implement anti-money laundering programs.