By Kevin Bogardus - 02/04/10 12:00 AM EST
Washington lobbyists and lawyers helped launder millions of dollars for allegedly corrupt African politicians and their relatives, according to a two-year-long investigation by the Senate Permanent Subcommittee on Investigations.
The report, to be released Thursday, is part of a push by the panel chairman, Sen. Carl Levin (D-Mich.), to strengthen anti-money laundering and anti-corruption measures, which aides suggest could be added to the financial regulatory reform package moving through Congress.
Many have been at the center of corruption scandals in their own countries and have been under investigation off and on by law enforcement authorities around the world, including the U.S. Justice Department.
Speaking to reporters Tuesday, Levin said there were “significant holes” in American defenses against money laundering that must be reinforced to reduce corruption and other crimes, including terrorism.
“Particularly now that we are focusing so much on the threat of terrorism, going after the source of money that supports terrorism, we have to take strong steps here to make sure that we do not aid and abet dirty money,” Levin said. “We have got to live up to our own rhetoric in this regard.”
The 330-page report, written by staff for Levin and the subcommittee’s ranking member, Sen. Tom Coburn (R-Okla.), consisted of more than 100 interviews and more than 50 subpoenas for millions of pages of documents, including bank records, contracts and e-mails. On Thursday, the subcommittee will hold a hearing with many of the people named in the report testifying before the panel.
The report centers on “politically exposed persons” (PEPs) — powerful foreign officials, their relatives and close associates from countries rife with political corruption. Banks and other financial institutions depend on private vendor lists to avoid lending to and borrowing from PEPs.
The report suggests Americans representing PEPs helped to circumvent anti-corruption safeguards and may have brought in funds resulting from bribery or other corruption. Lawyers, lobbyists, real estate agents and others do not have the legal duty to report suspicious transactions by their clients.
In 2001, Congress passed the Patriot Act, which made accepting proceeds from foreign corruption a money laundering offense. It also required American banks to scrutinize foreign officials’ private accounts more carefully. Other anti-money laundering measures followed, including a 2004 executive order by President George W. Bush and supporting legislation to deny U.S. visas to foreign officials involved in corruption.
Nevertheless, allegedly corrupt foreign officials, some under investigation by the Justice Department, have still been able to use American banks to transfer millions of dollars, the report concludes.
For example, Teodoro Nguema Obiang Mangue, the son of Equatorial Guinea President Teodoro Nguema Obiang Mbasogo, used American lawyers, real estate agents and escrow agents to move more than $110 million in suspect funds into the United States, according to the report.
Two lawyers based in Beverly Hills, Calif., “Michael Berger and George Nagler, helped Mr. Obiang circumvent U.S. anti-money laundering … and PEP controls” by setting up shell companies to move funds for Obiang. Among Obiang’s purchases were a $30 million Malibu mansion and a $38.5 million Gulfstream jet, according to the report.
Nagler declined to comment for this piece through his assistant. An attorney for Berger also declined to comment. They are scheduled to testify before the subcommittee on Thursday.
When asked if the State Department should deny Obiang a visa, Levin said he will push the subcommittee report on the department and added, “I think the question is the right question and we will press our report on the State Department.”
The report also focuses on Atiku Abubakar, a former vice president of Nigeria who was a figure in the corruption scandal surrounding Rep. William Jefferson (D-La.), who was sentenced last year to 13 years in prison. Abubakar’s fourth wife, Jennifer Douglas, an American citizen, helped bring more than $40 million into the United States, the report says.
Douglas denied wrongdoing in a 2008 civil complaint by the Securities and Exchange Commission that alleged she was bribed with $2 million by Siemens AG. To help bring Abubakar’s funds into the U.S., Douglas set up bank accounts to accept money from a number of offshore corporations in his name, the report says.
American University accepted about $14 million from Abubakar for consulting services in developing a Nigerian university. The school did not inquire about the source of the funds, which came from an offshore company, and had no legal obligation to do so, the report says.
An AU spokeswoman said the school consulted the U.S. ambassador to Nigeria and the intelligence community about Abubakar. They both indicated there was nothing more than rumors of corruption surrounding the vice president.
A Washington lawyer, Ed Weidenfeld, a legal adviser to Abubakar and his wife, also shows up in the report.
For Douglas, “Mr. Weidenfeld helped her open up accounts,” and for both members of the couple, he “has on occasion transferred funds to other accounts for them,” according to the report. Further, “at least another $2.1 million was wire transferred … to accounts controlled by Edward Weidenfeld” to help pay for his legal expenses and the school in Nigeria.
Weidenfeld did not return messages asking for comment for this piece.
Other foreign officials sometimes used lobbyists as a conduit to move cash into the United States.
The late Omar Bongo, who was president of Gabon, wired more than $18 million to “The Grace Group LLC, a U.S. corporation formed by Mr. [Jeffrey] Birrell,” the report states. Birrell used the money to buy Bong six armored vehicles and six C-130 military cargo aircraft from Saudi Arabia, the report says.
Ian Pitz, an attorney for Birrell, said with respect to the allegations raised by the report and activities undertaken by The Grace Group, “we are unaware of any wrongdoing by any party. All of the ‘export’ and ‘re-export’ activities undertaken by The Grace Group LLC, were done with complete transparency.”
Birrell is scheduled to testify at the hearing Thursday.