US Congressional Report Cites Loopholes in Anti-Money Laundering Legislation

Nico Colombant | Washington  May  06, 2011

A U.S. Congressional report has shed new light on massive infusions of suspect money into the United States by people in the inner circles of power in the impoverished African oil-producing countries of Gabon, Equatorial Guinea, Nigeria and Angola.

The more than 300-page report follows two years of investigations into how lawyers, lobbyists, real estate agents and others in the United States have helped hide the existence of hundreds-of-millions of dollars coming from people in or close to power in African oil-producing nations, where despite oil wealth, endemic poverty persists. The report does not accuse those cited of breaking any U.S. laws.

In 2001, the U.S. Congress passed the Patriot Act, which included anti-money laundering regulations pertaining to financial institutions, but the report says there are loopholes that have allowed suspicious funds to be funneled into the United States.

The report cites individuals, including the wife of former Nigerian Vice-President Atiku Abubakar, American Jennifer Douglas. She is alleged to have helped bring $40 million in suspect funds into the United States. The report says that, at one point, the Wachovia Bank failed to identify her as a so-called "politically exposed person" who might be moving illicit cash.

The son of Equatorial Guinea's president, Teodore Nguema Obiang Mangue, is alleged to have brought in more than $100 million with the help of several U.S. lawyers. The report says they set up shell companies with names such as Sweet Pink, with no employees, to move money around.

The report also says the late long-time president of Gabon, Omar Bongo, and his son, Ali, who is now president, paid millions to hire an American lobbyist, Jeffrey Birrell, to help secure the purchases of military transport aircraft and armored vehicles.

At a recent hearing presenting the report, the chairman of the U.S. Senate Permanent Subcommittee on Investigations, Senator Carl Levin, underlined the importance of stopping the flow of laundered money from a local and global perspective. "Corruption is a cancer, which corodes the rule of law, undermines economic development and eats away at the fabric of civil society.  In extreme cases, corruption can destabilize communities and lead to failed states, lawlessness and terrorism.  If you want to credibly lead efforts to stop illegal money abroad, we have got to stop it here at home, as well," he said.

Several American lawyers invited to testify declined to do so.  Some have rejected allegations of any wrongdoing through previous statements.

African leaders and their relatives who have faced these types of inquiries in France before have denied any money moved out of their countries was transferred illegally.

Wiecher Mandemaker, the director of anti-money laundering at HSBC Bank USA, did testify. The Congressional report looked into his bank's dealing with the Bongo family as well as with Angola's central bank. He answered a question asked by the subcommittee's Republican ranking member, Senator Tom Coburn. "We will take a close look at this report. If we believe there are opportunities to improve on our activities, I am sure that we will do so and quite frankly, Senator, we are not perfect, but I do believe that we are one of the leading institutions, especially when it comes to identifying appropriate anti-money laundering practices, not doing business with individuals that we should not be doing business with, and I am quite proud to be a part of that institution," he said.

Senator Coburn said, because others had refused to testify, the investigation needed to be pursued. He also praised Senator Levin for pushing for tougher anti-money laundering legislation. "(There is) much to be found in the future about what has been going on in the past. I congratulate you. I think you are well on the way with your bill that you are introducing, which I hope we can work out, and that I can co-sponsor. I think we are there. I think maybe we need a little more balance in terms of not inhibiting regular trade, but I look forward to working with you on that," he said.

The bill is intended to further curb the use of American institutions by foreign officials found to be corrupt, as well as set up new rules to increase corporate transparency.


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