Paradise Papers highlight the link between grand-scale corruption and poverty

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

Equatorial Guinea's President Teodoro Obiang casts his ballot for the Equatorial Guinea legislative elections in Malabo, Equatorial Guinea, 12 November 2017. His son, the vice-president, was convicted in France in October of embezzlement and money laundering. [Mario Cruz/EPA]

To truly crack down on corruption and end poverty, European governments must make corporate secrecy a thing of the past, and that starts at home, writes Tutu Alicante.

Tutu Alicante is the founder and Executive Director of EG Justice, a non-profit organisation that promotes human rights, the rule of law, transparency, and civic participation in his native Equatorial Guinea.

A French court’s decision on 27 October to convict (in abstentia) Teodoro Nguema Obiang Mangue (commonly known as “Teodorin”), the vice-president of Equatorial Guinea (who happens to be the son of the president), for embezzling his government out of tens of millions of euros and laundering the proceeds in France was a significant symbolic moment in the global fight against grand corruption. Rare indeed are the instances in which still-serving high-level government officials are convicted of corruption.

The Paradise Papers now dominating the headlines further highlight the scale of global financial secrecy and the many ways it enables actions that are detrimental to ordinary citizens in both the Global North and South. The leak has revealed the offshore activities of more than 120 politicians and world leaders, and called into question the way in which multinational corporations use accounting gimmicks to lower their tax bills.

The Paradise Papers are the latest in a growing number of leaks that expose that the powerful and wealthy get to play by a different set of rules than the rest of us. While owning an anonymous company doesn’t necessarily indicate illegal activity, it does raise questions about why public officials are actively hiding their activities, particularly at a time when public trust in government is at dangerously low levels in many parts of the world.

The Teodorin case illustrates how grand corruption hurts the world’s poorest. Teodorin has famously spent millions on lavish shopping sprees in European countries and the United States. French authorities have seized his assets totaling more than €100m, including a 101-room mansion in a chic neighborhood in Paris and several luxury sports cars. US officials accuse Teodorin of embezzling $300m, some of which was allegedly used to purchase a $38m private plane, a $30m Malibu mansion and $1.3m in Michael Jackson memorabilia, including a Thriller jacket and a diamond-studded ‘Bad Tour’ glove.

Meanwhile 75% of the people in my country – oil-rich Equatorial Guinea – live in poverty, many without reliable access to quality healthcare, education, sanitation, or electricity. Teodorin’s father holds the less-than-honorable distinction of being the world’s longest serving (non-monarchical) ruler, a position the US State Department and human rights groups assert he maintains in part by violating human rights and civil liberties with absolute impunity.

The reasons for these glaring contradictions are complex, but the Teodorin case highlights the degree to which corrupt officials in poor countries rely on enablers in the Global North to help launder, hide, and spend their stolen loot. Teodorin relied on a network of anonymous shell companies in countries around the world to covertly finance his high-end lifestyle. A cadre of lawyers, accountants and real estate agents shielded him and enabled his secrecy.

Unfortunately, his isn’t a unique case. In two similar cases currently pending in France, one involving the ruling Bongo family from Gabon and another involving the long-serving President Nguesso and his family in the Republic of Congo, anonymous shell companies and trusts were used to launder millions in illicit money into France and elsewhere.

While the French court’s decision is important symbolically, and enables France to permanently seize Teodorin’s assets, it is unlikely that the kind of justice most victims in Equatorial Guinea expected will be meted out any time soon – even if Teodorin sets foot in France. Judgments like this are a step in the right direction, but to be more than symbolic they must be accompanied by effective action from the international community that prevents the abuse of the global financial system in the first place. And it starts with the adoption of effective measures to prevent corrupt government officials from successfully hiding money.

The solution isn’t hard; in fact, it’s common sense. Governments around the world should require that the true ownership of companies – as well as trusts, whose secrecy also makes them easy vehicles for corruption – be publicly available, so that citizens can see who controls them. That would make it much more difficult for corrupt government officials to launder stolen money through banks in London, Malta, or Cyprus.

The European Union is currently considering regulations that could do just that. After last year’s Panama Papers leak and the terrorist attacks in Brussels, EU authorities decided to tighten the EU’s anti-money laundering regulations. On Tuesday (14 November) they are holding a critical negotiation to finalise those changes. The European Parliament has twice backed making company ownership and trust structures fully transparent, but some member states have so far blocked progress.

To truly crack down on grand corruption, they should ensure that the ownership structures of companies and trusts are fully transparent to the public.

Anything less would be a missed opportunity to stand with and bring about justice for the millions of victims of grand-scale corruption around the world.

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