Last month, U.S. authorities moved to seize a $2.8 million Miami apartment with sweeping ocean views. In the court filings, they laid out new corruption allegations against its ultimate owner: Denis-Christel Sassou Nguesso, the son of the president of the Republic of Congo and also a member of parliament who has held top positions in the country’s oil sector.* The allegations provide a glimpse into how powerful political elites might extract public funds from oil industry institutions, and how a wide range of foreign enablers play along.
(In this post, “Sassou Nguesso” refers to Denis-Christel Sassou Nguesso.)
As in many asset seizure cases, authorities filed the case against the asset itself, in this case the seaside apartment. Denis-Christel Sassou Nguesso is described as the ultimate owner of the condo, but not as a defendant. Neither he nor his associates have been charged with a crime. Sassou Nguesso has not commented on the proceedings to mediaoutlets. In response to questions from Global Witness, a representative of SNPC said that the Congolese national oil company would study the allegations before responding further.
Most unusually, all three types of allegations appear in the Miami apartment complaint. U.S. authorities allege that Sassou Nguesso “accepted bribes worth over $1.5 million in exchange for awarding lucrative oil license contracts on behalf of SNPC from approximately 2014-2016.” These are not the first bribery allegations that involved the Congolese NOC or its representatives. In 2018, a Swiss legal proceeding revealed that an employee of Gunvor, a large oil trading company, paid bribes to SNPC officials and other top figures in Congo.
The Miami complaint also alleges that Sassou Nguesso steered juicy deals toward his own companies, using “his position of control at SNPC to ensure that companies he had an interest in were granted the status of ‘local partner’ for lucrative oil projects.”
Completing the trifecta, U.S. authorities believe that Sassou Nguesso, the “gatekeeper of Congo’s oil wealth,” embezzled millions of dollars from SNPC accounts. The complaint quotes several emails in which he asked the CEO of the Congo branch of a Gabonese bank to transfer money from SNPC’s accounts into the accounts of his own shell companies.
Nearby foreign players
The funds that purchased the Miami apartment and other luxury goods passed through the bank accounts of several shell companies, as well as accounts opened by Sassou Nguesso himself and by one of his close associates at Bank of America and other institutions. In this way, the allegations reflect one of the most prominent trends in modern kleptocracy: the use of shell companies and foreign banks to spirit away illicit wealth. In its assessment of the Miami complaint, Global Witness calls for a full investigation of all parties involved, including any individuals or firms who facilitated the transactions, and reiterates the urgent need for public registries of beneficial ownership information and tougher requirements that banks, lawyers and real estate agents know their clients and the source of their funds. Multiple investigations of the Sassou Nguesso family justify these demands: Global Witness has uncovered other offshore properties linked to the family, (including one in a Trump-owned building), as have French authorities.
Along with the facilitators who helped to move the money, other foreign players were operating nearby too. SNPC, the Congolese NOC, relies heavily on international oil companies and international commodity traders to extract and market the country’s oil. SNPC has featured in a stringofcontroversies, but the NOC’s current or recent partners still include many top companies who have committed to preventing corruption and upholding integrity standards. These include the supermajors Chevron, Eni and Total, and the trading firms Glencore and Trafigura. These partnerships don’t mean that the companies have engaged in illegal conduct—but they do indicate a high tolerance for risk. (Eni and Total reiterated that they have not engaged in any corrupt behavior in Congo when asked by Global Witness about the most recent SNPC allegations.)
However, according to the Miami complaint, at least one of SNPC’s corporate partners paid bribes in order to secure an oil concession. One or more companies also did business with a Congolese company that has Sassou Nguesso among its beneficial owners. These are clearly problematic and possibly criminal behaviors that anti-bribery authorities in the relevant jurisdictions should investigate.
How can private companies avoid enabling NOC corruption?
In a new NRGI project, we are examining how private companies might respond when a prospective NOC partner exhibits high corruption risks. In some scenarios, if the NOC is too firmly embedded in a country’s kleptocracy, companies should probably just walk away. But, if companies choose to stay and do business with the NOC, what measures can they take to prevent and avoid enabling corruption?
Over the coming months, we will develop ideas for what these measures could entail, discuss them with a range of company representatives and experts, and share the results widely. Ideas under discussion include: tailoring due diligence systems to the unique political realities of NOCs; timely disclosures of payments to NOCs; avoiding certain types of high-risk third-party agents and contractors; improving anticorruption provisions in joint venture contracts; adopting more robust conceptions of political exposure when vetting contractors; and supporting civic accountability.
The resulting guidance will not contain perfect answers nor will its uptake magically dissolve decades-old legacies of corruption. But by openly discussing the real-world corruption risks surrounding many NOCs and generating practical advice for how to do better, we hope the project will reduce both witting or unwitting enabling behavior among private sector players.
Like most oil producers, the Republic of Congo is facing an economic crisis. Oil revenues are drying up and public debts loomlarge. Oil investments are under threat as oil companies tighten their belts and narrow their portfolios in the face of dropping demand. While “race-to-the-bottom risks” could ensue, producer countries may also feel pressure to improve their governance game in order to secure foreign investment and emergency relief from actors such as the IMF. These factors could possibly combine to make large-scale corruption a costlier proposition. In this shifting context, international companies can either be part of the problem, by engaging in or enabling corruption, or part of the solution, by insisting on higher governance standards even when their own legal wellbeing is not on the line.
* The complaint was filed with the US District Court for the Southern District of Florida by U.S. Department of Justice attorneys on 12 June 2020. It is a civil application for forfeiture of the property at 900 Biscayne Boulevard, unit #6107, Miami, Florida. The document can be accessed on the U.S. court record website Pacer.