Skip to main content
  • News
  • Events
  • Blog
  • Search

Natural Resource Governance Institute

  • Topics
    Beneficial ownership
    Economic diversification
    Mandatory payment disclosure
    Revenue sharing
    Civic space
    Energy transition
    Measurement of environmental and social impacts
    Sovereign wealth funds
    Commodity prices
    Gender
    Measurement of governance
    State-owned enterprises
    Contract transparency and monitoring
    Global initiatives
    Open data
    Subnational governance
    Coronavirus
    Legislation and regulation
    Revenue management
    Tax policy and revenue collection
    Corruption
    Licensing and negotiation
  • Approach
    • Stakeholders
      • Civil society actors
      • Government officials
      • Journalists and media
      • Parliaments and political parties
      • Private sector
    • Natural Resource Charter
    • Regional knowledge hubs
  • Countries
    NRGI Priority Countries
    Colombia
    Guinea
    Nigeria
    Tanzania
    Dem. Rep. of Congo
    Mexico
    Peru
    Tunisia
    Ghana
    Mongolia
    Senegal
    Uganda
    OTHER COUNTRIES
  • Learning
    • Training
      • Residential training courses
        • Advanced
        • Executive
        • Anglophone Africa
        • Francophone Africa
        • Asia-Pacific
        • Eurasia
        • Latin America
        • Middle East and North Africa
      • Online training courses
        • Negotiating Contracts
        • Massive open online course (MOOC)
        • Interactive course: Petronia
      • Trainers' modules
        • (empty)
    • Primers
    • Glossary
  • Analysis & Tools
    • Publications
    • Tools
    • Economic models
  • About Us
    • What we do
      • 2020-2025 Strategy
      • Country prioritization
    • NRGI impact
    • Board of Directors
    • Emeritus Board Members
    • Advisory Council
    • Leadership team
    • Experts and staff
    • Careers and opportunities
    • Grant-making
    • Financials
    • Privacy policy
    • Contact us
  • News
  • Events
  • Blog

You are here

  1. Home
  2. Blog

From Brazzaville to Miami: National Oil Company Corruption and its Global Implications

22 July 2020
Author
Alexandra Gillies
Topics
Corruption
Social Sharing

Français »

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.)

 

 

According to federal prosecutors, between 2011 and 2014, Sassou Nguesso “used his control over the Congolese oil sector to embezzle millions of dollars in public funds from [national oil company] SNPC and extract millions more in bribes.” The allegedly stolen funds then wound through shell company accounts and ultimately paid for fancy cars, private flights, a $650,000 Los Angeles hotel bill, and several luxury properties, including the Miami penthouse. Such luxuries are unknown to most of the Republic of Congo’s five million citizens. The country is sub-Saharan Africa’s third-largest oil producer, yet large oil rents over the years haven't translated into sustainable economic growth or poverty reduction.

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 media outlets. 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.

National oil company corruption risks

Colleagues at NRGI and I have examined dozens of corruption cases that involve national oil companies (NOCs) in countries including Angola, Brazil, Iraq, Nigeria, Russia and Venezuela. From this review, we find that NOC corruption typically takes one of three main forms: NOC corruption typically takes one of three main forms: NOC officials solicit or receive bribes; NOCs steer profitable contracts and business opportunities toward politically connected firms; or officials misappropriate NOC funds.

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 string of controversies, 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.

More nuanced and challenging is how SNPC’s industry partners may have enabled corruption, including just by looking the other way. After all, without its foreign partners, SNPC officials would not have oil money to misappropriate. These companies are essential players in the wider scenario—even those that did not engage in wrongdoing such as by paying bribes.

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 loom large. 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.

Alexandra Gillies is an advisor at the Natural Resource Governance Institute and the author of Crude Intentions: How Oil Corruption Contaminates the World.

Miami image by Flickr user Valerie (viaAttribution-NonCommercial-NoDerivs 2.0 Generic (CC BY-NC-ND 2.0)).

Related content

De Brazzaville à Miami : la corruption des sociétés pétrolières nationale et ses implications à l’échelle mondiale

Alexandra Gillies
24 July 2020

Initial Evidence of Corruption Risks in Government Oil and Gas Sales

23 June 2016
Aaron SayneAlexandra Gillies

Might the U.K. and the U.S. Exhibit Leadership in Addressing State Capture and Legal (as well as Illegal) Corruption?

Daniel KaufmannAlexandra Gillies
25 April 2016

De Panamá a Londres: La corrupción legal e ilegal necesita de la acción de la cumbre anticorrupción que se celebrará en el Reino Unido

Daniel KaufmannAlexandra Gillies
9 May 2016

De Panama à Londres : agir contre la corruption légale et illégale au sommet anticorruption du Royaume-Uni

Daniel KaufmannAlexandra Gillies
9 May 2016
Helping people to realize the benefits of their countries’ endowments of oil, gas and minerals.
Follow on Facebook Follow on Twitter Subscribe to Updates
  • Topics
    Beneficial ownership
    Civic space
    Commodity prices
    Contract transparency and monitoring
    Coronavirus
    Corruption
    Economic diversification
    Energy transition
    Gender
    Global initiatives
    Legislation and regulation
    Licensing and negotiation
    Mandatory payment disclosure
    Measurement of environmental and social impacts
    Measurement of governance
    Open data
    Revenue management
    Revenue sharing
    Sovereign wealth funds
    State-owned enterprises
    Subnational governance
    Tax policy and revenue collection
  • Approach
    • Stakeholders
    • Natural Resource Charter
    • Regional knowledge hubs
  • Priority
    Countries
    • Colombia
    • Dem. Rep. of Congo
    • Ghana
    • Guinea
    • Mexico
    • Mongolia
    • Nigeria
    • Peru
    • Senegal
    • Tanzania
    • Tunisia
    • Uganda
  • Learning
    • Training
    • Primers
  • Analysis & Tools
    • Publications
    • Tools
    • Economic models
  • About Us
    • What we do
    • NRGI impact
    • Board of Directors
    • Emeritus Board Members
    • Advisory Council
    • Leadership team
    • Experts and staff
    • Careers and opportunities
    • Grant-making
    • Financials
    • Privacy policy
    • Contact us
  • News
  • Blog
  • Events
  • Search