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CORRUPTION CLAN

The high price of doing business in Equatorial Guinea

How a former Spanish colony is gripped by the greed of its ruling family

Teodoro Obiang Nguema (right) and his wife Constancia Mangue, pictured in South Africa in 2009. Ampliar foto
Teodoro Obiang Nguema (right) and his wife Constancia Mangue, pictured in South Africa in 2009. AFP

In the summer of 2009, in a five-star hotel in Madrid, Ruslan Obiang Nsue, a son of Teodoro Obiang, president of the tiny but oil-drenched West African state of Equatorial Guinea, met with a businessman who had paid a commission of 200,000 euros to secure a contract to build several soccer stadiums in the former Spanish colony in the run up to its hosting the 2012 African Cup of Nations.

“You sign a contract with the son of the president and you believe it is worth something. You have no idea what is going to happen to you. We had to flee the country. We were afraid for our lives,” remembers the businessman, who asked not to be named.

Doing business with the clan led by Teodoro Obiang, who seized power in 1979 after ousting and then killing his uncle, can be a dangerous business. So-called commissions are obligatory, and fictitious contractual disputes are common, often resulting in extortion, death threats, and the loss of all money and assets. In response to the worsening problem and the hazards to life and limb, Spain’s Foreign Ministry has just posted a warning on its website telling anybody thinking of doing business in Equatorial Guinea that foreigners are often prevented from leaving the country and, in the absence of internationally accepted arbitration procedures, can be held for weeks until disputes are settled.

Roberto Cubría, a Valencia-based businessman, sold several warehouses to Genoveva Andeme Obiang, one of the president’s daughters and who also happens to be the co-director of the Central Bank of West Africa (BEAC). When the deal went sour, his passport was confiscated, and he had to take refuge in the Spanish Embassy for two months, finally having to pay a “gift” of 50,000 euros in building materials before he could leave the country.

Things went wrong because we didn't want to pay any more money”

Ruslan Obiang is Equatorial Guinea’s sports minister and president of one of the country’s leading soccer clubs, The Panthers. He also has his sights set on running the Guinean Soccer Federation. He has spent a lot of time in Spain over the last decade, living in Valencia for two years, contacting companies throughout the country interested in doing business in Equatorial Guinea, which has a population of around 700,000 and where the average life expectancy is 51. Most of its citizens live on less than 200 euros a month, despite the country being sub-Saharan Africa’s third-largest oil producer.

The Spanish businessman who met with Ruslan Obiang believing he had secured a lucrative contract is still fearful of repercussions. “Ruslan signed the contracts in Madrid. We had the concession, the projects and the budgets. We took all the equipment and material needed to do the job. We invested more than half a million euros. The son of the president sent us letters of recommendation saying that we were acting in good faith. I traveled to [the capital city] Malabo 11 times, setting up a front company run by the son of the president and one of our partners who moved there to oversee the work. You realize that this is a country where you have to pay for everything as soon as you arrive at the airport: from the person who stamps your passport to the national security people who give you the exit visa, and the state attorney for permits. It is a never-ending chain.”

Worse was to come after he met with Emilio Oñebula, a senior official in the Sports Ministry. “Everything is so easy that you fall for it. As long as you are paying them, they do not leave you alone for a moment. Initially I thought that this was just the way they did things, but I later realized that they are simply keeping an eye on you. If you went out alone, they got angry. We were watched the whole time.”

By 2011, the whole deal had fallen apart, says the businessman. The reason was simple: “Things went wrong because we didn’t want to pay any more money to Ruslan’s people. They just strangle you financially, and then when you’re finished, they look for somebody else. And they keep everything, all the money you have put into the country. In the end, when we stood up to them, they threatened to accuse us of rape and to send us to jail. They threatened us on several occasions, and we were genuinely afraid. The partner that was living in Malabo had to leave. The corruption is absolute and endemic; there is nobody you can turn to.”

They just strangle you financially; then they look for somebody else”

He says that once he was back in Spain and tried to contact the people he had paid to put him in touch with Obiang, they had disappeared, or simply blamed him for mishandling the situation. “Later, we realized that we weren’t the only ones who had been tricked. We fell into a trap.”

The ordeal was not over. The partner who had set up in Malabo, and was now living in Portugal, was visited by two men in dark suits who sat outside his house in a car for several days, and then visited him at his offices to warn him against telling his story to the media or the authorities.

It is an experience that has become all too common since Spanish businesses began looking for lucrative contracts in Equatorial Guinea in the 1990s. Felipe Martín, a property developer based in Barcelona, lost more than 600,000 euros over a two-year-period. In 1995, his business partner persuaded him to invest in a timber mill with two large warehouses in Malabo. They had the misfortune to deal with Teodorín Obiang, the president’s anointed successor and de facto overlord of the country’s forestry resources. France last year issued a European detention order against him, embargoing his 5,000-square-meter property in the Avenue Foch, in Paris’s most upscale residential district, estimated to be worth 180 million euros and containing furnishings totaling 50 million euros, along with a collection of luxury cars.

Martín and his business partner, who asked not to be named, thought they were set to make a killing from exporting tropical hardwoods from Equatorial Guinea to Spain, where there is a huge market.

The police arrived, accused him of rape and took him to the Black Beach prison

“We were forced to set up with a local partner at the Forestry Ministry. Teodorín was on the board of the company and already involved in the timber business. My partner dealt with him and, initially, all doors were open, although of course we had to pay commissions at every stage of the way. We were given a six-hectare plot of land about four kilometers outside Malabo. We imported from Spain all the machinery we would need: bulldozers, trucks, and cutting and drying equipment. We also took four engineers to help train the local Guineans, along with 40 men. It took almost two years to set the timber mill up, and then, when we were ready, we couldn’t export the first load. The problems with permits and other obstacles began when the warehouse was full of timber. We didn’t understand what was going on. Finally, by bribing the people at the port we were able to get four containers out. But this angered Obiang, and we were told my partner would be put in jail, but nevertheless, he decided to stay put,” says Martín.

That’s when things really turned ugly. One morning, the police turned up at the home of Martín’s partner, accused him of rape and then took him to the notorious Black Beach prison. “It was a false charge, and the conditions in the prison were terrible. There was no food and he had to sleep on the floor surrounded by his own excrement, because there was no toilet. He caught malaria and had a fever. I thought he was going to die. In return for being allowed to leave, he had to agree to leave all his money and the timber warehouse behind. He went to Cameroon first, where he spent several months recovering. We lost everything. My partner just wants to forget all about it,” says Martín.

In 1998, after the two Spanish businessmen had lost their timber mill, Teodorín Obiang told US bank Riggs that he had set up a business called Somagui Forestal, according to a charge made against him by Jennifer Shasky, head of the money-laundering division of the US Department of Justice. That same year, Teodorín had been named forestry minister, a post that he occupied until a year ago. At the age of just 24, he had acquired control over 88,000 acres of tropical jungle.

The US Department of Justice accuses him of enrichment through “corruption schemes” and from charging illegal commissions to businesses. It accuses him of extorting French company Isoroy, Spain’s ABM, and Italian outfit Agroforestal. “He threatened timber companies, among them Isoroy and ABM, that refused to meet his payment demands,” reads the charge.

Just to sit with Teodorín in his Paris house could cost 100,000 euros”

Antonio Cabanellas was chief supervisor of ABM’s operations in Equatorial Guinea between 1995 and 1997. He describes his dealings with Teodorín: “He would call us to come to his office, which meant wearing a suit and tie. He would keep you waiting for five hours and then appear wearing shorts. He would then tell you how much he wanted you to pay him, and that you had a week to do so, saying: ‘If you don’t pay, we will confiscate the machinery and give your concession to the Chinese.’ We had to flee the country. He was demanding millions. The only ones who stayed were those who paid him. Somagui Forestal was simply a front company.”

Jorge will not give his second name, but admits that he and his partners have lost more than two million euros’ worth of equipment in Equatorial Guinea. He says that between 2009 and 2011, they ran some half-dozen companies in Malabo and Bata. “I was in Teodorín’s house in Paris. He was dealing directly with business people, and just to sit with him cost between 40,000 and 100,000 euros. This figure is what was called the intentions royalty. But the problems really begin when you start talking about machinery. They create all kinds of problems so that you will leave and they can keep it. If you don’t accept, you know that you will end up in the Black Beach prison. They then hold a meeting and say that their Spanish partner has left the country. People leave out of fear.”

The businessman says that this is exactly what has happened to many who have gone to Equatorial Guinea hoping to make money. “Those who stay do so because they adapt to the situation. You can imagine what that means.”

Last week officers from Spain’s anti-corruption unit met in Madrid with French judge René Grouman, the man who has issued the arrest warrant against Obiang’s number-one son. They heard testimony from Gervais Mauikiki, the financial director of one of the timber companies that Teodorín Obiang allegedly extorted money from. His story matches that given by a number of Spanish businesspeople to Judge Grouman, his colleague Roger Loire, and other French officials over recent months.

There is a vacuum of Spanish businesses because the corruption is absolute"

Their statements are recorded on video and considered “extraordinarily” important in bringing charges of money laundering by the Obiangs. The French magistrate, Helen Davo, and her Spanish counterpart, Luis de Río — who are both investigating money laundering by the Obiangs in the Canary Islands — have also been present when witnesses have testified.

Catalan businessman Juan Colomer had his 300-square-meter cocoa estate on the outskirts of Malabo confiscated. After trying to get it back, he says he is now afraid of returning to Equatorial Guinea. “There is a vacuum of Spanish businesses because the corruption is absolute. Either you go with the corruption, or you put your life at risk,” he says.

Not that the Obiang regime is without its friends in high places. The Socialist Party’s Miguel Ángel Moratinos, a former foreign minister, has just returned from Malabo, where he attended the seventh annual Friends of Obiang Movement event there. Equatorial Guinea’s official media — there is no free press — highlighted the presence of the former minister. During his term in office, Moratinos worked hard to strengthen links with Obiang.

The Spanish Foreign Ministry says that there are around 1,500 Spaniards living in Equatorial Guinea. Some of them say that they have done well, but ask for their names not to be given. One Catalan businesswoman says: “You have to know the country and to behave the way they expect you to behave. We do, and things work.” Asked what behaving as one is expected to behave means, she brings the conversation to an abrupt end.

Last July, US agents questioned several Spanish and Guinean businesspeople in Madrid, among them Germán Pedro Tomo, a former congressional deputy for Obiang’s so-called Democratic Party who has been living in Spain since 2004. Tomo says he can no longer go out alone in Madrid. Since giving evidence he has been assigned a 24-hour police bodyguard at the request of the French authorities. In 2005 two Colombian hit men stabbed his brother, mistaking him for Tomo. “It was the response to my first statement to the NGOs Global Witness and Human Rights Watch in relation to the investigation into the Obiang family’s secret accounts in Riggs Bank, where they have salted away the money they have made from the oil industry. They wanted to get rid of me.”