Equatorial Guinea spends its oil money on K Street

Equatorial Guinea’s oil riches are finding their way to K Street as President Teodoro Obiang Nguema Mbasogo and the government he controls try to polish a tarnished image in Washington with a million-dollar-plus public-relations, legal and lobbying campaign.

The tiny West African nation opened its burgeoning wallet to K Street after a Senate Homeland Security and Governmental Affairs Investigations Subcommittee report alleged Obiang and his family were getting huge financial windfalls from American oil companies that were given access to recently discovered oil and gas reserves.

The findings were part of a report on D.C.-based Riggs Bank, which held accounts from Equatorial Guinea in excess of $700 million, making the country the bank’s biggest account holder.

All-Republican Barbour Griffith and Rogers, hired through Farragut Advisors, a New York-based public-relations firm, is being paid $37,500 a month for its help, while Cassidy & Associates is being paid an eye-popping $120,000 a month, or $1.44 million a year, for lobbying and PR, according to foreign-agent reports. 

A nation of just 500,000 people, Equatorial Guinea is also working with Annabel Hughes Communications, also hired through Farragut, C/R International and the law firm Sidley Austin Brown & Wood.

Obiang defended the expensive image campaign in an interview last week in the Hay-Adams Hotel’s presidential suite.

 “The capacity of the government is not enough, so we need to hire other people to help us spread the message of what is really happening in Equatorial Guinea,” the Spanish-speaking Obiang said through a translator. “I personally feel the U.S. government could also benefit from working with some lobbyists around the world.”

In addition to the Senate investigation, the State Department reported in 2004 that Equatorial Guinea’s security forces continue to commit serious human-rights abuses and noted: “Most of the oil wealth remained in control of the government with little being distributed to the majority of the population, which remained poor.”

Enter the lobbyists and the consultants. The firms have set up meetings on Capitol Hill and in the administration to show how things are changing in Equatorial Guinea under Obiang, who seized power in a 1979 coup, replacing dictator Francisco Macias Nguema, whose tyrannical rule led to the death or emigration of one-third of the population. Macias was tried and executed.

The campaign to burnish the image of the third largest oil producer in Africa continued last week, as the United States prepares to reopen officially its embassy in a July 7 ceremony. The official reason for its closure in 1995 was economic constraints, but the move was seen by some as a protest of abuse and corruption in the country.

Obiang was in the United States to attend a convention in Baltimore sponsored by the Corporate Council on Africa, a group that promotes closer business ties with Africa. He used the opportunity to meet with House Majority Whip Roy Blunt (R-Mo.) and staffers to Sen. James Inhofe (R-Okla.), who had been held up by a climate-change debate on the floor.

Obiang also met with Deputy Secretary of State Robert Zoellick, Deputy Energy Secretary Clay Sell and World Bank President Paul Wolfowitz.

“We have asked E.V.S. officials to provide us technical assistance on issues of transparency,” Obiang said. The meetings were to “reaffirm our friendly relationship with Americans,” he added.

Mike Waldron, an Energy Department spokesman, said Sell “strenuously emphasized” that Equatorial Guinea should reform its government and increase the transparency of its finances to attract foreign investment. Obiang has faced two elections. The most recent was in 2002, which the State Department said was “marred by extensive fraud and intimidation.”

But there is some indication Equatorial Guinea’s reputation is beginning to improve.

Wolfowitz, for example, expressed his pleasure with Obiang in a speech to the Corporate Council following a meeting he had had that day with the president.

“I’m happy to say he came asking for our technical assistance so they can manage their newfound wealth … according to the standard of transparency and accountability that will ensure that wealth goes to the benefit of the people of Equatorial Guinea,” Wolfowitz said, according to a transcript of the speech on the Corporate Council’s website.

Wolfowitz, who recently visited four other African nations on his first trip as president of the World Bank, added, “I was very impressed with his leadership and his government’s leadership.”

Where that wealth is going- the country’s economy has grown at an annual clip of greater than 20 percent- has been one of the main concerns of the country’s critics.

The Senate subcommittee’s report knocked Riggs for failing to report suspicious activity in the Equatorial Guinea accounts and documented alleged sweetheart deals between Obiang and his family members and American oil companies.

The Senate report also focused on suspicious transactions of Gen. Augusto Pinochet, the former dictator of Chile.

Obiang said, however, that the money was placed with Riggs to take advantage of interest rates and that the money is now back in the country.

“One hundred percent of the oil revenues are being used for programs for the people,” he said.

Riggs, meanwhile, agreed last spring to pay a $16 million fine for failing to report suspicious transactions involving Equatorial Guinea and Pinochet.  

In the 20-minute interview, Obiang also noted efforts to build roads and said there is a health clinic or a hospital “every 60 kilometers.”  He rejected the findings of an International Monetary Fund report that only 1 percent of the country’s budget went to healthcare between 1997 and 2002.

Another example that Equatorial Guinea’s message is getting through is the State Department decision to classify the country as Tier 2 instead of Tier 3 in its 2005 assessment of human trafficking. 

The country actually jumped two slots, because there is a Tier 2 Watch list in between Tier 3 and 2.

Others on the Tier 2 list include Israel and Switzerland, and several Central and South American countries.

Tier 3 countries can face economic sanctions, although with America’s growing interest in Equatorial Guinea’s oil it isn’t clear whether it faced that threat. 

Obiang said that after the country was placed on Tier 3 that his government passed tough new laws to combat illicit human trafficking, and he noted the reclassification as an indication of the improving relations between the United States and Equatorial Guinea.

“A lot of U.S. citizens don’t know what is really happening in Equatorial Guinea, so the work of the lobbyists is to let everybody know the realities of what is happening,” Obiang said.