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29th Mar 2020

EU banks named in dirty money report

  • A €1.2 million Bugatti Veyron: Teodorin Obiang bought three. The cost of less than one of the cars could buy a mosquito net for every child in the malaria-prone country (Photo: Wikipedia)

Europe's biggest banks are happy to do business with corrupt regimes in Africa and Central Asia, according to a new report by UK-based NGO, Global Witness.

As late as November 2007, Barclays in Paris held a private account for Teodorin Obiang, the study says. A scion of the ruling family in Equitorial Guinea, Mr Obiang in the past 10 years spent €4.5 million on sports cars even as 20 percent of children die before their fifth birthday due to poverty in the oil-rich country.

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Until March 2007, BNP Paribas was involved in billions of euros of syndicated loans to the Angola ruling elite-linked oil firm Sonangol, Global Witness writes.

Deutsche Bank has still not made clear to the NGO what happened to the €2 billion or so of Turkmenistan's natural gas income, which it was holding for the country's notoriously cruel dictator, Saparmurat Niyazov, when he died in January 2007.

"The international banking system is complicit in helping to perpetuate poverty, corruption, conflict, human suffering and misery," the Global Witness paper says.

Coming ahead of the G20 finance summit in London on 2 April and in a climate of hostility to big bank secrecy caused by the financial crisis, the report calls for regulation of bank dealings with "PEPs" (politically-exposed persons) and a name-and-shame campaign by FATF (the Financial Action Task Force).

The Paris-based FATF is a little-known international anti-money laundering body with 34 members, including 15 of the richest EU states and the European Commission.

Of 10 EU states surveyed which are also FATF members, none complied with the body's full set of recommendations on issues such as making money laundering illegal or forcing banks to carry out enhanced due diligence on PEP-type clients.

Global Witness' paper, Undue Diligence, reads like a roll call of the most respectable financial institutions in Europe.

HSBC and Banco Santander are named in connection to the Obiang family. Credit Lyonnais allegedly helped Gabonese President Omar Bongo place funds abroad. Societe Generale is said to have done similar work for the ruling family of Congo-Brazzaville.

Fortis bank is accused of helping the former ruler of Liberia, Charles Taylor, fund conflict in east Africa by processing payments for government-linked timber firms.

The list of banks implicated in the Angola loans includes Commerzbank, KBC, the Royal Bank of Scotland, ING and Standard Chartered.

"If [banks] cannot identify the ultimate beneficial owner of the funds ...and if they cannot identify a natural person (not a legal entity) who does not pose a corruption risk, they must not accept the customer as a client," the NGO said.

An article which appeared on 8 March on a Turkmenistan opposition website, the Chronicles of Turkmenistan, broadens the debate.

The story points the finger at French construction company Bouygues for allegedly giving current President Gurbanguly Berdymukahemmedov an €80,000 Mitsubishi Evolution X while bidding for contracts for a new airport building and palace complex.

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