[Congressional Record (Bound Edition), Volume 152 (2006), Part 15]
[Senate]
[Pages 19690-19691]
[From the U.S. Government Publishing Office, www.gpo.gov]




                       FOREIGN CORRUPTION AND OIL

  Mr. LEVIN. Mr. President, last month, on August 10, President Bush 
announced a new U.S. initiative to combat corruption around the world. 
He named it a ``National Strategy to Internationalize Efforts Against 
Kleptocracy.'' In introducing this initiative, President Bush said:

       High-level corruption by senior government officials, or 
     kleptocracy, is a grave and corrosive abuse of power and 
     represents the most invidious type of public corruption. It 
     threatens our national interest and violates our values. It 
     impedes our efforts to promote freedom and democracy, end 
     poverty, and combat international crime and terrorism.

  I couldn't agree more.
  But lately, some of the President's actions are at odds with his 
rhetoric. The first principle of the President's initiative against 
corruption is to deny entry into the United States to kleptocrats, 
meaning high-level officials engaged in or benefitting from corruption. 
Yet in recent months the administration has welcomed two of the world's 
most notorious kleptocrats: Teodoro Obiang, the President of Equatorial 
Guinea, and Nursultan Nazarbayev, the President of Kazakhstan.
  What do these two men have in common besides corrupt dictatorships? 
Oil. Both control their nations' vast oil resources. Both supply oil to 
the United States. By welcoming these corrupt dictators into the United 
States, in contradiction to the anticorruption principles articulated 
by the President in August, the administration announces to the world 
that we will compromise our principles for a price: oil.
  On April 12 of this year, at the State Department, Secretary Rice 
greeted the President of Equatorial Guinea, Teodoro Obiang, by saying: 
``Thank you very much for your presence here. You are a good friend and 
we welcome you.'' In welcoming Mr. Obiang, she made no mention of the 
deeply troubling hallmarks of his regime, no mention of human rights 
abuses, no mention of election fraud; no mention of widespread and 
high-level corruption. Instead, a photograph of Secretary Rice shaking 
Mr. Obiang's hand and smiling broadly appeared in publications around 
the world. Mr. Obiang has undoubtedly used his visit, and that 
photograph, to legitimize his regime and demonstrate his favored status 
in the United States.
  Secretary Rice said that her objective as Secretary of State is to 
conduct ``transformational diplomacy'' which, in her words, requires us 
to ``work with our many partners around the world to build and sustain 
democratic, well-governed states that will respond to the needs of 
their people--and conduct themselves responsibly in the international 
system.'' Under Mr. Obiang, Equatorial Guinea is nothing near 
democratic, well-governed, or responsive to its citizens.
  Equatorial Guinea is the third largest oil producer in sub-Saharan 
Africa. It currently exports about 360,000 barrels per day, with much 
more under development. U.S. companies have invested over $10 billion 
to develop those oil resources. But the development of Equatorial 
Guinea's oil resources has not benefitted its deeply impoverished 
people. Though Equatorial Guinea's oil money makes it, on a per capita 
basis, one of the wealthiest nations in the world, the standard of 
living of its people is among the world's poorest. Equatorial Guinea 
ranks 121st on the United Nations Human Development Index. According to 
a 2002 State Department report, there is ``little evidence that the 
country's oil wealth is being devoted to the public good.''
  Mr. Obiang is a principal cause of his people's misery. He took power 
by coup 30 years ago, his opponents have been jailed and tortured, and 
his most recent election was condemned by the State Department as 
``marred by extensive fraud and intimidation.'' The 2005 State 
Department Country Report on Human Rights Practices states, that in 
Equatorial Guinea, ``Official corruption in all branches of the 
government remained a significant problem.'' In its index of 
corruption, Transparency International ranks Equatorial Guinea 152 out 
of 159 nations. In other words, Equatorial Guinea is one of the most 
corrupt countries in the world today.
  I became familiar with the Obiang regime through my role as ranking 
minority member of the Senate Permanent Subcommittee on Investigations. 
On July 15, 2004, the subcommittee held a hearing entitled, ``Money 
Laundering and Foreign Corruption: Enforcement and Effectiveness of the 
Patriot Act.'' That hearing and an accompanying report detailed how 
President Obiang and his family had been personally profiting from U.S. 
oil companies operating in his country, established offshore shell 
corporations to open bank accounts at Riggs Bank here in Washington, 
and made large deposits, including cash deposits of as much as $3 
million at a time, in transactions suggesting strongly that the funds 
were the proceeds of foreign corruption. In addition, over $35 million 
in oil proceeds were transferred to suspect offshore accounts.
  President Bush has stated that his intention is to ``defeat high-
level public corruption in all its forms and to deny corrupt officials 
access to the international financial system as a means of defrauding 
their people and hiding their ill-gotten gains.'' And yet, after it was 
revealed that Mr. Obiang misused U.S. financial institutions to launder 
suspect funds, the State Department actually intervened on behalf of 
his regime in order to convince U.S. banks to open accounts for the 
Equatorial Guinean Government. That bears repeating: after it was shown 
how Mr.

[[Page 19691]]

Obiang used Riggs Bank to deposit and transfer suspect funds, and after 
Riggs shut down the accounts used by him and his regime, the State 
Department approached reluctant U.S. banks and asked them to open 
accounts for the Obiang regime. So much for ``denying corrupt officials 
access to our financial system.''
  There is more. A few months ago, in May, the administration announced 
a new program directing the Defense Department to help 20 specified 
countries build up their military forces. One was Equatorial Guinea. 
Despite a terrible human rights record, a reputation for corruption, 
and their own oil wealth, the administration proposed spending U.S. 
taxpayer dollars to build up the Obiang regime's military. Indeed, 
President Bush asked for a provision in the DOD authorization bill 
approving the funding. A number of us objected, and Equatorial Guinea 
was removed from the provision in the Senate bill.
  These and other actions taken by the administration to court Mr. 
Obiang are more than misguided. They supply ammunition to critics of 
America who claim we don't mean what we say and we don't live up to our 
principles, especially when oil is at stake. On the issue of foreign 
corruption, the President needs to play it straight. What will it be? 
Will we avert our eyes from Mr. Obiang's record of corruption and 
brutality so we can obtain Equatorial Guinea's oil? Or will we demand 
an end to his corrupt ways?
  The President's courting of Mr. Nazarbayev of Kazakhstan is also 
disturbing. Mr. Nazarbayev is an iron-fisted dictator who imprisons his 
opponents, bans opposition parties, and controls the press. The State 
Department's 2005 Kazakhstan Country Report on Human Rights Practices 
states that ``the government's human rights record remained poor,'' and 
``corruption remained a serious problem.''
  That is not all. Several years ago, our Justice Department filed a 
criminal indictment alleging that Mr. Nazarbayev accepted tens of 
millions of dollars in bribes from an American businessman. The U.S. 
attorney of the Southern District of New York is at this very moment 
preparing for trial in the case, U.S. v. Giffen. The indictment targets 
the American businessman, James Giffen, for paying $78 million in 
bribes to Mr. Nazarbayev and his cronies to gain access to an oil field 
in Kazakhstan. It does not charge Mr. Nazarbayev with a crime, despite 
alleging his acceptance of the bribes. It is a sad and sorry spectacle 
to observe that, despite this indictment, the administration is 
welcoming Mr. Nazarbayev to the White House this week.
  Talk about mixed messages. For paying the bribes, Mr. Giffen gets 
indicted for violating the Foreign Corrupt Practices Act, mail and wire 
fraud, money laundering, and tax evasion; for accepting the bribes, Mr. 
Nazarbayev gets an invitation to the White House. The President has 
invited to the White House a man who our very own Department of Justice 
accuses of accepting a $78 million bribe. Why? What could be the 
reason, the justification, for this White House invitation? Could it be 
that Kazakhstan exports 1 million barrels of oil per day?
  The President has got to play it straight. The State Department says 
Mr. Nazarbayev is a dictator who imprisons opponents and disregards 
human rights. The Justice Department says he accepted $78 million in 
bribes from one U.S. businessman alone. The President says he is an 
honored guest. Which is it? Corrupt dictator or honored guest? Surely 
it can't be both.
  President Bush said that kleptocracy ``threatens our national 
interest and violates our values.'' He said high-level foreign 
corruption ``impedes our efforts to promote freedom and democracy, end 
poverty, and combat international crime and terrorism.'' He is right, 
which is exactly why his courtship of corrupt dictators like Mr. Obiang 
and Mr. Nazarbayev is so deeply regrettable. To compromise our battle 
against corruption to gain favor with oil-producing dictators is not 
only morally wrong, it hands a propaganda club to our critics, it 
sustains brutal and corrupt regimes, and it is ultimately destructive 
of our efforts, in the words of Secretary Rice, to ``build and sustain 
democratic, well-governed states.'

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