Meet global corruption's hidden players

When the son of the president of a desperately poor country starts buying mansions and sportscars on an official monthly salary of $7,000, Charmian Gooch suggests, corruption is probably somewhere in the picture. In a blistering, eye-opening talk (and through several specific examples), she details how global corruption trackers follow the money -- to some surprisingly familiar faces.

When we talk about corruption,

there are typical types of individuals that spring to mind.

There's the former Soviet megalomaniacs.

Saparmurat Niyazov, he was one of them.

Until his death in 2006,

he was the all-powerful leader of Turkmenistan,

a Central Asian country rich in natural gas.

Now, he really loved to issue presidential decrees.

And one renamed the months of the year

including after himself and his mother.

He spent millions of dollars

creating a bizarre personality cult,

and his crowning glory was the building

of a 40-foot-high gold-plated statue of himself

which stood proudly in the capital's central square

and rotated to follow the sun.

He was a slightly unusual guy.

And then there's that cliché,

the African dictator or minister or official.

There's Teodorín Obiang.

So his daddy is president for life of Equatorial Guinea,

a West African nation that has exported

billions of dollars of oil since the 1990s

and yet has a truly appalling human rights record.

The vast majority of its people

are living in really miserable poverty

despite an income per capita that's on a par

with that of Portugal.

So Obiang junior, well, he buys himself

a $30 million mansion in Malibu, California.

I've been up to its front gates.

I can tell you it's a magnificent spread.

He bought an €18 million art collection

that used to belong to fashion designer Yves Saint Laurent,

a stack of fabulous sports cars,

some costing a million dollars apiece --

oh, and a Gulfstream jet, too.

Now get this:

Until recently, he was earning an official monthly salary

of less than 7,000 dollars.

And there's Dan Etete.

Well, he was the former oil minister of Nigeria

under President Abacha,

and it just so happens he's a convicted money launderer too.

We've spent a great deal of time

investigating a $1 billion --

that's right, a $1 billion —

oil deal that he was involved with,

and what we found was pretty shocking,

but more about that later.

So it's easy to think that corruption happens

somewhere over there,

carried out by a bunch of greedy despots

and individuals up to no good in countries

that we, personally, may know very little about

and feel really unconnected to

and unaffected by what might be going on.

But does it just happen over there?

Well, at 22, I was very lucky.

My first job out of university

was investigating the illegal trade in African ivory.

And that's how my relationship with corruption really began.

In 1993, with two friends who were colleagues,

Simon Taylor and Patrick Alley,

we set up an organization called Global Witness.

Our first campaign was investigating the role

of illegal logging in funding the war in Cambodia.

So a few years later, and it's now 1997,

and I'm in Angola undercover investigating blood diamonds.

Perhaps you saw the film,

the Hollywood film "Blood Diamond,"

the one with Leonardo DiCaprio.

Well, some of that sprang from our work.

Luanda, it was full of land mine victims

who were struggling to survive on the streets

and war orphans living in sewers under the streets,

and a tiny, very wealthy elite

who gossiped about shopping trips to Brazil and Portugal.

And it was a slightly crazy place.

So I'm sitting in a hot and very stuffy hotel room

feeling just totally overwhelmed.

But it wasn't about blood diamonds.

Because I'd been speaking to lots of people there

who, well, they talked about a different problem:

that of a massive web of corruption on a global scale

and millions of oil dollars going missing.

And for what was then a very small organization

of just a few people,

trying to even begin to think how we might tackle that

was an enormous challenge.

And in the years that I've been,

and we've all been campaigning and investigating,

I've repeatedly seen that what makes corruption

on a global, massive scale possible,

well it isn't just greed or the misuse of power

or that nebulous phrase "weak governance."

I mean, yes, it's all of those,

but corruption, it's made possible by the actions

of global facilitators.

So let's go back to some of those people I talked about earlier.

Now, they're all people we've investigated,

and they're all people who couldn't do what they do alone.

Take Obiang junior. Well, he didn't end up

with high-end art and luxury houses without help.

He did business with global banks.

A bank in Paris held accounts of companies controlled by him,

one of which was used to buy the art,

and American banks, well, they funneled

73 million dollars into the States,

some of which was used to buy that California mansion.

And he didn't do all of this in his own name either.

He used shell companies.

He used one to buy the property, and another,

which was in somebody else's name,

to pay the huge bills it cost to run the place.

And then there's Dan Etete.

Well, when he was oil minister,

he awarded an oil block now worth over a billion dollars

to a company that, guess what, yeah,

he was the hidden owner of.

Now, it was then much later traded on

with the kind assistance of the Nigerian government --

now I have to be careful what I say here —

to subsidiaries of Shell and the Italian Eni,

two of the biggest oil companies around.

So the reality is, is that the engine of corruption,

well, it exists far beyond the shores of countries

like Equatorial Guinea or Nigeria or Turkmenistan.

This engine, well, it's driven

by our international banking system,

by the problem of anonymous shell companies,

and by the secrecy that we have afforded

big oil, gas and mining operations,

and, most of all, by the failure of our politicians

to back up their rhetoric and do something

really meaningful and systemic to tackle this stuff.

Now let's take the banks first.

Well, it's not going to come as any surprise

for me to tell you that banks accept dirty money,

but they prioritize their profits in other destructive ways too.

For example, in Sarawak, Malaysia.

Now this region, it has just five percent

of its forests left intact. Five percent.

So how did that happen?

Well, because an elite and its facilitators

have been making millions of dollars

from supporting logging on an industrial scale

for many years.

So we sent an undercover investigator in

to secretly film meetings with members of the ruling elite,

and the resulting footage, well, it made some people very angry,

and you can see that on YouTube,

but it proved what we had long suspected,

because it showed how the state's chief minister,

despite his later denials,

used his control over land and forest licenses

to enrich himself and his family.

And HSBC, well, we know that HSBC bankrolled

the region's largest logging companies

that were responsible for some of that destruction

in Sarawak and elsewhere.

The bank violated its own sustainability policies in the process,

but it earned around 130 million dollars.

Now shortly after our exposé,

very shortly after our exposé earlier this year,

the bank announced a policy review on this.

And is this progress? Maybe,

but we're going to be keeping a very close eye

on that case.

And then there's the problem of anonymous shell companies.

Well, we've all heard about what they are, I think,

and we all know they're used quite a bit

by people and companies who are trying to avoid

paying their proper dues to society,

also known as taxes.

But what doesn't usually come to light

is how shell companies are used to steal

huge sums of money, transformational sums of money,

from poor countries.

In virtually every case of corruption that we've investigated,

shell companies have appeared,

and sometimes it's been impossible to find out

who is really involved in the deal.

A recent study by the World Bank

looked at 200 cases of corruption.

It found that over 70 percent of those cases

had used anonymous shell companies,

totaling almost 56 billion dollars.

Now many of these companies were in America

or the United Kingdom,

its overseas territories and Crown dependencies,

and so it's not just an offshore problem,

it's an on-shore one too.

You see, shell companies, they're central

to the secret deals which may benefit wealthy elites

rather than ordinary citizens.

One striking recent case that we've investigated

is how the government in the Democratic Republic of Congo

sold off a series of valuable, state-owned mining assets

to shell companies in the British Virgin Islands.

So we spoke to sources in country,

trawled through company documents and other information

trying to piece together a really true picture of the deal.

And we were alarmed to find that these shell companies

had quickly flipped many of the assets on

for huge profits to major international mining companies

listed in London.

Now, the Africa Progress Panel, led by Kofi Annan,

they've calculated that Congo may have lost

more than 1.3 billion dollars from these deals.

That's almost twice

the country's annual health and education budget combined.

And will the people of Congo, will they ever get their money back?

Well, the answer to that question,

and who was really involved and what really happened,

well that's going to probably remain locked away

in the secretive company registries of the British Virgin Islands

and elsewhere unless we all do something about it.

And how about the oil, gas and mining companies?

Okay, maybe it's a bit of a cliché to talk about them.

Corruption in that sector, no surprise.

There's corruption everywhere, so why focus on that sector?

Well, because there's a lot at stake.

In 2011, natural resource exports

outweighed aid flows by almost 19 to one

in Africa, Asia and Latin America. Nineteen to one.

Now that's a hell of a lot of schools and universities

and hospitals and business startups,

many of which haven't materialized and never will

because some of that money has simply been stolen away.

Now let's go back to the oil and mining companies,

and let's go back to Dan Etete and that $1 billion deal.

And now forgive me, I'm going to read the next bit

because it's a very live issue, and our lawyers

have been through this in some detail

and they want me to get it right.

Now, on the surface, the deal appeared straightforward.

Subsidiaries of Shell and Eni

paid the Nigerian government for the block.

The Nigerian government transferred

precisely the same amount, to the very dollar,

to an account earmarked for a shell company

whose hidden owner was Etete.

Now, that's not bad going for a convicted money launderer.

And here's the thing.

After many months of digging around

and reading through hundreds of pages of court documents,

we found evidence that, in fact,

Shell and Eni had known that the funds

would be transferred to that shell company,

and frankly, it's hard to believe they didn't know

who they were really dealing with there.

Now, it just shouldn't take these sorts of efforts

to find out where the money in deals like this went.

I mean, these are state assets.

They're supposed to be used for the benefit

of the people in the country.

But in some countries, citizens and journalists

who are trying to expose stories like this

have been harassed and arrested

and some have even risked their lives to do so.

And finally, well, there are those who believe

that corruption is unavoidable.

It's just how some business is done.

It's too complex and difficult to change.

So in effect, what? We just accept it.

But as a campaigner and investigator,

I have a different view,

because I've seen what can happen

when an idea gains momentum.

In the oil and mining sector, for example,

there is now the beginning

of a truly worldwide transparency standard

that could tackle some of these problems.

In 1999, when Global Witness called

for oil companies to make payments on deals transparent,

well, some people laughed at the extreme naiveté

of that small idea.

But literally hundreds of civil society groups

from around the world came together

to fight for transparency,

and now it's fast becoming the norm and the law.

Two thirds of the value

of the world's oil and mining companies

are now covered by transparency laws. Two thirds.

So this is change happening.

This is progress.

But we're not there yet, by far.

Because it really isn't about corruption

somewhere over there, is it?

In a globalized world, corruption

is a truly globalized business,

and one that needs global solutions,

supported and pushed by us all, as global citizens,

right here.

Thank you.

(Applause)