International banks promoters of corruption, says report By MARINA LITVINSKY THE EAST AFRICAN Posted Friday, March 13 2009 at 21:38 Some of the worlds leading banks facilitate corruption in the poorest countries, a new report by Global Witness, an independent watchdog group, has said. Titled Undue Diligence: How banks do business with corrupt regimes, the report reveals how by doing business with dubious customers in corrupt, natural resource-rich states, banks are facilitating corruption and state looting. The same lax regulation that created the credit crunch has let some of the worlds biggest banks facilitate the looting of natural resource wealth from poor countries, said Gavin Hayman, Global Witness campaigns director. If resources like oil, gas and minerals are to truly help lift Africa and other poor regions out of poverty, then governments must take responsibility to stop banks doing business with corrupt dictators and their families, he said. The report presents a series of case studies about bank customers in Equatorial Guinea, Republic of Congo, Gabon, Liberia, Angola and Turkmenistan. In these countries, the national resource wealth has been captured by an unaccountable few, whether for personal enrichment, to maintain an autocratic personality cult that violates human rights, or to fund devastating wars. The banks doing business with these customers include Barclays, Citibank, Deutsche Bank, and HSBC. Nearly all of the banks that are featured in the report are major international banks and all of them make broad claims about their commitments to social responsibility. Yet, according to the report, there is a grotesque mismatch between rhetoric and reality. Natural resource revenues offer a potential way out of poverty for many developing countries. But too often, resource revenues that could be spent on development are misappropriated or looted by senior government officials, or are used to prop up regimes that oppress their own people. Banks are providing the mechanism for natural resource corruption to take place, said Anthea Lawson, campaigner for Global Witness. Some of the evidence presented in the report includes the case of Barclays Bank, which kept open an account for Teodorin Obiang, the son of the dictator of oil-rich Equatorial Guinea, long after clear evidence emerged that his family was heavily involved in substantial looting of state oil revenues. In 2004, Riggs Bank collapsed as a result of a US Senate committee investigation and federal criminal investigators findings that it had been holding accounts for President Teodoro Nguema Obiang, his family members, and his corrupt government. Despite this, Teodorin, who as minister for agriculture and forests in his fathers government earns a salary of $4,000 a month, still had an open Barclays account as of November 2007. The report notes that while his country remains one of the poorest in the world, he owns a $35-millionMalibu, California mansion and has spent $6.3 million on car purchases in the past decade. Also mentioned is Citibank, which facilitated the funding of two vicious civil wars in Sierra Leone and Liberia by enabling the warlord Charles Taylor, now on trial for war crimes in The Hague, to loot timber revenues. As evidenced by the current financial crisis, the report argues that when it comes to sticking to the rules, bankers are doing the minimum they can get away with. They aggressively exploit the loopholes and ambiguities in regulations and arbitrage their responsibilities to the lowest level.