London-based watchdog organization Global Witness is accusing several of the world's largest banks of playing a role in supporting some of West Africa's most corrupt regimes.
A report entitled "Undue Diligence" tracked the flow of money out of a number of the world's most criticized regimes. According to Global Witness, the trail leads to, and through, a handful of the world's largest international banks, including Citigroup, Barclays, and HSBC.
The report documents the involvement of multi-national banks with dictators in countries including Liberia, the Democratic Republic of Congo, and Equatorial Guinea. Anthea Lawson is a campaigner for Global Witness.
"By doing business with corrupt regimes and their family members, these banks are facilitating corruption and therefore poverty in some of the poorest countries in the world." Lawson said.
The links between banks and corrupt regimes are sometimes direct, Lawson says, citing the case of Barclays. Global Witness says the English bank maintained accounts for Teodorin Obiang, son of the long-time ruler of Equatorial Guinea.
The report says Barclays has done little to investigate the provenance of the funds in the Obiang accounts, thereby helping the family launder millions of dollars of oil revenue from the West African country.
"This particular customer, Teodorin Obiang, earns $4,000 a month as a minister in his father's government, yet we revealed a couple of years ago that he owned a $35 million mansion in California and a fleet of fast cars that he has bought in France." Lawson said. "The question is what due diligence has this bank been able to do in order to reassure itself that the funds in this account are not the proceeds of corruption."
The report says even in cases where the trail of money can be followed, regulation is lax, and incomprehensive across international borders.
Lawson says the global nature of the banking industry means that banks are often also involved with corrupt regimes in indirect ways. She says U.S.-based Citibank helped former Liberian president Charles Taylor, now on trial at The Hague for war crimes, to launder ill-gotten timber revenues through a partnership with a Liberian bank.
"So effectively what this means is that Citibank, through its relationship with a Liberian bank, was allowing a warlord such as Taylor access to the financial system, which Taylor was using through timber revenues to fuel the conflict," Lawson said.
Lawson says Global Witness wrote to the banks cited in the report, asking them to explain their relationships with corrupt regimes.
"Those that wrote back are not able to tell us anything specific about the customers, because it is all under confidentiality, and this is the problem." Lawson said. "All of this is occurring underneath the usual cloud of banking secrecy that has also allowed banks to destabilize and cause such damage to some of the world's largest economies."
According to Lawson, Global Witness hopes the report will lead to changes in the way international banking is regulated. The organization released the report intending to focus attention on the matter on the eve of this week's meeting of the G-20 finance ministers in London.
In response to the report, Barclays offered a statement saying it complies with applicable laws and regulations in the jurisdictions in which it operates, and has a global money-laundering policy in place.