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Gaps in laundering laws vex senators
Question of the Day
A Senate subcommittee outlined on Thursday “glaring gaps” in federal money-laundering laws that allow foreign governments to channel millions of dollars in illicit cash into the United States, again raising questions of influence peddling by powerful lawyers and lobbyists.
The flouting of laws against money laundering was a top concern during a hearing of the Homeland Security and Governmental Affairs permanent subcommittee on investigations, during which panel members were told that U.S.-based lobbyists, lawyers and others had helped route millions of dollars for their foreign-based clients and also heard two lawyers and a lobbyist invoke the Fifth Amendment when asked about their roles, if any, in the process.
“How can the United States tell other countries to stop the flow of illegal money when we don’t do a better job of it within our own borders?” asked Sen. Carl Levin, Michigan Democrat and subcommittee chairman. “Stopping the flow of illegal money is critical, because foreign corruption damages civil society, undermines the rule of law and threatens American security.”
In the wake of a national scandal involving superlobbyist Jack Abramoff, who pleaded guilty in 2006 to fraud charges in an investigation that resulted in the convictions of White House officials, a congressman and nine other lobbyists, a subcommittee report this week described an exhaustive patchwork of government officials in Africa who worked with U.S. contacts to bypass anti-money-laundering safeguards and transfer millions of dollars in and out of U.S. banks.
The 330-page document said influential foreign leaders had used a variety of lawyers, lobbyists, bankers, real estate agents, escrow agents and university officials to circumvent anti-corruption laws. It also noted that some industries, including hedge funds, had been exempted by the Treasury Department from Patriot Act anti-money-laundering requirements.
“The report shows what can happen when foreign leaders grab hold of their nation’s wealth and use it for personal gain,” said Sen. Tom Coburn of Oklahoma, the subcommittee’s ranking Republican. “Millions - if not hundreds of millions - of dollars were routed directly from the countries’ treasuries into the leaders’ pockets.”
Two lawyers and a lobbyist used the hearing to assert their Fifth Amendment rights when called to testify about their dealings with suspected corrupt African politicians and their relatives. Lawyers Michael Berger and George Nagler, who represented Equatorial Guinea Cabinet Minister Teodoro Nguema Obiang Mangue, and lobbyist Jeffrey Birrell, a registered foreign agent for the Republic of Gabon, declined to answer questions and were excused by Mr. Levin.
According to the report, Mr. Nagler and Mr. Berger were instrumental in helping Teodoro Nguema Obiang Mangue, the son of Equatorial Guinea President Teodoro Nguema Obiang Mbasogo, establish front, or shell, companies to funnel more than $110 million for him in and out of the United States. The report said some of the cash was used to buy a $30 million Malibu, Calif., mansion and a $38.5 million Gulfstream jet.
The report also said that Mr. Birrell, who lists his home address as Falls Church, Va., helped the now-deceased former president of Gabon, Omar Bongo, take delivery of more than $18 million in wired funds to his company, identified as the Grace Group. The report said Mr. Birrell used the money to buy Bongo six armored vehicles and six C-130 military cargo aircraft from Saudi Arabia.
According to the report, a New York bank closed an account belonging of Bongo’s daughter after discovering that she had $1 million in $100 shrink-wrapped bills in her safe-deposit box. She later told bank authorities that her father had brought the money into the United States using his diplomatic status.
In 2005, the Senate Indian Affairs Committee reported that Abramoff had offered to arrange a meeting between President George W. Bush and Bongo for $9 million, and while no evidence was offered regarding an exchange of cash, Mr. Bush met with Bongo 10 months later in the Oval Office.
The report also said Jennifer Douglas, a U.S. citizen and former wife of former Nigerian Vice President Atiku Abubakar, helped her husband route more than $40 million in suspect funds into the United States, $25 million of which was wire-transferred by offshore corporations into more than 30 U.S. bank accounts opened by Ms. Douglas.
It said two offshore corporations transferred about $14 million over five years to American University in Washington, D.C., to pay for consulting services in setting up a university in Nigeria founded by Mr. Abubakar.
Last year, U.S. prosecutors accused former Rep. William J. Jefferson, Louisiana Democrat, of demanding $100,000 from a Virginia businesswoman to pay a bribe to Mr. Abubakar. The FBI raided his congressional offices in May 2006, and he was indicted by a federal grand jury in June 2007 on 16 counts of corruption.
Jefferson was convicted in August on 11 counts and sentenced to 13 years in prison, the longest sentence ever meted out to a congressman for bribery. He remains free pending an appeal.
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