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United States Senate

PERMANENT SUBCOMMITTEE ON INVESTIGATIONS

Committee on Homeland Security and Governmental Affairs_____________________

** Carl Levin, Chairman -

Tom Coburn, Ranking Minority Member

EMBARGOED TO WEDNESDAY, FEBRUARY 3, 2010 -10 PM

KEEPING FOREIGN CORRUPTION OUT OF THE UNITED STATES:

FOUR CASE HISTORIES

MAJORITY AND MINORITY STAFF REPORT

PERMANENT SUBCOMMITTEE ON INVESTIGATIONS

RELEASED IN CONJUNCTION WITH THE

PERMANENT SUBCOMMITTEE ON INVESTIGATIONS

FEBRUARY 4, 2010 HEARING




UNITED STATES SENATE




SENATOR CARL LEVIN Chairman

SENATOR TOM COBURN, M.D. Ranking Minority Member

PERMANENT SUBCOMMITTEE ON INVESTIGATIONS

ELISE J. BEAN Staff Director and Chief Counsel

ROBERT L. ROACH

Counsel & Chief Investigator

LAURA E. STUBER Counsel

ADAM K. PARKS ICE Detailee

JASON E.MEDICA ICE Detailee

ADAM HENDERSON

Professional Staff Member

ROBERT KAPLAN

Intern

CHRISTOPHER J. BARKLEY

Staff Director to the Minority

JUSTIN J. ROOD Senior Investigator to the Minority

MARY D. ROBERTSON Chief Clerk

2/2/10________________________________________


V. ABUBAKAR CASE STUDY: USING OFFSHORE COMPANIES

TO BRING SUSPECT FUNDS INTO THE UNITED STATES

Jennifer Douglas Abubakar, a U.S. citizen, is the fourth wife of Atiku Abubakar, the former Vice President of Nigeria and a former candidate for the Presidency of Nigeria. This case history examines how, from 2000 to 2008, Ms. Douglas helped her husband bring over $40 million in suspect funds into the United States, including at least $1.7 million in bribe payments from Siemens AG, a German corporation, and over $38 million from little known offshore corporations, primarily LetsGo Ltd. Inc., Guernsey Trust Company Nigeria Ltd., and Sima Holding Ltd.

Over half of the suspect funds, nearly $25 million, were wire transferred by the offshore corporations into U.S. bank accounts opened by Ms. Douglas. For most of the time period examined, the U.S. banks with those accounts were unaware of Ms. Douglas' PEP status, and allowed multiple large wire transfers into her accounts from the offshore corporations. As, over time, each of the banks began to question the wire transfers into her accounts, Ms. Douglas indicated that all of the funds came from her husband and professed little familiarity with the offshore corporations actually sending her money.

Bank records indicate that Ms. Douglas used most of the funds placed into her accounts to support a lavish lifestyle in the United States, paying credit card bills and household expenses in the range of $10,000 to $90,000 per month, including substantial legal and accounting bills. She also transferred funds to accounts she opened for the Gede Foundation, a nonprofit corporation she established in 2002, and the American University of Nigeria (AUN), a university that Mr. Abubakar founded in 2003, and whose name reflects its association with American University in the United States.

An additional $14 million of the suspect funds were wire transferred by two of the offshore corporations, LetsGo and the Guernsey Trust Company, to American University to pay for consulting fees related to AUN. American University officials told the Subcommittee that they understood the funds came from Mr. Abubakar and never inquired why the wire transfers were sent by unfamiliar offshore corporations. At least another $2.1 million was wire transferred by the Guernsey Trust Corporation to accounts controlled by Edward Weidenfeld, a U.S. lawyer who provided legal services to Ms. Douglas, Mr. Abubakar, and AUN. Mr. Weidenfeld explained that the funds paid for the Abubakars' legal expenses and an account set up for AUN, and that he had assumed the funds came from Mr. Abubakar.

Over the years, questions have been raised about the source of Mr. Abubakar's wealth. He spent twenty years in the Nigerian Customs Service, and then worked in the private sector for ten years, before serving as Vice President of Nigeria from 1999 to 2007. While Vice President, Mr. Abubakar was the subject ©f corruption allegations relating to the Nigerian Petroleum Technology Development Fund. In December 2008, the U.S. Securities and Exchange Commission alleged in a formal complaint against Siemens AG, a German company, that, among other actions, in 2001 and 2002, Siemens wire transferred $2.8 million in bribe payments to a U.S.)' bank account belonging to Ms. Douglas as part of a scheme to bribe Nigerian officials. In response to this and other legal actions, Siemens admitted to engaging in widespread bribery



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payments, pled guilty to criminal violations and settled civil violations of the U.S. Foreign Corrupt Practices Act, and agreed to pay over $1.6 billion in civil and criminal fines. Ms. Douglas has denied any wrongdoing, but the Subcommittee has obtained financial records showing the transfer of over $2 million from Siemens AG to Ms. Douglas' account at Citibank.

Mr. Abubakar has attributed his substantial wealth to fortunate investments. His wealth is attributable in part to a 16% ownership interest he held in Integrated Logistics Services Inc. ("Intels", an oil services company formed in the 1980s, which has now become one of the largest Nigerian companies in the oil industry in Africa. When Mr. Abubakar took office in 1999, he placed his Intels shares in a blind trust. Instead of selecting an independent trustee from a financial firm, however, Mr. Abubakar appointed as trustee of the blind trust Orleans Invest Holding Ltd., a Panamanian corporation that is active in the oil industry in Africa, is closely associated with Intels, and is owned in part by Gabriele Volpi, Mr. Abubakar's trusted friend and business partner. Orlean served as trustee of the Abubakar Blind Trust from 1999 to 2003, when the trustees exchanged the Intels shares for shares in Orlean, thereby making the trust part owner of its own trustee. Orlean then resigned from the Abubakar Blind Trust and was replaced by Guernsey Trust Company Nigeria Ltd., a Nigerian shell company that was formed the day before the appointment. Mr. Volpi is one of three trustees of the Guernsey Trust Company whose sole activity is managing the Abubakar Blind Trust.

From 2003 to 2008, the Guernsey Trust Company wire transferred over $10 million into the United States, including about $7 million into Douglas and AUN accounts; $2.1 million into the Weidenfeld law firm and AUN accounts; and $900,000 into American University accounts. Two other offshore corporations, LetsGo Ltd. and Sima Holdings Ltd., both of which are private corporations beneficially owned by Mr. Volpi and his family members, wire transferred nearly $27 million into the United States, including about $8 million into Ms. Douglas' accounts; $5.5 million into AUN accounts; and $13.1 million into American University accounts. Mr. Volpi told the Subcommittee that LetsGo and Sima Holdings sent millions of dollars to Ms. Douglas in connection with Mr. Abubakar's ownership interest in Intels and a line of credit that LetsGo had extended to the Bind Trust.

A. Background

Nigeria. Nigeria is lqcated on the west coast of Africa, on the Gulf of Guinea. With more than 145 million citizens, it is the eighth most populous country in the world, and the most populous nation on the African continent. 54 Nigeria has a diverse ethnic make-up, with three majorethnic groups, the Hausa, Ibo, and Yoruba, comprising nearly 40% of the population.95 The official language of Nigeria is English, and the official currency is the naira. The predominant religions are Christianity and Islam, with Islam predominant in the north of the country, and Christianity predominant in the south.

United Nations, Department of Economic and Social Affairs, 2008 Population Report

http://www.un.org/esa'populatioii/publications/\vpp2008/wpp2008 text tables.pdf.

955 Embassy of Nigeria, http://www.ni aeriaembassyusa.org/thisisnigeria.shtml.

956 The New York Times, "Deadly Nigeria Clashes Subside," November 30, 2008; see online at
http://www.nytimes.com/2008/12/01/world/africa/01nigeria.htm17hp.



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Nigeria gained its independence from the United Kingdom on October 1, 1960, and now operates as a federal republic of 36 states. Following years of military rule, Nigeria elected its first President in 1999, Olusegun Obasanjo, who was re-elected in 2003. Mr. Abubakar was his Vice President. In 2007, Umaru Yar'Adua won election as President over Mr. Abubakar and another candidate, marking the first peaceful civilian transfer of power in Nigeria. International observers nevertheless criticized the 2007 election, citing vote rigging and fraud. The European Union described the election as "not credible," and the United States described it as "deeply troubling."958 The President of Nigeria holds a maximum of two, four-year terms. The country also has a bicameral legislature and 36 state governors.

Nigeria ranks among the top ten nations in the world in proven oil reserves,960 and is the second largest oil producer in Africa.961 It is one of the world's largest exporters of oil, and its economy is highly reliant on oil revenues, which make up about 95% of generated revenues in the country.962 Its oil production facilities are concentrated in the Niger Delta region, which is an impoverished area despite its oil reserves. Militants have staged numerous attacks against the area's oil production facilities, demanding that a greater share of oil proceeds be allocated to the region. A World Bank report notes that 80% of Nigeria's oil wealth benefits only 1% of the population,96 and the United Nations currently ranks Nigeria as among the world's worst performing countries in life expectancy and infant mortality rate.964 In addition, the 2008 U.S. State Department's Human Rights Report characterizes Nigeria's human rights record as "poor" and states that "government officials at all levels continued to commit serious abuses."

Corruption. Nigeria has long had a problem with corruption. The U.S. State Department's most recent Human Rights Report provides the following description of the corruption problem in Nigeria during 2008:

• "Corruption was massive, widespread, and pervasive, at all levels of government and society. The constitution provides immunity from civil and criminal prosecution to the president, vice president, governors, and deputy governors while in office."

• "Police mistreated civilians regularly to extort money."

• "According to the Swiss-based Centre on Housing Rights and Evictions, authorities demolished more than 800,000 homes in the Abuja area since 2003. There was widespread opinion that the demolitions were primarily motivated by corruption and

157 CIA World Factbook, https://www.cja.gov/librarv/publications/the-woiid-factbook/geos/ni.html.

958 The Guardian, "Ruling Party Named Winner in Disputed Nigerian Election,"April 24, 2007; see online at

http://www.guardian.co.uk/world/2007/apr/24/chrismcgreal.intemational.

5 CIA World Factbook, http://www.nigeriaeiTibassvusa.org/tliisismgeria.shtml.

960 U.S. Department of Energy, Energy Information Administration, World Proved Reserves of Oil and Natural Gas,
Most Recent Estimates, .March 3, 2009; http://www.eia.doe.gov/emeu/inteniational/reserves.htnil.

961 Africa: The Good News, "Africa's Major Oil Producers," February 17, 2009,
http://www.africagoodnews.com/energy/africas-niaior-oil-producers.html.

Embassy. of Nigeria, http://www.nigeriaembassvusa.org/thisisnigeria.shtinl. 953 Frontline (PBS), "Nigeria: The Hidden Cost of Corruption," April 24, 2009; see online at http://www.pbs.org/front lineworld/stories/bribe/2009/04/ni geria-the-hidden-cost-of-corruption.html. 9641 The United Nations World Population Prospects: The 2008 Revision. 965 U.S. State Department, "2008 Human Rights Report: Nigeria" February 25, 2009;

http://www.state.gov/g,'drl/rls/'hrrpt/2008/aiy 119018.htm.



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discrimination based on socioeconomic class, since mostly lower and middle class persons lost their homes and property, which was sold to wealthy persons with connections to government officials once vacated." • "The EFCC's anticorruption efforts waned, with little progress on prosecutions of federal, state, and local officials accused of comaption."966

The latest Transparency International Corruption Perception Index ranks Nigeria 121 out of 180

967

countries.

In 2002, then-President Olusegun Obasanjo created the Economic and Financial Crimes Commission (EFCC) to investigate and prosecute corruption. Nuhu Ribadu was appointed as the first EFCC chair and experienced significant success, including prosecutions of government officials and the recovery of over $5 billion in stolen assets.969 During one investigation of the Governor of the Niger Delta state, Mr. Ribadu was offered a $15 million dollar bribe, seized the money, and brought criminal charges against the Governor. 7 Mr. Ribadu was removed from his post soon thereafter, and experienced two attempts on his life. In a recent interview, Mr. Ribadu estimated that more than $380 billion had been lost to corruption in Nigeria since its

971

independence.

Until recently, Nigeria was considered non cooperative in the battle against money laundering. In 2001, the Financial Action Task Force on Money Laundering (FATF) identified Nigeria as non-cooperative in the fight against money laundering. The next year, in 2002, the U.S. Department of Treasury issued an advisory informing U.S. banks of the "serious deficiencies in the counter-money laundering systems of the Federal Republic of Nigeria" and warning that "banks and other financial institutions operating in the United States should carefully consider, when dealing with transactions (especially those involving large sums of money, whether in cash or by wire transfer), originating in or routed to or through Nigeria, or involving entities organized or domiciled, or persons maintaining accounts, in Nigeria, how the lack of adequate counter-money laundering controls in Nigeria affects the possibility that those transactions are being used for illegal purposes."973 In 2006, due to Nigeria's enactment of AML laws, FATF removed Nigeria from its list of non-cooperative countries. In May 2007, Treasury withdrew its advisory to U.S. financial systems.974

966 Id.

I cant understand why the likes of Atiku cannot simply go underground and "chop" their loot.