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TEDGlobal 2013

Charmian Gooch: Meet global corruption's hidden players

June 14, 2013

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.

Charmian Gooch - Anti-corruption activist
Charmian Gooch is the 2014 TED Prize winner. At Global Witness, she exposes how a global architecture of corruption is woven into the extraction and exploitation of natural resources. Full bio

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Double-click the English subtitles below to play the video.
When we talk about corruption,
00:12
there are typical types of individuals that spring to mind.
00:14
There's the former Soviet megalomaniacs.
00:18
Saparmurat Niyazov, he was one of them.
00:20
Until his death in 2006,
00:23
he was the all-powerful leader of Turkmenistan,
00:25
a Central Asian country rich in natural gas.
00:28
Now, he really loved to issue presidential decrees.
00:32
And one renamed the months of the year
00:36
including after himself and his mother.
00:38
He spent millions of dollars
00:42
creating a bizarre personality cult,
00:44
and his crowning glory was the building
00:46
of a 40-foot-high gold-plated statue of himself
00:48
which stood proudly in the capital's central square
00:52
and rotated to follow the sun.
00:55
He was a slightly unusual guy.
00:58
And then there's that cliché,
01:01
the African dictator or minister or official.
01:03
There's Teodorín Obiang.
01:07
So his daddy is president for life of Equatorial Guinea,
01:10
a West African nation that has exported
01:14
billions of dollars of oil since the 1990s
01:17
and yet has a truly appalling human rights record.
01:20
The vast majority of its people
01:25
are living in really miserable poverty
01:26
despite an income per capita that's on a par
01:29
with that of Portugal.
01:31
So Obiang junior, well, he buys himself
01:34
a $30 million mansion in Malibu, California.
01:37
I've been up to its front gates.
01:41
I can tell you it's a magnificent spread.
01:42
He bought an €18 million art collection
01:45
that used to belong to fashion designer Yves Saint Laurent,
01:49
a stack of fabulous sports cars,
01:53
some costing a million dollars apiece --
01:55
oh, and a Gulfstream jet, too.
01:57
Now get this:
02:00
Until recently, he was earning an official monthly salary
02:01
of less than 7,000 dollars.
02:05
And there's Dan Etete.
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Well, he was the former oil minister of Nigeria
02:11
under President Abacha,
02:14
and it just so happens he's a convicted money launderer too.
02:16
We've spent a great deal of time
02:19
investigating a $1 billion --
02:22
that's right, a $1 billion —
02:24
oil deal that he was involved with,
02:26
and what we found was pretty shocking,
02:28
but more about that later.
02:30
So it's easy to think that corruption happens
02:33
somewhere over there,
02:37
carried out by a bunch of greedy despots
02:39
and individuals up to no good in countries
02:41
that we, personally, may know very little about
02:43
and feel really unconnected to
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and unaffected by what might be going on.
02:48
But does it just happen over there?
02:51
Well, at 22, I was very lucky.
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My first job out of university
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was investigating the illegal trade in African ivory.
03:01
And that's how my relationship with corruption really began.
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In 1993, with two friends who were colleagues,
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Simon Taylor and Patrick Alley,
03:12
we set up an organization called Global Witness.
03:15
Our first campaign was investigating the role
03:18
of illegal logging in funding the war in Cambodia.
03:21
So a few years later, and it's now 1997,
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and I'm in Angola undercover investigating blood diamonds.
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Perhaps you saw the film,
03:33
the Hollywood film "Blood Diamond,"
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the one with Leonardo DiCaprio.
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Well, some of that sprang from our work.
03:38
Luanda, it was full of land mine victims
03:41
who were struggling to survive on the streets
03:44
and war orphans living in sewers under the streets,
03:46
and a tiny, very wealthy elite
03:49
who gossiped about shopping trips to Brazil and Portugal.
03:52
And it was a slightly crazy place.
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So I'm sitting in a hot and very stuffy hotel room
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feeling just totally overwhelmed.
04:01
But it wasn't about blood diamonds.
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Because I'd been speaking to lots of people there
04:07
who, well, they talked about a different problem:
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that of a massive web of corruption on a global scale
04:12
and millions of oil dollars going missing.
04:15
And for what was then a very small organization
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of just a few people,
04:21
trying to even begin to think how we might tackle that
04:23
was an enormous challenge.
04:26
And in the years that I've been,
04:28
and we've all been campaigning and investigating,
04:30
I've repeatedly seen that what makes corruption
04:33
on a global, massive scale possible,
04:35
well it isn't just greed or the misuse of power
04:37
or that nebulous phrase "weak governance."
04:40
I mean, yes, it's all of those,
04:43
but corruption, it's made possible by the actions
04:45
of global facilitators.
04:48
So let's go back to some of those people I talked about earlier.
04:51
Now, they're all people we've investigated,
04:54
and they're all people who couldn't do what they do alone.
04:56
Take Obiang junior. Well, he didn't end up
04:59
with high-end art and luxury houses without help.
05:01
He did business with global banks.
05:05
A bank in Paris held accounts of companies controlled by him,
05:07
one of which was used to buy the art,
05:11
and American banks, well, they funneled
05:13
73 million dollars into the States,
05:16
some of which was used to buy that California mansion.
05:19
And he didn't do all of this in his own name either.
05:23
He used shell companies.
05:26
He used one to buy the property, and another,
05:28
which was in somebody else's name,
05:30
to pay the huge bills it cost to run the place.
05:32
And then there's Dan Etete.
05:36
Well, when he was oil minister,
05:38
he awarded an oil block now worth over a billion dollars
05:41
to a company that, guess what, yeah,
05:46
he was the hidden owner of.
05:49
Now, it was then much later traded on
05:51
with the kind assistance of the Nigerian government --
05:54
now I have to be careful what I say here —
05:57
to subsidiaries of Shell and the Italian Eni,
05:59
two of the biggest oil companies around.
06:03
So the reality is, is that the engine of corruption,
06:06
well, it exists far beyond the shores of countries
06:08
like Equatorial Guinea or Nigeria or Turkmenistan.
06:11
This engine, well, it's driven
06:14
by our international banking system,
06:16
by the problem of anonymous shell companies,
06:19
and by the secrecy that we have afforded
06:21
big oil, gas and mining operations,
06:23
and, most of all, by the failure of our politicians
06:26
to back up their rhetoric and do something
06:30
really meaningful and systemic to tackle this stuff.
06:32
Now let's take the banks first.
06:37
Well, it's not going to come as any surprise
06:39
for me to tell you that banks accept dirty money,
06:42
but they prioritize their profits in other destructive ways too.
06:46
For example, in Sarawak, Malaysia.
06:50
Now this region, it has just five percent
06:54
of its forests left intact. Five percent.
06:57
So how did that happen?
07:03
Well, because an elite and its facilitators
07:04
have been making millions of dollars
07:07
from supporting logging on an industrial scale
07:09
for many years.
07:13
So we sent an undercover investigator in
07:15
to secretly film meetings with members of the ruling elite,
07:17
and the resulting footage, well, it made some people very angry,
07:21
and you can see that on YouTube,
07:24
but it proved what we had long suspected,
07:27
because it showed how the state's chief minister,
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despite his later denials,
07:32
used his control over land and forest licenses
07:34
to enrich himself and his family.
07:37
And HSBC, well, we know that HSBC bankrolled
07:40
the region's largest logging companies
07:45
that were responsible for some of that destruction
07:47
in Sarawak and elsewhere.
07:49
The bank violated its own sustainability policies in the process,
07:52
but it earned around 130 million dollars.
07:56
Now shortly after our exposé,
07:59
very shortly after our exposé earlier this year,
08:02
the bank announced a policy review on this.
08:04
And is this progress? Maybe,
08:07
but we're going to be keeping a very close eye
08:10
on that case.
08:13
And then there's the problem of anonymous shell companies.
08:15
Well, we've all heard about what they are, I think,
08:18
and we all know they're used quite a bit
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by people and companies who are trying to avoid
08:24
paying their proper dues to society,
08:26
also known as taxes.
08:29
But what doesn't usually come to light
08:31
is how shell companies are used to steal
08:34
huge sums of money, transformational sums of money,
08:39
from poor countries.
08:42
In virtually every case of corruption that we've investigated,
08:44
shell companies have appeared,
08:48
and sometimes it's been impossible to find out
08:50
who is really involved in the deal.
08:52
A recent study by the World Bank
08:56
looked at 200 cases of corruption.
08:58
It found that over 70 percent of those cases
09:01
had used anonymous shell companies,
09:04
totaling almost 56 billion dollars.
09:07
Now many of these companies were in America
09:10
or the United Kingdom,
09:13
its overseas territories and Crown dependencies,
09:14
and so it's not just an offshore problem,
09:16
it's an on-shore one too.
09:19
You see, shell companies, they're central
09:21
to the secret deals which may benefit wealthy elites
09:23
rather than ordinary citizens.
09:26
One striking recent case that we've investigated
09:29
is how the government in the Democratic Republic of Congo
09:33
sold off a series of valuable, state-owned mining assets
09:36
to shell companies in the British Virgin Islands.
09:40
So we spoke to sources in country,
09:43
trawled through company documents and other information
09:45
trying to piece together a really true picture of the deal.
09:49
And we were alarmed to find that these shell companies
09:53
had quickly flipped many of the assets on
09:55
for huge profits to major international mining companies
09:58
listed in London.
10:02
Now, the Africa Progress Panel, led by Kofi Annan,
10:05
they've calculated that Congo may have lost
10:08
more than 1.3 billion dollars from these deals.
10:11
That's almost twice
10:16
the country's annual health and education budget combined.
10:18
And will the people of Congo, will they ever get their money back?
10:24
Well, the answer to that question,
10:26
and who was really involved and what really happened,
10:28
well that's going to probably remain locked away
10:30
in the secretive company registries of the British Virgin Islands
10:32
and elsewhere unless we all do something about it.
10:35
And how about the oil, gas and mining companies?
10:40
Okay, maybe it's a bit of a cliché to talk about them.
10:43
Corruption in that sector, no surprise.
10:46
There's corruption everywhere, so why focus on that sector?
10:48
Well, because there's a lot at stake.
10:53
In 2011, natural resource exports
10:55
outweighed aid flows by almost 19 to one
10:59
in Africa, Asia and Latin America. Nineteen to one.
11:02
Now that's a hell of a lot of schools and universities
11:07
and hospitals and business startups,
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many of which haven't materialized and never will
11:12
because some of that money has simply been stolen away.
11:15
Now let's go back to the oil and mining companies,
11:19
and let's go back to Dan Etete and that $1 billion deal.
11:22
And now forgive me, I'm going to read the next bit
11:25
because it's a very live issue, and our lawyers
11:28
have been through this in some detail
11:30
and they want me to get it right.
11:32
Now, on the surface, the deal appeared straightforward.
11:36
Subsidiaries of Shell and Eni
11:40
paid the Nigerian government for the block.
11:42
The Nigerian government transferred
11:45
precisely the same amount, to the very dollar,
11:47
to an account earmarked for a shell company
11:50
whose hidden owner was Etete.
11:54
Now, that's not bad going for a convicted money launderer.
11:57
And here's the thing.
12:00
After many months of digging around
12:01
and reading through hundreds of pages of court documents,
12:03
we found evidence that, in fact,
12:07
Shell and Eni had known that the funds
12:09
would be transferred to that shell company,
12:12
and frankly, it's hard to believe they didn't know
12:15
who they were really dealing with there.
12:19
Now, it just shouldn't take these sorts of efforts
12:22
to find out where the money in deals like this went.
12:25
I mean, these are state assets.
12:28
They're supposed to be used for the benefit
12:29
of the people in the country.
12:31
But in some countries, citizens and journalists
12:33
who are trying to expose stories like this
12:36
have been harassed and arrested
12:38
and some have even risked their lives to do so.
12:39
And finally, well, there are those who believe
12:44
that corruption is unavoidable.
12:48
It's just how some business is done.
12:50
It's too complex and difficult to change.
12:52
So in effect, what? We just accept it.
12:55
But as a campaigner and investigator,
12:58
I have a different view,
13:00
because I've seen what can happen
13:01
when an idea gains momentum.
13:03
In the oil and mining sector, for example,
13:06
there is now the beginning
13:09
of a truly worldwide transparency standard
13:10
that could tackle some of these problems.
13:13
In 1999, when Global Witness called
13:16
for oil companies to make payments on deals transparent,
13:18
well, some people laughed at the extreme naiveté
13:22
of that small idea.
13:26
But literally hundreds of civil society groups
13:28
from around the world came together
13:31
to fight for transparency,
13:33
and now it's fast becoming the norm and the law.
13:35
Two thirds of the value
13:39
of the world's oil and mining companies
13:41
are now covered by transparency laws. Two thirds.
13:43
So this is change happening.
13:47
This is progress.
13:48
But we're not there yet, by far.
13:50
Because it really isn't about corruption
13:53
somewhere over there, is it?
13:56
In a globalized world, corruption
13:58
is a truly globalized business,
14:00
and one that needs global solutions,
14:02
supported and pushed by us all, as global citizens,
14:04
right here.
14:08
Thank you.
14:09
(Applause)
14:11

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Charmian Gooch - Anti-corruption activist
Charmian Gooch is the 2014 TED Prize winner. At Global Witness, she exposes how a global architecture of corruption is woven into the extraction and exploitation of natural resources.

Why you should listen

Charmian Gooch co-founded the watchdog NGO Global Witness with colleagues Simon Taylor and Patrick Alley in 1993, in response to growing concerns over covert warfare funded by illicit trade. Since then, Global Witness has captured headlines for their exposé of "blood diamonds" in Uganda, of mineral exploitation in the Congo, of illegal timber trade between Cambodia and Thailand, and more. With unique expertise on the shadowy threads connecting corrupt businesses and governments, Global Witness continues its quest to uncover and root out the sources of exploitation.

In 2014, Gooch and Global Witness were awarded the $1 million TED Prize, along with the Skoll Award for Social Entrepreneurship, for their campaign to end anonymous companies. Gooch's TED Prize wish: for us to know who ultimately owns and controls companies and launch a new era of openness in business. Global Witness highlighted the importance of this issue in an investigation, aired on 60 Minutes, where they sent an undercover investigator into 13 New York law firms. The investigator posed as an adviser to a government minister in Africa and asked for thoughts on how to move money into the United States for a plane, a yacht and a brownstone. All but one firm offered advice. 

The Panama Papers, released in April of 2016, further demonstrate the need for transparency. The papers paint a picture of how the rich and powerful around the world use offshore accounts and anonymous companies to move money. "This secretive world is being opened up to global public scrutiny," said Gooch, on the day the papers were released.

 

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