Take care doing due diligence on foreign officials — especially when you’re still in their country
Recent events in the small oil-rich nation of Equatorial Guinea illustrate the potential dilemmas for representatives of global companies trying to perform due diligence on foreign government officials. One dilemma – when the background checkers are still in the officials’ own country, they run the risk of being accused of crimes.
In December 2016, three employees of the French bank Société Générale were detained by security officials “for transferring confidential banking information to third parties outside the country,” a government news release said. “The information involved the private data of several high-ranking members of the Government of Equatorial Guinea, including the Vice President, Teodoro Nguema Obiang Mangue. The transfer of private information violates the internationally recognized right of the confidentiality of bank data, which must be kept secure by banks and their employees.”
The Financial Times (PDF), under the headline “Equatorial Guinea accuses SocGen bankers of being ‘spies,’” said the detention of the three bankers was “the latest in a tit-for-tat battle” between Equatorial Guinea and France, where prosecutors have charged VP Obiang, the son of the country’s decades-long president, with money-laundering and plundering his nation.
The Wall Street Journal (PDF) said the detentions demonstrate “the tension of coordinating anti-money laundering compliance globally while operating in multiple jurisdictions with conflicting privacy requirements.” The newspaper quoted Colleen Corwell, a director at Alaric Compliance Services, a consulting firm, as saying, “you’ve got a thicket of rules and regulations, country by country, as it relates to privacy, and none of it has been harmonized.”
The paper’s Risk & Compliance Journal also quoted Dan Wager, a global financial crime VP at LexisNexis Risk Solutions, saying that more forward-looking nations grant exemptions to their data restrictions to allow companies to do money-laundering due diligence, often following standards promulgated by a global financial-policy entity, the Egmont Group. Equatorial Guinea doesn’t participate in Egmont. “An entity’s non-participation in Egmont can be an indicator of how it feels about global financial crime law enforcement,” the Journal quoted Wager as saying.
A senior Equatorial Guinea politician close to the Obiangs told reporters in the capital Malabo that the data that the three French bankers sent to Paris was directly used in France’s legal case against the younger Obiang, a case the politician said filled him with “disgust.” Société Générale has not commented on what the disputed data was or what it was used for.