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Globa1 Witness, a non-profit corruption watchdog, is reporting that the daughter of Denis Sassou-Nguesso, president of the Republic of the Congo (Brazzaville), purchased an apartment for $7 million in a Donald Trump-developed building in New York. Global Witness and a Lisbon newspaper have traced ownership of the apartment to a shell company owned by Claudia Sassou-Nguesso and involving a money trail including Republic of the Congo contracts awarded to a Brazilian company to a shell company in Cyprus to the purchase of the apartment. An author of the Global Witness report is calling on the Department of Justice to seize the apartment because it was purchased with embezzled money. Separately, the French government is actively investigating Sassou-Nguesso for corruption and has identified 60 million euros of various types of property that the family has acquired in France.
Because of the association of the New York apartment building with President Donald Trump’s company and the involvement of the daughter of the president of the Republic of the Congo, the Global Witness story is attracting mainstream media coverage; it has been featured on the first page of the business section of the New York Times. However, the Trump Organization, apparently, had nothing to do with the sale of the apartment to Claudia Sassou-Nguesso. The shell-company purchaser acquired the unit from a third party.
The use of expensive real estate in the developed world for money laundering by the elite in the developing world is an old song. In New York and London, the practice is extensive enough to distort the real estate market in certain neighborhoods. Money-laundering elites create a market for houses and apartments costing tens of millions of dollars; absent such a market, developers might build housing in a different price range. In New York and London, in areas where such mega-million dollar residential properties are concentrated, owners typically will be in residence only a few days or weeks a year, if at all. Otherwise, the units sit empty. Empty units mean, among other things, lack of customers for the numerous small enterprises that a residential neighborhood would otherwise support.
Of course it is odious when these elites, usually from countries that are among the world’s poorest, spend huge amounts of laundered money stolen from the public on residential units in two or three of the world’s most expensive cities. Municipal authorities in New York and London are considering measures to control, even reduce, the construction of these pied-à-terres. The U.S. Treasury Department is now requiring title companies to report on all-cash purchases of high-end real estate in certain New York and Miami neighborhoods.
Once corruption goes international, certain laws in sought-after destinations can allow foreign governments to play a positive role. In July 2017, the FBI announced that it would seek the forfeiture and recovery of some $144 million, the proceeds of Nigerian corruption allegedly laundered in and through the United States. In June 2018, Nigeria reached an agreement with a number of countries, including the United States, France, and the United Kingdom, for the repatriation of $500 million in looted public funds. Prior to that, over $300 million was agreed to be returned from Switzerland. Much of this wealth was connected to the late Sani Abacha, Nigeria’s former military chief of state.
Elite money laundering is an aspect of the pervasive problem of failed leadership and lack of accountability to be found in various parts of the developing world. It is an aspect of the alienation of many elites from the people that they ostensibly lead.