Report | March 11, 2009

Undue Diligence

This report names some of the major banks who have done business with corrupt regimes. By accepting these customers, banks are assisting those who are using state assets to enrich themselves or brutalise their own people.

This corruption denies the world's poorest people the chance to lift themselves out of poverty and leaves them dependent on aid. The report sets out what governments, regulators and banks need to do in order to tackle this complicity with corruption.

Undue DiligenceThe world has learnt during 2008 and 2009 that failures by banks and the governments that regulate them have been responsible for pitching the global economy into its worst crisis in decades. People in the world's richest countries are rightly angry at the increasing job losses and house repossessions.

What is less understood is that for much longer, failures by banks and the governments regulate them have caused untold damage to the economies of some of the poorest countries in the world.

This is happening despite anti-money laundering laws that require banks to know who their customers are and what the source of their funds is. But there are huge loopholes in the system that mean it isn't working. Governments that regulate them have caused untold damage to the economies of some of the poorest countries in the world.

Undue Diligence presents evidence that:

Barclays kept open an account for the son of the dictator of oil-rich Equatorial Guinea long after clear evidence emerged that his family were heavily involved in substantial looting of state oil revenues. 

A British tax haven, Anguilla, and a Hong Kong bank, Bank of East Asia, helped the son of the president of Republic of Congo, another oil-rich African country, spend hundreds of thousands of dollars of his country's oil revenues on designer shopping sprees. Read his credit card statements.

Citibank facilitated the funding of two vicious civil wars in Sierra Leone and Liberia by enabling the warlord Charles Taylor, now on trial for war crimes in the Hague, to loot timber revenues.

HSBC and Banco Santander hid behind bank secrecy laws in Luxembourg and Spain to frustrate US efforts to find out if Equatorial Guinea's oil revenues had been looted and laundered.

Deutsche Bank assisted the late president Niyazov of Turkmenistan, a notorious human rights abuser, to keep state gas revenues under his personal control and off the national budget.

Dozens of British, European and Chinese banks have provided Angola's opaque national oil company, Sonangol, with billions of dollars of oil backed loans, though there is no transparency or democratic oversight about how these advances on the country's oil revenues are used, and they have a recent history mired in corruption and secret arms deals. 


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