Shaxson’s chapters on Gabon, a sparsely populated, often overlooked West African oil producer, demonstrate the real contribution of his book: a vivid illustration of how oil-induced corruption, with the help of the “pinstripe infrastructure” of the international banking system, is digging its tentacles deep into the developed world.
Before Shaxson arrived in Gabon in 1997, he knew only that “it was a quiet, oil-rich former French African colony whose people consumed more champagne on average than anyone, including the French,” and whose “diminutive president, Omar Bongo, kept popping up in parts of the world that did not obviously concern him.”
Despite his short stature, President Bongo, Africa’s longest-serving head of state, “towers over the country, unchallenged,” enjoying “secret influence around the globe with a force far, far out of proportion to his country’s tiny population.” That’s because in 1967 Bongo was handpicked for power, at age thirty-two, by France’s president, Charles de Gaulle, who since Gabon’s independence in 1960 had been desperate to retain influence over the former colony.
To entrench that power, de Gaulle created the French oil company Elf Aquitaine, with Gabon as its launching pad. Bongo, as Gabon’s president, consistently granted Elf the best oil licenses on remarkably favorable terms. But it wasn’t until Eva Joly, a French investigating magistrate, started digging into Elf’s connections with Gabon in 1994 that the depths of their relationship came to light.
Despite receiving repeated death threats, Joly unveiled a complex, hidden system of secret offshore accounts that Elf in Gabon had created for funneling cash to French political parties, and through which “tides of corrupt money sluic[ed] around the globe.” Elf’s strategy was to split the paper trail among multiple countries. Without a global police force, it was nearly impossible to track the system. Many countries, meanwhile, eager to attract foreign capital, allowed their largest banks to shroud their clients’ corrupt money “in secrecy.”
In 2003, the former head of Elf was found guilty of misusing over $100 million of company funds. But as Shaxson explains, “the investigations could not tackle the wholesale bribery of African politicians, or Elf’s payments to armed rebel movements, because bribery of foreign officials was not only legal, but tax deductible in France.” (It’s not any more.) Although bribery is illegal in the U.S., it is legal for American banks to accept deposits containing money looted from foreign treasuries. Citibank set up shell corporations for Bongo for years, no questions asked. And in 2005 the U.S. government confirmed that Riggs Bank in Washington, D.C., had been accepting hundreds of millions of dollars of highly suspicious money into personal bank accounts controlled by the president of Equatorial Guinea.
Until international rules are developed to eliminate tax havens and prohibit banks from receiving corrupt money, the vast thievery of oil revenues, and the disillusionment with democracy that accompanies it, will persist. The losses are astronomical: untaxed offshore funds make up a third of total global assets, or $11 trillion. That costs governments over $250 billion a year—more than twice what’s spent on foreign aid for all developing countries combined.
That is a reality Margonelli doesn’t address. Although Shaxson, for his part, spends too much time blaming oil itself for Africa’s conflicts, he makes a critical contribution to the growing awareness and understanding of the “resource curse”: that we in the developed world, as oil’s primary consumers and financiers, are at the heart of the problem. It is not a happy feeling.