Mike Malloy

[Don Smith]

Congo Republic's heavy use of D.C. lobbyists prompts questions

By Carol D. Leonnig
Wednesday, August 25, 2010; 4:32 PM



Over the past five years, the authoritarian regime of the Congo Republic has leaned on Washington lobbyists to help with an image problem.

Denis Sassou-Nguesso, the president of the one of the world's poorest countries, had been accused in court and in lawsuits of diverting tens of millions of dollars in national oil profits to hidden bank accounts, then using the money to buy mansions in France and to finance spending sprees in Paris, Dubai and New York. His main antagonist was a New York investment firm that had accused him of misspending funds in a lawsuit seeking to to get paid on an old debt.

Sassou-Nguesso reached out for help on Capitol Hill. In 2006, the Congo Republic launched a Washington lobbying campaign that has now cost about $9 million and involved more than 100 conversations and meetings with members of Congress, their staffs and African advocacy groups, according to lobbying disclosure reports.

A main focus of the effort was to persuade Congress to stop the profitable business of investment funds like the one that had embarassed Sassou-Nguesso.

Experts on the Congo Republic and African debt say the lobbying effort financed by the small central African nation has been unusual in its cost and intensity. Impoverished countries struggling to provide food, water and medical care to citizens rarely pay out millions to retain the services of high-powered D.C. lobbyists.

The Congo Republic made clear that its legislative priorities included "responding to allegations of misconduct directed at President Sassou-Nguesso by creditors of the Republic of Congo," according to reports filed in Washington.

The Congo Republic's lobbyists took the lead among African nations in pushing for Congress to enact "vulture fund" legislation that would prevent foreign investors from reaping windfall profits by buying up at basement price the debts of poor countries and then suing the countries to repay in full. The Congo Republic, which settled most of its outstanding debts to investment firms in a confidential 2008 agreement, said it was seeking protection for all poor African countries, such as Rwanda, Ethiopia and Sierra Leone.

In the House, Maxine Waters (D-Calif.) stepped forward to sponsor a bill that won support from 33 co-sponsors, including many members of the Congressional Black Caucus. She introduced it 2008, and reintroduced it in 2009.

Waters told the British news media a year ago that she was unaware that the Sassou-Nguesso government had been involved in pushing the legislation. Last week, she acknowledged that lobbyists for the Congo Republic submitted proposed legislative language to her office in 2007 and met with her and her staff to shape the final bill. Records show that the Congo Republic's lobbying team has met or spoken with Waters's office 40 times since 2006, including two meetings with her personally.

Waters said the legislation is part of her long-standing effort to help impoverished African nations. She said the Congo Republic's lobbying against these investors, paid for by state oil revenue, may well be in the interest of the Congolese people.

"Poor countries have the same right to hire lobbyists and lawyers as more affluent countries," she said.

To groups supportive of the legislation, like TransAfrica and Jubilee USA, Waters and her colleagues are taking on a powerful segment of the financial industry and preserving scarce African resources for their people. Every year, African nations pay about $14 billion in debt costs to wealthy nations and international institutions while receiving less than $13 billion in international aid, advocacy groups estimate.

But John Clark, a professor at Florida International University and an expert on the Congo Republic, said members of Congress, including Waters, should be wary of lobbyists for Sassou-Nguesso and should scrutinize the country's "grotesque" record of neglecting its citizens.

"She has a duty not to take at face value that any benefit she gives to the Congolese state will go directly to the Congolese people," Clark said. "The purpose of the lobbying is to cover up this nasty reality of authoritarian politics and to protect the leadership's personal finances. The money of the state is spent on the elite and has little to do with the lives of ordinary people."

The trail of Congo Republic funds was exposed by Elliott Management, a New York hedge fund that sued the Congo Republic for repayment of an estimated $100 million in debt purchased on the secondary market. The company declined to discuss its dispute with the Congo Republic.

In 2005, the firm alleged in court that it found the Sassou-Nguesso regime had diverted tens of millions of dollars of state oil shipments into shell companies secretly owned by a top presidential deputy. (A British court agreed the country had concealed its oil assets in hidden accounts.) The Congo Republic's ambassador to the United States, Serge Mombouli, said embezzlement charges are unproved.

Other groups then alleged that Sassou-Nguesso used oil profits for his personal benefit. A lawsuit brought by French humanitarian organizations claimed that three African leaders, including Sassou-Nguesso, embezzled from their countries' treasuries for personal luxuries. A preliminary French police investigation in 2007 turned up $205 million in French property for the three, including Sassou-Nguesso family holdings of five mansions in or near Paris and a $224,492 car.

In a visit to France last year, Sassou-Nguesso said the assets were typical for a world leader.

"All the leaders of the world have castles and palaces in France, whether they are from the Gulf, Europe or Africa," he explained.

In 2006, the Congo Republic retained the D.C. law firm Trout Cacheris to handle several assignments, including working with the International Monetary Fund to win impoverished-nation status and dealing with charges made against Sassou-Nguesso. Trout Cacheris has turned to numerous subcontractors for help: the Livingston Group, run by former House speaker Bob Livingston; Chlopak Leonard; the former Amani Group, led by former representative Bill Gray; and the communications firm Public Private Solutions.

John Richards, the primary Congo Republic lobbyist who led several discussions on Capitol Hill about banning vulture funds, said Sassou-Nguesso properly sought to stop a creditor's campaign to disgrace and bankrupt the nation.

He said the investment firms "utilized their own in-house communications capacities and outside PR consultants to conduct a global smear campaign against the Congolese government."

Sassou-Nguesso, he said, wants legislation because, like a cancer survivor, he "knows firsthand that a cure is needed."

Lobbyists for the Congo Republic worked closely with Waters as well as a coalition of U.S.-based religious, human rights and environmental groups.

Jubilee USA, a group of religious and human rights groups, also worked with Congo Republic lobbyists. Melinda St. Louis, a Jubilee deputy director, said her group relied on lobbyist Richards for technical expertise, because he had the unusual experience of helping defend a country against a vulture fund lawsuit.

"Trying to come up with legislation to deal with this niche behavior requires some technical expertise that we don't have," St. Louis said.

However, St. Louis said her group has tried to "keep an arm's-length relationship" with the Congo Republic government.

In an interview last year, Waters said poor nations need protection from vulture funds. At that time, she said that she would not seek legislation to protect dictators who are "known to be stealing" from their people and that she was not aware that the Congo Republic's lobbying team was involved in the push for legislation.

Waters, who is facing an ethics charge on a separate matter before the House Ethics Committee, now says her earlier comments did not accurately describe her staff's dealings with the Congo Republic lobbying team.

In a statement last week, she confirmed that lobbyists had submitted a proposed bill and were consulted in vetting her legislation. She declined to answer questions about Sassou-Nguesso and allegations that he diverted state money.

Clark, of Florida International, said vulture funds are unpopular for a reason, but he said liberal groups are naive in partnering with the Congo Republic to fight them.

"We may not have warm feelings toward the vulture funds. But one positive thing they are doing is shedding light on the [government] accounts," he said.
http://www.washingtonpost.com/wp-dyn/content/article/2010/08/25/AR2010082505238.html
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