Africa’s oldest oil-rich dictatorship has a succession problem

18th April 2024 By: Bloomberg

Africa’s oldest oil-rich dictatorship has a succession problem

Equatorial Guinea President Teodoro Obiang Nguema Mbasogo
Photo by: Bloomberg

Two South African engineers working in Equatorial Guinea’s offshore oil fields were preparing to return home in February 2023 when they were arrested for cocaine trafficking and thrown in jail, where they remain. Both men, their families and their employer have declared their innocence. They were detained days after a South African court ordered the seizure of one of Equatorial Guinean vice-president Teodoro Nguema Obiang Mangue’s yachts.

The two incidents are linked, said people familiar with the matter who declined to be identified due to the sensitivity of the situation. They described the arrests — the first involving foreigners in the country’s critical oil sector — as the latest example of the vice-president’s impulsive behavior, which threatens the long-term stability of the Central African state that has been ruled by his father for the past 45 years.

Teodorin, as he’s known, is next in line to succeed his 81-year-old father, President Teodoro Obiang Nguema Mbasogo. Once reliant on cocoa and coffee as main sources of revenue, the discovery of offshore oil in the 1990s made Equatorial Guinea—and specifically, the Obiangs—massively wealthy. Bolstered by cash, they built what the pro-democracy nonprofit Freedom House describes as a “highly repressive authoritarian regime.”

Yet since the height of the early 2000s oil boom, when international oil workers lived in luxurious homes and had food imported from Europe, the smallest OPEC member’s overall crude output has dropped to roughly a fifth of what it was at its peak. The country’s economic growth is forecast to decline 5.5% this year, making it the world’s worst-performing economy, according to available IMF data. And after nearly three decades in Equatorial Guinea, Exxon Mobil Corp. is planning to pull out entirely, a decision the company says is part of a long-term strategy. With a void to fill after the departure of its biggest investor, the growing severity and frequency of Teodorin Obiang’s outbursts puts the tiny country’s future in greater doubt than ever.

Equatorial Guinea’s Oil Ministry, Foreign Ministry, the country’s embassy in South Africa and the Office of the Vice President did not respond to requests for comment.

While the current leader has maintained “a veneer of stability” despite being a “despot,” human rights lawyer Tutu Alicante wrote in response to questions from Bloomberg, the son is known for his “erratic behavior and arbitrary decisions.”

“Teodorin has amassed a lot of power, and control[s] the national security apparatus,” Alicante added, predicting that a Teodorin presidency would further destabilize the country.

In a 2023 brief on the investment climate in Equatorial Guinea, the US Department of State highlighted instances of “government officials abusing their power or access to power to imprison or mistreat individuals with whom they have a business dispute.’’ The country ranked 172 out of 180 in a public corruption study conducted that same year by Transparency International.

In the past decade, Teodorin has been the subject of lawsuits on at least three continents. He agreed to turn over more than $30-million in assets, including a hilltop mansion in Malibu, California, to the US Department of Justice, which described them as having been obtained through corruption and money laundering. He was convicted in absentia of embezzlement in France, and tried to claim diplomatic immunity when a Paris court ordered the seizure of more than €100-million of his assets, including a mansion near the Champs-Elysees.

Over the years, the 55-year-old, who is known for flaunting his collections of luxury cars, opulent properties and Michael Jackson memorabilia, has become more willing to openly challenge his perceived opponents. Hours after the French embezzlement decision against him was upheld, police in Equatorial Guinea temporarily detained a French military helicopter that landed in the country because it was running low on fuel.

In June, Teodorin celebrated online after a court in Equatorial Guinea ordered the seizure of more than $125-million in assets belonging to Brazilian construction companies.

That was “retaliation,” he wrote in a post translated on X, for a 2018 episode in which Brazilian customs authorities confiscated around $1.5-million in cash and $15-million worth of watches from a delegation he was traveling with. The group had failed to declare the goods and cash beforehand.

The detention of the South African engineers is the most recent example of retributive actions occurring on Equatoguinean soil shortly after Teodorin has been disciplined abroad. The men had been working on Exxon and Chevron production vessels off the coast of the country when Obiang lost a court case in South Africa and had two of his properties in Cape Town seized, along with the 67-meter yacht, the Blue Shadow, which he maintains belongs to his country’s Ministry of Defense. That case that kicked all this off was brought by a South African businessman who was jailed in Equatorial Guinea for well over a year after he had a falling out with a politically connected local businessman.

Days after the ruling, Peter Huxham, 55, and Frederik Potgieter, 54, were arrested.

Although both Huxham and Potgieter worked for the same Dutch oil services company, the men had never met before SBM Offshore booked them into the same hotel ahead of their flights back to South Africa.

Huxham had a sinking feeling when he was summoned to reception. He was being accused of something, but he couldn’t tell what. “Something terrible has happened,” he told his fiancée in a phone call shortly before his arrest.

The men were in short order convicted of drug trafficking, sentenced to 12 years in prison and fined $5-million each. They were initially held at Black Beach, a Spanish colonial-era prison where the president’s uncle, who’d led a brutal dictatorship, was detained before being executed by firing squad.

The engineers have since been transferred to a jail on the mainland for political prisoners. Huxham’s fiancée has spoken to him three times since he was arrested a year ago, and Potgieter’s wife has spoken to her husband only twice. South Africa’s Department of International Relations said when asked to comment that it has been engaging with the government of Equatorial Guinea and held meetings about the matter in March.

Chevron unit Noble Energy said in a statement that it is “aware of the detention in Equatorial Guinea of two employees of SBM Offshore,” adding that it “remains committed to the rule of law and ethical business standards in its operations.”

Exxon has “supported SBM in their efforts to care for Peter and Frik, who are both SBM employees,” the company said in a statement. “These are sensitive matters, and we don’t comment on details involving employees of other companies.”

The Texas oil giant is currently transferring its Equatorial Guinea assets to the government as it exits the country after nearly three decades.

Officials in Equatorial Guinea didn’t respond to emailed questions about the men, but its oil ministry said last month that it will take over production of Exxon’s field and invited American companies to increase their presence.

“The government has always expressed its willingness to privilege their positive action in the country’s economy,” the ministry said, adding that China is an ongoing partner in building the country’s infrastructure.

For a country already grappling with “widespread persistent poverty, a rising cost of living, and repeated high-level corruption scandals,” as Robert Besseling, chief executive of Pangea-Risk, an advisory firm focusing on analysis of African economies, put it, cases like this risk further alienating Equatorial Guinea from the international community.

“Until the Equatorial Guinea government is satisfied, our guys are not going to get out,” said Shaun Murphy, a spokesperson for the Potgieter family. “We have absolutely no control over it.”