For a man paid less than £3,000 a month, the 16 acres of mansion, designer golf course and sprawling gardens speckled with fountains in Malibu was quite a buy. The views of the ocean alone - never mind the 15,000 sq ft mansion with eight bathrooms, a pool and tennis courts - probably accounted for a good chunk of the $35m (£18m) asking price.

But then Teodoro Nguema Obiang's modest salary as a minister in his father's government in Equatorial Guinea is largely symbolic, just like the elections in which his father is returned to power with 97% of the vote and the distribution of oil revenues in a country with one of the highest per capita incomes on Earth but some of the poorest people.

Little Teodoro, as President Teodoro Obiang Nguema's son is known at home, appears to spend as little time as possible fulfilling his duties as the minister of agriculture and forestry in the west African state. Instead he flits between South Africa, France and the US, pursuing business ventures such as a failed rap label while acquiring property and a fleet of Ferraris, Lamborghinis and Bentleys - all made possible by the discovery of oil in Equatorial Guinea's waters a decade ago.

At the time, there was a promise that the country would become the "Kuwait of Africa", but it has increasingly come to look like Nigeria as a few kleptocrats get rich while the masses eke out a living.

Mr Obiang probably thought his acquisition of the Malibu house through a front company of which he is the owner would slip by largely unnoticed, particularly after there was so little comment about earlier purchases of two houses in Cape Town and a $2m penthouse flat in California. But the British anti-corruption group Global Witness spotted the sale and is publicising it as evidence that the Obiang family has followed in a long tradition of African rulers who plunder their country's wealth while their people live in poverty.

Seen from the Pacific Coast Highway, Mr Obiang's house doesn't look like much, at least not in the context of the exclusive millionaires' mansions looking out from the cliffs over the Pacific Ocean. "Oh, that's a lovely house," explained Malibu Carl yesterday, watching the surfers next to Malibu pier. "That's a hell of a piece of property right there. It's huge."

The house is hidden from prying eyes by a sheer bluff and guardhouse. But while $35m may buy a lot of house, it cannot guarantee you privacy. A stroll along Malibu pier reveals arched windows, plain, cream plaster walls and a tiled roof. Royal palm trees line the drive, and the bright red of bougainvillea stands out against the sandy hillside.

Described as a "playboy", Mr Obiang may be quite interested in meeting his neighbours. Whether they would return the interest seems unlikely. Mel Gibson lives on Serra Road, as does Britney Spears. Olivia Newton John is up there too, and so are Larry Hagman and Titanic director James Cameron. Across the road is the equally exclusive Malibu Colony, the gated community that housed most of Hollywood during the 1970s and 1980s.

"That's one of the premier estates in Malibu," says a local estate agent. He notes that Cher's house in Malibu recently went on the market at $29m.

The property belonged to a Canadian developer named Bill Connor. Rumour has it that he sold two years ago for $28m to a Disney executive (some say it was someone from Fox) before its current owner paid $35m at the beginning of this year. "Most of these sales happen very quietly," says the estate agent. "The properties don't usually hit the market."

President Obiang, who has ruled since seizing power in 1979, has decreed that the management of his country's $3bn a year in oil revenues is a state secret. That is why it is difficult to say for sure exactly how he comes to have about $700m in US bank accounts. But the president's son gave an insight into his salary in an affidavit filed with the Cape high court in South Africa in August, as part of a lawsuit against him over a commercial debt.

"Cabinet ministers and public servants in Equatorial Guinea are by law allowed to own companies that, in consortium with a foreign company, can bid for government contracts ... A cabinet minister ends up with a sizeable part of the contract price in his bank account," he testified.

Global Witness wants the US government to invoke a proclamation by President Bush nearly three years ago that bars corrupt foreign officials from entering the US and allows their assets to be seized.

But Washington is unlikely to move against Mr Obiang when it was so welcoming of his father only last April. The US secretary of state, Condoleezza Rice, called President Obiang a "good friend" even though her own department's annual human rights report said officials in Equatorial Guinea use torture.

Among those on the receiving end have been a group of mercenaries arrested two years ago for attempting to overthrow the regime with the backing of Mark Thatcher.

Before the oil, relations were not always so friendly. In the mid-1990s the US ambassador to Malabo was withdrawn after the state radio station said he had been spotted conjuring up his ancestors' spirits in a graveyard to put spells on President Obiang. In fact, the ambassador was the son of a Canadian airman and was tending the graves of an RAF bomber crew killed during the second world war.

But once the oil started flowing, American drillers such as ExxonMobil and ChevronTexaco began pouring billions of dollars into the country. The US diplomats were soon back in a very different frame of mind. Today, the $3bn annual oil revenues gives Equatorial Guinea's 520,000 citizens the second highest income in the world at about £26,000 per head.

But ordinary people see little of it. Most of the population live on less than a pound a day. Equatorial Guinea comes bottom in the United Nations' Human Development Index, which measures quality of life.

Three years ago, state radio declared that the president is a god who is "in permanent contact with the Almighty" and can "kill anyone without being called to account". But President Obiang is mortal after all: he is suffering from terminal prostate cancer. He has made it known he favours Little Teodoro as his successor.

Backstory

The tiny state of Equatorial Guinea, five inhabited islands and a mainland portion of jungle, is one of the smallest in Africa, with 520,000 citizens. In 1979, nine years after independence from Spain, President Teodoro Obiang Nguema seized power, and has been absolute ruler ever since. In the past decade, Equatorial Guinea has become Africa's third largest oil producer. On paper, oil has made its citizens the second wealthiest on the planet. In practice, much of the £370m revenue is grabbed by the president, while most people live on less than a dollar a day. A coup plot was staged in 2004, led by Simon Mann, a friend of Sir Mark Thatcher; the former prime minister's son escaped a claim for millions of pounds in damages when the UK appeal court blocked an attempt by the dictator to sue him.