Angola - Corruption
The billionaire daughter of the former President of Angola, Isabel dos Santos, has been charged with money laundering and mismanagement. Her father, José Eduardo dos Santos, ruled the country between 1979 and 2017. Africa’s richest woman is wanted by the Angolan government who accuse her of mismanaging the state-owned oil firm Sonangol and lining her own pockets. Hundreds of documents from dos Santos’s business empire were leaked to The Guardian and other newspapers allegedly revealed she had plundered Angola’s huge oil wealth to build her fortune, which is now estimated at US$2.1 billion.
Angola’s prosecutor general Helder Pitta Gros told a press conference on 22 January 2020: "Isabel dos Santos is accused of mismanagement and embezzlement of funds during her tenure at Sonangol and is thus charged in the first instance with the crimes of money laundering, influence peddling, harmful management ... forgery of documents, among other economic crimes.”
Portuguese police said on 23 January 2020, the manager of Angola’s state-owned oil company’s bank account has been found dead at his home in Lisbon. Police said Nuno Ribeiro da Cunha was found hanging in the garage of his home. Police said da Cunha, who was director of private banking at Eurobic, a small Portuguese bank, had tried to commit suicide earlier in the month. The corruption report named him as a suspect along with Isabel.
The firing of the billionaire daughter of former Angolan president José Eduardo dos Santos sent shockwaves through the country's political elite. Isabel dos Santos was remvoed 15 November 2017 from her influential post as head of state oil company Sonangol in a shake-up that has seen other members of her family axed. New President Joao Lourenço swore he would tackle corruption and nepotism when he was elected three months earlier. But he also agreed to reappoint his predecessor's daughter and other key allies.
The purge has taken many by surprise. Lourenço has had to move faster than he wanted to because of the perilous state of Angola's economy. Lourenço has been under increasing pressure to do that from independent oil companies who were saying that, unless there were serious structural reforms, they might well move their business elsewhere.
Although the law provides criminal penalties for official corruption, the government did not implement these laws effectively, and local and international NGOs and media sources reported that officials engaged in corrupt practices with impunity. Government corruption was widespread, and accountability was limited due to a lack of checks and balances, lack of institutional capacity, and a culture of impunity. The judiciary was corrupt and subject to political influence and conflict of interest.
In January 2017 Forbes magazine listed the president's daughter, state oil company chief Isabel dos Santos, as Africa's richest woman with a fortune of $3.2 billion. The oldest daughter of the Angolan president, Jose Eduardo dos Santos, and Africa's richest woman, Isabel dos Santos has built a vast empire in one of the world's most expensive cities. Her businesses range from telecommunications to banks to satellite TV to sports. In all, she owns a large chunk of Luanda's major businesses. Dos Santos controls Unitel, Angola's largest cell phone company, with 81 stores in the capital alone and over 10 million clients in the country. She owns Candando, the country's first supermarket and has stakes in BIC and BFA banks and in the cement company Nova Cimangola. She heads Angola's state-owned oil giant Sonangol as well as the company-sponsored football club, Petro de Luanda. The list goes on and on. She is estimated to be worth $3.2 million (2.9 million euros).
By late 2016 Isabel dos Santos, the president's billionaire daughter, had taken over a major bank and embarked on restructuring the state-owned oil company. These moves raised criticisms that dos Santos, ranked by Forbes magazine as Africa’s richest woman, was trying to further her family’s wealth at the expense of Angola’s people. Watchdog Transparency International, however, has ranked her among the world’s 15 most corrupt people and institutions — putting her in the company of the international soccer (football) governing body, FIFA.
By the early 1990s, against the background of a paralyzed economy, many officials reportedly were providing for themselves and their families at public expense. While the discipline of a war-time authoritarian state may have kept corruption in check as the war dragged on, political and social dynamics were apparently driving many public officials outside the law. The nomenklatura was thus facing serious obstacles to becoming a middle class in a market economy. The arbitrary and undemocratic process by which they were selected to serve in the socialist regime adversely affected their ability to cope with an open and democratic society.
Government corruption at all levels was endemic. The country does not have a special entity mandated with the responsibility of combating corruption. Public prosecutions were rare. During the year the government did not charge or prosecute any high-level official for corruption. The Financial Court, the government agency most directly responsible for investigating and prosecuting government corruption, released a list of officials found guilty of embezzlement in 2011. The list included mostly municipal administrators, two ambassadors, and lower-level civil servants in several ministries. Any actions taken against these individuals were not made public. The National Criminal Investigation Department of the National Police also investigated some cases.
In December 2011 Human Rights Watch urged the government to account for $32 billion in missing government funds, thought to be linked to Sonangol [Angola's State Oil Corporation], which were spent or transferred from 2007 through 2010. It cited an IMF report that revealed that the spending and transfers were not properly documented in the budget. "Tens of billions of dollars could be used for the benefit of the Angolan people - instead the government can't account for them," said Arvind Ganesan, business and human rights director at Human Rights Watch.
Corruption, including bribery, raises the costs and risks of doing business and can create an uneven playing field for foreign investors. Corruption has a corrosive impact on both market opportunities overseas for U.S. companies and the broader business climate. It also deters international investment, stifles economic growth and development, distorts prices, and undermines the rule of law.
It is important for U.S. companies, irrespective of their size, to assess the business climate in the sector in which they will be operating or investing, and to have an effective compliance program or measures to prevent and detect corruption, including foreign bribery. U.S. individuals and firms operating or investing in foreign markets should take the time to become familiar with the relevant anticorruption laws of both Angola and the United States in order to properly comply with them, and where appropriate, they should seek the advice of legal counsel.
The U.S. Government seeks to level the global playing field for U.S. businesses by encouraging other countries to take steps to criminalize their own companies’ acts of corruption, including bribery of foreign public officials, by requiring them to uphold their obligations under relevant international conventions. A U.S. firm that believes a competitor is seeking to use bribery of a foreign public official to secure a contract should bring this to the attention of appropriate U.S. agencies.
Angola is generally a cash-only economy; neither traveler’s checks nor credit cards are used outside the capital of Luanda. In Luanda, credit cards are accepted in extremely limited circumstances, namely large hotels. Despite a major campaign to expand credit card acceptance, this effort has yet to expand beyond the capital city. In general, Automated Teller Machines (ATMs) are only accessible to those individuals who hold accounts with local banks.
The regulatory system has been complex, vague, and inconsistently enforced. In many sectors, no effective regulatory system exists, due to lack of capacity. The Angolan Communications Institute (INACOM) sets prices for telecommunications services and is the regulatory authority for the telecommunications sector. Revised energy-sector licensing regulations have improved legal protection for investors to attract more private investment in electrical infrastructure, such as dams, power plants and distribution grids.
Other than personnel assigned to elite units, police were poorly paid, and the practice of supplementing income through extortion of civilians was widespread. Corruption and impunity remained serious problems. A domestic NGO reported that police throughout the country were abusive and created a gulf between authority figures and the people they are meant to protect. Most complaints were handled within the National Police by opaque internal disciplinary procedures, which sometimes led to formal punishment, including dismissal. The government had not established regular or transparent mechanisms to expedite investigations and punish alleged offenders, and it rarely disclosed publicly the results of internal investigations.
Travelers should be alert to fraud occasionally perpetrated by Luanda airport personnel. Immigration and customs officials sometimes detain foreigners without cause and then demand gratuities before allowing them to enter or depart Angola. Airport health officials sometimes demand that passengers arriving without proof of current yellow fever vaccination accept and pay for a vaccination at the airport.
In January 2012 anticorruption activist Rafael Marques filed a criminal complaint with the attorney general against the partners of an Angolan company, Nazaki Oil and Gas, including the then president of Sonangol (the state-owned oil company) Manuel Vicente, General Helder Manuel Vieira Dias Junior “Kopelipa,” minister of state and chief of the president’s military cabinet, and General Leopoldino Fragoso do Nascimento “Dino,” advisor to President dos Santos. The complaint charged that all profited from illicit enrichment resulting from partnership with a foreign oil company that had obtained several exploration licenses from Sonangol. The attorney general did not respond to the allegations.
In September, the Luanda Military Tribunal tried 15 presidential guards for the crime of making “demands in a group” for better wages and working conditions. During the trial evidence came to light that the soldiers were used as private security guards and laborers by senior military officers setting up private businesses with state funds. The attorney general did not pursue any claims against the officers.
In November 2012 the attorney general in Portugal opened a fraud and money laundering investigation against Angolan Vice President Manuel Vicente and other high-ranking Angolan political leaders. The case centered around potentially illicit business dealings that Vicente and others allegedly carried out with Portuguese firms in Portugal in 2010 when the Portuguese bank Banco Espirito Santo sold $325 million dollars worth of shares in one of its subsidiaries, Banco Espirito Santo de Angola, to an Angolan capital investment firm called Portmill. Portmill is allegedly owned by high-ranking members of the government, including Vice President Manuel Vicente (who was chief executive officer of the state-owned oil company Sonangol when this sale took place in 2010), Minister of State for Security Affairs Manuel Helder Vieira Dias Junior “Kopelipa,” and General Leopoldino Nascimento “Dino,” a confidant of Angolan President dos Santos and the former head of communications for the president. The Portuguese Attorney General’s Office reportedly opened the investigation based on credible evidence that Portmill used illegally gained funds to make the purchase and that Portmill and Banco Espirito Santo committed fraud and money laundering in the process. Manuel Vicente publicly denied any wrongdoing. The Portuguese attorney general had not filed charges against Portmill or its stakeholders as of the end of 2012.
There were no further developments in the July 2011 corruption case against the former governor of Luanda, Jose Maria dos Santos, accused of trying to extort $25 million from an Israeli developer. The case of Joaquim Ribeiro, the former commander of the Luanda Provincial Police who was under investigation for embezzling public funds and ordering the killing of a police officer who had incriminating information, continued at the end of 2012.
In October 2011 David Mendes from the Partido Popular (an opposition party) filed a criminal complaint with the attorney general against President dos Santos and Elisio Figueiredo (a Portuguese citizen and the financial advisor of President dos Santos), Pierre Falcone (a French citizen and arms dealer), and Manuel Vicente (then president of the state-owned oil company Sonangol) for their involvement in embezzling public funds of more than $775 million. In April the attorney general responded that he lacked jurisdiction to pursue a lawsuit against the president. Mendes countered with a request that the remaining three defendants be prosecuted. By year’s end the attorney general took no further action.
In 2010 the National Assembly approved a law on public probity, which requires most government officials to declare their assets to the attorney general. However, no officials made information available to the public during the year, and the president, vice president, and president of the National Assembly are exempt from these requirements. The law stipulates that nonexempt government officials declare all real estate holdings, household goods, livestock, cash assets, land titles, and stock holdings. Declarations are to include all assets in country and overseas. The law does not cover spouses and children. Nonexempt government officials are to make a new declaration within 30 days of assuming a new post and every two years thereafter.
The law does not stipulate for a redeclaration to be made upon leaving office but does state that officials must return all government property within 60 days. Penalties for noncompliance with the law vary depending on which section of the law was violated but include removal from office, a bar from government work for three to five years, a bar from contracting with the government for three years, repayment of the illicitly gained assets, and a fine of up to 100 times the value of the accepted bribe. The National Office of Economic Police is responsible for investigating violations of this law, as well as other financial and economic crimes, and then referring them to the Financial Court for prosecution.
The Attorney General’s Office, National Assembly, Financial Court, Supreme Court, and National Directorate of Inspection and Investigation of Economic Activities (DNIIAE) were all agencies responsible for combating corruption. The Attorney General’s Office had the authority to initiate investigations into potential cases of corruption at high levels. The DNIIAE did so at lower levels. The court system had responsibility for convicting and punishing corruption cases.
The government made progress in improving transparency in its economic operations, in large part due to the measures implemented under a Stand-By Arrangement agreement reached in May with the International Monetary Fund (IMF). According to the IMF, “significant progress has also been made toward improving fiscal transparency and accountability.”
As a condition of the IMF program, the state-owned oil company Sonangol published its 2009, 2010, and 2011 audited financial statements on its Web site. In December 2011 the IMF reported that $32 billion (3.04 trillion kwanzas) was unaccounted for in the government’s fiscal accounts during the period 2007-10. Some readers of the IMF report suggested that most of that sum may have resulted from misreporting of transfers from Sonangol to the national treasury. The government adopted several reforms to improve accountability of oil transfers, including the phase-out of quasi-fiscal activities by Sonangol and enhanced reporting of oil revenues.
The government published online a detailed block-by-block accounting of the monthly revenues it received from Sonangol’s oil production. However, there continued to be a significant lack of transparency in the government’s overall procurement and use of loans received from private banks and foreign governments.
To monitor and control expenditures more effectively, the Ministry of Finance continued implementation of the Integrated Financial System, designed to record all central government expenditures. The financial statements of Endiama, the state diamond parastatal, were not made public. Serious transparency problems remained in the diamond industry, particularly regarding allocation of exploration, production, and purchasing rights and reporting of revenues.
In October 2012 the government launched a five billion dollar sovereign wealth fund tasked with investing some of the country’s oil wealth in infrastructure and social development projects. Appointment of the president’s economic affairs advisor and his son to sit on the three-person board raised concerns of government transparency, although a performance review, an annual report to the National Assembly, and the appointment of internationally recognized independent auditors are intended to ensure accountability.
The business climate continued to favor those connected to the government, including members of the president’s family. Government ministers and other high-level officials commonly and openly owned interests in companies regulated by or doing business with their respective ministries. There are laws and regulations regarding conflict of interest, but they were not widely enforced. Petty corruption among police, teachers, and other government employees was widespread. Police extorted money from citizens and refugees, and prison officials extorted money from family members of inmates.
As in previous years, there were credible reports that government officials benefitted from their political positions to profit from business deals. For example, a foreign government investigated reports of complaints filed against foreign companies that had engaged in corrupt practices with Angolan officials.
The law provides for public access to government information. While the amount of information posted on government Web sites gradually increased, it remained limited. Laws are made public by being published in the official gazette; this publication can be purchased for a small fee but was not available online. In general the government was not responsive to requests for information, and it was sometimes unclear what information the government considered public versus private.
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