$2bn in oil cash as Angola starves

The Scotsman "‘Institutions spend lots on war but nothing on the people’ " By DECLAN WALSH IN LUANDA WESTERN countries have slowed aid assistance to Angola, where around three million people need urgent help, over concerns about $1bn in "missing" government oil revenue. As hundreds of thousands of starving, bedraggled people emerge from their bush hiding places after years of civil war, British and international aid agencies are rushing to help. The Angolan government is also appealing for help. But many Western donors believe the oil-rich government, which earned $2bn in oil revenues last year, should be paying for itself. "There’s obviously a question about whether we should pick up the tab for a government that clearly has the money," said one European diplomat in the capital, Luanda. The indignation is compounded by evidence of gross corruption. The International Monetary Fund estimates that £750m of last year’s oil revenue was "unaccounted for". Campaigners say the phrase is a euphemism for what the campaign group Global Witness calls "wholesale state theft". They also hold Western oil companies - which are responsible for up to 90% of state revenue - and banks responsible. The spectacular corruption has resulted in some countries, such as Britain, the Netherlands and Sweden, refusing to channel aid through the Angolan government. And although the UN says it needs £147m to tackle the crisis, donors have only pledged about one third of that amount. As one diplomat pointed out, that amounts to three weeks’ oil profits for the government. Angola’s bountiful supply of offshore oil should make it one of Africa’s richest countries. Instead it is one of the poorest. Oil revenues make up nearly 90% of the national budget, and in recent years a large proportion has been devoted to fighting the war against the UNITA rebels. Precious little was spent on health and education. It has never been clear where the remainder of the oil money went, although a walk along the streets of Luanda offers some clues. The sewage-laced streets are crowded with fleets of the latest BMW, Mercedes and Jaguars, often driven by government officials or associates. Many believe that the money is controlled by the ‘Futungo’, a circle of friends and officials that surrounds the long-time President, Eduardo dos Santos. Western companies pay generous taxes and fees to the state oil company, Sonangol, and large amounts go missing in what has been called the "Bermuda triangle" between Sonangol, the treasury and the Futungo. Although all international oil giants - Chevron, TotalFinaElf, BP-Amoco and others - have operations in Angola, none publish their payments. They are being encouraged to do so by the international financier George Soros. However the government is doggedly resisting attempts to change. An IMF programme to account for the oil revenues has been frozen by lack of co-operation. When British company BP-Amoco announced last year it was going to make its payments public, Sonangol threatened to shut down its operations. Critics say Western banks have also played a questionable role, either by extending expensive loans to the government mortgaged against future oil production, or by dispatching "personal bankers" to Luanda, where they help the small elite invest its wealth in offshore accounts. Some clues into how the Futungo jet set spends its money can be gleaned from Tropical, a glossy magazine that sells on Luanda street corners. The latest issue has Hello!-style photo spreads showing designer-clad Angolans enjoying glitzy parties in London, Lisbon and Luanda. It also contains a two-page feature on the 29th birthday celebrations of Isabel dos Santos, the president’s daughter. The extravagance contrasts starkly with living conditions for the vast majority of Angola’s 13 million people. Average life expectancy is just 48, more than 60% of people have no access to drinking water and 80% are unemployed. One in five children dies before the age of five. Angola is close to the bottom of the UN’s Human Development Index. Other diamond-rich African countries, such as Congo and Sierra Leone, also rated badly. Campaigners call it the "paradox of plenty". "Dependency on extractive resources leads to unaccountable state institutions, who spend lots on internal security and war but nothing on their own people," said Patrick Nicholson of development agency, Cafod. Some countries, such as Botswana, have used their diamond wealth to improve democracy and provide free health and education. But President dos Santos has shown little interest in such reforms. He has frequently invoked the war as the reason for the murky financial secrecy. But since the rebel leader Jonas Savimbi was killed last February, peace has come at an astonishing speed. UNITA’s troops officially disbanded on Friday, and calls for transparency are growing. "Before, the war was the scapegoat for everything. But now people are starting to ask questions," said Father Antonio Jaca of Radio Ecclesia, an independent, Catholic-funded radio station. Even the government is starting to acknowledge the calls for transparency. "We had to defend the country so we invested a lot in buying weapons. Today we are facing a different situation," said Norberto dos Santos, spokesman for the ruling MPLA party. Others are sceptical that the ruling elite is about to abandon the patronage system that kept it in power. Although politicians and civil servants earn low salaries, their families receive generous "benefits" such as large luxury cars, free school fees at private schools abroad and international healthcare. Those who fall out of favour can suddenly find their school fees in South Africa, or their medical bills in expensive London clinics, going unpaid. For now, both government and aid agencies are struggling to cope with the swelling humanitarian crisis. The aid agency caseload has increased by one million people in six months. Even if enough aid arrives, getting it to people in need could be just as big a challenge. Much of the countryside is scattered with mines, and vast areas are inaccessible due to impassable roads. Aid agencies are calling on the government to invest in infrastructure to assist the distribution. The government recently pledged several hundred million dollars to help rebuild the worst affected provinces. But diplomats, donors and aid workers say there is a long way to go before they are convinced that President dos Santos’s government is committed to putting oil money into the Angolan people, and not its own pockets.