Angola: On the Trail of Stolen Billions

The Africa Report Angola's economy is in a state of fragility. Its tough economic restructuring programme at the beginning of the year focused on the sale of state-owned oil and diamond assets, reform of the national budget. The major hit it has taken from the coronavirus epidemic, has also weakened the country. But perhaps Angola would have weathered the storm better had over $100bn not been stolen from state coffers during the four decade presidency of José Eduardo dos Santos. In this five-part series, Patrick Smith and Zoe Eisenstein report on the campaign to find those stolen funds and how it is changing the politics and economy of Angola. In the first of a five-part series on Angola's campaign to find its stolen funds, we meet the man central to the country's hunt to retrieve its missing billions. Part One: Joining the Dots Sunlight streamed through the tiny window of a cell in a Luanda’s maximum security prison. Beneath it lay a corpse covered by a flimsy white sheet and a band of men playing cards. “How can you play cards next to a corpse, [with] the smell and everything?” Rafael Marques asked his fellow inmates. “Oh, it’s your first day – on the third day you’ll be here playing cards with us,” one of them shot back. “And will the corpse still be there?” asked Marques, one of Angola’s most celebrated journalists. “No, there will be another one. Every day there’s a new corpse. They just stay here until they get buried,” said another inmate. “And on the third day I sat down with them to play cards. The corpse was just there, next to us,” Marques told The Africa Report in a macabre account of his arrest and detention at Viana maximum security prison back in 1999. “Central player in Angola’s hunt” Today, Marques is a central player in Angola’s hunt for its missing billions which is pitting President João Lourenço against the Dos Santos clan, especially Isabel dos Santos, daughter of the former president. For years, Marques cut a solitary path, exposing the procurement scams and wholesale transfer of state assets overseas. Once vilified by regime sycophants and criminal business people, and under surveillance by state security, these days Marques is walking through the corridors of power for meetings with President João Lourenço. President João Lourenço wants the return of the more than $100 billion reckoned to have been plundered between 2002 and 2017. Last year, along with another long-time dissident Sousa Jamba, Marques was awarded a medal for services to the nation in a ceremony at the presidential palace. Credible fight against corruption For now, Marques views the government’s fight against corruption as credible. He rejects accusations from the Dos Santos camp that Lourenço just wants political vengeance. “It’s not a selective campaign … they are going after many different officials and business people.” With one of the biggest searches for stolen assets in the world (compared to countries such as Portugal, Britain and its tax haven dependencies, United Arab Emirates, Russia, China and Hong Kong) Angola’s money chase could break the mould. A decree passed in 2018 allowing a voluntary repatriation of assets has yielded a little over $2bn, barely 2% of the target. Casting the net far and wide Angola’s prosecutors are touring western capitals, setting up exchanges of financial information, urging regulators to freeze assets and accounts. Specialist asset tracing companies are talking to officials in Luanda to start the painstaking process of finding, then negotiating the return of the looted assets. If successful, Angola will have scored a first. Attempts in Egypt, Indonesia and Nigeria to claw back resources have floundered, derailed by compromised officials or tied up in legal procedure. This time in Angola, Marques thinks there is a strong chance of success. One of the toughest reporters in Africa, his reports on rights abuses and grand theft in the diamond business, frauds linked to the oil industry and defence procurement are a route map for state investigators and foreign journalists tracking Angola’s stolen funds. After exposing the depredations of the war, forced recruitment, massacres, Orwellian-style manipulation of news, Marques had turned a spotlight on the gangs of war profiteers. He had countless enemies – on all sides of the political scene. Angola then… Back in 1999, Marques had been collecting signatures for a peace manifesto. He accused President Jose Eduardo dos Santos and UNITA rebel leader Jonas Savimbi of being warlords. “I was trying to explain how the war became profitable for these individuals”. One of the few journalists to join the dots between the brutality of the war and the fast-growing wealth of Luanda’s political elite, Marques had become an irritant to the regime. One morning at five o’clock he heard an insistent rapping at his front door. “The neighbourhood was full of special police forces …the back street, the main street,” said Marques. “I had seven officers pointing guns at me, one pressed his pistol against my temples … After hours of interrogation, [I was taken] to the forensic laboratory that has a special prison. I was locked up as a captured guerrilla fighter.” …Angola now Now Angola is another country, says Marques. This year, walking through the cobbled streets of Lisbon’s old town, he explains why Angola’s fight against grand corruption could reverberate across the international financial system. A lot of powerful financial and corporate interests benefitted from doing business with the Dos Santos clan, he says. If the Luanda government has the political will, it can get cooperation from western governments and financial institutions to track and return the funds. Looking at the list of top ranking corporate consultancies, law firms and accountants tied up in successive scandals in Angola, Marques says: “It’s time the enablers – who have earned rich fees from these frauds – were held to account. They should contribute to civil society.” “Angola is in financial meltdown” Much as the chase for the missing billions could roil international corporate interests, it will also transform Angola, according to a senior official in Luanda, as the old order faces a reckoning: “If you’ve had any role during the Dos Santos years – a long time – you run the risk of being confused for a marimbondo (a type of hornet or bloodsucker). It’s quite serious what’s happening.” Part Two: The Money Chase Angolan Twitter went wild – mostly cheering – when the Lourenço government froze the assets and accounts of Isabel Dos Santos in the country last December. The courts claimed she and her art dealer husband Sindika Dokolo had caused over a billion dollars of losses to the Angolan state. “The Princess” Despite a fortune reckoned at around $2.2bn – many say a gross underestimate – she cultivates a homespun image. An associate recalls their first meeting when Isabel was sitting by a swimming pool in flip flops and a bathing suit. Yet “the Princess” symbolises the failures of her father’s four-decade rule. Her constant social media posts, taking on Lourenço, senior Angolans and Portuguese anger many. She dismissed advice from public relations advisors, friends and even her husband to rein it in. I was brough up to never give up. I believe it‘s from our African blood, resilient and strong. Throughout the history of our continent, we‘ve experienced many battles and challenges. It's in our DNA. We’re warriors and we never give up. We seek #truth #justice #africanResilience pic.twitter.com/exYBVzw3HS “She’s at the top of the pyramid of what was happening in this place. She’s the highest exponent, she’s as good as it got,” said a top official in Luanda. Angola versus Dos Santos Angolan officials are doing battle with Dos Santos across the world. They want the United States to impose sanctions on Isabel to bar her from visiting the US and her companies from using US dollars. The charges on the warrant would include: money-laundering, influence-peddling, harmful management … forgery of documents … and other economic crimes. Last June, Angola signed a $4.1m contract with Washington DC lobbyist Squire Patton Boggs to push its case against the Dos Santos clan. Isabel’s business empire spans several continents but her banking options have shrunk over the last decade. Banks, such as Citigroup, Deutsche Bank and Santander will not work with her. Uria Menéndez, the Spanish law firm she retained in Portugal has dropped her. “She’s asked everyone here if they will work for her,” a legal source in Lisbon said. “She thought she was above the law and untouchable but she’s now become literally untouchable – none of the serious firms will go anywhere near her.” Assets frozen In February her Portuguese bank accounts were frozen. Angola’s attorney general has said he will issue an international warrant against Dos Santos if she fails to cooperate with investigations. The charges on the warrant would include: ‘money-laundering, influence-peddling, harmful management … forgery of documents … and other economic crimes,’ he said. At the centre of the charges against Dos Santos are claims that she used her position as chairwoman of Sonangol, Angola’s state oil conglomerate, to make illicit payments via Eurobic bank in Portugal, in which she was the main shareholder, to companies in Dubai controlled by her friends. Luanda Leaks Journalists who have seen a closely-guarded cache of 750,000 hacked documents say that she and her associates had ordered millions of dollars of payments to be made after the Lourenço government had sacked her from Sonangol on 15 November 2017. Nuhna Ribeiro da Cuhna, who managed Sonagol’s account at Eurobic, was found dead in his garage in Lisbon after local media linked him to Dos Santos’s business operations. Business sources close to Eurobic in Lisbon told us that the dates and timings of the documents seen by the journalists were forged. That could become the subject of a drawn-out legal fight. But it doesn’t settle the conflict of interest raised by Dos Santos’s controlling stake in Eurobic. Insisting on her innocence, Isabel promises to fight through the courts. She had hired Schillings, London-based lawyers and reputation managers who acted for the Gupta family at the heart of South Africa’s state capture scandal, and is threatening to sue journalists behind the Luanda Leaks reports for defamation. The government is guilty of a “concentrated and well-coordinated attack ahead of elections,” said Isabel. “Stolen documents have been leaked selectively to give a false impression of my business activities … all my commercial transactions have been approved by lawyers, banks, auditors and regulators”. Yet those auditing firms have launched their own probes. A top executive resigned from PwC over the affair. Spanish bank Abanca has bought 95% of Eurobic, including Isabel’s share. Over a dozen senior officials working for her companies have quit. And in early April, a Lisbon court ordered the “preventive seizure” of Dos Santos’s 26% stake in Portuguese telecoms company NOS, reported Bloomberg News on 4 April. This followed a generalised freeze in February of all the bank accounts held by Isabel in Portugal; that was in response to a request from the Angolan authorities for judicial cooperation. “Sliver of a chance” Legal experts in Luanda and Lisbon say there is a sliver of a chance that Isabel’s representatives might offer to return some funds to Angola. But her closest associates insist she would never return to Luanda to negotiate. Tracking the Dos Santos assets would be an enormous task and investment in time and labour. A settlement between both parties might be possible, said a consultant with knowledge of the transactions. “You would need the host country to be pulling their finger out to prove that funds that are abroad belong to them rather than to the target and that’s a much harder task.” “Often countries have never faced this situation before, certainly where there are political families involved it’s usually a first,” says Kamal Shah, a UK-based lawyer who has taken on several politically-charged asset tracing cases in recent years. “Generally the targets are a couple of steps ahead of those that are chasing them because they tend to have the best professional advisors”. One of Isabel’s biggest vulnerabilities, according to an expert on Angola’s finances, is her companies using state backing in Luanda to get loans in Portugal to buy large stakes in companies there. “There are difficulties with that in legal terms,” he adds. “Likewise, there are problems with a loan that Dos Santos took in US dollars from Sonangol but tried to repay in Angolan kwanza.” “A purely legal route in getting back the assets”? However, he raises doubts about the viability of a purely legal route in getting back the assets. “Asset tracing is a huge job. Knowing where this stuff is is a big form of pressure. But if she says I’m never moving back to Angola, she could hold out for a hell of a long time. That’s her option. There’s a real issue there.” Jonathan Benton, a former head of the UK government’s international Corruption Unit who now runs a asset-tracing company called Intelligent Sanctuary, agrees that tracking the Dos Santos assets would be an enormous task and investment in time and labour. “A case like this is not that simple (for the UK) … it may require a team of twelve working full-time to try and gather the necessary evidence. Valuable resources I don’t believe they have at present.” That leaves the ball very much in Angola’s court – to invest in a professional forensic investigation and apply as much diplomatic pressure as possible. All that has been made much harder by the global public health crisis this year. Part Three: Portugal Connections “I simply tweeted saying getting loans is one way of laundering money,” explains Ana Gomes, the former Portuguese MEP who has taken on the elites of both Angola and Portugal through her investigations, official complaints, in the media and in court. Isabel Dos Santos sued Gomes for tweets she alleged had damaged her honour and reputation. “I said in court, you have the reputation of mother Teresa of Calcutta or the reputation of Al Capone,” says Gomes, who is small in stature but exudes energy. It is no secret who Gomes thinks Isabel resembles. Portugal – Angola connection alive as ever The Portuguese landed in Angola more than 400 years ago, brutally colonized it and stayed until 1975. The elites in Luanda and Lisbon have quarreled but were ultimately drawn back together because of the synchronicity of their economic interests. One savvy business executive who welcomed us to his Lisbon boardroom dotted with photographs of stars and politicians he had met, explained it as a relationship that moved with the economic tides. Most recently, Angolan investors saved several floundering Portuguese companies. “(Engineering firm) Efacec was bankrupt, Isabel (Dos Santos) saved it. It employs 2,700 families – that makes it a huge employer in the north of Portugal,” he said. “Everybody in Portugal wanted to do business with her. And everybody who does business in Angola is responsible for corruption. Angels are in heaven.” “Caught with our pants down” There are dissidents on both sides of the coin – people like Gomes, a member of Portugal’s Socialist Party, or Rafael Marques in Angola. The Dos Santos crisis is shining a light on the often shady mechanics of the relationship. This is awkward for some businesses in Portugal where, as one legal source put it, “we were caught with our pants down. There is no way we can justify – legally or morally – the role we played”. You can see, the level of complicity here was also very much political. On 17 January, three days before the publication of Luanda Leaks, the court in Lisbon rejected Dos Santos’s libel case against Gomes. A lawyer by training and a former career diplomat before becoming a politician, Gomes points to EuroBIC, in which Dos Santos had a 42.5% stake until February, as just one example of the complicity between Portugal and Angola for personal enrichment of the elites on both sides of the Atlantic. Under the former Portuguese finance minister, Fernando Teixeira dos Santos, the collapsed BPN bank was saved by the state with a huge cash injection, creating Banco BIC – later called EuroBIC. The bank was then sold to Dos Santos for 40 million euros ($43.3m). “That’s outrageous because the state – Portuguese taxpayers – had put over 5 billion euros in the bank (to save it),” explains Gomes. “Then – coucou (peek-a-boo) – he (Teixeira dos Santos) becomes the CEO of her bank (EuroBIC),” she adds. Portugal’s central bank is currently scrutinising Eurobic’s compliance with anti money laundering rules and in January said it was assessing the suitability of Dos Santos as a shareholder in Portuguese banks. Ties with Luanda’s elite goes back generations Lisbon’s ties with Luanda’s elite has been promoted by successive Portuguese leaders. Former Portuguese Prime Minister José Manuel Barroso’s special relationship with Angola dates back to his negotiations on the Bicesse accords in the early 1990s. Critics of the Dos Santos regime and anti-corruption investigators accuse Barroso, who is now the non-executive chairman of Goldman Sachs, of trying to block investigations into top regime officials and their business partners in Luanda and Lisbon. “You can see, the level of complicity here was also very much political. This isn’t just Isabel Dos Santos and her husband – she was acting as a front woman for her father. A lot of people are implicated here – these people will want to get as much as they can themselves,” explains Gomes. Some of the transactions were, as the business executive says, so obvious that they were “como o gato escondido com o rabo de fora” – a popular Portuguese saying meaning like a cat hiding with its tail showing. But opinion remains divided over whether the judiciary in Lisbon will be able – or willing – to flex its muscles given that investigating Angolan corruption will implicate senior Portuguese officials. Gomes says parties from across Portugal’s political spectrum – including her own – have been complicit, with the exception of the Bloco Esquerda. Although Portugal’s judiciary has the capacity to act, much will depend on Angola’s determination to follow the money. Portugal’s politicians will try to exert their own leverage. It’s a delicate balance. “Lisbon is using its support for Angola to ingratiate itself … we are becoming submissive to this guy (Lourenço) like we were submissive to Dos Santos,” a disgruntled business man in Lisbon concluded. Part Four: International Implications Tales of illicit transfers from state companies, inflated procurement contracts and land grabs in the capital – as documented by government prosecutors and the Luanda Leaks data hack – are the tip of a gargantuan iceberg according to commercial lawyers familiar with some of the biggest transactions over the past decade. More deals may surface Many more suspect deals will be exposed in the coming months with Portugal’s judicial police planning raids on local companies suspected of malfeasance. “The 100 million dollars transfer – widely reported in the media – is a minor part of what happened during the Sonangol period under Isabel Dos Santos,” a business executive told us. “A lot more is going to come out – the worst is yet to happen. They’ll raid anybody and any company that had anything to do with Isabel Dos Santos,” he added. A key issue will be to what extent international oil companies in Angola may be implicated. The central question is how much Angola earns from its oil exports, how much tax the oil companies pay and who negotiates those payments and with what transparency. There will be a renewed spotlight on the ethical procedures and relationships they have with their lawyers, auditors and accountants. “…benfitted enormously from the millions syphoned” Many of Angola’s trading partners have questions to answer. “Portugal wasn’t the country that helped corrupt Angola the most – that prize goes to China,” said a legal source. “And take the UK – it has benefitted enormously from the millions syphoned out of Angola. Just look at the multi-million pound properties Isabel owns there”. Dos Santos’s husband Sindika Dokolo obtained a stake in the Geneva-based firm De Grisogono, making diamond jewellery for the stars, in what was meant to be an equal partnership with Angola’s state diamond firm Sodiam. But it has emerged that Sodiam paid the lion’s share, with Dokolo making a negligible contribution. De Grisogono, which had six stores in the United States, filed for bankruptcy in late January this year, which may trigger further investigations over its finances. Dos Santos and Portugal’s Galp Questions are being asked about the Dos Santos clan’s 6% indirect stake in the Portugal’s oil firm Galp. They paid $75m for that stake, which was worth well over $700m in February, with a loan from Sonangol. Officials at Galp – the second biggest company on the Lisbon stock exchange with operations in Angola, Brazil and Mozambique – say it is a matter for Sonangol to sort out. Associates of Isabel, whose mother Tatiana was born in the Soviet Union, deny media reports that she now travels on a Russian passport or has plans to relocate to Moscow. But anti-corruption campaigners are scrutinising business operations by Tatiana and Isabel with Russian companies – even if their inquiries are likely to hit a brick wall in Moscow. Part Five: Luanda Life Some Angolans reminisce about “better times” under President Dos Santos, when they were poor but the country was rich. This year, Angola will struggle to get out of recession, according to Alves da Rocha, Economics professor at the Catholic University in Luanda. More important for most people is the fight against unemployment – over a third of young people are jobless and 41% of Angolans are considered poor, “Unemployment and poverty could increase and I fear for social turbulence.” Wealthier Luandans complain that crime is increasing. There are also regular demonstrations, with demands that the “povo” should not bear the brunt of the crisis. How far will President Lourenço go? Plans to privatise state assets have been beset by problems over finances, management and valuation. There is big talk of foreign investment and bankers are looking again at doing business in Angola. But assessments have not been matched with new money. “Externally, the perceptions are quite positive. More important for most people is the fight against unemployment – over a third of young people are jobless and 41% of Angolans are considered poor according to the most recent survey,” said Da Rocha. “The question remains … how far President Lourenço wants to go and if the members of the ruling party will allow him to complete his transparency campaign.” Elections a “key test” for Lourenço A big question now is when Angola will hold its local elections, slated for this year but now likely to be delayed again due to the coronavirus pandemic. Whenever the elections are held, they will be a key test for Lourenço’s leadership of the MPLA. Lourenço has agreed to reforms with the IMF but has delayed cutting subsidies and social projects for fear of losing popular support. Some businesses see the campaign against the Dos Santos family as a useful distraction. Adalberto da Costa Junior, leader of the former rebel-turned opposition party UNITA, says those leaders who profited under Dos Santos should no longer run the show. “The MPLA institutionalised corruption. The leaders who accumulated these riches were in the politburo yesterday and are in the politburo today.” Yet Lourenço argues his insider knowledge will help him to reform it. “We were all part of the system … it is because I have seen these high levels of corruption and think that situation shouldn’t continue … that we are fighting what we have seen for decades,” he said in February. Angola discouraging foreign investors Angola’s business environment may have improved but a Western businessman who has been there for decades says he hadn’t seen many serious foreign investors coming in. “Angola has changed a lot of laws and regulations but they don’t realise that they are in competition with other countries in the region. People think it’s too complicated, Angolans are difficult to deal with, I’ll go somewhere else. The fact it’s Portugese-speaking doesn’t help either.” Among established companies in Luanda, there is unease, he says. “Most people have a couple of degrees of separation from somebody who could be on the wanted list. As long as Lourenço is in power, they can’t lock up everybody because everybody’s implicated.” Some businesses see the campaign against the Dos Santos family as a useful distraction. “Some of those guys may get screwed, especially if the Isabel thing doesn’t work out. As long as they can keep that going – and that’s still in the press – that takes a lot of attention away from a lot of potential targets. They are smart, keep a low profile, reinforce deals they are doing with the government.” Fate of Dos Santos clan: a national obsession Populist attacks against the old elite could hit a reality check. A worried official told us the fate of the Dos Santos clan has become a national obsession. “Nobody talks about anything else. That’s dangerous. It gives too much room for populists, for empty talk, hate speech even.” “People are happy she’s being smeared on international TV. But it’s not just her being smeared but it’s everybody here.” Both sides, he argues, have been shortsighted: “She should have, very early on, realised there was no way she could get away with it all. That at some point she needed to come to grips with the new establishment and have discussions on how to deal with it. But she just existed in her own reality,” he says of Isabel. There were cracks in the system that permitted financial leaks on a giant scale, according to a long-time official in Luanda: “We haven’t fixed that yet. This was the system, how things were run. You needed to start a business, you went to Sonangol. You were friendly enough to the regime, you got the contract. This stuff was given away.” Lourenco’s campaign risks polarising society, warned the official. “If you’re not careful what you say … you’ll be accused of defending the marimbondos (the hornets and bloodsuckers). As a result I think we are missing an opportunity.” Party loyalists echo the anti-graft mantra against the plutocrats but there are many in-between who want to seize the chance to push through positive change, he warned: “These could end up having no voice.” “Litmus test for what might happen to them” Angola’s gilded class is nervous about the campaign, argued a European-based academic: “The elite haven’t got any great allegiance to Isabel but see this as a litmus test for what might happen to them. The pressure could mount for Lourenço to take on other people – there’s a big concern there.” A senior official tells us a clear plan is needed. “What are we going to do with this endeavour – you call out a few names, recoup a bit of money, but what do you do next?” “This will make the difference between being trapped in a cycle or really setting the country off in a different direction,” concluded the official. Yet few are betting that Angola that will break the cycle this year against the backdrop of the global pandemic – even if fast changing conditions force the government to take some radical economic decisions this year.