Bank of Angola Bank of Angola Kingsley Ibokette

Angola sharpens fight to recover stolen cash as debt pressure mounts

Written by  Nov 13, 2020

President João Lourenço of Angola has stepped up his fight to recover billions of dollars allegedly stolen under his predecessor as Africa’s second-biggest oil producer battles to escape the continent’s largest debt crisis.

Mr Lourenço estimates the scale of the looting to amount to at least $24bn — an assertion that signals the next phase in his struggle against allies of José Eduardo dos Santos, who for decades presided over a country reputed to be one of the world’s most corrupt. Mr dos Santos stepped down in 2017.

“New things are being discovered . . . it is likely that much bigger numbers will be announced later,” Mr Lourenço said in a state of the nation address last month. He also noted that the sum was larger than Angola’s roughly $20bn debt to its main creditor, China.

Mr Lourenço already claims to have recovered almost $5bn of ill-gotten gains and wants to recover more. Angolan prosecutors have begun to investigate one of the most notorious scandals of Mr dos Santos’s rule — an alliance between allies of the former president and a secretive Hong Kong group, 88 Queensway, that allegedly hollowed out Sonangol, Angola’s oil company.

Sonangol has also begun litigation to claw back alleged loot from Isabel dos Santos, the former president’s daughter and the continent’s richest woman, who briefly chaired the company before the family’s downfall. She denies wrongdoing.

The sheer scale of the alleged looting has underlined the stakes for Mr Lourenço’s ruling Movement for the Popular Liberation of Angola as it faces rising frustration, including urban protests, over the turmoil in the economy, Africa’s third largest, and the legacy of theft by the country’s elite. 

This year’s pandemic-related crash in oil prices has exacerbated half a decade of recession and forced Beijing’s biggest African debtor to seek billions of dollars in relief. Angola has received about $2.5bn from the IMF as part of its biggest programme on the continent. The IMF has said that Angola is making progress on negotiations with three large creditors, believed by analysts to be Chinese, on $6.7bn of debt relief, but deals are yet to be announced.

A lack of direction on the economy and a crackdown on protests in Luanda, the capital, have fuelled discontent. People think little has changed. It is “basically a reproduction of the same structures, the same status quo, the same way of doing things from dos Santos’s dark past”, said Rafael Marques de Morais, an anti-corruption activist in Angola.

A recent survey of Angolan business owners by Exx Africa, a research group, also indicated that two-thirds were unhappy with the country’s direction.

Mr Lourenço, therefore, has an incentive to blame the alleged dos Santos corruption for Angola’s economic problems, say analysts. “Lourenço is portraying these grand schemes as being instrumental in the high levels of sovereign debt being accumulated over the past two decades, particularly the debt owed to China, to keep public opinion on his side,” said Darias Jonker, Africa director at Eurasia Group.

With Sonangol pledging oil deliveries to secure Chinese loans for investment, Angola became so much a testing ground for Chinese commodity-for-infrastructure loans on the continent this century that the World Bank dubbed the model “Angola Mode”.

A government investigation into two Angolan-Chinese companies has ensnared senior allies of the former president. Leopoldino Fragoso do Nascimento, a confidante of Mr dos Santos known as Dino, and Hélder Vieira Dias Junior, or Kopelipa, a former military adviser, were last month named by prosecutors as formal suspects in alleged corruption involving China International Fund (CIF), a Queensway venture. Angola’s attorney-general did not respond to a request for comment.

These two men together with Manuel Vicente, chairman of Sonangol before he became deputy to Mr dos Santos, controlled significant business interests as a so-called “triumvirate”. Under Mr Vicente’s tenure, Sonangol began a joint venture with Queensway called China Sonangol.

CIF and China Sonangol helped secure access to Angola’s elite for Sam Pa, a formerly powerful Chinese middleman in Africa and senior figure at Queensway. Mr Pa ventured into Angola at the dawn of Chinese interest in the nation’s oil sector as Mr dos Santos sought loans to rebuild after the end of a long civil war in 2002.

The investigation into CIF was sensitive, given Angola’s close relationship with China, said Alex Vines, Africa programme director at Chatham House. Mr Pa was arrested in China in 2015 in an anti-corruption sweep. Mr Pa could not be reached for comment and his current whereabouts are unknown. The “relationship with China is so strategic, given the debt exposure that the timing of this [the asset recovery drive] is clearly political,” said Mr Vines.

Still, many doubt Mr Lourenço will ever recover all the money. “In macroeconomic terms, they are never going to get anything close to $24bn back from the global economy,” said Ricardo Soares de Oliveira, professor in the international politics of Africa at Oxford university.

Sonangol’s management “want to clean up” but “they have a lot on their plate” to pursue complex lawsuits while battling to control the company’s finances, said a lawyer who has worked with the business. “They probably have to prioritise.”

Mr Lourenço’s approach to tackling corruption was also “extremely ambivalent”, said Mr Soares de Oliveira. “The rhetoric is systemic and all-encompassing, but the practice is discretionary and political.”

Despite Mr Lourenço’s statement that more than $13bn was stolen from the company that Mr Vicente once chaired, Mr Vicente remains close to Mr Lourenço.

“There is a sense of arbitrariness that some who were close to dos Santos haven’t been touched, but others have,” Mr Vines said. “There is a sense of old wine in new wineskins in Angola right now.”

 

Source: Financial Times

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