From the President to His Family: The Drainage Ditch

By Alfredo Muvuma

http://makaangola.org/

Years ago, a high-ranking MPLA politburo member praised the business acumen of President José Eduardo’s children. More recently, the state-owned and only daily newspaper Jornal de Angola awarded Isabel dos Santos the title of entrepreneur of the year for 2012. In both cases, the objective was to sell the notion that there is a genuine business talent, within the Dos Santos’s family, to accumulate vast wealth.

Forbes places Isabel dos Santos as the first Africa’s woman billionaire, which it estimates as the value of her legitimate shares in UNITEL, BIC Bank and in Portugal.

Meanwhile, the State Budget Bill for 2013, passed days ago by the National Assembly, uncovers the farce: there is no mystery behind the enrichment of the Dos Santos clan and its entourage. Article 11 of the bill explains, in part, how the Angolan president and his cronies accumulate fortunes without sweating, much less without overloading their neurons.

Maka Angola examines here the purpose and scope of the referred legal disposition. Briefly, as the head of Government, and author of the budget proposal, José Eduardo dos Santos requested, and was granted carte blanche by the National Assembly, to continue to manage public funds as he saw fit and without any transparency requirements.

In today’s world, it is almost impossible to identify any other country whose president requested and was granted licence to plunder state coffers in broad daylight and in full view. The bill, as it is, amounts to plunder.

To meet the financial demands of any of his children or close relatives, JES does not need to tax his brains. He merely needs to invoke national or external security needs or threats. Under this vast umbrella, the President of the Republic has the authority to create as many funds and companies as he likes, to accommodate members of his family, cronies and an ever growing list of lackeys. He can create funds containing more money than the actual budget itself. The article imposes absolutely no restrictions or limits to José Eduardo dos Santos.

The President of the Republic has converted the budget into his principal, but by no means single, source of illicit enrichment.

Dos Santos did not require such explicit permission from the National Assembly to create Angola’s Sovereign Wealth Fund, whose management and endowment of US $5 billion were entrusted to his son Filomeno “Zenú”. The enrichment of the presidential family has nothing to do with entrepreneurship or business acumen, rather it is the result of schemes designed to effectively privatise the State.

He frequently uses his position as President of the Republic to whimsically approve investment contracts that benefit his own family.

When not appropriating public funds, political and economic blackmail have also been used to force successful companies to hand over a considerable percentage of their business to the economic interests of the presidential family. The Angolan Bank of Foment (BFA- Banco de Fomento Angola) was in danger of losing the accounts of all the relevant public Angolan institutions and companies. In order to avoid this risk, BFA was obliged to yield 49 per cent of its shares to UNITEL, whose majority shareholder is Isabel dos Santos. Since then, José dos Santos’s firstborn is also a board director of the bank.

The awarding of contracts, without public tender, for the provision of goods and services to the State , is also another preferred model for the presidential clan’s illicit enrichment. It was through the use of this method that Channel 2 of Angolan Public Television (TPA- Televisão Pública de Angola), as well as its International Channel, were practically donated to Welwitschea “Tchizé” dos Santos and her brother José Paulino dos Santos “Coreon Dú”.

The budget, which will come into effect on February 14, assigns almost US $60 million to these two children of the President. This money will be channelled to José Eduardo dos Santos’s loved ones through GRECIMA. GRECIMA is the Portuguese acronym for the Office for the Revitalization and Implementation of the Administration’s Institutional Communication and Marketing, a shady department within the Presidency. GRECIMA is led by Manuel Rabelais, against whom there are criminal proceedings for corruption during his years as Information minister. President José Eduardo dos Santos therefore granted immunity to Manuel Rabelais, now occupying the post with the rank of Secretary of State, an equivalent to deputy-minister.

GRECIMA is a body that has usurped the authority of the Information minister. In practice, Tchizé and Coreon Dú run GRECIMA. In turn, GRECIMA transfers the funds to Semba Comunicação, the company owned by the same President’s children, which for years has the contract to improve the regime’s image, as previously documented by Maka Angola.

The 2013 budget also delivers a further US $50 million into the hands of the above mentioned siblings. The funds are earmarked for them to indulge in their favourite pastime, which is playing at being television managers and producers. Through abuse of power and nepotism, the President’s children privately control the second and the international channels of the public television.

TPA and GRECIMA together, by means of contracts with Semba Comunicação, place almost US $110 million into the hands of Dos Santos’s heirs. This figure is higher than the US $90 million which the Information Ministry has to run TPA, the Angolan National Radio (RNA), the Angolan News Agency (ANGOP), the national daily newspaper Jornal de Angola, Centro de Imprensa (Press Centre), CEFOJOR, and other agencies under its management.

This is yet another shocking demonstration of misappropriation of funds belonging to the people of Angola. The hopes held by some naïve people that President Dos Santos can lead the country for the good of the people are fast evaporating.

Within the judicial systems of modern countries, plunder and misappropriation of public funds are crimes. It is not different in Angola. But in this country, Members of Parliament must give their seal of approval for such crimes to be institutionalized. The People’s Movement for the Liberation of Angola (MPLA) parliamentarians, who hold 175 of the 220 seats, are accomplices in the large-scale theft of the state coffers by the Dos Santos’ family. MPLA has been in power for 37 years, since independence in 1975, and it is presided by Dos Santos since 1979, the year he became President of the Republic, upon the death of the first President Agostinho Neto.

A Record Budget for the Presidency, the Military and the Spooks

By Rafael Marques de Morais

http://makaangola.org

Angola’s 2013 budget has been hailed by government propaganda as its greatest ever, owing to how much is being spent on social sectors and in the fight against poverty. The State Budget Bill, approved by the National Assembly on January 15, is expected to become law on February 14.

Spending this year is up some 50 percent from 2012, taking the overall budget to a record high of AKZ 6.6 trillion (around US $ 69 billion).

In fact, 33.5 percent, over one third of the budget, is allocated for the “social sector,” which includes health, education, housing, environment, and social protection. It is also true that more is being spent on the “social sector” than ever before.

But the headline numbers are misleading. Moreover, focusing on the figures fails to notice that, in essence, the State Budget Bill legalizes in fact presidential unaccountability in the management of the public resources.

The legal provision on Spending and Special Funds establishes a special regime for the budget execution, accountability, and “special spending” related to the sovereign bodies and public services that carry out internal and external intelligence services tasks.

In essence, all functions of the state are subordinated to the maintenance of a generalized culture of fear and suspicions. Thus, citizens in the public sector and beyond are enlisted into spying against each other for the regime’s survival.

Furthermore, the same provision earmarks credits, on the state budget, aimed at setting up special funds “to work as strategic reserves of the state” for expenditures on intelligence.

Then, the management and accountability of the special funds, according to the draft law, is to be exclusively regulated by the President of the Republic, in his capacity as head of government. In simple terms, the president gets a legal authorization to self-regulate himself, as chief-executor of the budget, in a novel way of establishing checks and balances.

For the first in a series of articles on the 2013 budget, Maka Angola addresses the presidential spending, as well as the military and security budgets, and compares them to social spending.

Soldiers and Guns for the President

The Presidency alone has a budget of US $1.8 billion, which is more than the funds for the Ministry of Health (US $1.5 billion). Of this sum, José Eduardo dos Santos will personally spend US $1.4 billion on military defense, which accounts for 81 percent of the presidential palace expenditures. The President’s personal arrangements for the defense might suggest that he is feeling more unsecure or that he is running a parallel presidential army.

Overlooked by many in the budget, is the US $67.9 million Dos Santos will spend on paying his paramilitary personnel. Besides this budget item, there is more US $150.2 million allocated to the members of the Presidential Guard Unit (UGP) and the Presidential Security Unit (USP). An average presidential guard has a salary of up to US $1,050 a month, and the average calculations suggest that Dos Santos still has on its payroll a dedicated presidential force of over 11,000 men. The salary of a UGP soldier is five times more than that of an average army soldier.

But in terms of keeping the reins of the presidential palace, it is not all about armed personnel. Public relations are also an important part of Dos Santos’ strategy. The presidency has an overall budget of US $49 million for marketing, up from the $40 million in the 2012 budget, which were all allocated to a private company, Semba Comunicação, belonging to two of Dos Santos’ children. So, the Dos Santos’ family sought to promote the patriarch and the country’s image by showcasing how open they are about nepotism and corruption. Yet, all this money has not enabled the Presidency to update its website regularly. The Ministry of Social Communication, whose job is to control the state media and the government’s image, has less than half of the presidency’s amount for marketing, and it cannot run its website either.

Defending the Country

As far as the defense and public order are concerned, both account for 17.6 percent of the country’s total budget, up from 15.1 percent in 2012, while social sector spending has only increased 0.6 percent in the same period. The Ministry of Defense has the largest budget of all, at US $ 5.7 billion, while the Interior Ministry has a total planned spending of US $4.7 billion.

In spite of the largesse on defense and homeland security spending, which keeps increasing in times of peace, the funds barely trickle down to those who most need them – soldiers and police officers. Despite all the cash flowing, the army has difficulties in paying its pensioners and war veterans who have been regularly staging small protests to demand what is owed to them. The Angolan Armed Forces has an extremely high rate of tuberculosis among its rank and file due to the lack of basic living conditions in the barracks. In the provinces, many garrisons are still largely made of straw and mud quarters. The situation of the police forces, particularly in the provinces, is also dire, as anyone who has driven throughout Angola will attest, knowing how many times he or she must make a “contribution” to a hungry officer who cannot afford his children’ school fees.

Maka Angola has been researching the distribution of food supplies to the army and the police, and it has been finding that most contracts, ranging from tens of millions to hundreds of millions of dollars, are awarded to phony companies belonging to senior generals, government officials and their cronies who often do not deliver the goods.

Comparatively, a closer look reveals that of the 33.5 percent allocated to social spending, health only gets 5.29 percent and education 8.09 percent, totaling 13.38 percent. The Presidency’s own budget remains much higher than the funds allocated to the entire health sector, which receives US $1.3 billion

Elsewhere in Africa, while few governments meet the Abuja Declaration’s commitment to spend 15 percent of their budget on health, several do spend over 10 percent and many commit as much as a quarter of all spending to education. It is a shame for Angola that countries like Cote d’Ivoire, torn by a recent conflict, spends 30 percent of its budget on education. Very small and rather poor countries like Swaziland, Lesotho and Burkina Faso, spend 24, 17 and 16.8 percent of their total budgets, respectively, on education. Angola, as the second largest oil producer in Africa, and with a regime obsessed with the idea of being a regional power, cannot dream of competing with South Africa, which spends a quarter of its budget on education, or Ghana that exceeds the 30 percent threshold.

More for Spooks, Less for Agriculture

The contradictions on spending surpass any reasonable understanding. For instance, the government continues to promote the idea of diversifying the economy to break the dependency from oil, which accounts for more than 95 percent of the country’s exports. But these stated goals are contradicted by the fact that the Intelligence and Security Services (SINSE) has US$ 695 million at its disposal, while the Ministry of Agriculture gets a lower budget of US $611 million. Angola has a great potential to be a competitive exporter of agricultural produce for it is endowed with some of the most fertile soils and water resources in Africa. Nevertheless, spooking is the priority.

By the same set of priorities, spying abroad is more important than having a coherent foreign policy. The Foreign Intelligence Services (SIE) has an allocation of up US$ 340 million for intelligence gathering abroad alone, while the entire budget of the Ministry of Foreign Affairs is US $380.4 million.

Angolan embassies abroad are a nightmare to deal with, either by Angolan or foreign nationals, due to the distressing levels of staff incompetence, arrogance and lack of guidance on clear policies towards their host countries and their own citizens. China is the exception, due to its overwhelming role on Angola’s national reconstruction. A recent report by the Angolan Embassy in Beijing, stated it had issued over 221,000 visas to Chinese nationals in the last six months. Prior to this period there were already, according to official data, over 258,000 Chinese nationals working and living in Angola.

It is possible that the bulk of the funds earmarked for spying abroad are for outsourcing intelligence services to international profiteers at unreasonable costs. What is certainly questionable is the Angolan government’s own legitimacy to engage in such large-scale and expensive operation, as this budget would suggest.

The rationale for development, often hailed by the regime, also does not make sense when it comes to its priorities in the distribution of resources. Seven of Angola’s 18 provinces have lower or similar budgets than that allocated to the Foreign Intelligence Services. Lunda-Sul (0,40%), Namibe (0.41%), Zaire (0.42%), Kwanza-Norte (0.46%), Cunene (0.48%), Bengo (0.50%) and Kuando-Kubango (0.57%) also benefit from Public Investment Programs managed from the capital Luanda, but when implemented, do not add that much to the overall expenditures in the abovementioned provinces. They remain lesser important than the foreign adventures of the regime, which is apparently investing more on rather expensive gadgets and assignments than the fictional James Bond and his crew.

But it is more likely that the money is being used by Dos Santos to bankroll his trademark conversion of national money into honeypots for high ranking and privileged officers of the army, police and security services. These officers gorge themselves on ill-gotten wealth plundered from state coffers in return for their complicity, support and silence. Angola’s development will have to wait for Dos Santos to go.

Top Police Chief Sells Guns in Angola. By Rafael Marques de Morais

http://makaangola.org/

The Commander-General of the National Police, Commissioner Ambrósio de Lemos Freire dos Santos, may soon become one of the largest private arms dealers in Sub-Saharan Africa.
At stake is the importation of 95,000 arms from Brazil, including sub-machine guns, pistols, revolvers and riot control equipment destined for the National Police. The Commissioner’s company, R & AB, has been brokering the deal with the Brazilian manufacturer Taurus since 2009.

According to its website, Taurus is “one of the three largest arms manufacturers in the world” and exports for more than 70 countries. The company, with offices in Florida, was recently classified as the fourth largest distributor of firearms in the United States.

In August 2009, as an urgent need arose, Taurus sold 2,600 pistols to the Angolan National Police at a total price of US $825,000. However, R & AB overcharged the National Police for the consignment of the pistols, which included the models PT917 and PT909 (9mm calibre) handguns. Acting as Taurus’s representative for Southern Africa, R & AB presented the buyer, i.e. the Commander of the National Police, Commissioner Ambrósio de Lemos Freire dos Santos, with an invoice in the value of US $1,500,000. Deducting about US $24,000 for air freight and insurance charges, R & AB overcharged the National Police some US $651,000.

In addition to this, the official records from the Brazilian government show a discrepancy in the number of arms sold. The Brazilian Ministry for Development, Industry and International Trade (MDIC) formally recorded the sale to Angola of 2,613 small arms, with a total value of US $863,967, and filed the transaction as having taken place in 2010. Therefore there is a discrepancy of 13 pistols between the official Brazilian figures and those recorded by the National Police.

What is R & AB? On January 24, 2008, commissioner Ambrósio de Lemos dos Santos set up the referred company in partnership with the Angolan businessman Raúl Mateus, better known as the owner of the Pomobel supermarkets’ chain.

In its business profile, the company describes its activity as “long-haul overland transportation, group haulage, vehicle rental, general commerce, service providing, distribution of foodstuffs, fish, cattle and industrial material, as well as engaging in all sorts of secondary and complimentary activities to the principal activity, with the possibility of extending its activity into other branches of commerce, industry and any other legitimate business, subject to the partners’ approval.” The commissioner and the businessman hold equal shares of the company’s stock.

However, R & AB undertook the deal with Taurus without having the pre-requisite importation licence or permit for arms dealing. Sources from the Ministry of Commerce indicate that the entire operation was carried out with special authorisation from the Angolan National Police General Command. The formula, which has become the institutional trademark of corruption within the government of President José Eduardo dos Santos, is simple: commissioner Ambrósio de Lemos Freire dos Santos, in the guise of a public servant, authorised the businessman Ambrósio de Lemos Freire dos Santos, himself, now in the guise of a private individual, to enter into business with the State, in order to achieve illicit gains.

The Law of Public Probity defines as an act of corruption the acceptance of “any economic advantage, whether direct or indirect, on the basis of commission, percentage, gratuity or gift from an interested party, whether directly or indirectly, which can be affected or supported by action or omission on the part of a public servant in the course of his duties” (Art. 25, 1, a).

A source within the National Police confirms that the Brazilian company Taurus was well aware of the commander’s corrupt scheme and even encouraged it in order to close the deal.

Besides, exportation of arms from Brazil always requires government authorisation, and this transaction with Angola was no exception. How can the Brazilian authorities have given a green light to the sale of pistols to Angola, by means of such a corrupt and simplistic expedient? The name of the commander of the Angolan National Police chief’s name appears on the public deed of the articles of constitution of R & AB.

The unrestrained levels of institutional corruption in Angola, on a par with violence, have become the binomial for the exercise of authority by the current regime. Today, in Angola, to be a leader and to be corrupt are synonyms of patriotism. Corruption is the symbol of loyalty to the ruling party, the People’s Movement for the Liberation of Angola (MPLA) and of servitude to José Eduardo dos Santos. He, as the supreme leader, is the principal enabler and beneficiary of corruption.

When corruption is discovered, those implicated do not resign, nor are they sacked. They remain merely at the whims of the President, who holds the impunity cards. This model is applied all the way down to the lowest level of public administration. Among corrupt people, nobody has the moral high ground to point an accusing finger. This is the reality of power and government in Angola.

Trafigura and the Angolan Presidential Mafia. By Rafael Marques de Morais

http://makaangola.org

In two years of operations in Angola, Pumangol has become a leading player in the marketing of Angolan oil, as well as in the distribution of oil products in the country.

This company is a joint-venture between multinational Puma Energy, a subsidiary of Swiss based company Trafigura, and its Angolan counterpart Cochan.

In August 2010, President José Eduardo dos Santos authorized a total of five investment contracts worth US$ 931 million, by multinational Puma Energy and its Angolan partner Cochan.

In a country ranked among the 15 worst in the world to do business, the rapid success of Trafigura and its subsidiary Pumangol is, by its own right, a case study and one for an in-depth investigation into its dealings with the presidential inner circle.

The Geneva-based company benefits of a swap contract with Sonangol. Trafigura receives Angolan crude oil (in unknown quantities) in exchange for delivering all petroleum products for domestic consumption in Angola. Trafigura apparently sells most of its crude to the Chinese oil parastatal Sinopec.

An investigation by the international magazine Energy Compass, last September indicated that the contract between Trafigura and Sonangol started in 2009. In 2011, it was worth US $3.3 billion for 3.25 million metric tons of imported oil derivatives, according to the magazine. The contract is handled by DTS Refining, a subsidiary of DTS Holdings, also called DT Group. The group, founded in 2008, is based Singapore.

General Leopoldino Fragoso do Nascimento, a top adviser to the minister of State and Chief of Intelligence at the Presidency, general Manuel Hélder Vieira Dias “Kopelipa,“ is one of the directors of DT Group, according to the most recent official records in Singapore, examined by Maka Angola.

Among DTS’s directors are also Claude Dauphin, one of the founders of Trafigura, and the Brazilian national Mariano Marcondes Ferraz, the Trafigura pivot in Angola. The latter signed the nearly one billion dollars investment deals with the Angolan authorities. The company has two more board directors, namely Patrick Waters, a British citizen currently living in Singapore, and Juliana Loh Joo Hui, from Singapore.

DTS Holdings is a joint-venture between Trafigura PTE (Singapore) and Cochan Limited (Singapore). General Leopoldino Fragoso do Nascimento is also director of Cochan Limited, sharing the board with the same Juliana Loh Joo Hui and Johan David Berman, also from Singapore. The only shareholder of Cochan (Singapore) is Cochan Ltd (Bahamas).

A third Cochan company, Cochan S.A., was established in Angola on April 6, 2009. In the billion dollar contracts signed by President Dos Santos, Cochan S.A. owns 51 percent of Pumangol’s shares, while the foreign investor, DT Holdings, holds 49 percent. Nonetheless, the DT Holdings is not so foreign, as its director is the presidential adviser General Leopoldino Fragoso do Nascimento.

But to understand this web of interests, it is imperative first to disclose the nominal owners of Cochan S.A. They are Zandre Eudénio de Campos Finda, Augusto Mondlane de Campos Finda, António Carlos de Oliveira, Telma Marina Alves Pedro Gomes e Eden Zerá de Carvalho Albuquerque.

Who are these individuals?

Zandre Eudénio de Campos Finda is the formal CEO of Nazaki Oil and Gas, the company owned by the current Vicente President, Manuel Vicente, and generals Kopelipa and Leopoldino Fragoso do Nascimento, in equal shares. Nazaki is the partner of the U.S. oil company Cobalt International, which is exploring the pre-salt blocs 9 and 21. Cobalt is currently under investigation in the United States, by the Department of Justice and the Securities and Exchange Commission on suspicion of having violated the Foreign Corruption Practices Act, in its joint-venture with Angolan government officials. António Carlos de Oliveira also sits on the board of Nazaki, formally as non-executive director.

Coincidence or not, both Cochan and Nazaki were established and initially headquartered in the same office address in the capital Luanda, at Rua Luís Mota Feo 3-2º,Apt 5, Ingombota. The presidential triumvirate comprising Manuel Vicente, Kopelipa and Leopoldino Fragoso have used the same address to set up almost 40 companies, whose tentacles spread across Angola’s political economy.

Furthermore, Eudénio Finda is also the formal CEO of one of the two mobile phone operators in the country, Movicel. This former state company was privated in 2010. The presidential trio received 40 percent of the shares of Movicel without any public tender, via a decree by President Dos Santos. Portmill Investimentos and Telecomunicações, a company they set up on July 27 2007, and initially headquartered at the same address, became the front for the corrupt officials. As a henchman for general Fragoso and associates, Eudénio Finda also holds a directorship on the executive board of Banco Espírito Santo Angola, where they hold shares.

Usually, in such shell companies, upon their set up, nominal shareholders sign the transfer of the shares and full benefits to the true owners, often government officials. In the case of Cochan S.A. it is just one of the nearly 40 companies that belong to Manuel Vicente, and generals Kopelipa and Leopoldino Fragoso do Nascimento.

What needs to be further investigated are the origins of the hundreds of millions of dollars DT and Cochan are splashing in the business joint-ventures in Angola.

The Law on Administrative Probity defines as an act of corruption, conducive to illegal enrichment, the receiving of economic advantage as commission, percentage, gratification or gift, in a direct or indirect form, among other acts, from a party that might have an interest that might be the subject of or seeks to benefit from an action ‘‘arising from the duties of a public servant’’ (art. 25, 1, a).

General Fragoso do Nascimento took a directorship abroad, at Cochan Singapore, on May 10, 2010, when he was still the head of telecommunications at the Presidency of the Republic. As a close confidant, and business front for President Dos Santos, General Fragoso do Nascimento would not have engaged in such a venture without the authorization of is commander-in-chief. He remains a director abroad while still working for the presidency, certainly under the orders of general Kopelipa, his immediate superior and business associate, and with the President’s blessing.

In two years of operations, just the distribution outfit of the DT Group, Pumangol, has already built almost 60 gas stations throughout the country. According to information provided by Pumangol’s director Paul Edwards, to the local media, the entreprise has a daily revenue of around one million dollars. He also discloses that his company buys petrol from Sonangol, the National Oil Company. Pumangol is the Angolan brand for Puma Energy. In September 2011, Trafigura sold 20 percent of Puma Energy to Sonangol Holdings. Pumangol is an obscure company, having not less than eight entities based in the Marshall islands.

The political clout of this company is also measured by the media coverage it gets from public and private outlets, from which the largest group is also owned by the Kopelipa, Manuel Vicente and Leopoldino Fragoso triumvirate. Each gas station is often inaugurated in the presence of local authorities and media, and the attendant propaganda on how it is set to contribute to the social and economic development of the respective region.

The web of business and political entanglements involving Sonangol, Manuel Vicente, generals Kopelipa and Leopoldino Fragoso do Nascimento, Trafigura, and the myriad of offshore companies raises serious questions. Where does the Sonangol investment in such a joint-venture starts and where do the private interests of the presidential triumvirate, in the same business end ? By following the patterns of previous and similar uses of Sonangol by the trio to advance their corrupt agendas, one can only tremble at the sheer magnitude of plunder of state assets and money laundering schemes this enterprise is engaged in.

Furthermore, there is the fact that President Dos Santos remains unmoved by the fact that general Leopoldino Fragoso do Nascimento can infringe the Angolan legislation by openly taking up private jobs in Singapore, while working for the presidency. It is the hallmark of impunity of the reign of President Dos Santos, and bequeathed unto those close to him.