4 February 2016

Angola: Dos Santos Kleptocracy Is Out of Control - Everything for the Daughter

analysis

Has Angola's President José Eduardo dos Santos lost his bearings? Recent events suggest he is in the process of arranging a dynastic succession.

His first-born daughter, Isabel dos Santos, has accumulated three major public projects:

first, the Urban Redevelopment Master Plan for the capital city, Luanda; second, the Restructuring of the National Oil Company Sonangol (the largest state-owned company); and, finall, the Commission for the Restructuring of the Oil Sector.

Isabel dos Santos is estimated to have become a billionaire (many would say thanks to her father) and has more than thirty companies to manage. Why does the president need to hand over these major public undertakings to her? Could it be that she has extraordinary managerial and leadership abilities? Or not?

Maka Angola has already outlined Isabel dos Santos's likely intentions with the Master Plan for Luanda. As things stand, Isabel will have ultimate control over an astonishing US $15 billion of funds for the envisaged projects. If past experience is a guide, there will be a lack of clarity over actual ownership: what belongs to the President, his daughter, the State or (as the Constitution would have it) the Angolan people.

It appears that whatever Isabel wants, Isabel gets, courtesy of the President. Is Isabel's primary concern the efficiency of Sonangol? Or is she interested in the money that this company generates? A source familiar with her work on Sonangol told Maka Angola: "the fundamental question regarding the restructuring of Sonangol is the placing of its revenues under the control of the Ministry of Petroleum." "At the Ministry of Petroleum, a body will be created to manage the funds."

Staff at Sonangol suspect that the work of consultants from the Portuguese legal firm Vieira de Almeida and Associates, and the US-based Boston Consulting Group, to restructure Sonangol may be a mere smokescreen to allow yet further diversion of funds. And who would be the main beneficiary? Is it possible that the first daughter or her father the President might derive any personal benefit?

For some observers, the final objective in all this is simple and clear: the revenues coming into Sonangol, whether from the sale of oil or from the concessions of oil blocks, will no longer be managed by the same company. Normally, 90% of this revenue goes into the General State Budget. The revenue from Sonangol is key to the Angolan state.

Without Sonangol's contribution to the state budget, the company is stripped of its political relevance. Critics of the present government say they suspect that Isabel is using this manoeuvre to gain further control over the affairs of the state.

There is no argument but that President Jose Eduardo dos Santos is the dominant figure in the governing MPLA party. With direct control over the primary source of State revenue, i.e. Sonangol, the MPLA has little choice but to continue legitimizing his grip on power, however arbitrary that may be.

Sonangol's other directors Joaquim David (1989-1999) and Manuel Vicente (1999-2000) used to report directly to the President, and only to him. Direct control over Angola's oil revenues seems to be the ultimate goal.

"Whatever shape the oil fund management body will take at the Ministry of Petroleum, the aim appears to be for Isabel to have a 40 % say in the management of the funds," said one source. Hence they are considering creating a new company to manage these funds.

Could this be the final straw for the MPLA's ongoing support for what seems to have evolved into a machine promoting corruption and abuse of power? Sources within the ruling party suggest that there are limits. There are reports that some members of the regime have already advised the president to remove his daughter from the procedures because it is improper and does not fit well with the proposed model.

Cynics might say that Isabel dos Santos is going to have come up with a less disturbing scheme to loot the state.

It is often argued that a restructuring is motivated by a need for greater efficiency. It is, therefore, worth looking back at the last restructuring of Sonangol in 2008.

At the time, the then CEO, Manuel Vicente, reorganized the main subsidiaries of the National Oil Company. He transferred one percent of Sonangol Holdings, which was owned 100% by Sonangol, EP (Public Company) to himself. Sonangol Holdings Limited was set up to manage subsidiaries of the Sonangol Group, and was initially fully owned by the state company.

In 2010, Maka Angola carried out an investigation and revealed the whole scheme. Sonangol reacted by releasing a press statement which stated that "Engineer Manuel Vicente has been named, to benefit the state, as a shareholder, because no company can by law have only one shareholder." In 2012, Manuel Vicente was promoted to the position of Vice-President of the Republic, in effect a token figure.

While the day-to-day operation is in the hands of Isabel dos Santos, her half-brother José Filomeno dos Santos (known as "Zenú") chairs the Angolan Sovereign Wealth Fund, giving him power over the rich revenues from Angola's 100,000 barrels a day production.

International analysts have long described this arrangement as part of a "kleptocracy" in which the primary beneficiaries are the President and his close family. The question now for the MPLA is this: amidst all the looting and pillaging, what will be left for them to share? After 40 years in power, giving unquestioned support to their President, they are now asking themselves whether any crumbs will be left over for their own sons and daughters.

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