1 June 2017

Angola: Sonangol On the Brink

Photo: Sonangol
The Angolan Oil Company Sonangol.
analysis

Putting the President's daughter in charge of Angola's national oil company has been such a 'good move' that the company is now reported to be on the brink of bankruptcy.

The 'genius' businesswoman and her cabal of Portuguese consultants have succeeded only in a level of mismanagement greater than ever before. And so it has come to pass that the state monopoly that controls Angola's main source of income is now reduced to the role of beggar.

Maka Angola is reliably informed that on May 17 Isabel dos Santos went to see the Finance Minister, Archer Mangueira, to request an injection of three billion dollars (!!) to rescue Sonangol from imminent bankruptcy.

A source close to the Portuguese consultancy firm which has been the de facto administrator of Sonangol on behalf of Isabel dos Santos, told Maka Angola that the Minister had to inform the President of the Sonangol Board that the State does not have the financial wherewithal to rescue her.

The future for Sonangol, then, looks bleak.

From the moment her father appointed her to head Sonangol, Isabel dos Santos has encountered repeated difficulty in obtaining credit from the international financial markets given the conflicts of interest between her private business interests and those of the Angolan state.

International financiers are said to believe that her brand is now "toxic".

The Portuguese consultants have been told that the Finance Minister suggested to Isabel dos Santos that she should ask her father, the President, for the money. In return, the presidential daughter is said to have threatened the Minister with "consequences" for having denied her bailout request. Her threats apparently left the minister completely unmoved. The Portuguese consultants believe Isabel's star is waning and say they expect their lucrative stay in the Angolan capital is likely to be at an end, very soon.

The powers available to the President mean that José Eduardo dos Santos could have recourse to the State reserves to bail out his daughter and rescue her reputation as a businesswoman.

However, President Dos Santos has only just returned to Angola from a month-long stay in the Catalan capital, Barcelona, where he was reportedly undergoing medical treatment.

Officially, Angola says there is nothing wrong with their leader's health. But sources close to the first family let slip some time ago that the President was suffering from prostate cancer. A known complication of late-stage prostate cancer is a tendency to suffer strokes or trans-ischaemic attacks and there is widespread speculation in Angola that this was the reason for the emergency flight to Spain at the beginning of the month, accompanied by his wife and personal physician among others.

The ruling party is desperate to maintain the façade of normality ahead of presidential elections in August which promise a peaceful transition of power after 37 years.

In his final months at the helm, will Dos Santos carry the same clout? Archer Mangueira's predecessor as Finance Minister, Armando Manuel, was reportedly fired because he was disinclined to release funds requested by his erstwhile friend and mentor, the President's son José Filomeno dos Santos, who recommended him for the position in the first place. Can Archer Mangueira now expect summary dismissal for turning down Isabel's bailout request?

Or could it turn the other way? Because the power brokers at the MPLA are increasingly worried about Isabel's mismanagement of Sonangol, which has been the sole cash cow of the Angolan economy.

Amongst their concerns is a formal complaint from leading members of the ruling party (*see note below) that Isabel cancelled the 2015 tendering process for onshore oil exploration blocks for which they were engaged in the bidding.

The injured parties are demanding US $80 million in compensation, allegedly for the financial losses caused to those taking part in the bidding process.

Isabel had tried to pass the buck, claiming Sonangol's Chairman of the Executive Committee, Paulino Jerónimo, was responsible as he had signed the order to cancel the tenders. The ruse was not successful.

Maka Angola has learned from a source in the MPLA that the party leadership summoned Isabel dos Santos to party headquarters to explain herself and was met with a point-bank refusal from the presidential daughter. They followed up, just two weeks ago, with a demand that the Sonangol Board give an explanation. But the Board members also declined to do so, saying they did not have Isabel dos Santos' authorization.

The bidding process for the new oil exploration blocks was supposed to offer a preferential opportunity for Angolan companies. Yet, aside from the MPLA elite, Isabel dos Santos herself and other family members were among the long list of beneficiaries.

In a blatant conflict of interest, Isabel's private company Isoil, in partnership with the state company Sonangol Exploration and Production (Sonangol Pesquisa & Produção) where she is CEO, was to have been allocated Blocks KON 9 and KON 17 of the Kwanza Basin.

One of the ruling party slogans for the past election is this: "Angola a crescer mais, a distribuir melhor" (More Growth and Better Distribution for Angola). Perhaps they should clarify that the growth and distribution are intended for the presidential family and the ruling MPLA... and no-one else.

Companies affected by the cancellation of the bidding process include:

(1) Somoil operators (Congo Basin, COM 1) counts Secretary of State for Oil, Aníbal Silva, among the shareholders;

(2) Simples Oil (Kwanza Basin, KON 6), whose nominal head is Alberto Jorge de Jesus Mendes, who is the coordinator of the Angolan Forum of Young Entrepreneurs (Fórum Angolano de Jovens Empreendedores, FAJE), a member of the National Committee of the MPLA Youth (JMPLA) and the son of Isalino Mendes, an MPLA veteran;

(3) Sunshine (Congo Basin, COM 6 and Kwanza Basin, KON 5) is controlled by Muadi Efani, the son of the former Oil Minister, Desidério Costa; (4) Soconinfa (Kwanza Basin, KON 17) has Ginga Isabel Neto Costa e Almeida, Desidério Costa's daughter as one of its shareholders;

(5) Poliedro (Congo Basin, COM 6) is connected to MPLA Political Bureau members Roberto de Almeida and Bornito de Sousa (who is also the MPLA's candidate for Vice-President);

(6) Group Gema (Kwanza Basin, Kon 8 and Kon 19) has another two MPLA Political Bureau members on its board: Pitra Neto and Carlos Feijó.

(7) Servicab and Prodoil (Congo Basin, CON 1) are connected to the President's sister (and Isabel's Aunt) Marta dos Santos "Mana Marta" who entered into partnership with her niece. Mana Marta also has an interest in Prodiam.

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