Angola: Stealing From Angola's Sovereign Fund Was This Easy

Angola's national bank seems to have been looking the other way when the President's son and his friend used a bank and several 'shell' companies to steal US $100 million, one of many schemes they put in place to loot Angola's Sovereign Fund.

As everyone now knows, then-President José Eduardo dos Santos put his son, José Filomeno dos Santos (Zenú) in charge of Angola's Sovereign Fund. In turn, Zenú put his close friend and business associate, Jean-Claude Bastos de Morais, in charge of managing the Sovereign Fund monies.

The two already face charges of theft and money-laundering in connection with an attempted $250 million dollar embezzlement from the Sovereign Fund. One by one, more instances of their criminal conspiracy to defraud the Angolan public purse continue to emerge.

Three years ago, Maka Angola learned that the equivalent of USD $100 million had been transferred out of Angola's Sovereign Fund on January 22nd, 2015 and credited to the domestic account of a 'shell' company named Kijinga, S.A., at the Banco Kwanza Invest (BKI). Kijinga had no previous business activity and its office address was the same as the bank.

These facts were reported by Maka Angola within three months of the transfer (April 15, 2015) and at the time the BKI used its friends in the Angolan state media to trumpet its case as a legal and honourable institution. Now Maka Angola has received additional evidence that shows exactly how they arranged that US $100 million transfer to Jean-Claude Bastos de Morais. So much for legal and honourable.

Astonishingly, Bastos de Morais remains free to walk the streets and spend the millions he pocketed for "managing" the US $5 billion-dollar Sovereign Fund when ever more clearly, his management of the Fund served mainly to enrich himself.

The facts

Documents have reached Maka Angola showing that after the Sovereign Fund transfer was credited into the Kijinga account at BKI, on February 3, 2015 the company transferred $88 million into a second 'shell' company named Ulussu S.A. and the balance of $12 million into yet another 'shell' company, named Kabasa S.A.

These three companies, Kijinga, Ulussu e Kabasa, were set up and registered at the same time on December 4, 2012 and with the same address, Avenida Comandante Gika, nº 150, which is also the address of the BKI.

The registration of Kijinga and Ulussu was published in the official gazette, the Diário da República, on December 28, 2012 (III Série, nº 248) while the registration of Kabasa was held back for the next edition, nº 249, published on December 31.

The Public Notary for the Registration of Companies (Guichet Único) (First Office) at the time, Maria Isabel Fernandes Tormenta dos Santos, made sure that any business linked to the most powerful people in Angola (the Presidential family and their allies) was despatched with alacrity - even those now unveiled as frauds perpetuated by Jean-Claude Bastos de Morais and his accomplice Zenú. For her pains, she was amply rewarded first as Secretary of State for Justice. Today Maria Isabel dos Santos is the Deputy Inspector General for the State Administration.

Needless to say, the financial manoeuvres did not end there. Before close of business on the same day, the entire US $88 million transferred into the account of Ulussu, S.A. was transferred again, this time into a fourth company named Afrique Imo Corporation. Jean-Claude Bastos de Morais owns 90% of the stock of Afrique Imo Corporation.

Each of these internal transfers between BKI accounts was personally and exclusively authorized and signed off by Jean-Claude Bastos de Morais, according to information supplied by Swiss investigators. Bastos de Morais has dual Swiss and Angolan nationality and not only has a stable of businesses based in Switzerland, but also, apparently, the servers for the BKI operation and all the information relating to its business transactions - a treasure trove of information about his dodgy dealings.

Transparency vs propaganda

Jean-Claude Bastos de Morais used the state-run newspaper, Jornal de Angola (JA), in its edition of April 17th, 2015 to attack Maka Angola's publisher, Rafael Marques de Morais. At the time the JA (known locally as Angola's 'Pravda') was edited and published by a lifelong defender of José Eduardo dos Santos, José Ribeiro. That day's paper had the banner headline 'The Transparent Kwanza Bank' ('Banco Kwanza Transparente').

In an attempt to use the state media to whitewash his image, Jean-Claude Bastos de Morais issued another statement the following day, saying "the initial shareholders of Kijinga had transferred their shares to the BKI in 2012 and in turn the BKI had sold this stock to the Sovereign Fund".

State-runned newspaper Jornal de Angola published this article arguing that BKI's activity was totally transparent.He also stated: "Kijinga is not a service company but is focussed on supporting Angolan entrepreneurs with micro-business start-ups". Don't bother trying to figure out what he meant by that - the phrase is deliberately meaningless

This fraudster, who faces trial on even more serious charges, did not specify at the time that Kijinga had been set up with BKI officials as straw men and that he had also set up a further two phantom companies based at his own bank. Kijinga's sole purpose appears to have been to obscure the origin of the Sovereign Fund's US $100 million dollars and act as a vehicle to transfer the funds to the other Bastos de Morais companies. All the evidence suggests that the money went nowhere except into Bastos de Morais's own pocket.

Let's examine his assertion that Kijinga was sold to the Sovereign Fund. Firstly, why would the Sovereign Fund be so keen to acquire a business that existed only on paper? According to the information supplied by Kijinga S.A. itself to the Angolan tax authorities (Administração Geral Tributária), the company occupied the same address as the BKI, at Nº 150 da Avenida Comandante Gika. Did this not arouse any suspicion? Secondly, the Sovereign Fund did not have an investment policy until the end of 2013 and had made no investments at all that year, according to the annual statement by its managers.

It was all too easy for Bastos de Morais to say whatever he wanted, regardless of its relationship to the truth. Take his statement to JA about BKI's management of another fund. He said: "Currently, Banco Kwanza Invest has been named as the sole administrator of the USD $250 million Angolan Venture Capital Fund (Fundo Activo de Capital de Risco Angolano, FACRA), one of the largest venture capital funds in Sub-Saharan Africa to date."

"FACRA is a Venture Capital Fund which supports Angolan entrepreneurs with micro, small and medium-sized businesses (the so-called MPMEs) to construct and expand their businesses in Angola, focussing on those enterprises capable of strong growth and business opportunities that can substitute imports. It also seeks to diversify the Angolan economy, with support to businesses outside the oil and gas sectors, and to create employment opportunities for qualified Angolans."

There is no evidence that FACRA did any of this. To this day, FACRA has not submitted a single annual report or balance sheet. Many suspect that the former President set it up simply as another vehicle to benefit associates who could invent business schemes to benefit from State funds.

None of the small and medium business owners in Angola have dared utter so much as a peep of protest over the use of their sector and images on PR brochures published by those who were actually taking the money for their own use.

When he felt cornered by the denunciations of his activities by Maka Angola, Jean-Claude Bastos de Morais hired an English law firm, Schillings, which had built a reputation for itself as a pricey defender of the reputations of those rich enough to afford their services. Schillings was notorious for their use of the so-called 'super-injunction' to prevent reporting on the bad behaviour of their clients. Schillings duly sent out letters threatening court action against Rafael Marques de Morais and numerous publications, including AllAfrica. Some of those publications felt obliged to remove any mention of Bastos de Morais from their websites.

For his part, Marques de Morais responded by telling Schillings to sue and be damned as he would welcome the opportunity to take the matter to trial. Maka Angola had acquired a wealth of documentary evidence that he could exhibit at trial to prove his reports were based on fact and that publication of them was in the public interest. The evidence was made available to investigators in the UK, Switzerland and Angola and once made public, they would ruin Bastos de Morais's reputation beyond repair once and for all.

And what is Schillings' reaction now that charges have been laid and Bastos de Morais is to stand trial? Silence. There is no possibility of their bringing any suit for defamation against Angola's President, government and judicial systems, all of whom now echo the accusations made by Maka Angola against their client.

The complicit silence of Angola's Central Bank

One voice strangely absent from Angola's official statements on Bastos de Morais and the fight against corruption was any input from Angola's Central Bank (Banco Nacional de Angola, the BNA) about Banco Kwanza Invest (BKI).

An international banking specialist consulted by Maka Angola said it was not possible that the BKI could have "sold" Kijinga, S.A. to the Sovereign Fund without BNA approval. Speaking on condition of anonymity, the specialist said "Any stock transaction, even if it is between existing shareholders, would have to be approved by the regulatory authority, in this case the BNA."

"Even worse, this operation is typical of a money-laundering scheme - a criminal operation conducted by a bank which is supposed to be supervised in terms of compliance by the BNA which is the regulatory authority for all banking activity in Angola. At the end of the day, the BNA also bears some responsibility for this criminal operation because of its failure to enforce compliance and transparency - in effect allowing the criminals to get away with it."

"The BNA is quick to act when it comes to some private banks and then so lax when it comes to banks that are supposed to be managing funds from the public purse. Surely, this is where BNA supervision should be at its most rigorous."

Money-laundering and abuse of trust

The facts as laid out give rise to two legal questions. The first relates to the behaviour of Jean-Claude Bastos de Morais, the second to the supervisory function of the Banco Nacional de Angola.

The jurist Rui Verde believes there is sufficient evidence from the supporting documents for the Attorney-General's office to open another criminal investigation: "in the case of Jean-Claude Bastos de Morais, the actions so described give rise to potential charges both of abuse of trust and money-laundering."

As for the BNA, and given that accusations of malfeasance by the BKI had already been made public, "the lack of action, at the very least, constitutes gross negligence with regard to its supervisory duty."

It's worth noting that this is not the first banking scandal to tarnish the reputation of the BNA. Some say it calls into question the administration of the current governor, José de Lima Massano. Is it showing unacceptable weakness in the world of international finance?

Unless the BNA has somehow been relieved of its regulatory duties, shouldn't it be investigating the BKI? Why is Jean-Claude Bastos de Morais, who has been named as a defendant in a criminal case and faces several charges, being allowed to continue to run the bank with impunity? Why is he free at all?

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