8 August 2018

Angola: Temporary Reprieve, or Pyrrhic Victory?

analysis

Jean-Claude Bastos de Morais - an indicted swindler connected to the former kleptocratic regime in Angola, accused of the brazen theft of untold millions of dollars of public money - has obtained a temporary victory in his legal battles.

An attempt by lawyers representing the Angolan government to prevent Bastos de Morais from continuing to access the US $5 billion dollar Angolan Sovereign Fund, was not upheld by the courts in London, UK due to their failure to produce the required documentation in time.

The effect is to allow Bastos de Morais, who is already facing charges for embezzlement of hundreds of millions of dollars from the Sovereign Wealth Fund, to regain access to hundreds more.

Blame for this procedural mishap is reputedly down to ineptitude by Angola's new government, possibly related to the ruling party's desire to protect the former President. The word in London is that Luanda is wholly responsible for the delay in supplying the additional documentary evidence required to freeze, and thereby safeguard, the US $5 billion dollar funds improperly diverted to Bastos's Quantum Global group of companies.

The former President, José Eduardo dos Santos, had installed his son, José Filomeno dos Santos, known as 'Zenú', as the Chairman of the Sovereign Wealth Fund and 'Zenú' ensured the $5 billion dollar fund was handed to his lifelong friend and business associate Jean-Claude Bastos de Morais. When evidence emerged of alleged fraud, embezzlement and money-laundering (along with deliberate mismanagement and obscenely-inflated fees and commissions) President Lourenço yanked Zenú from the Fund and began the necessary legal proceedings in Angola, England and Switzerland to recover the misappropriated billions.

Sources at the Angolan Sovereign Wealth Fund (Fundo Soberano de Angola - FSDEA) have supplied sworn testimony that Bastos de Morais, the owner and head of the Quantum Global Group, was the front man for systematic embezzlement from the Fund, thanks to "full protection" from former President Dos Santos. The FSDEA sources say that Jean-Claude Bastos de Morais was paid US $750 million in fees for 'managing' the Fund, US $250 million more than publicly disclosed hitherto.

There is a wealth of evidence like this in the public domain (albeit not all of it is yet before the courts in various jurisdictions) that document Bastos de Morais's links to the kleptocratic family who ruled Angola until last year. Official documents, including presidential decrees signed by the former President, José Eduardo dos Santos, along with testimony from Angolan officials, attest to the attempted embezzlement of hundreds of millions of dollars from the Angolan Sovereign Fund, prevented only thanks to British and European financial safeguards against money laundering.

ENGLISH RULES

It was thanks to a tip-off from the British financial authorities that Angola was first able to request a global freeze order on the disputed monies.

In the interim, Angola laid multiple charges against both Bastos de Morais and Zenú, who under a travel ban but otherwise free pending trial. The two men are indicted on counts of fraud, malfeasance and criminal association in connection with the looting of the Sovereign Wealth Fund.

However, the Angolans failed to produce the required documentary evidence required by the High Court in London, to ensure the continuation of this global freeze order on all the sums connected with the Angolan Sovereign Fund.

In his ruling on July 30, 2018, Justice Popplewell explains that he is unable to extend the global freeze order because the claimants failed to supply "full disclosure" of all the facts, as required.

"Given the size of the freezing order sought and the allegations of dishonesty being made, it was incumbent on the claimants and their legal advisers to make the fullest enquiry into the central elements of their case if they were to proceed without notice," Justice Popplewell said.

He said the Angolan authorities were "culpable" and hid critical information in the original application for the freezing order that amounted to "breaches of the duty of disclosure". "Proper disclosure would have put a very different complexion on the application."

What would the Angolans be hiding? And why? Given that President Lourenço is attempting to recover many billions of dollars that properly belong to the Angolan Treasury as well to extricate Angola from the illegal and corrupt contracts signed or authorized by his predecessor, José Eduardo dos Santos.

According to government insiders, the reason was that, less than a year after securing a peaceful succession that removed Dos Santos from office, the Angolan side was fearful of allowing evidence to be presented in London that would incriminate the former President.

Such a move would make it politically impossible for his successor to avoid triggering the process in Luanda to hold former President Dos Santos to account, a move that could destabilize the new régime.

Observers suggest the Lourenço Administration is not yet sufficiently well-established to risk the political upheaval that might ensue, given that Dos Santos created a nexus of corruption that involved every major political and military official to ensure their complicity and loyalty to him over four decades.

The outcome in London, however, suggests that any attempt to conceal evidence that links directly to Dos Santos will prevent Angola from the looted billions - in effect giving Bastos de Morais carte blanche to regain control of the disputed money, which had already earned him fees far in excess of industry standards for investment fund management, even if he has actually invested the monies.

Maka Angola has obtained evidence that Bastos de Morais was paid at least US$ 750 million dollars in fees for his supposed 'management' of the Sovereign Fund - at least US$ 250 million more than ever revealed hitherto. His 'management' left much of the money languishing in Quantum Global accounts, rather than earning interest elsewhere.

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