The woman who once styled herself as Africa's first female billionaire, controlling a complex empire of companies registered around the world, is discovering that all those overseas registrations make her vulnerable to legal action in multiple jurisdictions.
As reported extensively by Maka Angola over many years, evidence shows the Dos Santos family and associates customarily registered companies overseas (often in tax havens known for lax supervision) using them as vehicles for the sole purpose of transferring large sums of money between multiple companies owned or controlled by the Dos Santos cohort.
International experts say such transactions between shell companies are typical of large-scale embezzlement and money-laundering.
One particular financial manoeuvre involving nearly US $500 million transferred through a Dutch-registered subsidiary has now placed Isabel dos Santos in the position of having to defend herself against a lawsuit in the Netherlands in a case that has also been the subject of arbitration proceedings before the International Chamber of Commerce (ICC) in Paris.
This is by far the most dangerous development for the Angolan in a multifaceted litigious war involving the four corporate shareholders in Angola's first, and biggest, mobile phone company, Unitel SA.
As a result of Isabel's having registered Unitel International Holdings BV (UIH) in the Netherlands, an appeal court there has ruled that the Amsterdam district court does have jurisdiction to hear interlinked cases against Isabel's companies UIH, Vidatel and the BVI-registered Tokeyna Management Limited. And for the first time, Isabel is directly named as a co-defendant in the case, along with Antony (Tony) Dolton, the executive director of Unitel. If the case goes against them, the financial penalties would have major repercussions for Angola and for the erstwhile first family.
Nepotism and Corruption
Information in the public domain has already established that Isabel dos Santos's entire business empire was built on privileged access to Angolan state funds and international business partnerships authorized by her father in his capacity as President.
According to Forbes: "every major Angolan investment held by [Isabel] Dos Santos stems either from taking a chunk of a company that wants to do business in the country or from a stroke of the president's pen that cut her into the action."
This was the case with Unitel, created by a presidential decree that overturned a requirement that such awards be put out to tender. Shares of 25% apiece in the enterprise were awarded to the major investors, Angola's state oil company Sonangol (through a subsidiary named Mercury or MSTelcom) and Portugal Telecom (through its international subsidiary Portugal Telecom Ventures (PTV)'s stake in Africatel. The remaining two tranches of 25% went to a pair of Angolan companies: Geni SARL whose majority shareholder is a Presidential associate, General Leopoldino Fragoso do Nascimento 'Dino' and Vidatel, a company wholly owned by Isabel dos Santos (who is also alleged to have an interest in the Geni Group).
The relationship between the four parties was far from smooth. Such was the hostility between the Angolan partners and PTV, that Unitel withheld payment of dividends from 2011, as reported by PT in its 2013 filing to the US Securities and Exchange Commission.
Portugal Telecom had bitten off more than it could chew in trying to expand into the African and South American markets and an attempt to acquire the Brazilian telecommunications conglomerate Oi, SA ended in a merger of the two. One consequence of that merger with PTV's parent company was that PTV became part of the Oi stable. The ownership situation was further complicated by the break-up of PT and the fact that PTV's Africatel interest remained with Oi, which was highly leveraged and had to file for bankruptcy protection.
This sparked all-out war with the Angolan parties who alleged that PTV had contravened Unitel's shareholder agreement which, they argued, gave the right of first refusal of any sale to the existing partners.
On the one hand, Oi's position was somewhat vindicated by an Angolan court, which found in July 2017 that Unitel's Angolan partners did indeed "disrespect" the rights of the fourth partner (at the time PTV, subsequently taken over by Oi) in denying them the right to inspect company documents and take part in the annual general meeting, which the court found was not properly conducted.
But in March, a similar case brought against PTV in Cape Verde of "violation of shareholder's rights" (including the right to first refusal) as a result of Oi's acquisition of Portugal Telecom's stake in Africatel, went against PTV/Oi. And Samba Luxco, who owns 25% of Africatel (which is also registered in the Netherlands) is also counter-claiming against PTV at the ICC.
Portugal Telecom and Oi both assert that there was no 'sale' and therefore no such requirement. They have counter-sued for US $3.4 billion for the dividends which the Angolan parties withheld from both parties over consecutive years; for damages for the denial of rights which saw them excluded from shareholder decisions; and, for the harm done to the company by the withdrawal of US $465 million by Isabel dos Santos, assisted by Antony Dolton of Unitel, channelled via a 'loan' to UIH in the Netherlands.
This manoeuvre in which Isabel simultaneously signed the loan agreement both as the representative of the lender, Unitel, and the debtor, UIH, set a 10-year period for repayment at 1% interest. But Isabel then "sold on" the debt to Tokeyna Management Services, the BVI-registered company that she owns outright.
Adding insult to injury, the funds that Isabel dos Santos transferred out of Unitel, via UIH to Tokeyna, were partially recovered by her hours before a BIV court's freeze order, and were used to take control of direct rivals of Portugal Telecom in Portugal.
Lawyers representing Oi have used every available avenue to seek redress, including a suit in the BVI which resulted in a global freeze order (which Isabel partly evaded by moving US $270 million out of the BVI hours before the order was made) and an arbitration suit heard by the Paris-based International Chamber of Commerce whose ruling may be imminent.
In her recent questioning by the ICC arbitration panel, Isabel relied heavily on ignorance, faulty memory and what she said was her lack of competence in finance and accountancy to 'explain' why she, as President of the Board of Unitel, authorized payment of US $155 million in "commissions" to her own company Tokeyna in 2013 and US $177.9 million in 2014.
Lawyers for PTV say these 'service contracts' with Tokeyna are a fiction with no commercial justification. They say Tokeyna is a company with no employees, apparently incapable of offering any services. Isabel's justification in her responses to the ICC was that Unitel "needed a company outside Angola for operational reasons".
Her method of paying this "fee" for "services' was a convoluted contract selling on the US $465 million debt owed to Unitel by UIH, to Tokeyna and "reimbursing" Tokeyna for that amount. As lawyers for Oi have argued, even if the $155 million fee had been honestly earned by Tokeyna, this manoeuvre illicitly deprived Unitel SA of US $315 million at a stroke.
As reported by Público, Unitel's auditors Price Waterhouse Cooper expressed their concern over the 2013 accounts, not least because these transactions were between related parties. PwC estimated that the transactions with Tokeyna had reduced Unitel's value by an estimated $764 million USD and caused a negative impact on the company's liquidity to the value of $434 million in that financial year.
Unitel tried to divert blame for failure to pay dividends to PTV and Oi by issuing a statement to say that the dividends were available but only in local currency and the reason for their non-delivery to the non-Angolan partner was due to the Angolan currency crisis. The Unitel statement said:
"Due to macroeconomic issues in Angola -- namely the lack of currencies -, it has not yet been possible to pay dividends to foreigners, since they must be exchanged into dollars or euros, in order to be properly exported". "Dividends from PT Ventures have been licensed by BNA, but there are no currencies available in the exchange market".
Ominously for Isabel dos Santos, arguments that may hold sway in Angola or Cape Verde are unlikely to pass the standards required in the European Union When Oi sued in the Netherlands, where UIH is registered, lawyers for Isabel, Dolton and Tokeyna counter-sued before striving to have all the cases struck out on the grounds that the Netherlands did not have jurisdiction to intervene. On this count, they have lost the argument. The linked cases will now all be heard simultaneously by the same judge at the Amsterdam district court.
The danger to Isabel dos Santos is this: as a member of the European Union, the Netherlands is required to comply with the EU's Anti-Money Laundering Directive (AML), and its courts are likely to take a far tougher view of ultimate beneficial ownership by a politically-exposed person.