Africa: President Lourenço's Anti-Corruption Drive Changes the Rules in Angola

Generals Dino and Kopelipa, Dos Santos and Vicente.
10 October 2018

Several allies and relatives of the former president have been arrested on corruption charges. What effect is this crusade having on the country?

President João Lourenço's anti-corruption crusade continues to surprise and delight - both in Angola and abroad - a year after he took office. Against most expectations when he was elected, the president (known sometimes as J-Lo) has opened several high-level investigations into elites who have enjoyed impunity for decades.

Lourenço's most high-profile figures targets include family members and close associates of his predecessor, Jose Eduardo dos Santos. In the course of his 38-year rule, the former president had overseen widespread corruption and installed his family and allies into influential positions. Many expected the Dos Santos family to remain powerful despite ceding the presidency to Lourenço. It seems they were mistaken.

Jose Filomeno dos Santos, the son of the ex-president and former head of Angola's sovereign wealth fund, was arrested in late-September. He remains in custody together with his former business associate, Jean Claude Bastos de Morais. They face charges of money-laundering, embezzlement, and fraud. Jose Filomeno also faces an additional charge related to a $500 million "get-rich-quick" scheme orchestrated in the final weeks of his father's rule.

Isabel dos Santos, the ex-president's eldest daughter, is also under investigation. She is alleged to have been involved in suspicious transactions that took place during her time as CEO of the state-owned oil firm Sonangol. Isabel, one of Africa's richest women, was sacked from this post in November 2017, weeks after Lourenço's inauguration.

It is not just the Dos Santos family, however, that is being targeted.

Valter Filipe, head of Angola's central bank from 2016 to 2017, was charged in September with criminal association, embezzlement and money laundering for his alleged involvement in the $500 million transfer with Jose Filomeno. The same month, Ismael Diego, head of the former president dos Santos' private foundation, was arrested over the alleged misappropriation of $20 million. Former minister Augusto Tomás was arrested on related charges.

Looking abroad, Angolan authorities also obtained global asset freeze orders in the UK, Switzerland and Mauritius against Quantum Global. The government accuses the Swiss asset manager, which oversees $3 billion of Angola's $5 billion sovereign wealth fund, of mismanagement and overcharging for its services. Quantum Global's chair, the aforementioned Jean Claude Bastos de Morais, is detained in Luanda.

Endemic corruption under Dos Santos

Endemic corruption in Angola runs deep, spreading to all corners of the country's tightly-controlled economy. The problem soared after the end of the war in 2002 as growing oil production and high commodity prices fuelled ambitious reconstruction efforts. The rebuilding of the country has been impressive, but much money has been wasted or stolen. An estimated $28 billion from government budgets between 2002 and 2015 remains unaccounted for.

Like in other kleptocracies, much of Angola's diverted assets have crossed international borders. Elites are known to shift their looted wealth abroad in order to hide their tracks or provide a refuge in case political winds change at home.

Under President Dos Santos, the will to tackle corruption was negligible. Scandals erupted but were quickly shoved under the carpet. This was the case, for example, when BESA, Angola's second-largest bank, collapsed in 2014 under the weight of bad loans worth $5.7 billion or approximately 80 % of the bank's debt portfolio. Angolan authorities were keen to play down the impact of the banks problems even as it emerged that the majority of these bad loans had been handed out as favours to the family and friends of dos Santos.

Changing the rules

President Lourenço's approach so far has differed markedly from that of his predecessor. But the question remains of what effects his anti-corruption crusade will have on the country.

His administration recently passed the Law on the Repatriation of Financial Resources. This legislation establishes a 180-day amnesty period for those who voluntarily repatriate ill-gotten gains based in foreign bank accounts. After this period, authorities can forcibly recover such funds.

The government hopes the return of embezzled assets will help with Angola's current economic woes as it faces fragile growth, high debt and high inflation. Officials estimate that over $30 billion of illicitly transferred capital is held outside the country. Yet it may struggle to recover much of this sum; campaigns against grand corruption undertaken elsewhere have typically delivered limited monetary returns.

Indeed, Lourenço's anti-corruption initiatives may be more likely to help the economy in indirect ways. His efforts to tackle corruption after decades of inaction, for example, have been well-received by officials in Washington. Positive recognition from the International Monetary Fund could prove important as the Angolan authorities negotiate new funding.

It is perhaps politically, though, that Lourenço's new approach is having the most impact. His anti-corruption drive and marginalisation of the dos Santos family have dramatically changed the political climate at home. Even as the economy continues to struggle, Angolans are exhibiting a kind of optimism that has not been seen for years.

Crucially, much support for Lourenço's reforms has come from within the ruling MPLA party. This internal backing has allowed the new president to consolidate his own power whilst pushing out his opponents and allies of his predecessor. He has challenged the interests of elites, which have remained largely untouched for years.

Lourenço's presidency has shaken up Angola after nearly four decades under Dos Santos. However, despite rising hope in much of Angola and abroad, it remains unclear whether his actions represent an end to the country's kleptocracy or if it is merely being reshaped under the helm of the new leader. For now, it is still too early to say where Angola is going under Lourenço, but the rules of the game certainty seem to be changing.

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