23 October 2018

Angola's Path to Justice - Prosecuting the Guilty and Recovering the Stolen Billions

Photo: Maka Angola
Generals Dino and Kopelipa, Dos Santos and Vicente.
analysis

The dramatic recent arrests of high-ranking figures linked to former Angolan President José Eduardo dos Santos has gripped the public. Yet little or nothing has been revealed about the struggle to recover the billions of dollars stolen from the public purse during Dos Santos's corrupt regime.

Extensive whistleblower reports published by Maka Angola have led to numerous investigations and prosecutions across the globe to bring to justice all those who illicitly enriched themselves during the Dos Santos years. But efforts to repatriate the missing billions have been complicated by the tortuous schemes devised by the principals to obscure the money trail.

One such example: Back in 2009, an Angolan company named Portmill Investimentos e Telecomunicações S.A. allegedly committed fraud in its acquisition of a majority shareholding in the Banco de Espírito Santo Angola (BESA). BESA was the Angolan subisdiary of one of Portugal's oldest private banks, the Banco de Espírito Santos (BES).

By 2009 BES was already struggling under the weight of toxic debt, much of it related to bad loans made by its Angolan subsidiary. It sold 24% of the 75.94% stock it owned in BESA to Portmill for the sum of US $375 million dollars. On the face of it, this improved BES's financial position, albeit only temporarily. BES finally went under in 2014 and was partially bailed out by Portugal's Central Bank at great personal cost to the Portuguese taxpayer, not to mention the losses suffered by BES investors.

BESA too was in trouble in 2014 and within a year was refinanced, restructured and renamed as the Banco Económico, S.A. (BE). Portmill lost its majority share of BESA during the restructuring although it is believed that its interest was included in the 30.98% of the BE awarded to a hitherto-unknown company called Lektron Capital S.A., which apparently was just a name-change for Portmill.

Our readers will not be surprised to learn that the cast of characters at the heart of the BESA-Portmill scandal feature in many other Angolan financial scandals. At their head are three of the most powerful members of the previous Dos Santos administration, known as the "Presidential Triumvirate": Manuel Vicente (at the time CEO of Sonangol and the country's vice-president from 2012-2017), General Manuel Hélder Vieira Dias Júnior "Kopelipa" (Head of the Intelligence Bureau at the Presidency 1995-2017; and Minister of State 2010-2017) and General Leopoldino Fragoso do Nascimento "Dino" (Head of Telecommunications in the Presidency from 1995-2010; and advisor to the Minister of State and Head of the Inteligence Bureau in the Presidency from 2010-2018). General Dino is best known as being at the forefront of Dos Santos' private businesses.

Documentary records handed to Maka Angola appear to prove the fraud and its cover-up. They show conclusively that Portmill did not pay US $375 million for the 24% parcel of BESA stock from earned income, as Portmill claimed in evidence to Angolan prosecutors. Nor was the stock bought with a loan to Portmill from the Angolan Investment bank (Banco Angolano de Investimentos, BAI), approved for that specific purpose, as Portmill claimed in evidence given to Portuguese prosecutors.

Instead, Portmill apparently obtained the necessary total of US $375 million to pay for the BESA stock from BESA itself. It was able to do this by obtaining the sum indirectly via three other companies, also owned by the 'Triumvirate'.

BESA - A scandal from start to finish

BESA was a scandal from start to finish, reportedly approving millions in unsecured loans to Angolan VIPs without keeping proper records. At least one of the top ten unsecured loans issued by BESA was made to Marta dos Santos, who happens to be a sister of former President dos Santos.

Just last month the bank's former chairman, Álvaro Sobrinho, made a public statement to Angolan Television to defend his record and to claim that BESA was allowed to go under as a "political decision, given the personalities involved" - a reference to the role played by the triumvirate in the bank.

Within hours the triumvirate put their names to a statement blaming Sobrinho for the bank's failure and accusing him of diverting monies for his own benefit.

And yet the story of Portmill and BESA is a classic example of how the triumvirate themselves were able to get their hands on public money for private benefit with no accountability to date. With the assistance and blessing of then President Dos Santos, Manuel Vicente, General Kopelipa and General Dino created a complex network of companies in the space of a few short years.

Together they formed a wholly-owned conglomerate called Grupo Aquattro International, which set up at least 40 separate subsidiary companies between 2007 and 2008, amongst them the Medianova Group (owner of TV Zimbo, O País, Rádio Mais), and Zahara (owner of the Kero supermarket chain).

The Grupo Aquattro stable of subsidiaries also included Portmill and three "shell" companies that obtained large loans from BESA: Althis Siderurgia, Delta Inertes e Betão (both set up on December 27, 2007) and Nazaki Hidrocarbonetos (incorporated on July 23, 2008). All were based at the same address in Luanda (Rua Luís Mota Fêo, Porta 3, 2º Andar, Apto. 5).

In November 2009, Althis, Delta and Nazaki applied for loans from BESA and Portmill stood surety for them, as evidenced by the loan guarantee signed by a Portmill official named Zandre Eudénio de Campos Finda on November 20, 2009.

One week later, on November 27, 2009, Althis received a BESA loan of US $135 million, while Nazaki and Delta received BESA loans of US $120 million apiece. Within hours all three companies immediately withdrew the entirety of their BESA monies and deposited them to a fourth party.

According to the documentation, each of the three shell companies received their BESA loan capital at an annual interest rate of 2%, with repayment due by November 27, 2017. Conveniently, the evaluator of this credit operation was António Carlos Oliveira, General's Dino cousin.

And to whom were those three loans transferred to? The paper trail shows that they were deposited that very day, as if by magic, to Portmill Investimentos e Telecomunicações S.A's account with BESA (Account No. 00006317320). Portmill ,which had a zero balance and no prior transactions, received a US $375 million deposit. A source explains to Maka Angola that the withdrawals and the deposits were simply a way of avoiding leaving no banking trail would show that the loans were going straight to Portmill. There was no physical withdrawal of the funds nor of their deposit.

In early December 2009 Portmill went on to obtain a loan for US $375 million from the Angolan Investment Bank (Banco Angolano de Investimentos, BAI) also stated to be for the purpose of purchasing the BESA stock.

The documentation provided by sources close to these transactions indicate that altogether, by these direct and indirect means, Portmill obtained a total of US $750 million from BESA and BAI. Yet it only paid out the agreed US $375 million for the purchase of 24% of BESA stock. What happened to the other half of the money? The only people who know for sure are Manuel Vicente, General Kopelipa and General Dino.

The triumvirate thus stands accused of using three of Grupo Aquattro's subsidiary companies as a front to obtain a loan from BESA for the exact sum of US $375 million required by a fourth subsidiary, Portmill. This constitutes fraud, but although criminal investigations were opened in both Portugal and Angola, none of the triumvirate has yet been brought to trial.

Fraud, misappropriation of public funds and other crimes

The documents supplied to Maka Angola not only indicate that the Grupo Aquattro owners used three of their shell companies to obtain US $375 million from BESA under false pretences, before diverting the money back to Portmill to fund the purchase of BESA stock. They also appear to show that the Grupo Aquattro owners committed a second act of fraud when Portmill subsequently applied directly to the Angolan Investment Bank (BAI) for a loan of US $375 million for the purpose of purchasing the BESA shares and that these public funds were misappropriated as there is no record as to where they ended up.

Maka Angola took the precaution of consulting two international financial consultants who agreed to evaluate the documentary evidence and offer an opinion, provided they could be guaranteed anonymity. Both concurred in their opinions that the Portmill purchase of BESA stock was a sham.

Expert A said: "This was a manoeuvre aimed at hiding the trail of evidence that would have showed BESA was granting a loan that would enable Portmill to buy BESA stock to become a majority shareholder in that same bank."

In Expert A's opinon, BESA supplied the US$375 million via the third parties to Grupo Aquattro which then diverted the funds to Portmill so it could buy up 24% of BESA stock from BES, and thus take control of the Angolan bank. The manoeuvre gave the appearance of adding funds to the balance sheet of Portugese parent bank BES, but the same amount was showing up as a loan on the BESA accounts.

Was the fraud part of a conspiracy to defraud both Portuguese and Angolan investors? When trying to determine if there is criminal responsility, legal experts often cite the"Cui bono" rule: who would benefit from this scheme?

Why would the 'presidential triumvirate', notorious for their boundless greed, agree to a scheme to benefit the BES in Portugal, in exchange for stock in its Angolan subsidiary which was already in free fall? Is it feasible that the 'Triumvirate' would arrange the money-go-round to make the BES accounts look better without securing some quid-pro-quo?

Such a scheme didn't only benefit the triumvirate by giving them an initial 24% controlling interest in the BESA bank without having to put up any of their own money.

What is not in dispute is that on December 10th, 2009, Portmill deposited the full US $375 million for the BESA share purchase in BES Portugal's account with the Bank of America in New York. According to information received by Maka Angola the entire amount was later transferred to an account held by BES with the Banque Privée in Switzerland.

Expert B, a US-based international investor, said of this: "This could be a classic fraud, taking depositors' money and putting it in the pocket of the majority shareholder, Portugal's Banco Espírito Santo."

Expert B cited similar examples which led to the collapse of the Anglo-Irish Bank, the Allied Irish Bank (both in Ireland) and of Lehman Brothers (in the USA). In each case, bank principals who were fully aware that their respective financial institutions were in desperate straits gave out loans to third parties to buy back stock, thus appearing to enhance the value of their institutions by an injection of capital. A side-benefit was that the principals were also able to turn a profit.

One clue lies with General Dino. He was also the majority shareholder (with 62%) of Geni Novas Tecnologias S.A., alongside fellow Dos Santos associates António Pereira Van-Dúnem (20%) and Inocêncio Francisco Miguel (14%). Geni in turn owned 18.99% of the stock of BESA.

When BESA went bust and was reconstituted as the Banco Económico, Geni Novas Tecnologias S.A increased its capital share of the bank to 19.9%. Meanwhile, Portmill was excluded with much of its share of the stock passing to a company led by the same representative of Portmill, Zandre Eudénio Finda, Lektron Capital, S.A.

The scandal of how BESA became the Banco Económico and the allegations of illegality by General Dino with the complicity of the then BNA Governor, José de Lima Massano, were reported by Maka Angola here.

It should also be noted that at the time of the alleged fraud, General Dino's personal private company Dinagest was one of the bank's largest clients, with deposits of close to US $300 million. And that when BESA went under, depositors such as General Dino and the President's sister had their investments underwritten by the Angolan government.

An extraordinary cover-up

Amid all the allegations surrounding the collapse of BES and BESA, the Portuguese authorities began an investigation into Portmill's actions. It stalled in the face of misleading information from the accused and an alleged attempt by one of the Angolan principals, Manuel Vicente, to corruptly influence Portuguese prosecutors into dropping this and other cases against him that have not come to trial because of the refusal by Angola to extradite Vicente.

Public Prosecutor Paulo Gonçalves from Portugal's Central Department of Criminal Investigation and Prosecution (Departmento Central de Investigação e Açao Penal, DCIAP) initially set aside the Portmill case (N.º142/12.OTELSB), (which included evidence supplied by the author) on November 11, 2013.

Gonçalves's justification for closing the file was that that "the company in question had submitted voluminous documentation related to its transactions to submit proof of earnings compatible with the operations it had conducted".

Did Portmill and/or its lawyers overwhelm the Portuguese authorities with reams of information about business activities and earnings to divert attention from the loans it had obtained? Credible information about the BESA and BAI loans did make its way to the Portuguese Prosecutors but they seem to have failed to connect the dots.

The DCIAP, which falls within the hierarchy of Portugal's Prosecution Service (the Ministério Público), documented both loans in Case n.º 333/14.9TELSB on February 16, 2015. It did so in the investigation into the alleged corruption of Portuguese prosecutor Orlando Figueira by Manuel Vicente (with the complicity of his Portuguese lawyer Paulo Amaral Blanco) in an attempt to get the cases against him, including Portmill, dropped.

And yet on Februrary 27th, 2015 Prosecutor Ricardo Matos, ordered that Case number 142/12.OTELSB, the investigation into Portmill's acquisition of the BESA shares, be archived. Based on the information that the triumvirate had submitted, Matos said: "Portmill showed it had obtained a US $375 million loan from the Banco Angolano de Investimentos, S.A. to purchase the shares on December 7, 2009." Matos ruled that there was therefore no relevant information to justify reopening the investigation.

In Angola too, evidence of the fraud was swept under the rug by the office of the Attorney-General of the Republic (Procuradoria-Geral da República, PGR, which serves as the their centralised public prosecution service) which took charge of the preliminary inquiry (06-A/2012-INQ) launched as a result of Maka Angola's allegations of crimes by the presidential triumvirate, including the accusation that Portmill committed fraud in the BESA stock acquisition.

Assistant Angolan Attorney-General Domingos Sebastião Baxe and then Deputy Attorney-General Henrique dos Santos archived the inquiry on the grounds that Portmill acquired the BESA stock with its own legitimately-acquired funds. "The funds disbursed by the company Portmill Investimentos e Telecomunicações, S.A. were the result of money raised from its business activities - at the time it was a shareholder in Movicel Telecomunicações, S.A - and of a bank credit aimed at expanding the business, as previously authorized by the BNA on December 4, 2009 (... )".

This ruling ignored the allegations regarding the BESA loan to three of Portmill's fellow Grupo Aquattro subsidiaries as well as the missing US $375 millions from the BAI loan to Portmill. The state-owned oil giant Sonangol is the majority shareholder in both the BAI and BESA's successor, the BE. On both counts this gives the Angolan State the right to pursue those missing funds in full.

A mountain of obstacles to recover the stolen billions

Many of the charges against the 'Triumvirate' - as with so many other members of the previous Angolan administration - have yet to be proven in a court of law but Vicente, Kopelipa and Dino were an integral part at the very highest level of what global experts described as the "official kleptocracy" that ruled Angola until September 2017.

A mountain of evidence already made public shows that President Dos Santos repeatedly flouted constitutional and legal niceties to involve party, government and military officials (high and low) in government-backed 'business opportunities', funded from the public purse (i.e. from oil revenues to Sonangol).

Dos Santos bought their loyalty by making them complicit in the crimes that enriched them (and his own family) beyond their wildest dreams. How else did so many become US dollar millionaires (and even billionaires) while officially on lowly salaries as they served in the Angolan armed forces, government and ruling party? For the sake of brevity, let's call the complicit presidential family members, associates and administration officials, the 'Dos Santos cartel'.

There are numerous examples already in the public domain of the schemes and manoeuvres repeatedly used by the Dos Santos cartel to misappropriate public funds for private gain as well as their subsequent attempts to conceal the provenance of the funds that enriched them so improbably.

Angola's current administration under President João Lourenço pledged a war against corruption and there have been encouraging signs, notably in the most egregious cases that came to public attention, such as the arrest of one of President dos Santos's sons (José Filomeno dos Santos, known as 'Zenú).

However unravelling the dealings of the complex national and international network of corporate structures and financial transactions perfected by the Dos Santos cartel over four decades is no easy matter. Bringing so many rich and powerful criminals to justice is complicated by the fact that so many retain positions of political or military power.

The then and current governor of Angola's Central Bank (BNA) José de Lima Massano was at the helm of the BNA when the transitioning BESA, under the chairmanship of General Dino, held an Extraodinary General Meeting (EGM) in 2014 to raise capital. BESA had been placed under the BNA's administration, and Massano had appointed his deputy António Ramos da Cruz to lead the reestructuring of the private bank, as it interim CEO.

At that AGM, Sonangol had to fund the entire capital injection of US $650 millon required to restructure BESA into the Banco Económico. In effect Sonangol was not only paying for its own 39.4% stake in the new bank but also the stock awarded to two companies linked to General Dino: Lektron (which got 30.98%) and Geni (which got 19.9%) making them the bank's majority shareholders.

The BNA, which was meant to act as the banking industry's regulator, had already failed to notice (or turned a blind eye) as BESA and BAI funds were misappropriated to fund the people "saving it" back in 2009. And in 2014, the "new capital" demanded by the BNA to relaunch the bank as the Banco Economico, was in fact bleeding yet more capital from Sonangol to cover the losses.

Although President Lourenço sacked then BNA board director António Ramos da Cruz, the latter was allowed to go on to become a board director of the Banco Económico. And the man appointed by Lourenço to a second stint as BNA Governor, José de Lima Massano, is no less guilty of complicity.

At the very least, there is sufficient evidence now available to Angola's PGR to use its authority under the Law of Cautionary Measures (Law 25/15 enacted on September 18, 2015). Under such law, it should freeze the assets of both the Banco Económico and any of its shareholders (such as Lektron and Geni) linked to the accusations of fraud, at least pending the completion of an investigation, and any subsequent trial.

Article 45 of that same law also gives the PGR the authority to place suspects in preventative custody and to place a hold on the suspects' assets. The question is whether the new Angolan administration has sufficiently secured its own position to risk a move against the triumvirate at this stage.

It would have been helpful if the Portuguese had reopened the BESA investigation. There is sufficient evidence to raise questions as to why the Portuguese authorities failed to take further action in light of the serious economic consequences of the collapse of the Banco Espírito Santo and the cost to the Bank of Portugal and the state of its bailout.

Sources at the highest levels of the governments of both Portugal and Angola have suggested that pressure was brought to bear on the Portuguese Ministério Público to stall in order to avoid embarrassing damage to diplomatic and trade relations between the former colonial master and subject states. Not the least of their preoccupations is that in recent years, the Dos Santos cartel has acquired interests across a large swathe of the Portuguese economy and has the potential to cause havoc.

It remains to be seen whether the current governments in Portugal and Angola are sufficiently stable to move forward. Undoubtedly it will take courageous political leadership in both countries to ensure the judicial branches are not only allowed, but encouraged, to carry out their investigations into crimes of corruption regardless of the status of the individuals accused of such crimes. Until then, the enduring and pernicious influence of the Dos Santos cartel remains the main obstacle to the recovery of Angola's stolen billions.

*D. Quaresma dos Santos translated and contributed to the English version of this investigation.

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