Banking on fixers
The Panama Papers reveal how Angolan oil money ended up in offshore tax havens
hen Portugal’s largest bank, Banco Espirito Santo (BES), collapsed several years ago, in part due to alleged money laundering and questionable loans, the consequences rippled across the world.
Few countries felt the grim aftershocks as severely as Angola.
The bank’s Angolan branch, Besa, had made bad loans worth a staggering US$6bn to various people — including those believed to be close to Jose Eduardo dos Santos, Angola’s president for 36 years.
In itself, this wasn’t a surprise. The country has developed an unenviable reputation as a place where those close to Dos Santos flourish, while the citizens of the oil-rich country are routinely forgotten.
A company called Geni, owned by Dos Santos’s 43-year-old daughter Isabel dos Santos, owned 18.9% of the Angolan bank, while Manuel Hélder’s Portmill owned another 24%. Isabel dos Santos is reputed to be the richest woman in Africa, with a fortune estimated at $3.3bn.
The Panama Papers, leaked from law firm Mossack Fonseca, have cast new light on Angola’s role in the bank’s collapse. Numerous inscrutable oil deals took place where well-connected people emerged as having benefited. Perhaps the most significant “fixer” of resources deals over the years was a company that was 67%-owned by BES, called Escom (Espirito Santo Commerce). Escom was one of the first Portuguese companies to set up shop in Angola after the civil war ended in 1993. It was run by Portuguese businessman Hélder Bataglia, who held the other 33%.
The Panama Papers leak reveals how Angolan oil money ended up flowing, through a helix of convoluted deals, away from Angola and into offshore tax havens in places like the Bahamas.
WEscom’s structure unearths a train of shell companies. For example, many of Escom’s activities are veiled behind shell entities such as Africa Natural Resources (ANR), run by Bataglia.
Perhaps most notable of ANR’s oil deals was its 5% stake in a deepwater oil consortium known only as Block 18, which produced one-tenth of Angola’s entire oil production by 2010. Escom’s partners in Block 18 are controversial: Falcon Oil, for example, owns 5% and is controlled by Antonio Mosquito, an alleged proxy of Isabel dos Santos. The Chinese also own 40% of the oil field through Sonangol Sinopec International — a joint venture between China’s secondlargest oil producer, Sinopec, and the Angolan state-owned Sonangol.
In documents contained in the Panama Papers, Bataglia explains his role in luring the Chinese to Angola: “[I] found a group in China and convinced them to come to Angola and invest and co-operate on different projects, and [the construction projects in Angola are] part of that program.”
This was apparently done through a China Beiya Escom International, a partnership between China’s CIF and Escom. This company acted as an “intermediary” between the Angolan state-owned companies and international banks.
“It is a case of private actors in China and senior officials in Angola using corporate and public sector vehicles to advance their interests,” says JR Mailey, author of the African Center for Strategic Studies’ report.
The Panama Papers reveal the full extent of the questionable loans granted in Angola that ultimately sank the Portuguese bank.
Already in 2011, the Espirito Santo family had set about selling its 67% of Escom to Sonangol. Yet Escom still owed plenty of money to the Portuguese bank — €267m, according to BES’s 2014 annual report.
But the money never arrived from Angola. And the odds of getting repaid were slim, considering, as one journalist put it, this debt was often created by “advancing massive loans to themselves”.
In the case of Angola, the $6.5bn in bad loans had been advanced to unknown shell companies — money that sources say has yet to be repaid. Though Dos Santos’s Angolan regime had theoretically put up a $5.7bn “guarantee” for these loans, it soon recanted.
Five companies that got $1.6bn in loans — through an entity called Legacy — are rumoured to be linked to Besa’s former chairman, Álvaro Sobrinho. Yet Sobrinho has managed to defy both an audit and a parliamentary investigation, refusing to disclose the owners of those companies.
Mossack Fonseca’s data reveals e-mails sent by Sobrinho’s lawyer informing them of intercompany dealings which appeared suspicious. Documents suggest that the bank’s money would then flow from these five entities to various others.
Questions sent to Sobrinho’s private e-mail were not acknowledged.
This article was produced by the African Network of Centers for Investigative Reporting and supported by Connecting Continents.