The fall from power of a corrupt political family in one of Africa’s poorest states is causing waves in one of Africa’s richest. Since the fall of the Dos Santos family from power in Angola, Mauritius is increasingly feeling the tremors of the political upheaval in Luanda. The recent Luanda Leaks is just the latest such episode. Weekly takes a look at how Mauritius is now paying the price for becoming the playground for Angola’s corrupt elite.
In September 2017, João Lourenço became the new president of Angola, replacing his old mentor José Eduardo dos Santos who had ruled the country for 38 years since 1979. Under Dos Santos’ long tenure, one of Africa’s largest producers of diamonds and its second-largest oil producer was already ranked one of the poorest and most corrupt countries on earth where state revenue has halved since 2014, a third of the population lives on just $1.90 (Rs69.64) a day and the average Angolan lives to only 60. Shortly after coming to power, Lourenço announced an anti-graft campaign and the spotlight shifted to the Dos Santos family that over the years has amassed a fortune since a series of constitutional amendments introduced by Eduardo dos Santos starting in 1992 granted him blanket immunity allowing him to engineer the rise of his own children. Since then, the waves caused by the fall of the Dos Santos family from the pinnacle of the Angolan economy has reached Mauritius as well, exposing it as a set piece when it comes to corruption in Angola.
The rise of Isabel
The latest leaks, a trove of 715,000 documents dubbed the ‘Luanda Leaks’ released by the International Consortium of Investigative Journalists (ICIJ), outline the rise to power of Eduardo dos Santos’ daughter Isabel Dos Santos, widely regarded as Africa’s richest woman with a personal fortune estimated at $2.2 billion. And she owed that wealth primarily to the political power exercised by her father. She and her mother benefitted from a shell company in Gibraltar that owned 24.5 per cent of ASCORP, which, since 1999, received the revenues from the Angolan diamond trade. Eduardo dos Santos set up Unitel in 2000, Angola’s first private mobile phone service, a quarter of which is owned by Vidatel, a company in the British Virgin Islands that just happens to be owned by Isabel. But the crown jewel in the fortune of Isabel and her husband, the Congolese-born, Sindika Dokolo, was Sonangol. Set up during the Angolan civil war, the state-owned company dealt with foreign oil firms and the revenue from Angola’s massive oil deposits which even today accounts for 90 per cent of Angola’s exports. In June 2016, Eduardo dos Santos appointed his daughter as head of Sonangol. In effect, giving Isabel control over the most powerful economic player in the country with interests across the spectrum of the Angolan economy. What Luanda Leaks has exposed is the manner in which Isabel’s brief tenure at Sonangol was used to enter into a number of shady transactions to buttress her and her husband’s fortunes. Under her watch, Sonangol agreed to sell some of its shares in the Portuguese oil company, Galp, to a shell company owned by her husband. The shares were worth €750 million, but Dikolo paid just €11.2 million, promising to pay later. Isabel then approved a plan for her husband’s company to pay back the outstanding amount not in euros, but in Angolan currency. Under her brief tenure at Sonangol, the oil giant paid $115 million in consultancy fees through a Dubai-based company controlled by her associates, $200 million in a strange transaction to prop up an ailing Swiss jewellery brand partly owned by her husband and $500 million claimed by two Dos Santos-linked companies for a luxury real estate project in Angola’s capital Luanda, just to give a few examples. Recently, the Angolan government estimated that Isabel’s deals had cost the country more than $1 billion.
The murky trail behind Isabel and her husband’s fortune was no big secret amongst financiers. Big banks such Citigroup, Barclays, Santander and Deutsche Bank had refused to handle the couple’s business. So instead, the couple relied upon an extensive network of 400 companies in 41 countries. Ninety four of these companies were offshore companies based in Dubai, Mauritius and the British Virgin Islands, as well as accounting firms such as Pricewaterhouse Coopers and the Boston Consulting Group and banks that they themselves partly owned to move their money around.
Within Mauritius, for example, Isabel and her husband created at least five companies including Saguaro Management wholly owned by the couple, held in trust by Sun Wukong Services Ltd and managed by ABC Global Management Services. Saguaro holds shares in the Angolan firm Alcea which received $150 from the government to set up a dairy processing plant. Another is Silverfields Ltd, based in Mauritius but holding all the shares in the Malta-based Espacos Media Group.
Just a month after coming to power, in November 2017, the new Angolan government fired Isabel as head of Sonangol. What they discovered was that on the same day, she tried to get $38 million transferred out of Sonangol to the account of a Dubai-based company owned by a close associate. And Portuguese authorities intercepted another attempt to transfer $11 million to Russia.
Quantum Global and the son
That Isabel was using companies in Mauritius to help run her empire should come as no surprise. The fall of the Dos Santos family from power also saw another of the former president’s children attempting similar stunts. And Mauritius was quite clearly implicated in that too.
Shortly after Isabel was heaved out of Sonangol, her half-brother, José Filomeno dos Santos, was also fired in January 2018 as the head of Angola’s sovereign wealth fund – the Fundo Soberano de Angola (FSDEA) – that controlled $5 billion. José Filomeno earmarked $3 billion of the fund to be managed by his close friend, Jean-Claude Bastos de Morais, who ran the Quantum Global group. Bastos de Morais tried setting up shop in Jersey and the Isle of Man but was refused due to his links with José Filomeno and the likelihood that the company would be dealing in money coming from corruption-prone Angola. Plus, Bastos de Morais himself came with a chequered past: a Swiss court had fined him $5,390 for improperly approving loans and he was also given a suspended fine of $188,646 and found guilty of withdrawing $100,000 from a company account without authorisation. Refused everywhere else, Bastos de Morais found a ready welcome in Mauritius where the legal firms, management companies and some local banks were more than happy to do business with him. Bastos de Morais’ company, Quantum Global, got $63.2 million in fees from the FSDEA in 2015 and the money circulated from one company within the group to another. The gravy train ended, however, with the sacking of José Filomeno dos Santos’ as the head of FSDEA. Like his half-sister, José Filomeno also tried a last-minute withdrawal from the state company he was supposed to run before he got the boot. UK regulators blocked a $500 million transfer from the accounts of the FSDEA into another account. While José Filomeno was arrested for attempted fraud, his partner, Bastos de Morais’ Mauritius-based Quantum Global saw the heat turned up.
In April 2018, an Angolan official travelled to Mauritius to get the Mauritian government to act against the Quantum Global group, which the Angolan authorities claimed was involved in the corruption. This came as a major embarrassment to the Mauritian authorities. They could no longer pretend this was all business as usual – Mauritius was already criticised for being an offshore tax haven benefitting at the expense of other developing countries, and now the country getting embroiled in a corruption scandal involving the family of the former Angolan president only seemed to confirm that view. And so following the visit by the Angolan official, the Supreme Court directed the financial services regulator, the Financial Services Commission, to suspend the licences of seven offshore firms linked to Quantum Global and the court froze 91 bank accounts peppered across the major banks in the country, linked to the group. As Quantum Global threatened Mauritian authorities with international arbitration, the matter was brought to an abrupt end. Bastos de Morais was arrested by the Angolan authorities, joining José Filomeno dos Santos in prison. In March 2019, Bastos de Morais was released in a quid pro quo deal that saw the Angolan authorities agreeing to drop all charges against him and Quantum Global and in return the FSDEA would get back all its money. Following Bastos de Morais’ release, the Angolan authorities announced that they had recovered $3.35 billion in assets formerly controlled by his company, including $2.35 billion held in bank accounts in Mauritius and the UK and another $1 billion in real estate holdings. José Filomeno, the son of the former president, Eduardo dos Santos, (himself in comfortable retirement in an up-scale residence in Barcelona), however, still faces trial over the attempted $500 million transfer out of the FSDEA. Meanwhile, the Mauritian authorities quietly lifted the restrictions on Quantum Global in Mauritius and simply pretended that nothing had happened.
The Sobrinho episode
It was not just the Dos Santos family that was using Mauritius. Another Angolan with heavy pockets lined with funny money had also found a home in Mauritius, and nearly caused a constitutional crisis within the country to boot.
Former Angolan banker with ties to the Angolan ruling party – the MPLA – Alvaro Sobrinho attempted to shift his fortune to Mauritius and found a government all too eager to please. In 2016, the then-government had amended the country’s banking laws to allow the Financial Services Commission (after the central bank had refused to do so) to greenlight an investment banking licence for Sobrinho. The former banker had faced accusations in Portugal of running down its Angolan operation while he headed it, extended loans to party officials in government and himself totalling $5.7 billion. Facing investigations elsewhere, Sobrinho decamped to Mauritius where he set up an investment bank, an NGO (the Planet Earth Institute) and a real estate company amongst others. As rumours swirled about Sobrinho parking his money in huge real estate investments and civil servants taking time off to work for his real estate company, the country was plunged into an unprecedented crisis as, for the first time, a president was embroiled in a corruption scandal. In 2018, following revelations that she had used a credit card supplied by Sobrinho’s NGO to rack up a huge shopping bill, the former president, Ameenah Gurib-Fakim, was forced to resign. Initially, she refused to do so and attempted to set up a parallel commission to look into Sobrinho’s dealings in the country – nearly causing a constitutional crisis – but soon threw in the towel and quit. A commission was then instituted into the matter that has yet to produce its report into the episode. Sobrinho shortly left the country and following that, a major real estate project – Royal Park in Balaclava – went bankrupt and was put into liquidation in February 2019. Just another episode to show that the fall of the Dos Santos family is not the first time that Angolan corruption has made its way to Mauritius.
With Sobrinho, the Quantum Global episode and now, most recently, Luanda Leaks, the reassurances of the Mauritian authorities about the cleanliness of its financial industry is ringing increasingly hollow. And as the corruption in Angola becomes more exposed to the light of day, it seems more and more rays will shine Mauritius’ way.