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Tom Burgis has been
tenacious and intrepid in confronting the powerful vested interests –
corporate, military, financial and political – that have fed to excess off
Africa’s riches. He has been reporting for the Financial Times for the last
eight years, writing a series of prizewinning investigative reports from
Johannesburg and Lagos.
Since the end of the civil war in 2002 (by then some five hundred
thousand people had died), Angola, a nation of 20 million people, has notched
up some of the fastest rates of economic growth recorded anywhere, at times
even outstripping China. Angola boasts sub-Saharan Africa’s third-biggest
economy, after Nigeria and South Africa. Luanda consistently ranks at the top
of surveys of the world’s most expensive cities for expatriates, ahead of
Singapore, Tokyo, and Zurich. In glistening five-star hotels like the one
beside Chicala, an unspectacular sandwich costs $30. The monthly rent for a
top-end unfurnished three-bedroom house is $15,000. Luxury car dealerships do a
brisk trade servicing the SUVs of those whose income has risen faster than the potholes
of the clogged thoroughfares can be filled. At Ilha de Luanda, the glamorous
beachside strip of bars and restaurants a short boat-ride from Chicala, the
elite’s offspring go ashore from their yachts to replenish their stocks of
$2,000-a-bottle Dom Pérignon. The railways, the hotels, the growth rates, and
the champagne all flow from the oil that lies under Angola’s soils and seabed. Oil
accounts for 98 percent of Angola’s exports and about three-quarters of the
government’s income.
“When the MPLA dropped its Marxist garb at the beginning of
the 1990s,” writes Ricardo Soares de Oliveira, an authority on Angola, “the
ruling elite enthusiastically converted to crony capitalism.” The court of the
president—a few hundred families known as the Futungo, after Futungo de Belas,
the old presidential palace— embarked on “the privatization of power.” Melding
political and economic power like many a postcolonial elite, generals, MPLA
bigwigs, and the family of José Eduardo dos Santos, took personal ownership of
Angola’s riches. Isabel dos Santos, the president’s daughter, amassed interests
from banking to television in Angola and Portugal. In January 2013 Forbes
magazine named her Africa’s first female billionaire.
The task of turning Angola’s oil industry from a war chest
into a machine for enriching Angola’s elite in peacetime fell to a stout,
full-faced man with a winning grin and a neat moustache called Manuel Vicente.
Blessed with what one associate calls “a head like a computer for numbers,” as
a young man he had tutored schoolchildren to supplement his meager income and
support his family. After a stint as an apprentice fitter, he studied
electrical engineering. Though he had been raised by a lowly Luanda shoemaker
and his washerwoman wife, Vicente ended up in the fold of dos Santos’s sister,
thereby securing a family tie to the president. Vicente honed his knowledge of
the oil industry at Imperial College in London. Back home he began his rise
through the oil hierarchy. In 1999, as the war entered its endgame, dos Santos
appointed him to run Sonangol, the Angolan state oil company that serves, in
the words of Paula Cristina Roque, an Angola expert, as the “chief economic
motor” of a “shadow government controlled and manipulated by the presidency.”
Vicente built Sonangol into a formidable operation. He drove
hard bargains with the oil majors that have spent tens of billions of dollars
developing Angola’s offshore oilfields, among them BP of the UK and Chevron and
ExxonMobil of the United States. Despite the tough negotiations, Angola dazzled
the majors and their executives respected Vicente. “Angola is for us a land of
success,” said Jacques Marraud des Grottes, head of African exploration and
production for Total of France, which pumped more of the country’s crude than
anyone else.
On Vicente’s watch oil production almost tripled,
approaching 2 million barrels a day—more than one in every fifty barrels pumped
worldwide. Angola vied with Nigeria for the crown of Africa’s top oil exporter
and became China’s second-biggest supplier, after Saudi Arabia, while also
shipping significant quantities to Europe and the United States. Sonangol
awarded itself stakes in oil ventures operated by foreign companies and used
the revenues to push its tentacles into every corner of the domestic economy:
property, health care, banking, aviation. It even has a professional football
team. The foyer of the ultramodern tower in central Luanda that houses its
headquarters is lined with marble, with comfortable seats for the droves of
emissaries from West and East who come to seek crude and contracts. Few gain
access to the highest floors of a company likened by one foreigner who has
worked with it to “the Kremlin without the smiles.” In 2011 Sonangol’s $34
billion in revenues rivaled those of Amazon and Coca-Cola.
Oil is the lifeblood of the Futungo. When the International
Monetary Fund examined Angola’s national accounts in 2011, it found that
between 2007 and 2010 $32 billion had gone missing, a sum greater than the
gross domestic product of each of forty-three African countries and equivalent
to one in every four dollars that the Angolan economy generates annually. Most
of the missing money could be traced to off-the-books spending by Sonangol;
$4.2 billion was completely unaccounted
for. Having expanded the Futungo’s looting machine, Manuel Vicente
graduated to the inner sanctum. Already a member of the MPLA’s politburo, he
briefly served in a special post in charge of economic coordination before his
appointment as dos Santos’s vice president, all the while retaining his role as
Angola’s Mr. Oil. He left Sonangol’s downtown headquarters for the
acacia-shaded villas of the cidade alta, the hilltop enclave built by
Portuguese colonizers that serves today as the nerve center of the Futungo. Like
its Chinese counterparts, the Futungo embraced capitalism without relaxing its
grip on political power. It was not until 2012, after thirty-three years as
president, that dos Santos won a mandate from the electorate— and only then
after stacking the polls in his favor. Critics and protesters have been jailed,
beaten, tortured, and executed. Although Angola is not a police state, the fear
is palpable. An intelligence chief is purged, an airplane malfunctions, some
activists are ambushed, and everyone realizes that they are potential targets.
Security agents stand on corners, letting it be known that they are watching.
No one wants to speak on the phone because they assume others are listening.
On the morning of Friday, February 10, 2012, the oil
industry was buzzing with excitement. Cobalt International Energy, a Texan
exploration company, had announced a sensational set of drilling results. At a
depth beneath the Angolan seabed equivalent to half the height of Mount
Everest, Cobalt had struck what it called a “world-class” reservoir of oil. The
find had opened up one of the most promising new oil frontiers, with Cobalt
perfectly placed either to pump the crude itself or sell up to one of the
majors and earn a handsome profit for its owners. When the New York stock market
opened, Cobalt’s shares rocketed. At one stage they were up 38 percent, a huge
movement in a market where stocks rarely move by more than a couple of
percentage points. By the end of the day the company’s market value stood at
$13.3 billion, $4 billion more than the previous evening.
In July 2008, as Cobalt was negotiating exploration rights
to put its theory about the potential of Angola’s “presalt” oil frontier to the
test, the Angolans made a stipulation. Cobalt would have to take two
little-known local companies as junior partners in the venture, each with a
minority stake. Ostensibly the demand was part of the regime’s avowed goal of
helping Angolans to gain a foothold in an industry that provides just 1 percent
of jobs despite generating almost all the country’s export revenue.
Accordingly, in 2010 Cobalt signed a contract in which it held a 40 percent
stake in the venture and would be the operator. Sonangol, the state oil
company, had 20 percent. The two local private companies, Nazaki Oil and Gáz and
Alper Oil, were given 30 percent and 10 percent, respectively. What Cobalt had
not revealed—indeed, what the company maintains it did not know—was that three
of the most powerful men in Angola owned secret stakes in its partner, Nazaki
Oil and Gáz. One of them was Manuel Vicente. As the boss of Sonangol at the
time of Cobalt’s deal, he oversaw the award of oil concessions and the terms of
the contracts. The other two concealed owners of Nazaki were scarcely less
influential. Leopoldino Fragoso do Nascimento, a former general known as Dino,
has interests from telecoms to oil trading. In 2010 he was appointed adviser to
Nazaki’s third powerful owner, General Manuel Hélder Vieira Dias Júnior, better
known as Kopelipa who as the head of the military bureau in the presidency, presides
over security services that keep the Futungo protected by whatever means
necessary. Delivering a suitcase stuffed with cash is only the simplest way to
enrich local officials via oil and mining ventures run by foreign companies. A
more sophisticated technique involves local companies, often with scant
background in the resource industries. These companies are awarded a stake at
the beginning of an oil and or mining project alongside the foreign
corporations that will do the digging and the drilling. Sometimes genuine local
businessmen own such companies. Sometimes, though, they are merely front
companies whose owners are the very officials who influence or control the
granting of rights to oil and mining prospects and who are seeking to turn that
influence into a share of the profits. In the latter case the foreign oil or
mining company risks falling foul of anticorruption laws at home. But often
front companies’ ultimate owners are concealed behind layers of corporate
secrecy. One reason why foreign resources companies conduct what is known as
“due diligence” before embarking on investments abroad is to seek to establish
who really owns their local partners. In some cases due diligence
investigations amount, in the words of a former top banker, to “manufacturing
deniability.” Cobalt’s lawyer said, “Success naturally brings with it many
challenges. One of those challenges is responding to unfounded allegations.” The
problem for Cobalt was that the allegations were not unfounded.
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