Government Profits from Beer and Blames the Oil Prices

The crisis, which the government blames on falling oil prices, has been used to disguise a much older and deeper crisis  that already existed long before the reasons given by the government lately. The Court of Accounts provides some alarming evidence in its report to parliament on the Government’s Budget Execution Report for 2013 .

According to the Court of Accounts report, reviewed by Maka Angola, in 2013 the state was paid dividends to the tune of 95.4 million Kwanzas (US$954,000) on its direct shares in a total of 37 companies. The sum is ridiculously low given the government’s multi-billion dollar investments in the private sector. Apart from the national oil company Sonangol, the state only made a profit on beer sales from its shares in three beer producers. Dos Santos’ government billed Cuca for 67.9 million Kwanzas; a further 23.5 million from N’gola and another 4 million from Eka. The state only owns one percent of the shares in Cuca and N’gola, and four percent in Eka.

One of the largest banks in the country, the Banco de Poupança e Crédito  [The Savings and Credit Bank]  returned no dividend to the state, which is its majority shareholder, with 99 percent of the shares. Nor did the Banco de Comércio e Indústria [Commercial Industrial Bank], 91 percent of which is state owned.

Agriculture, inertia and foreign investment

Gesterras S.A., a company established for investment in the agricultural sector, 99 percent of which is state owned, is an even greater scandal. By 2011, the government had invested US $800 million  in 18 agricultural projects, operating in eight provinces, namely Benguela, Bié, Cunene, Kuando Kubango, Malanje, Moxico, Uíge and Zaire.

At the time, the chairman of the Board of Directors of Gesterras, Carlos Alberto Jaime, told Angop that “today we [Gesterras] are one of the companies with the largest agricultural production in the country, given the numbers we have attained”.

Also, according to statements made by management in 2012, every year Gesterras spends US$60 million replacing machinery because “since we are backing large scale production, we need to invest in the most up-to-date technology available in the world”. But this company pays the state no dividends.

The way the government submitted the state’s financial statement for the fiscal year of 2013 to the Court of Accounts, highlights the president and head of government, Mr Dos Santos, sangfroid.

The government disclosed a list of 11 multinationals in which the Angolan state owns shares. Within the oil industry, the state has invested in Chevron Texaco Corporation; the Exxon Mobil Corporation; British Petroleum; Royal Dutch Petrol and Andarko Petroleum. It has also invested in one of the largest pharmaceutical companies in the world, Abbot Laboratories, as well as one of the largest producers of chemical products, the Dow Chemical Company.

From all these investments abroad, in the 11 multinationals, the government has declared  to have collected “a total of 11 million Kwanzas for the financial year of 2013”, in dividends. According to the government, “the US$ equivalent of this amount is held in deposit accounts abroad”. In 2013, 11 million Kwanzas was worth around US $110,000. Therefore, the state had a higher profit from beer sales than from all its foreign investments. The amount stashed away abroad does not even cover the cost of a single SUV car Lexus LX 570, let alone the 220 of which Parliament saw fit to distribute as gifts to each and every one of its 220 MPs, who are supposed to represent the people.

The Court of Accounts commented on the complete lack of initiative demonstrated by the government with regard to accounting for dividends due to the state, from its companies and for stakes in the private sector. To this end, it recommends that the government endeavours to “make an effort to receive dividends due to the state on a regular basis from its shares in companies within the public enterprise sector that show a profit”.

With regard to the indirect state involvement in 220 companies, the Court of Accounts states in its report that the documentation submitted by ISEP [Institute for the Public Enterprise Sector] made it impossible to analyse dividends paid through indirect state involvement, “since no information was supplied to this end”. The ISEP is the state body in charge of public companies and state involvement in the private sector.

Between dividends and privatisations, the ISEP showed the Court of Accounts a drop of 87.5 percent in dues accrued in 2013, relative to the 743.9 million Kwanzas (US$7.4 million) collected in 2012.

Meanwhile, this same government which is negligent about  the accountability of state-owned companies and private enterprises with state capital, spent almost US $55 million buying cars in 2013, flooding the pot-holed roads of Luanda with luxury vehicles. This sum was used to buy 6,209 vehicles, at an average cost of US$88.400 each. So, these days, generals and National Police commissioners, even those living in slums, can parade gracefully around the country in luxury vehicles costing over US$100,000 each. And then there is the MPLA motto: “Grow more to distribute better”, preaching the illusion that everybody has an equal slice of the pie.

How can there be a serious discussion on the oil crisis and economic diversification, when the government is incapable of balancing the books or making a profit from investing in the private sector?

Last year, revenue from Sonangol, the country’s largest state Company, fell to US$750 million, registering a drop of 77 percent. We have already forgotten the policy of diversification of the current Vice-President of the Republic, Manuel Vicente, who, at the time was the Chairman of the Board of Directors of Sonangol, who steered this company to invest in various domains in Angola, and to expand into the banking business in Portugal, as well as real estate, aviation and other spheres in Asia, South America and the United States, through China-Sonangol. Manuel Vicente used to say that “we can’t put all our eggs in the one basket”. Now, do they not know where the eggs are or if they have all been scrambled? It appears that only the president’s daughter Isabel dos Santos, our very own billionaire, knows where the eggs are. In a interview with the Financial Times she had stated that she started selling eggs at the age of six, and that is how she started building her fortune.

Her father and his cronies have a better understanding of beer.

The Institute of insecurity

So, where can the growth come from, besides oil? From tax revenues? Well and good. As an example, in 2013, the National Institute of Social Security (INSS), into which revenue from income tax is channelled, undertook contracts to the value of US $190 million, without previous authorisation from the Court of Accounts, as is required by law. Of this amount, US $50 million is for the construction of its own building.

Accountants from the Court of Accounts have  also referred to the fact that the INSS spent US $18.2 million on the construction of 17 multipurpose halls in the provinces of Bengo, Benguela, Cabinda, Malanje, Luanda and Lunda-Sul. The projects were finished but “they are not listed on the entity’s property inventory”, according to the Court of Accounts.

These are taxpayers’ funds, to be used for pensions. No public sector is immune to this unfettered plundering.

It was recommended in 2012 that the Institute’s books be submitted for independent auditing, but this never happened.

We all know that the country is being plundered and sinking fast. We also know that the Angolan people are acting like sheep, following the leader, José Eduardo dos Santos, to the edge of the cliff.  What we don’t seem to know is that we are not sheep, but Angolans with the responsibilities of citizenry, of one another, to hold the leaders accountable and to have a say in the stewardship of the country. But we are idiots.