Chevron’s Misplaced Endorsement of Nepotism in Angola

What must Chevron’s CEO John Watson be thinking as he sits in his office in San Ramon, California and ponders the future of his Angolan subsidiary, the Cabinda Gulf Oil Company Ltd (Cabgoc)?

How much longer does he estimate that he needs to keep on the good side of José Eduardo dos Santos’s corrupt and kleptocratic MPLA government to ensure Cabgoc can continue to operate?  Is he hedging his bets?  Or is he staking Chevron’s African corporate future on the faint chance that the Dos Santos family and their acolytes will not be brought to justice for their crimes?

While oil industry analysts around the globe were divided about the merit of the President’s nepotistic appointment of his daughter Isabel to head the restructured Angolan state oil company, Sonangol,  Watson’s man in Angola, the Cabgoc director John Baltz, was telling a US-Angola Chamber of Commerce conference that he was “optimistic” about the move.

“The government has acted. It is clear the direction they want to go. I am always optimistic. I certainly support the direction Sonangol is taking,” John Baltz said.

That’s an interesting position given Chevron’s position as one of the doyens of international oil companies in Angola.

The Chevron website proudly boasts of nearly six decades of operations in Angola.   Last year alone, its subsidiary Cabgoc produced 110,000 barrels of liquids and 55 million cubic feet of natural gas from its Angolan wells.  Over those years it claims to have invested $215 million US dollars in programmes to support the health, education, environmental and social needs of millions of Angolans.

As anyone who has visited the Cabgoc ‘enclave-within-an-enclave’ in Cabinda knows, it has certainly invested millions in creating a slice of California, separated by barbed wire from the remainder of Cabinda which shows little evidence of material benefits in health, education, environmental or social needs from such oil company benevolence.

How did Chevron channel these funds to the millions of Angolans it claims to have benefited?   To whom were those checks made out?  Given the well-documented reality of doing business in Angola, is it possible the funds had to be routed through the governing MPLA party and its notoriously corrupt leadership?

It must be quite the predicament for the Chevron Johns.  On the one hand it would be foolhardy to jeopardize their current cozy corporate status in Angola by publicly acknowledging that the head of state has flouted the laws of the land by abusing his status to appoint a direct family member to run Sonangol.

On the other hand, if and when the Dos Santos family’s grip on Angola comes to an end, if the presidential family is called to account for their actions, then the actions of many rich and powerful corporations who have done business with them over decades will surely also come under close scrutiny.

There have been previous allegations that Chevron was able to influence the Justice system in Angola because it benefits from its clout with the ruling MPLA.   Would such influence survive beyond the Dos Santos regime?

And what about the US Justice system? And in particular, that 1977 US federal law known as the Foreign Corrupt Practices Act?

If Isabel dos Santos’s appointment to head Sonangol survives the coming legal challenges, the Chevron Johns may want to take note that Isabel’s “track record of getting deals done” may have been based on the improper use of state funds and remember the old adage that ‘he who sups with the devil, should have a long spoon’.