MONEY FOR NOTHING (PART TWO)
Multi-billion-dollar deals between the government of Angola and the US corporate giant General Electric for showpiece rail and energy infrastructure projects are under investigation after reports of scandalous “irregularities” involving an intermediary company.
As reported by Maka Angola, the projects were all part of a Memorandum of Understanding, signed by GE and the Angolan government in 2013. Two years later, three separate contracts by which these proposals would be executed were drawn up by Aenergy (Aenergia, S.A.) acting as GE’s intermediary or “channel” partner, whose legal owner is Ricardo Leitão Machado, a Portuguese national.
This was how the former Angolan administration did business with the world. Under President José Eduardo dos Santos, foreign investors and businesses were required to enter into partnership with the Angolan private sector. All too often, these were companies with nominal owners shielding the involvement of politically exposed persons whose primary goal was to divert Angolan public funds into their private bank accounts.
The Railway Network Deal
In Part One, Maka Angola reported concerns over the first of those deals: a contract signed with Angola’s Transport Ministry for the modernisation of the Angolan railway system. The project was supposed to be fully funded by a loan from a GE subsidiary, GE Capital, yet the Ministry of Finance coughed up (without prior approval) US $75 million US upfront to Aenergy, with little to show for it several years down the line.
Exercizing its right to reply, a lengthy statement from Aenergy (via PR firm Hill+Knowlton Strategies) says that all its actions in connection with that contract were legal and transparent and that the 20% of costs not covered under the deal with GE were due to logistics and import costs.
Angola’s Transport Ministry has a different opinion.
The Electricity Turbine Deal
Part Two of the investigation looks in detail at another of those contracts with Aenergy from May 2015, in this instance with the Angolan Ministry of Water and Energy, by which GE would provide turbines for hydroelectric projects in Angola, also to be financed by GE Capital.
Allegedly, a version of the Aenergy contract suggests GE Capital’s U$1.1 billion would cover the cost of 8 GE turbines. In fact, GE supplied additional turbines but somehow the Ministry says it was persuaded by Aenergy’s legal owner, Ricardo Leitão Machado, that the surplus turbines had no connection with their deal.
As Angola’s increased needs for energy in the regions became clearer, by 2018 Energy Minister João Baptista Borges submitted a proposal to President João Lourenço that Angola revise its requirements to increase capacity for Lubango (in the central highland province of the same name), Dundo (in the Northeastern province of Lunda Norte) and Tômbwa (on the coast of Namibe province. He argued they could achieve this with just four extra turbines, by reducing the turbine capacity for the Soyo I power station (in Northwestern Zaire province), thus remaining within the budget agreed with GE Capital.
When this was put to Aenergy and GE at a meeting in December 2018, there was uproar. Aenergy was set to sell an extra four turbines on to the Angolans, for more than US $120 million, but the GE Angola representatives were adamant that the additional turbines were already included in the deal, as confirmed in writing by GE’s regional executive director, Elisee Sezan.
In short, GE had funded and supplied 12 turbines to Angola; Aenergy had supplied only eight of them while asking the Ministry to pay again for the extra four.
Within days the Energy Minister sent a written report to President Lourenço (dated December 18, 2018) citing a breach of trust and no confidence in Aenergy. From that date onward, Angola began the process of extricating itself from its contractual obligations to Aenergy to deal directly with General Electric (as arguably should have been the case from the very start). On completion of the audit of their contractual relationship, Aenergy was found to owe Angola close to US $118 million.
President Lourenço was finally able to issue a decree authorizing the revocation of the contracts with Aenergy on the grounds of “violation of the principles of trust and good faith” in August 2019 and the following month a detailed dossier was sent to the office of the Attorney-General of the Republic, to launch a criminal investigation and request the seizure of the as yet undelivered turbines. On December 6, 2019, the Provincial Court of Luanda ordered the seizure of equipments in possession of Aenergy, worth US $114.2 million, all of which had been acquired with public funds.
It was only to be expected that Aenergy would react and launch an appeal against the Ministry’s injunction and for now the ponderous legal process is in course. One more mess, left by the Dos Santos kleptocracy, for which the Angolan people pay the price.
Sometimes I struggle to see exactly why corruption is still rampant throughout government institutions when the richness of Africa is so evident. It was an Al Jazeera news piece today that caught my attention about the latest ICIJ report on the Dos Santos family dynasty of embezzlement. This article is another sad example of how corruption is continuing.
Being a Canadian someone would think corruption is less in Canada. This is true, but when we read about an engineering corporation (SNC Lavalin) paying millions in brides to secure a contract in Libya, we are ashamed. And even worse, is when our government turns a blind eye (for the sake of Canadian jobs) and does not punish the Canadian corporation for engaging in such vial behavior.
When one thinks of government corruption, one often thinks of Mexico. Relatively recently, the citizens of Mexico have started a grassroots drive (Citizen Initiative of Law 3 of 3). It establishes the obligation of all public officials to make three statements public: declaration of assets, interests and tax. In addition, it defines clear rules of conduct for public servants and private actors, as well as penalties for corrupt.
With a website up (www.3de3.mx) and available to all Mexican citizens to view which civil servants have voluntarily submitted their financial documents, voting patterns will start to change for the better. And they have.
What if this same type of grassroots initiative was started in Angola? Push it further to become embedded in Angolan law. I have no doubt that elected future governments would have the honesty and drive to create policy, checks and balances, audit procedures so as to eliminate the possibility for tens of millions of tax dollars liberated so easily for a shady contract.
For now, we have media platforms like Maka Angola putting the pieces of the puzzle together and shedding light on the subject. Honourable and often dangerous work.
Keep it up!