From Colonization to Kleptocracy: a history of Angola …
Our visual explainer shows you how Africa’s richest woman rose amid a country divided by war and rich in natural resources.
With a natural harbor providing access to the Atlantic, Luanda becomes a major hub of the slave trade. Over three centuries, Portuguese and other slave traders ship nearly 6 million people from West and Central Africa to the Americas, particularly Brazil.
Protests by coffee workers meet with a fierce crackdown. A 14-year insurrection begins. Portuguese military bombings and village raids kill thousands of civilians.
António Agostinho Neto, leader of the Movimento Popular de Libertação de Angola (MPLA), becomes the country’s first president after the MPLA takes control of Luanda and secures the country’s coastal oilfields. Deep divisions remain between the MPLA and other factions that fought for independence.
The large oil deposits in Angolan coastal waters promise to transform the economy, but the war is taking a toll. Hundreds of thousands of Portuguese settlers, as much as 90% of the settler population, flee Angola, ravaging the broader economy. Western oil companies manage to pump about 100,000 barrels a day, well below earlier levels. The Luanda government is determined to keep oil operations running — and the cash flowing — even as war tears the country apart.
To secure technological help from the West, the government creates Sonangol, a state-controlled company, and later guarantees it a 51% share of oil production in Angola. With authority to negotiate exploration and production deals with U.S., French and other multinational oil companies, Sonangol quickly becomes the state’s primary revenue source, generating billions of dollars of badly needed foreign currency to fund the war effort. The money also enriches Angolan leaders, who use self-dealing contracts to build personal fortunes and pay off internal opponents.
Sonangol will go on to play a dominant role in the Angolan economy, acquiring stakes in banks, global real estate, health, education, transport and telecommunications companies, and in joint-ventures in Australia, China, the U.S. and elsewhere.
Today, crude oil still accounts for more than 90% of Angola’s exports. The economy’s fortunes ebb and flow with oil prices.
Neto dies of cancer and is succeeded by José Eduardo dos Santos, 37, an MPLA veteran of the war of independence. His family and allies will dominate Angolan political life for most of the next four decades.
Born in 1973 in Azerbaijan, Isabel is the only child of José Eduardo dos Santos, then an exiled guerrilla fighter, and Tatiana Kukanova, a Russian, whom the future Angolan president met while studying petroleum engineering at the Azerbaijan Oil Academy in Baku.
The marriage didn’t last, and Isabel was raised by her mother, spending some time in Luanda and her teen and young-adult years in London, where she attended the exclusive St. Paul’s girls’ school.
After graduating in 1994 with a degree in electrical engineering and business management from King’s College London, she worked for Coopers & Lybrand, an accounting firm, and then won a job as a project manager on a major government-funded sanitation project in Luanda.
As the civil war winds down, the dos Santos regime manages to capture diamond mines that fueled the UNITA opposition. The president creates ASCORP to manage the windfall and grants 24.5% of the company to a Gibraltar-registered shell company called Trans Africa Investment Services. The sole shareholders are later revealed to be Isabel dos Santos and her mother.
The president also grants a start-up called Unitel the right to launch Angola’s first private mobile phone service, reversing a previous decree that would have opened the mobile phone license to public bidding.
The decision proves a windfall for another shell company, Vidatel, registered in the British Virgin Islands, which owns a quarter of what will become Angola’s largest private company. It is later discovered that the beneficiary is daughter Isabel.
UNITA leader Jonas Savimbi dies in a firefight with government troops in February. Less than two months later, the civil war comes to an end.
At least 500,000 civilians were killed and millions more were injured in the war. An estimated 4 million people, about one-third of Angola’s population, were displaced. Many continue to seek sanctuary in a now desperately overcrowded Luanda.
The government promises to shift oil and diamond revenues toward rebuilding the country’s war-ravaged economy, but nongovernmental organizations and local activists ask where billions of oil dollars are really going, even as dos Santos appeals for international aid.
Reporting on the war’s aftermath from Luanda, London’s Independent newspaper paints a grim picture of the growing gulf between the wealthy few and the rest of Angola:
“Fleets of the latest BMW, Mercedes and Jaguar cars roar along the sewage-laced roads past the armies of ragged, homeless people on the pavements,”
In a story for the weekly Jeune Afrique, including a glamorous cover photo of the couple decked out in evening wear, Dokolo later proclaims approvingly:
“The next oligarchs – the kind we see in Russia – will come from our region.
“I’m not one of those nouveaux riches who feel duty bound to give away part of their wealth.”
China pledges to spend billions of dollars to help build Angolan infrastructure in exchange for oil. Though Angola later receives generous oil-backed loans from other countries, including Brazil and Israel, China quickly becomes the dominant creditor. Between 2004 and 2010, the Chinese Exim Bank extends $10.5 billion in loans.
OOver the next decade, professional facilitators in the United Kingdom, the Netherlands, Malta and elsewhere help Isabel dos Santos and Dokolo acquire stakes in a vast array of companies. Many of the businesses are in sectors typically involved in government contracting or require licenses or other forms of authorization from the government headed by Isabel dos Santos’s father.
Notable investments include stakes in:
- Banco Internacional de Credito (Banco BIC Angola), giving Isabel dos Santos a foothold in the international banking system.
- Angola’s biggest cement maker.
- Zon Multimedia, Portugal’s largest cable TV and internet provider.
- A new satellite TV company, ZAP, that caters to Portuguese speakers in Africa.
- Portugal’s Efacec Power Solutions, a manufacturer of large electrical infrastructure components.
- A struggling Swiss jeweler called de Grisogono with stores in New York, Paris, Geneva, Rome and other affluent urban centers.
- Candando, an Angolan supermarket chain.
Exem Holding SA, a company owned by Isabel dos Santos’ husband, Sindika Dokolo, promises to pay $99 million to the Angolan state via national oil company, Sonangol, for a 40% stake in Portuguese energy giant Galp Energia. Exem pays only $15 million at the time. Isabel dos Santos and Dokolo say the balance was paid in 2017.
Sonangol says it considers the amount outstanding and rejected Exem’s attempt to repay in Angolan currency as a violation of the deal. Dokolo’s stake is now valued at about $800 million.
A network of facilitators – including company administrators, financial advisers, lawyers, bankers and a tax expert – helped Dokolo and Exem pull off the deal.
Global oil prices top out above $139 a barrel, compared with an average OPEC basket price of about $24 a barrel in 2002. Angolan production has risen to 1.871 million barrels a day, more than double the 896,000 barrels in 2002.
By Jan. 2009, oil prices plunge to less than $42 a barrel as the financial crisis sends the world economy into a devastating recession. In November, the government is forced to borrow $1.4 billion from the International Monetary Fund.
Unitel gives a shell company controlled by Isabel dos Santos the first in a series of loans that eventually total more than $460 million. Isabel signs off as both the lender (as a Unitel board member) and as the borrower, according to loan documents obtained by ICIJ.
A year later, Unitel re-assigns the loans to a separate company she controls, a British Virgin Island registered shell called Tokeyna, in exchange for $150 million and “future financing guarantees,” a Unitel annual report says.
The transaction triggers, on paper, a $314 million loss for Unitel, according to PT Ventures, Unitel’s increasingly estranged Portuguese shareholder. In a non-public complaint filed in the ICC International Court of Arbitration in Paris, PT Ventures, which helped set up Unitel in 2000, accuses dos Santos and the other Angolan shareholders of emptying Unitel’s coffers for their own benefit.
Vidatel, the dos Santos shell company that holds her stake in Unitel, contends in response that the Tokeyna plan was recommended by “third-party management consultants, tax and legal advisors” to “further the commercial interests of Unitel.” Tokeyna would provide support services such as hiring, providing access to currency and “tax optimization” with greater flexibility than if such services were provided from Angola. (In a letter to ICIJ, lawyers for dos Santos said the Unitel International Holdings loans were a hedge against Angolan currency devaluation, and that the dos Santos’ company has made all its interest payments. Lawyers said the arbitration court found the loans caused “no damage.”)
In 2015, as scrutiny mounted, Unitel canceled the Tokeyna transaction.
“I don’t do politics. I do business and I’m not a politician. I’ve had business sense since I was very young. I sold chicken eggs when I was six,” .
The “Lunch with the FT” story is one of a series of press interviews, public appearances and, later, social media initiatives that emphasize her humble beginnings and put forward an image of self-made entrepreneurship.
Her Instagram account portrays her as a member of the global elite. Family portraits at home; community projects in Angola; breath-taking vistas in stunning locations around the world; photogenic selfies; high-powered corporate events; rock concerts and cocktail parties in the company of such gossip column staples as Paris Hilton, Kris Jenner, Nicki Minaj and Lindsay Lohan.
Dealing a significant blow to the self-made image, a Forbes magazine investigation estimates Isabel dos Santos wealth at $3 billion and attributes the fortune largely to nepotism.
“As best as we can trace, every major Angolan investment held by Dos Santos stems either from taking a chunk of a company that wants to do business in the country or from a stroke of the president’s pen that cut her into the action.”
Angola cuts its 2015 budget by $17 billion, or 25%. Construction companies cannot pay workers, and the local currency, the kwanza, falls to record lows. The government depletes foreign reserves to pay for necessary imports of food and fuel. Inflation soars.
Government revenues fall by more than 50% from 2014 to 2017.
- José Eduardo dos Santos awards Niara Holding, a company owned by his daughter, part of a contract to build the $4.5 billion Caculo-Cabaça dam and hydropower station with a Chinese construction firm. (Isabel dos Santos says the contract award was properly scrutinized and complied with the public procurement law.)
- Urbinveste, owned by Isabel dos Santos, secures lucrative contracts to revamp the capital city. The Luanda Metropolitan Master Plan is approved by her father.
- The president awards Urbinveste the contract to develop the $1.3 billion Marginal da Corimba project in Luanda, which includes a new road, fishing port and marina, with Van Oord, a Dutch company. (The project was canceled by the current Angolan government, claiming it was overpriced. Dos Santos says her companies never received any payments and that proposed costs were in line with comparable building projects.)
- José Eduardo dos Santos approves a $1.5 billion development and management contract for a new port north of Luanda. Project oversight is awarded to Atlantic Ventures, controlled by Isabel dos Santos. (The project was also canceled. Dos Santos claims her companies received no money.)
That summer, the new Private Investment Law requires that an “Angolan partner” hold at least 35% of certain companies in major sectors, including electricity and water, tourism, transport and logistics, civil construction and the media.
He will leave behind a country in chaos. Fiscal revenues have tumbled more than 50% since 2014. Poverty is rife. The World Bank estimates that almost a third of the population is getting by on less than $1.90 a day, and inequality is rising.
João Lourenço, “J-Lo,” takes over as president and says he found “the cupboard empty.”
As part of the Paradise Papers investigation of offshore finance, ICIJ reveals that Jean-Claude Bastos de Morais, an investment manager for Angola’s sovereign wealth fund, used tax havens to move millions of dollars in fees and dividends from the fund to offshore accounts. The fund’s chairman, José Filomeno dos Santos, is Isabel’s half brother. He appointed de Morais to the post.
President Lourenço fires Isabel dos Santos from Sonangol. On her way out she moves at least $38 million to a company in Dubai called Matter Business Solutions, the Angolan government will allege. Documents obtained by ICIJ show that Matter’s owner is Paula Oliveira, a longtime friend and business partner of dos Santos.
Dos Santos said she approved the transfer order before her dismissal. Through lawyers, Oliveira denied wrongdoing and said dos Santos hired her company to oversee the Sonangol overhaul because of her experience and know-how. Oliveira said that dos Santos has no “legal or management role in Matter” and that fees were legitimate and properly recorded.
Angolan authorities will jail José Filomeno dos Santos and Bastos eight months later, finding “sufficient indications” of their involvement in money-laundering, embezzlement of public funds and fraud.
Prosecutors later say they recovered $2.35 billion held in British and Mauritian banks and $1 billion in other assets. José Filomeno is awaiting trial and cannot leave the country.
Welwitschea dos Santos told ICIJ she had no financial connection to Isabel dos Santos and has appealed her removal from parliament.
Although the clan retains corporate power and considerable wealth in Angola, the power has diminished.
The new government has canceled lucrative public contracts awarded to Isabel dos Santos’ companies for infrastructure projects, citing millions of dollars in overpayments to consultants. The extended family is battling to hold on to its assets.