Western Advisers Helped An Autocrat’s Daughter Amass And Shield A Fortune
20 Jan 2020

Pausing at the entrance to a star-studded bash at the Cannes Film Festival, ’90s icon Sharon Stone flashed her one-of-a-kind cuff bracelet. It was a wraparound hippo with rubies for eyes, sapphire nostrils and white diamond teeth. Its body was covered in brown, gray and white diamonds.

The dazzling ornament was a creation of de Grisogono, a Swiss luxury jeweler and the host of the exclusive event, held at the Hotel du Cap-Eden-Roc on the French Riviera.

De Grisogono had thrown Cannes parties before. But this one in May 2013 was especially sumptuous, with a fireworks show and a chamber orchestra to serenade guests as they took in the seaside views. Underwriting the festivities: the government of Angola, a country with one of the highest poverty rates in the world.

Angola’s diamond trading company, known as Sodiam, and a Congolese businessman married to Isabel dos Santos, daughter of the country’s then-president, had acquired a controlling stake in the struggling jeweler the year before. Its new managers, who included former employees of the management-consulting giant Boston Consulting Group, which had briefly helped run the jeweler, hoped the bash would help halt a long decline in sales. Stone was that year’s “ambassador,” a star still bright enough to entice the rich and famous to buy a de Grisogono bauble of their own.

The plan didn’t work. De Grisogono sold just $5.6 million of its wares through private sales in 2013, far short of its $33 million target, and took on more and more debt. Angola’s state diamond company now fears its investment of more than $120 million is gone for good.

The story of how Angolan public money came to be used to fete the 1% on the French Riviera goes beyond that of a dubious business strategy gone wrong. It offers a window into the lightly regulated professional services sector, which over the years has become a cornerstone of a thriving offshore industry that drives money laundering, tax avoidance and public corruption around the globe.

Dos Santos made her fortune by taking a cut of Angola’s wealth, often courtesy of government decrees signed by her father. She also benefited from insider deals, preferential loans and contracts fueled by public money, a review by the International Consortium of Investigative Journalists and 36 media partners found. Over the last two decades, she acquired valuable stakes in every important Angolan industry, including oil, diamonds, telecom and banking.

Dos Santos and her husband, Sindika Dokolo, amassed an empire of more than 400  companies and subsidiaries in 41 countries, including at least 94 in secrecy jurisdictions like Malta, Mauritius and Hong Kong. These companies bought up assets, such as high-priced real estate in London and Lisbon, and purchased stakes in other businesses, including the jewelry company de Grisogono.

Consultants, accountants and lawyers provided vital support at each step of the way, according to ICIJ’s examination of the Luanda Leaks, a trove of more than 715,000 emails, contracts and other documents.

From storefront offices in the tiny tax haven of Malta to conference rooms in Switzerland and Angola, Boston Consulting, PwC (formerly PricewaterhouseCoopers), KPMG and other major firms helped sustain the dos Santos empire for years. These enabling relationships continued long after many Western banks had cut off dos Santos amid questions about the source of her wealth, according to ICIJ’s examination of the Luanda Leaks.

Accountants disregarded red flags that experts say should have triggered alarms. Lawyers at prominent Portuguese law firms helped set up shell companies and move money for dos Santos and Dokolo. Consultants advised them on ways to run their businesses and avoid taxes.

Financial institutions are subject to stringent regulatory requirements, which, even if not always enforced, tend to make them pay close attention to their clientele. Professional firms have faced far less scrutiny. As such, they are often less likely to say no to a risky and wealthy client.

“The incentive structure makes it still too easy and too lucrative and not risky enough for them to engage in that dirty business,” said Markus Meinzer, director of financial secrecy at the Tax Justice Network, a think tank that studies tax evasion and financial regulation.

The Angolan government’s unlikely investment in a jewelry company can be traced to a series of transactions in 2012 that quietly routed millions of dollars through shell companies in Malta and the British Virgin Islands.

The transactions, ICIJ has found, gave dos Santos’ husband, Dokolo, full management control of the Swiss jeweler despite a substantial investment by the Angolan agency.

The Luanda Leaks documents were shared with ICIJ by the Platform to Protect Whistleblowers in Africa, or PPLAAF, a Paris-based advocacy group.

They reveal a remarkable story of self-dealing and profiteering by a businesswoman whose vast fortune, and appealing narrative, bought access to such prestigious Western institutions as the World Economic Forum and the London Business School.

In late December, after ICIJ sent questions to the Angolan government, an Angolan court froze dos Santos’ and Dokolo’s assets in the country. The Angolan government told the court that the couple and a business associate were responsible for state losses of $1.1 billion.

Through their lawyers, dos Santos and Dokolo denied any allegations of wrongdoing. Dokolo said he was a successful entrepreneur and the target of a politically motivated campaign in Angola.

Dos Santos declined ICIJ’s requests for an interview. But in an interview with BBC Africa, which asked several questions on behalf of ICIJ, dos Santos called the inquiry a “political persecution.”

She accused the current Angolan government of targeting her family to distract attention from the country’s economic problems. “My holdings are commercial. There are no proceeds from contracts or public contracts, or money that has been deviated from public funds,” she said.

Dos Santos was scheduled to attend the 2020 World Economic Forum meeting in Davos, Switzerland, after Unitel, a mobile phone company she partly owns, was named an associate partner in 2019. Following the asset freezes, however, the World Economic Forum said dos Santos was no longer coming to the annual meeting.

Angola’s first daughter

Isabel dos Santos was born in Azerbaijan in 1973, the daughter of José Eduardo dos Santos, the future Angolan president, and Tatiana Kukanova, a Russian her father met and married while studying for a degree in petroleum engineering.

Dos Santos graduated from King’s College London in the 1990s with a degree in electrical engineering and business management, after which she worked for Coopers & Lybrand, an accounting firm that later became part of PwC, and as a project manager on a sanitation project in Luanda.

She went on to become the richest woman in Africa, with an estimated net worth of at least $2 billion and holdings in telecom, banks and a range of other industries.

In speeches and interviews, dos Santos promotes herself as a self-made billionaire and an inspirational figure whose great wealth is attributable to her shrewd business dealings. “I’m not financed by any state money or any public funds,” she told The Wall Street Journal.

But dos Santos’ pulled-up-by-her-bootstraps narrative never withstood much scrutiny.

Her father was president of Angola, a country wracked by poverty and civil war, for 38 years (1979 to 2017), and his administration was widely held to be corrupt. In 2013, Angola ranked near the bottom of a corruption index published by Transparency International. A stream of stories, including a Forbes magazine investigation, also published in 2013, have tied Isabel dos Santos’ fortune to handouts and preferential deals, including a founding stake in a major telecom company.

José Eduardo dos Santos did not respond to questions from ICIJ. In an open letter, he rejected allegations of wrongdoing, saying he never transferred government money to himself “or any other entity.”

‘Run like the devil from the cross’

Western banks were paying attention, ICIJ documents show. In the wake of the 2008 global financial crisis and a string of money-laundering scandals, regulators were breathing down lenders’ necks, and dos Santos and her husband fit the profile of clients that many institutions decided they could no longer afford.

A key U.S. banking regulator issued a cease-and-desist order to Citibank, a subsidiary of Citigroup, in 2012 after finding that the bank had failed to identify risky clients and stop illegal money transfers. High-profile cases against JPMorgan Chase and HSBC around the same time prompted the hiring of thousands of additional compliance officers to scrub client rolls of people tied to political corruption or criminal activity.

Later in 2012, another Citigroup subsidiary, Citigroup Global Markets Limited, walked away from a financing deal with Amorim Energia BV, a Dutch holding company. Barclays Bank did the same in 2013. Both were responding to concerns about the company’s shareholders, including Sonangol, which is the Angolan state oil company, and Exem Energy BV, a company owned by Dokolo, documents show. After Amorim Energia threatened legal action, Citigroup Global Markets agreed to pay $15 million as part of a confidential settlement. Citigroup and Barclays declined to comment for this article.

Banco Santander, a major Spanish bank, flagged dos Santos as a “politically exposed person” —  a term that applies to public officials and their family members — and refused to work with her, the documents indicate. Politically exposed persons, known in finance as “PEPs”, are considered risky clients because they can abuse their positions to engage in bribery, money laundering and other forms of corruption.

By Ben Hallman, Kyra Gurney, Scilla Alecci and Max de Haldevang, ICIJ, 19 January 2020

Read more at the International Consortium of Investigative Journalists

Photo (edited): Nuno Coimbra [CC BY-SA 4.0]

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