[Marxism] How U.S. Firms Helped Africa’s Richest Woman Exploit Her Country’s Wealth
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Tue Jan 21 08:56:12 MST 2020
NY Times, Jan. 19, 2020
How U.S. Firms Helped Africa’s Richest Woman Exploit Her Country’s Wealth
By Michael Forsythe, Kyra Gurney, Scilla Alecci and Ben Hallman
LISBON — It was the party to be seen at during the Cannes Film Festival,
where being seen was the whole point. A Swiss jewelry company had rented
out the opulent Hotel du Cap-Eden-Roc, drawing celebrities like Leonardo
DiCaprio, Naomi Campbell and Antonio Banderas. The theme: “Love on the
Posing for photos at the May 2017 event was Isabel dos Santos, Africa’s
richest woman and the daughter of José Eduardo dos Santos, then Angola’s
president. Her husband controls the jeweler, De Grisogono, through a
dizzying array of shell companies in Luxembourg, Malta and the Netherlands.
But the lavish party was possible only because of the Angolan
government. The country is rich in oil and diamonds but hobbled by
corruption, with grinding poverty, widespread illiteracy and a high
infant mortality rate. A state agency had sunk more than $120 million
into the jewelry company. Today, it faces a total loss.
Ms. dos Santos, estimated to be worth over $2 billion, claims she is a
self-made woman who never benefited from state funds. But a different
picture has emerged under media scrutiny in recent years: She took a cut
of Angola’s wealth, often through decrees signed by her father. She
acquired stakes in the country’s diamond exports, its dominant mobile
phone company, two of its banks and its biggest cement maker, and
partnered with the state oil giant to buy into Portugal’s largest
Now, a trove of more than 700,000 documents obtained by the
International Consortium of Investigative Journalists, and shared with
The New York Times, shows how a global network of consultants, lawyers,
bankers and accountants helped her amass that fortune and park it
abroad. Some of the world’s leading professional service firms —
including the Boston Consulting Group, McKinsey & Company and PwC —
facilitated her efforts to profit from her country’s wealth while
lending their legitimacy.
The empire she and her husband built stretches from Hong Kong to the
United States, comprising over 400 companies and subsidiaries. It
encompasses properties around the world, including a $55 million mansion
in Monte Carlo, a $35 million yacht and a luxury residence in Dubai on a
seahorse-shaped artificial island.
Among the businesses was the Swiss jewelry company, which records and
interviews reveal was led by a team recruited from Boston Consulting.
They ran it into the ground. Under their watch, millions of dollars in
Angolan state funds helped finance the annual parties on the French Riviera.
When Boston Consulting and McKinsey signed on to help restructure
Sonangol, Angola’s state oil business, they agreed to be paid in an
unusual way — not by the government but through a Maltese company Ms.
dos Santos owned. Then her father put her in charge of Sonangol, and the
government payments soared, routed through another offshore company,
this one owned by a friend of hers.
PricewaterhouseCoopers, now called PwC, acted as her accountant,
consultant and tax adviser, working with at least 20 companies
controlled by her or her husband. Yet there were obvious red flags as
Angolan state money went unaccounted for, according to money-laundering
experts and forensic accountants who reviewed the newly obtained documents.
When the Western advisory firms came into Angola almost two decades ago,
they were viewed by the global financial community as a force for good:
bringing professionalism and higher standards to a former Portuguese
colony ravaged by years of civil war. But ultimately they took the money
and did what their clients asked, said Ricardo Soares de Oliveira, an
international politics professor at Oxford who studies Angola.
“They are there as all-purpose providers of whatever these elites are
trying to do,” he said. “They have no moral status — they are what you
make of them.”
Now, more than two years after her father stepped down after 38 years as
Angola’s strongman president, Ms. dos Santos is in trouble.
Last month, an Angolan court froze her assets in the country as part of
a corruption investigation, along with her husband’s and those of a
Portuguese business associate. The Angolan attorney general claimed the
couple were responsible for more than $1 billion in lost state funds,
with particular focus on De Grisogono and Sonangol.
Ms. dos Santos and her husband could face years in prison if convicted,
according to the office of Angola’s president, João Lourenço. At the
heart of the inquiry: $38 million in payments from Sonangol to a Dubai
shell company hours after Angola’s new president announced her firing.
Ms. dos Santos’s half brother is also facing corruption charges for
helping to transfer $500 million from Angola’s sovereign wealth fund.
The asset freeze came soon after I.C.I.J. reporting partners asked the
government about transactions in the documents.
In an interview with the BBC, Ms. dos Santos, 46, denied any wrongdoing
and called the inquiry a “political persecution.” “My companies are
funded privately, we work with commercial banks, our holdings are
private holdings,” she said.
Her husband, Sindika Dokolo, 47, suggested the new government was
scapegoating them. “It does not attack the agents of public companies
accused of embezzlement, just a family operating in the private sector,”
he told Radio France Internationale, another I.C.I.J. partner.
Global banks including Citigroup and Deutsche Bank, bound by strict
rules about politically connected clients, largely declined to work with
the family in recent years, the documents show.
“These guys hear about Isabel and they run like the Devil from the
cross,” Eduardo Sequeira, head of corporate finance for Fidequity, a
Portuguese firm that manages many of Ms. dos Santos’s companies, wrote
in a 2014 email after the Spanish bank Santander turned down work with her.
Consulting companies, far less regulated than banks, readily embraced
her business. American advisory firms market their expertise in bringing
best practices to clients around the world. But in their quest for fees,
several have worked for authoritarian or corrupt regimes in places like
China or Saudi Arabia. McKinsey’s business in South Africa was decimated
by its partnership with a subcontractor tied to a political scandal that
took down the country’s president.
The new leaks show the pattern repeating itself in Angola, where
invoices point to tens of millions of dollars going to the firms. They
agreed to be paid for Angolan government work by shell companies — tied
to Ms. dos Santos and her associates — that were in offshore locations
long used to avoid taxes, hide illicit wealth and launder money. The
arrangement allowed her to keep a large portion of the state funds, the
(The documents, called the Luanda Leaks after the Angolan capital,
include emails, slide presentations, invoices and contracts. They came
to the I.C.I.J. through the Platform to Protect Whistleblowers in
Africa, a Paris-based advocacy and legal group.)
PwC, based in London, said it was investigating its dealings with Ms.
dos Santos and would stop working with her family. Boston Consulting
said it took steps, when hired, “to ensure compliance with established
policies and avoid corruption and other risks.” McKinsey called the
allegations against Ms. dos Santos “concerning,” and said it wasn’t
doing any work now with her or her companies.
De Grisogono, an upstart Swiss jewelry company, was on life support. Its
business had never fully recovered from the global financial crisis, and
by 2012, it was deeply in debt.
Mr. Dokolo, Ms. dos Santos’s husband, seemed to offer a way out. He
teamed up with Sodiam, the Angolan state diamond marketer, in a 50-50
venture set up in Malta that took over the jeweler. The state enterprise
eventually pumped more than $120 million into the business, acquiring
equity and buying off debt, the records indicate. Documents show that
shortly after the acquisition, Mr. Dokolo put in $4 million, an amount
he had gotten from a “success fee” — drawn from the Sodiam money and
shunted through a shell company in the British Virgin Islands — for
closing the deal.
Mr. Dokolo, through his law firm, said he had initially invested $115
million and “has subsequently invested significantly more into the
business,” but that could not be verified in the documents.
Flush with Angolan government money, the Geneva jeweler hired the Boston
Consulting Group, an American management company with offices in more
than 50 countries.
In 2012, according to the documents, a Lisbon-based team at the firm
took a central role in helping to run De Grisogono — “shadow management”
as John Leitão, a Boston Consulting employee who would become the
jeweler’s chief executive, said in a November interview in Lisbon.
The consulting firm, however, said its employees worked only on three
specific projects, ending its involvement in early 2013.
By that year, the consultants had started leaving the firm to join the
jeweler, eventually occupying the positions of chairman, chief financial
officer and chief operating officer alongside Mr. Leitão.
He said in the interview that the consultants had inherited “a total
mess.” But under his watch, the company, with boutiques in London, New
York and Paris, went deeper into the red, despite an initial uptick in
sales, documents show.
De Grisogono had a run of bad luck, including economic pressures
affecting Russian oligarchs and Saudi sheikhs who had been big
customers, Mr. Leitão said. Yet many rich patrons, including Ms. dos
Santos and her husband, would take jewelry and wristwatches without
paying for them up front, the documents show. Marketing expenses also
shot up — 42 percent during Mr. Leitão’s first year to $1.7 million,
with the increase going to the Cannes party, according to an internal
Mr. Dokolo was unapologetic about spending big on parties. “You tell me
what major luxury brand spends less than this on promotion to become a
global brand,” he told the French radio service. In an interview with
BBC, Ms. dos Santos said she was not a stakeholder in De Grisogono,
though several emails and documents call that into question, indicating
she had an ownership interest in the Maltese companies controlling it.
The jeweler gave the couple an ability to better market Angolan
diamonds. Mr. Dokolo already controlled the rights to more than 45
percent of the country’s diamond sales through a company that bought
uncut gems, generating hundreds of millions of dollars in income,
according to the Angolan president’s office.
Mr. Dokolo’s lawyers said he aimed to integrate the country’s diamond
industry, “from mining to polishing to retail sales.”
The Angolan people did more than pay dearly for a European jewelry
company. They paid with money borrowed at a 9 percent annual interest
rate from Banco BIC, an Angolan lender where Ms. dos Santos owns a 42.5
percent stake. The government will have to repay some $225 million,
according to the Angolan president’s office. The loans had been
guaranteed by Ms. dos Santos’s father.
For all the money it put in, Sodiam never exercised any management
control of the jeweler and never recouped any of its investment. Now,
Sodiam officials want out, and the business is for sale.
“It is strange,” said Eugenio Bravo da Rosa, Sodiam’s new chairman,
speaking of the man he replaced, who had signed off on the investment.
“I can’t believe a person would start a business and let its partner run
the business with total power to make all the decisions.”
In 2016, Sonangol, Angola’s state oil company, was in crisis after a
drop in market prices. One former Boston Consulting employee described a
company in an “absolutely chaotic” state. The Angolan president fired
the company’s board and appointed his daughter, Ms. dos Santos, as
chairwoman that June. Boston Consulting was helping Sonangol come up
with a “road map” to restructure.
Ms. dos Santos had a history with the company. A decade earlier, she and
her husband made millions partnering with Sonangol and a Portuguese
businessman to invest in a Lisbon gas company, Galp Energia. Their stake
came courtesy of the Angolan government — through an $84 million loan
from Sonangol, documents show. Their share in Galp is now worth about
The former Boston Consulting employee, speaking on the condition of
anonymity, said that Ms. dos Santos — the president’s eldest child — was
able to get things done that other executives could not because she
wasn’t susceptible to pressure.
“We’re very committed to transparency,” Ms. dos Santos told Reuters at
the time. “We’re very committed to improving our profits at Sonangol and
to improving our organization.”
But transparency went only so far. More than half a year before she was
named chairwoman, her father signed off on a decree drafted at the
couple’s law firm, records show, that led to the awarding of $9.3
million to a Maltese company to oversee Sonangol’s restructuring. The
business, Wise Intelligence Solutions, was owned by the couple and run
by a close associate, Mário Leite da Silva, De Grisogono’s former
chairman. Boston Consulting came on board, followed by McKinsey, with
the Maltese firm acting as their manager.
Boston Consulting and other advisers billed for only about half of what
Wise received from the Angolan treasury, receipts and invoices show,
even though the Maltese company had only limited expertise of its own.
Wise “does not have the human resources and specific know-how,” its
Maltese accountant said in a March 2016 email. Ms. dos Santos disputed
this, with her law firm saying Wise had “technical expertise.”
After she took charge of Sonangol, the payments to the offshore
companies would surge even higher.
The Sonangol account was with the Portuguese arm of Banco BIC, where she
was the biggest shareholder. Shunned by global banks, the couple
increasingly relied on the Angolan lender, which has a big office in
Lisbon steps from her apartment. In 2015, Portuguese regulators said the
bank had failed to monitor money flowing from Angola to European
companies linked to her and her associates, concluding that the lender
lacked internal controls.
“Paying huge and dubious consulting fees to anonymous companies in
secrecy jurisdictions is a standard trick that should sound all alarm
bells,” said Christoph Trautvetter, a forensic accountant based in
Berlin who worked as an investigator for KPMG, a global business
Days before the invoices were issued, the Sonangol executive who would
have approved them was fired, replaced by a relative of Ms. dos Santos,
the documents show. The managing director of the Dubai company, Matter
Business Solutions DMCC, was her frequent associate Mr. da Silva.
Months later, Carlos Saturnino, Ms. dos Santos’s successor as Sonangol’s
head, publicly accused her of mismanagement, saying her tenure was
marked by conflicts of interest, tax avoidance and excessive reliance on
consultants. He also said she had approved $135 million in consulting
fees, with most of that going to the Dubai shell company.
“We have there some situations of money laundering, some of them of
doing business with herself,” Hélder Pitta Grós, Angola’s attorney
general, said in an interview with I.C.I.J. partners.
Ms. dos Santos, speaking with the BBC, said the Dubai company supervised
work for Sonangol by Boston Consulting, McKinsey, PwC and several other
Western firms. When asked about the invoices, she said she was
unfamiliar with them but insisted the expenses were legitimate, charged
at “the standard rate” under a contract approved by Sonangol’s board.
“This work was extraordinarily important,” she added, saying that
Sonangol cut its costs by 40 percent.
Her lawyers said the $38 million was “for services that had already been
provided and delivered by consultants in accordance with the contract.”
By late 2017, Boston Consulting was winding down its work on the
project, which ended that November. McKinsey and PwC declined to comment.
The consultants’ involvement with Ms. dos Santos extended far beyond the
Swiss jeweler and Sonangol. McKinsey, for example, provided advice on a
Portuguese engineering firm she had just acquired and the Angolan mobile
phone company where she served as chairwoman, documents show.
Two of the “big four” accounting firms, PwC and KPMG, did consulting
work for Urbinveste, another thinly staffed company she owned that acted
as a public works contractor in Angola. It oversaw projects — such as
road and port design and urban redevelopment — worth hundreds of
millions of dollars, some set to be financed with loans from Chinese
banks and built by Chinese state-owned companies. KPMG also audited at
least two companies she owned in the country. The firm said that in
Angola, it performs “additional due diligence procedures” for all the
businesses it audits.
The other two major accounting firms, Deloitte and Ernst & Young, now
known as EY, did work for companies tied to her as well.
Accounting firms in the European Union, where much of Ms. dos Santos’s
business empire was located, are bound by the same rules banks are,
requiring them to report suspicious activity. One firm in particular,
PwC, had a broad view into the inner workings of Ms. dos Santos’s empire.
Ms. dos Santos had a long history with PwC. In the early 1990s, fresh
out of King’s College London, she took a job with Coopers & Lybrand,
soon to merge to become PricewaterhouseCoopers.
Her top money manager, Mr. da Silva, whose assets in Angola were frozen
last month, was also a PwC alum. And when Ms. dos Santos took over
Sonangol, she brought in a PwC partner, Sarju Raikundalia, as its
finance head. The payments to Dubai in November 2017 happened on his
watch before he, too, was fired. Neither of the businessmen responded to
requests for comment.
PwC not only audited the books of her far-flung shell companies, but
also provided her and Mr. Dokolo’s companies with tax advice and did
consulting work for Sonangol.
Like Boston Consulting, PwC was paid by Wise Intelligence for its Angola
work, and it audited the financial statements of the Maltese holding
companies that controlled the Swiss jeweler.
In 2014, PwC accountants in Malta had a problem. As they prepared annual
financial statements for Victoria Limited, one of the Maltese companies
that controlled De Grisogono, they wrote in a draft that the ultimate
owners were Mr. Dokolo and the Angolan government. But Antonio
Rodrigues, an executive at Fidequity, objected — the couple had been
facing increasing media scrutiny after a 2013 Forbes article examined
the origins of their wealth. Such information, he wrote, should not “be
“Noted — we will discuss internally and revert,” a PwC accountant
replied. The language was removed.
PwC accountants also noticed there was no paperwork to account for
millions of dollars in loans being pumped into the Maltese holding
companies and De Grisogono, according to emails.
Robert Mazur, who was an anti-money-laundering investigator for the
United States Customs Service, reviewed the PwC financial statements at
the I.C.I.J.’s request, along with email exchanges between the
accountants and Ms. dos Santos’s money managers.
“The accountants and financial service providers involved in these
transactions should have seriously considered filing a suspicious
transaction report,” he said.
When presented with the I.C.I.J.’s findings, PwC said it would not
comment on specific projects, citing client confidentiality, but said it
was ending its work with Ms. dos Santos. “In response to the very
serious and concerning allegations that have been raised,” the firm
said, “we immediately initiated an investigation and are working to
thoroughly evaluate the facts and conclude our inquiry.”
As for Ms. dos Santos’s assets, the bulk of her fortune is now outside
Angola, much of it in tax and secrecy havens where it will be hard to
“They are part of a system of finding the safest landing for all the
assets that are siphoned off,” she said.
KYRA GURNEY, SCILLA ALECCI and BEN HALLMAN are reporters for the
International Consortium of Investigative Journalists, based in Washington.
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