Massive African finance scandal may get even bigger

Mozambique's parliament has lifted immunity for its ex-finance minister Manuel Chang, detained in South Africa on a US-issued international arrest warrant. Investigators suspect a link to its Lusophone ally, Angola.

The noose seems to be tightening around former Mozambican Finance Minister Manuel Chang, who has been held in South Africa since late December under an international arrest warrant issued by the US.     

Chang, 63, was arrested at Johannesburg airport in connection with his alleged involvement in fraudulent loans to state firms totaling some $2 billion (€1.75 billion). The US alleges that Chang received $12 million to agree to sign a loan deal supposedly intended to finance a tuna-fishing fleet and maritime surveillance project.     

Angolan ex-Finance Minister Manuel Chang's fate is set to be decided in South African court

Chang had benefited from immunity as a serving member of parliament and extradition requests from both Mozambique and the US had gone unfulfilled.

The request by the Mozambican attorney general's office for Chang's immunity to be lifted was granted this week. Chang is due to return to court in South Africa on Thursday to hear the outcome of his bail application. Another hearing is scheduled for February 5 to rule on Mozambique's extradition request.

Government in the dark on murky financial dealings

The Mozambican scandal has all the ingredients of a spectacular criminal case. Various state companies took out loans of some €1.8 billion from Credit Suisse and Russian investment bank VTB Capital, with Mozambique's government acting as a guarantor. Parliament should have given its approval — but was not informed, and the money from the credits has disappeared. Mozambique cannot pay it back and is in deep trouble financially, also because international creditors have halted their payments.

Read more: Who is to blame for Africa's debt crisis?

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Business | 23.08.2017

Rich in resources but poor and corrupt

The credit was intended to pay for projects including the creation of a state fishing fleet. A company called Privinvest was to deliver coastal patrol boats for the navy and build a dockyard for their repair and maintenance. Behind Privinvest is Lebanese businessman Jean Boustani, who investigators say has taken bribes and bribed others to get orders for his company.

Former brothers in arms

According to British business risk intelligence agency Exx Africa, Privinvest and Jean Boustani have also been active in Angola, which has traditionally close ties to its fellow Lusophone country Mozambique. Both are former Portuguese colonies, and after independence Marxist-oriented liberation movements — MPLA (the People's Movement for the Liberation of Angola) and FRELIMO (the Mozambican Liberation Front)  came to power.

Read more: Little trace remains of Marxism in Africa

Many countries, including Germany, initially welcomed the transfer of power to Lourenco after over three decades of his predecessor's corrupt leadership — now, his future seems less rosy

"MPLA and FRELIMO previously had a common enemy, colonialism. They fought and became a group of friends with similar interests," Mozambican analyst Severino Ngoenha told DW. "That led to a situation in which groups that had fought together for freedom could also turn into Mafia groups."

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Through Simportex, a state company owned by the defense ministry, Angola is said to have made a $495 million deal with Privinvest. New Angolan President Joao Lourenco was the defense minister at the time. Here too, the deal involved the purchase of patrol boats and a series of coastal protection measures. According to Exx Africa, the contract resembles in form and content one of the controversial deals made by Priminvest in Mozambique. Lourenco is said to have visited the project in Mozambique and had contact with Boustani.

Petroleum giant Angola, a land of contrasts

Life in the slums

Over 400,000 people live in an area of 40 square kilometers in Cazenga, a poor area in the west of the capital Luanda. There are no tarred roads and many houses lack electricity. Many politicians of the governing MPLA party come from this area. Yet none of them has managed to initiate a development or infrastructure program for Cazenga.

Petroleum giant Angola, a land of contrasts

One party, one president

“MPLA is the party of the president! He has been trying to hand over power since the civil war, but the people still want him. So he continues.” This is how 27-year-old Euricleurival Vasco explains his 2012 vote for the MPLA. But critics says that Jose Eduardo dos Santos has not kept a single electoral promise up to now. An example is providing access to running water and electricity.

Petroleum giant Angola, a land of contrasts

No jobs for the people

Around 40 percent of Angolans live off less than one US dollar (75 eurocents) a day. Many had hoped for more job opportunities and wealth from the oil boom. But little has changed and they live from hand to mouth. Many, like these biscuit vendors, work informally.

Petroleum giant Angola, a land of contrasts

Luxurious Luanda

The oil riches have only reached Angola’s capital, Luanda. It is already one of the most expensive cities in the world. The rent for an apartment can cost US$5,000 (3,750 euros) or more. The wealth is especially visible in the Baia de Luanda, the city’s bay area. New skyscrapers are emerging all over the city.

Petroleum giant Angola, a land of contrasts

The Angolan Capitol Hill

Angola’s new parliamentary building is being constructed near the Baia de Luanda. The ruling MPLA party currently has 175 out of the 220 parliamentary seats. UNITA, the biggest opposition party, has 32 seats. The opposition parties often lament the MPLA’s strong grip on Angola’s political scenery.

Petroleum giant Angola, a land of contrasts

Angola’s strongman

President Jose Eduardo dos Santos gazes out from this campaign poster. Critics say he controls everything from the executive to the judiciary and legislative power. Dos Santo has ruled Angola for 33 years. He succeeded Agostinho Neto on September 20, 1979 as the president and party leader while the country was embroiled in a civil war.

Petroleum giant Angola, a land of contrasts

Post-war reconstruction in record time

Far from the capital, undiscovered landmines still litter the countryside. Such an area exists near the northern town of Soyo, even ten years after the civil war (1975-2002). A road network now exists between the various provincial towns. In 2002 it was almost impossible to cross the country by road.

Petroleum giant Angola, a land of contrasts

Riches from the sea

Angola's wealth is not only in the form of oil reserves. Just off its coastline, natural gas is also being extracted. The first liquid natural gas (LNG) plant was built in the northern town of Soyo, but it is currently still undergoing tests. It is expected to produce 5.2 million tonnes of gas every year.

Petroleum giant Angola, a land of contrasts

A green future?

Angola is heavily dependent on its oil. In October 2012, the government started a natural oil fund to invest inside and outside the country. With this it hopes to protect itself from the volatile market prices. But oil reserves will only last for another 20 to 30 years. Experts see an alternative in the expansion of agriculture.

Petroleum giant Angola, a land of contrasts

Investors from abroad

Advertisements for Chinese firms can often be seen in Angola. The Chinese are the largest expatriate community in the country, followed by euro-crisis driven Portuguese and the culturally close Brazilians. As Brazil cannot compete with the Chinese investors, it is focusing on technical training.

Petroleum giant Angola, a land of contrasts

Living in an iron shack

Angola’s government should “invest in its people and not in the tarmac,” says teacher Fernando Pinto Ndondi. He earns US$300 (225 euros) a month, with which he feeds his five children. Ndondi is officially homeless and lives in the suburb of Viana. His former house in Luanda was in the way of a governmental road project.

Petroleum giant Angola, a land of contrasts

Where does the money go?

Angola ranks 168th out of 182 countries on Transparency International’s Corruption Index. The regime faces accusations of embezzlement of funds. What happened to the US$32 billion (24 billion euros), which the state-run oil company Sonangol earned between 2007 and 2010? It says that the money flowed into infrastructure projects. However, it remains unclear which projects these were.

International acclaim

It was only in August last year that Lourenco was feted by the German government during a visit to Berlin. "We are happy that with the inauguration of the president, a fresh wind is blowing in Angola," said Chancellor Angela Merkel at a joint press conference. She praised the reforms initiated by Lourenco, saying "I have also made it clear to the president, that Germany would like to be a good, reliable partner for Angola along this road."

Lourenco was seen as a bearer of hope for Angola, after he replaced longtime President Jose Eduardo dos Santos in 2017. Dos Santos ruled for more than three decades, treating the oil-rich country as his private property and installing family members in key positions. Apart from the president's family, only a small elite profited from Angola's oil wealth.

One of Lourenco's first acts as president was to fire Isabel dos Santos, the former president's daughter, as head of the state oil company

Lourenco promised to change this. One of his first acts was to fire dos Santos' daughter Isabel as head of the state oil company Sonagol. That went down well both at home and abroad. But now questions are beginning to be asked about his possible involvement in the Mozambican scandal.

Read more: The fall of Angola's dos Santos clan

'Appropriate measures' may be taken

Exx Africa bases its investigation on anonymous high-level sources in both Angola and Mozambique. Angolan constitutional expert Albano Pedro thinks it is likely that Lourenco is involved in the case. "As he was defense minister and two countries are involved that have close political ties, I have no doubt that there were plans to grant an undue advantage," Pedro told DW.

Alcides Sakala, speaker of the main opposition party, the National Union for the Total Independence of Angola (UNITA), said his party was "following this case with great attention and we think that the attorney general's office should have already taken a position. I believe there is enough material for the public prosecutor's office to take appropriate measures."

Nadia Issufo contributed to this report.

Dos Santos: Angola's 'eternal' president

The fight for Angolan independence

At the age of 19, Jose Eduardo dos Santos joined the People's Movement for the Liberation of Angola (MPLA), a Marxist-inspired party fighting for Angola's freedom from Portuguese colonial rule. In 1963, dos Santos received a scholarship to study petrochemistry in the former Soviet Union, where he later went on to train in military communications. In 1970, he returned to Angola.

Dos Santos: Angola's 'eternal' president

A place at the Cabinet table

After independence from Portugal was declared in 1975, civil war broke out between the three independence movements: the MPLA, UNITA and FNLA. The capital city Luanda was under MPLA control. The party leader, Agostinho Neto (pictured), became the first president of an independent Angola and established a one-party system. Dos Santos was appointed foreign minister and later planning minister.

Dos Santos: Angola's 'eternal' president

Alliance with the Eastern Bloc

In September 1979, Neto died in Moscow. The MPLA chose dos Santos to be the new president of Angola. He strengthened alliances with communist countries in the Eastern Bloc - such as the Soviet Union, Cuba and East Germany. In 1981, he visited East Germany and was received by Erich Honecker (pictured, left), the general secretary of the Socialist Unity Party.

Dos Santos: Angola's 'eternal' president

A divided world: East versus West

During his stay in East Germany, dos Santos visited the Brandenburg Gate and the Berlin Wall - both symbols of the Cold War and the divide between East and West. In Angola, the Cold War had turned into a "hot" proxy war. The West - particularly South Africa and the United States - supported UNITA, while the East stood with the MPLA.

Dos Santos: Angola's 'eternal' president

Side-by-side with Cuba

Cuba took the militarily weak MPLA government under its wing. It sent 40,000 soldiers to fight in Angola, for example in 1988 in the battle of Cuito Canavale - one of the deadliest in the Angolan civil war. Three years later, an initial peace accord was signed in Portugal.

Dos Santos: Angola's 'eternal' president

The peace deal breaks down

The first free elections took place in 1992. The MPLA won a parliamentary majority but dos Santos did not secure an outright victory in the first round of the presidential election. The runoff against Jonas Savimbi, the leader of UNITA, never took place. War broke out again after UNITA rejected the elections, casting allegations of vote-rigging.

Dos Santos: Angola's 'eternal' president

The West loses interest

Once the Cold War was over, the West lost interest in the Angolan civil war. In 1993, the US recognized the MPLA government, which was increasingly embracing capitalism. After Apartheid had come to an end in South Africa, UNITA lost its most important ally. A 1994 peace deal in Angola also broke down, and dos Santos went into full-on military mode.

Dos Santos: Angola's 'eternal' president

Wading into the Congo Crisis

In 1998, the Angolan military came to the aid of Laurent-Desire Kabila (pictured) during the Congo crisis. By helping Kabila become president of the Democratic Republic of Congo, dos Santos was able to remove one of UNITA's areas of refuge. This move also established Angola as a leading military power in southern Africa.

Dos Santos: Angola's 'eternal' president

Taking down Savimbi

An international weapons embargo weakened UNITA, which was becoming increasingly isolated. On February 22, 2002, government troops killed UNITA's leader Jonas Savimbi (pictured). In the same year, UNITA and MPLA signed another peace deal. This brought one of Africa's bloodiest civil wars - in which 1 million people died and 4 million fled the country - to an end.

Dos Santos: Angola's 'eternal' president

Reminders of war

Many years after the end of the civil war, the destruction is still evident across the country. The armed forces continued to play an important role in the Angolan president's leadership. Clashes between government forces the separatist group FLEC still occur regularly in the northern enclave of Cabinda.

Dos Santos: Angola's 'eternal' president

Postponed elections

The second parliamentary elections, planned for 1997, did not take place until 2008. The MPLA emerged victorious, with 81.6 percent of the votes, while UNITA secured 10.4 percent. There were complaints of voter intimidation and poor organization. The 2009 presidential election was called off and dos Santos stayed in power.

Dos Santos: Angola's 'eternal' president

An uncertain partnership

In 2011, German Chancellor Angela Merkel visited Angola and even signed a "strategic partnership" with dos Santos. German companies initially showed interest in investment opportunities in Angola - but few projects actually came to fruition in subsequent years.

Dos Santos: Angola's 'eternal' president

Stifling the opposition

Inspired by the Arab Spring, young Angolans took to the streets in 2011 to protest against dos Santos. The police used force to suppress demonstrations and activists were arrested. In 2013, the presidential guard shot two opposition activists. Members of the Adventist sect "Luz do Mundo" (Light of the World) were also targeted. Human rights observers accused the police of extrajudicial killings.

Dos Santos: Angola's 'eternal' president

Legitimate leadership

In 2010, parliament changed the constitution and abolished direct presidential elections. The leader of the party with the most votes in the parliamentary elections would become president. In 2012, the MPLA took 71.9 percent of the votes. After 32 years in office, dos Santos had democratic legitimacy for the first time. Observers argued that the opposition did not have a fair chance.

Dos Santos: Angola's 'eternal' president

Family man

Family is also a powerful driving force behind the dos Santos leadership. He met his third and current wife, former model Ana Paula dos Santos (pictured), when she was working as a stewardess on the presidential plane. They married in 1991 and had four children. Ana Paula dos Santos will be put forward as an MPLA parliamentary candidate this year.

Dos Santos: Angola's 'eternal' president

The richest woman in Africa

Dos Santos' daughter Isabel - who he had with his former wife, Russian chess champion Tatiana Kukanova - was named the richest woman in Africa by Forbes magazine in 2011. She has invested in businesses ranging from telecommunications to sports. Dos Santos' son José Filomeno - from his second marriage, to Filomena de Sousa - leads the state investment fund.

Dos Santos: Angola's 'eternal' president

Scratching China's back

China is dos Santos' new best friend. The country is the main buyer of Angolan oil and Chinese credit has funded Angolan infrastructure projects. With this money, Chinese firms have built whole districts in Angola, like Kilamba Kiaxi (pictured). Unlike the IMF and western lenders, China does not impose any loan conditions based on transparency or human rights.

Dos Santos: Angola's 'eternal' president

Poverty and development

Despite the country's oil wealth, many Angolans still live in extreme poverty. The country has the highest global rate of death among infants. Even in the middle of the capital city, Luanda, there are neighborhoods without waste water disposal. Health services, which are often only offered privately, are too expensive for many people. The education system is similarly underdeveloped.

Dos Santos: Angola's 'eternal' president

Keeping a low profile

It is rare to see dos Santos in interviews or press conferences and he seldom gives speeches. In recent years, the president has traveled regularly to Spain for medical treatment. Only one African leader - Teodoro Obiang of Equitorial Guinea - has been in office longer than dos Santos.

Dos Santos: Angola's 'eternal' president

A successor for dos Santos

Once dos Santos announced that he would not be standing again for office in August 2017, the MPLA put forward Defense Minister Joao Lourenco (pictured) as its main candidate for the parliamentary elections. However, Dos Santos will remain the leader of the party, ensuring his continued presence in Angolan politics.