Global Witness presents...

The devastating story of oil and  banking in Angola's privatised war.

"ALL THE PRESIDENTS' MEN"

On general release from March 2002

"all the presidents' men" : directors' cut  A Global Witness Report

Starring jacques chirac and jose eduardo dos santos 

Co-starring boris yeltsin as himself « Special guest apprearances by george w bush and dick cheney « Based on an original idea by charles pasqua and jean-charles marchiani « Lack of transparency by most of the international oil and banking industries « Introducing the notion of "publish what you pay" No rating: uncensured by the international community

Contents

	1	Recommendations 1

	2	All the presidents' men - an introduction 3

Part One: The Scandal

	3	A story of state looting and a privatised war - a summary 5

	4	Angolagate - the full story 11

Pierre Falcone and Sofremi 11 

		The Brenco network and deals with Angola 15

Gaidamak's business empire 18

Deals and connections to other countries 21

Whose billions are in this bank account? 22

		Does Angolagate reach the United States? 22

		The searches and arrests begin 26

Jean-Christophe Mitterrand 27

Jacques Attali 28

Angolans connected to Angolagate 32

President dos Santos confirms suspicions about Angolagate  32

Part Two: The Complicity of Oil Companies

	5	Introduction 33

Development of Angola's oil industry 34

The top ten oil companies in Angola 35

Current practices on tax payment declaration 37

	6	Company dialogue 37

Elephant's tail or elephant - the reality of oil companies contributions to the Angolan State income 38

The IMF in Angola 39

	7	Campaign progress to date 41

Corporate social responsibility - Genuine sentiment or mere PR? 45

	8	Regulating payment disclosure 47

Risks of complicity 48

	9	The truth about tax payments to the Angolan Government in 2000 - another case of missing funds? 48

Complicity-O-Meter 49

	10	The complicity of oil companies - conclusion 50

Part Three: The Financing

	11	Introduction - international lending to Angola 51

	12	The credit tap remains wide open... 52

New lending since December 1999 53

The Wolfsberg Principles - Anti-money laundering guidelines for private banking 55

Shutting Down the Dictators' Laundromats 57



	13	Conclusion 59

		References 61

		Acknowledgements 62



1	Recommendations

Oil companies should:

*	Adopt a policy of full transparency. This involves:

1.	Rendering summary figures of taxes and other payments made to national governments publicly available for all countries of operation. In addition to information already available in the reports of subsidiaries, data should be listed as total net payments to national authorities for each country of operation and should be provided in the parent company's consolidated annual reports and in annual returns to investment authorities. 

2.	Data should be provided locally in the national language of each country of operation as well as in the home language of the company.

3.	Parent companies should publish the names and locations of registration of all subsidiary companies operating in each country.

*	Embrace a unified stand on full transparency of payments to national governments amongst all companies in the oil sector for all countries of operation. 

*	Facilitate the rapid publication of the IMF Oil Diagnostic study for Angola.

*	Adopt a policy of independent, transparent auditing of social programmes both for the purpose of the project and for its value for money. 

Commercial banks involved in existing loan arrangements to countries with severe corruption problems (such as Angola) should:

*	Publish full details of loans provided, including details of the amount lent, recipients, interest rate, expiry date and purpose of the loan.

*	Ensure internal systems are in place to prevent loans breaching internationally-agreed lending limits, such as Angola's US$269 million limit on new lending agreed with the IMF for 2001. 

*	Clarify measures taken to verify that actual expenditure corresponds with that stated on bank documentation and during negotiation and insist that such expenditure is verifiable as a condition of providing the loan.

*	Diagnose and implement mechanisms to ensure fiscal transparency in international lending in conjunction with multilateral lending institutions. This includes conditionality in loan attribution: loans should be approved when expenditure of previous loans has been verified and approved by an accredited committee; expenditure should be monitored and irregularities punished by non-attribution of further loans.

*	Ensure that any future loans to Angola are payable through one appropriately audited governmental channel, rather than the current situation with a multitude of parallel channels.

*	Immediately subscribe to the Wolfsberg anti-money laundering guidelines. Wolfsberg signatories themselves - particularly ABN Amro, Citibank and Sociòtò General which already loan money to Angola - should not collaborate with or take part in any loans in which all parties are not fully transparent as to their disbursement and subsequent expenditure.

*	Banks such as Lloyds Bank in London, which runs the Cabinda Trust, should publish regular updates detailing the resources held by the Angola oil-back offshore trusts funds and the demands being made upon them. 

Bilateral Export-Credit Agencies should:

*	Impose full transparency on all participants as a condition for future export-credit agreements.

National governments should:

*	Ensure that their national oil companies adopt full transparency criteria on overseas operations. National governments should require them to adopt a forceful common position on this issue. In particular, the French and the American governments should promote transparency in their oil industry: as major oil extractors in the off-shore of Angola, TotalFinaElf, Chevron and Exxon's apathy on this issue is appalling.

*	Insist that financial regulators of international stock exchanges should legally oblige companies filing reports with them to disclose payments to all national governments in consolidated and subsidiary accounts. 

*	Insist that their export financing agencies practice full transparency as a condition for setting up credit agreements, and that full transparency of funding partners and recipients becomes a pre-requisite for funding.

*	Fast-track the 'name and shame' process to isolate jurisdictions that are hiding and laundering dirty money and identify and seize assets of corrupt, non-transparent regimes. 

The Angolan Government should:

*	Immediately implement a policy of transparency for government income and its expenditure. The Government should fully clarify all revenues that are controlled or disbursed extra-territorially, in parallel budgets and/or by the Presidency.

*	Attend to civil society's demands for more accountability and increased social spending. 

*	Publish immediately the oil sector diagnostic results and allow the IMF to publish this data too.

The IMF should:

*	Render publicly and widely available the results of the Staff Monitored Programme, in particular the over-due KPMG report on the Oil Sector Diagnostic.

The international community should:

*	Institute appropriate national enquiries into influence peddling around access to oil reserves and revenue misappropriation from the Angolan oil industry and facilitate the French investigation into 'Angolagate'. Who knew what and when did they know it?

*	Insist that the oil industry and the financial world institute a policy of full transparency on all revenues and loans to Angola and other corrupt, neo-authoritarian regimes.

*	Provide a mandate to require the IMF to provide a retrospective analysis of oil revenues from 1993 onwards as part of an international effort to identify and repatriate misappropriated state assets in the wake of the 'Angolagate' scandal and insist that the IMF renders public all information uncovered by the Staff Monitored Programme public.

*	Ensure that current UN peace-building efforts, focused on UNITA's war effort, are extended to take into account the lack of transparency over Government oil revenues as part of the peace-building and demobilisation process. In addition, the UN must include civil society in any unfolding peace process.

*	Recognise that the definition of acceptable corporate behaviour is bound up with the operation of transparent and accountable business practices and the provision of information on payments to national governments to the citizens of that country. Future regulatory programmes or voluntary codes-of-conduct should recognise that the 'stakeholder' concept includes the general population of a country in whose name the resources of a territory are being exploited. Civil society is entitled to be provided with adequate information to be able to call their governments to account over the management of 'their' resources. It is time to move from debating corporate social responsibility to corporate accountability.

The G8, EU, OECD and the New Partnership for African Development (NEPAD) should:

*	End the practice of secret deals between governments and multinational companies by issuing clear contracting guidelines defining and legislating 'good practice' for multinational enterprises in structuring transparent financial arrangements with host governments. Such an initiative requires the G8 and others to make it a priority for national regulatory authorities to legally require full transparency for all companies over payments to national governments.

2	All the presidents' men - 

an introduction

All the presidents' men is the product of two years of investigations, and provides an update on the campaign for full transparency in the oil and banking sector. It continues an exposò, which started with December 1999's A Crude Awakening, into the mechanisms of wholesale state robbery in Angola. 

Central to the issue of state looting is a glaring discrepancy: the progressive impoverishment of a country during almost four decades of war and civil conflict has gone hand-in-hand with rising oil revenues. Despite earning around US$3-5 billon from oil last year (an estimated 87% of state revenue), social and economic development in Angola has continued to deteriorate. Three-quarters of the population are forced to survive in absolute poverty on less than one dollar a day; one in three Angolan children die before the age of five and one child now dies of preventable diseases and malnutrition every three minutes (480 every day);1 life expectancy is a mere 45 years; and about 3.1 million civilians have had to flee their homes since the war resumed in January 1998.2

Rising oil revenues have been diverted straight into parallel budgets of the shadow state. Information emerging from economists involved in analysis of Angola's oil sector suggests that up to US$1.4 billion in revenues - comprising almost a third of state revenue - is unaccounted for the year 2001. Although the exact amount of missing revenue is debatable - information on loans and payments revealed in this report suggest that this amount may, in fact, be a substantial underestimate - such figures nevertheless stand in stark contrast to the US$200m the UN barely managed to scrape together to feed the one million internally-displaced Angolans dependent on international food aid. 

Global Witness' investigations into this missing revenue culminated in uncovering how top government officials now make money out of a highly over-priced military procurement process and benefit financially from almost every item consumed in the pursuit of the war against UNITA. A billion dollar bank account connected to this process in the British Virgin Islands is also exposed, whose signatories include two high-powered Angolans. 

Whilst Global Witness does not deny that the majority of the Angolan Government would welcome genuine peace, it clear that the political and economic disorder brought about by the civil war has been deliberately exploited to enrich the ruling elite. Meanwhile, the failure of the Angolan state to provide for its citizens has been blamed on the conflict. The death of sociopathic UNITA leader Jonas Savimbi on 19th February 2002 may herald the end to that excuse; the international community must seize this opportunity to call the Angolan Government to account over its use of oil revenues.

part one - the scandal follows on from the 'Angolagate' arms-to-Angola affair that broke in France at the end of 2000. It reveals how what started as a legitimate exercise in self-defence by an internationally-recognized Government threatened by rebel insurgents in the early 1990s, ended up with full-scale appropriation and laundering of state assets through parallel budgets, over-priced arms deals and deliberate indebtedness through mortgaging of future oil production. Culpability and complicity amongst political and economic actors in France and Angola has reached to the highest level; significant links can also be inferred to the US, Israel, Russia and across Europe, including a direct lobby in the EU Parliament. 

The recent spectacular meltdown of Enron provides clear lessons on the dangers of 'influence peddling'. Enron's political donations clearly bought a substantial reformulation of national energy policy and diminished regulatory oversight. It is therefore impossible not to be concerned about the 'assistance' being sought through major donations (subsequently returned) to George W Bush's election campaign by a company connected to a figure central to Angolagate. If the impact of influence peddling can be so severe for US company employees and investors - theoretically, a domestic audience - imagine what its effect might be on the far-removed people of Angola.

part two - the complicity of the oil companies argues that international oil companies operating in Angola are complicit in the economic abuses of the ruling elite because they choose not to publish the revenues that they pay to the Angolan State. These companies claim that they do not get involved in the politics of the countries where they operate, yet the active decision to withhold information about payments to the State, when such information could clearly be provided (and is provided as routine in the developed world) is itself a political statement. 

Under the Angolan Law, 'all deposits of liquids and gaseous hydrocarbons ... belongs to the Angolan people'3; thus, it is outrageous that these owners are not allowed to know - and are actively deterred from finding out - what 'their' resources are worth. By not 'publishing what they pay', oil companies endorse a double standard of behaviour that would be unacceptable in the North and make it impossible for ordinary Angolan citizens to call their government to account over the management of revenues earned from resources that are meant to be held in trust for the general population. Instead, oil company revenues are diverted into non-transparent arms and other commodity deals. 

Despite the resistance from companies and the Angolan Government in rendering public information on revenue disclosure, Global Witness is pleased to reveal this information for the first time for the year 2000. ChevronTexaco and TotalFinaElf top the list of hidden contributions: these two companies are also notable for refusing to engage in discussions on transparency. Disturbingly, the data show that between the Ministry of Petroleum and the Ministry of Finance, some US$770 million unaccountably disappeared, indicating that the missing money from year 2001 is only part of a prolonged sequence of economic abuse. 

part three - the financing looks at how the international banking sector has operated offshore havens for these assets and gleaned lucrative commissions on oil-guaranteed loans with minimal oversight. Oil-backed loans represent a vast additional source of unaccountable income to the State; investigations by Global Witness suggest that the Angolan Government borrowed over US$3.55 billion by mortgaging future oil production at high interest from September 2000 to October 2001 alone. This was provided by various banks with almost no procedures to check that the money was actually spent on that for which it was requested and, if correct, these figures indicate that informal estimates of US$1.4 billion of revenue and loans diverted may be a substantial underestimate. Certainly, international banks have given no regard to the fact that they have vastly exceeded the Government's agreement with the IMF to restrict new lending to US$269 million during 2001. Northern Export Credit Agencies are guilty of a similar lack of care; taxpayers' money in Northern countries is being used to underwrite unaccountable export financing arrangements in highly corrupt countries with no transparency provisions attached. 

Despite this pressing need for the natural resource sector to be open and transparent about payments to unaccountable regimes, there is a startling lack of pressure in this direction from the international community. Angola, for example, has seen the full-scale retreat of any objective and principled foreign policy towards the country: recognizing the importance of future oil production, diplomatic efforts have at best refrained from hindering, and, at worst, have actively colluded with, the operations of their industrial interests. Policy engagement with the Angolan Government has resolutely focussed on sanctioning UNITA with the aim of moving the group back into line with its obligations under the 1994 Lusaka Protocol. Whilst this has been an admirable effort - indeed Global Witness made an important contribution to this effort by exposing UNITA's funding through the diamond trade and continues to negotiate and promote the Kimberley Process to address the conflict diamond issue - the international community has failed to examine faults on the side of the Government, including its manifest failure to provide adequately for the population as a consequence of corruption.

Without support from a broad international coalition for change, oil companies operating in the country are in a difficult position - even if they want to do the right thing and publish what they pay to the Angolan Government, they face immediate reprisals from those with a vested interest in the status quo. Indeed, the announcement of a policy of transparency by BP brought a vicious response from the Angolan State oil company, Sonangol, in a confidential letter reproduced in this report, which shows their apparent contempt for the issue. It is clear that a single company cannot make such a move alone, so there is a pressing rationale for coordinated group action by the major oil companies in the country, all of whom, according to their fine-sounding corporate mission statements, are committed partners in equitable development and social justice. 

The international community must also act conclusively to level the playing field amongst competitors and introduce mandatory disclosure of revenue payments to governments by transnational resource companies for all their countries of operation. This could be achieved overnight by requiring such summary disclosures in annual reports to major international securities exchanges. 

The international community should also identify and freeze, pending repatriation, all overseas assets that have been looted from Angola. This report reveals how the machinery for state robbery and money laundering took on a global dimension. The events of the destruction of the World Trade Centre have created a new sense of urgency to confront money laundering, arms trafficking and internationalised crime. The same resolution to trace and impound the assets of terrorist groups should also be directed against the mechanisms used for state looting in corrupt, neo-authoritarian regimes.

As World Bank President James Wolfensohn wrote after the 11th September 2001 'central to conflict prevention and peace-building must be strategies for promoting social cohesion and inclusion, ensuring that all have opportunities for gainful employment, that societies avoid wide income inequalities that can threaten social stability and that poor people have access to education, health care, and basic services such as clean water, sanitation and power'.4 

Full disclosure of payments and royalties to all national governments by natural resource companies is a necessary precondition to deliver just and equitable development and is central to preventing the blatant exploitation of political disorder for private economic gain. This report is a challenge to all involved to move forward creatively to address the real forces underpinning the Angolan civil war and deliver fiscal accountability of Angola's oil wealth such that it might, for once, deliver some benefit to its real owners.



Angolan Social Indicators

Population	12.4 million 

Life expectancy	48.9 years 

National Budget	US$5.1 billion 

GNP per capita (Constant 1995 US $)	US$233 

Children	

Population under 15	48% 

Infant mortality rate for children under 1	12.4%

Infant mortality rate for children under 5	male 20.9% 

	female 19.2% 

School enrollment rate, Primary	37.5%                                 

Children under 5 years suffering malnutrition	35%

Underweight children	42% 

	(14% severe)

Poverty Statistics	

Population living in absolute and relative poverty	82.5%

Maternal mortality rate during 1996	1.9%

Population without access to drinking water	62%

Population without access to adequate sanitation	56%

Population without access to healthcare	76%

People requiring food aid	3.2 million

Estimated rate of severe malnutrition	13%

Internally displaced persons (an estimate)	3.5 million 

Unemployment rate	80%

Adult literacy rate 	42% 

Land Mines	

Disabled land mine victims	86,000 

Part One: The Scandal

3	A story of state looting and a privatised war - 

a summary

Following the December 1999 report A Crude Awakening, Global Witness continued its investigations into the financing of Angola's war machine. The result is a story of how a legitimate exercise of self defence against UNITA turned into a conspiracy involving highest level politicians and individuals in Angola and beyond to rob the country of its wealth through kick-backs related to over-priced arms deals, financed by oil-backed loans.

Investigations indicated that certain key individuals benefit financially from the military procurement process, from almost every item consumed in the pursuit of the war against the UNITA. This leads to a disturbing conclusion: political and economic disorder and a total absence of financial transparency of the Government's oil revenues are the necessary conditions for this machinery of cash diversion and kickbacks to operate. Recent indications of a will to make peace appear to have received a major boost following the death of UNITA leader Jonas Savimbi, providing an opportunity which should be grasped with both hands by all sides to the conflict. The recent suggestion of a ceasefire is the first indication that peace negotiations are a possibility. However it is still far from clear how a genuine peace will be achieved, and as conflict and instability continues, Angola's wealth will continue to be siphoned off through a myriad of corporate and offshore centres, courtesy of the global banking system, whilst a major proportion of Angola's dispossessed are left to the mercy of donor assistance. 

All the Presidents' Men reveals an international scandal that encompasses a global process of control over oil and the predatory nature of the international financial and banking systems. The miasma of dirty dealing discussed in this section demonstrates how members of the international community have sought mutual advantage with Angola's shadow state to ensure future oil supplies. From the perspective of oil interests, this has been largely successful, but it has been a disaster for the ordinary citizens of Angola, who have paid a devastating price for access to resources that are being exploited in their name.

An insight into state looting in Angola?

Angolagate is the name given by French and international media to a scandal that saw, amongst others, the December 2000 arrest of Jean-Christophe Mitterrand, son of former French President Franôois Mitterrand. Fortune Magazine wryly commented that, 'it is de rigeur for French corruption scandals to be very complicated' and, so far, the scandal discussed in the press only concerns allegations of influence peddling, illegal weapons trading and abuses of public trust by a complex web of individuals in the supply of arms to Angola during 1993 and 1994.

Global Witness' investigations have uncovered additional information which, taken together with published material, leaves little doubt that Angolagate and associated events of 1993/4 are but a small proportion of a much wider international scandal involving key international political and business players. In fact, the true story is about the privatisation of Angola's war and the architecture of state looting on a scale to rival Mobutu and Abacha. Just how far this scandal reaches, and which other international political leaders are tainted, is difficult to determine. But as Philippe de Villiers, previously vice-President of former French Interior Minister Charles Pasqua's Rassemblement pour la France (RPF) party explained, 'I can confirm in a very explicit manner that the Mitterrand-Pasqua affair [Angolagate] is a very serious state affair, with inter-continental ramifications...'. 

This introductory section provides a summary of, and a background to, the whole affair and explores its wider international implications. The full account begins with the section entitled 'Angolagate - the full story'. Global Witness points out that we are not implying guilt on behalf of any party, and those individuals that are named have yet to be tried or convicted in a court of law. Nevertheless, we invite those named to clarify their actions.

Africa is seen from France as a 'judicial no-man's land which, in the name of mutual political interests, was to stay for eternity a land of unpunished crimes.' 

- Reuters, quoting from Le Monde editorial, December 200092 

The start of French influence peddling in Angola 

By 1993, despite having won the 1992 Angolan elections, President dos Santos' Government was losing the war against UNITA. The latter had reverted to armed conflict following electoral defeat, and at the time controlled around 80% of the country. The Government had neither the arms, nor the financing, to fight back.

The resultant call-for-help from dos Santos was aimed at sympathies within Mitterrand's Presidency in Paris. It also provided a potential solution to France's increasing paranoia about likely United States domination of Angola's oil sector following the Clinton Administration's formal ending of US support for UNITA. However, there was a major barrier to official French help for the Angolan Government due to the fact that President Mitterrand was going through his second period of co-habitation, sharing power with the centre-right Government of Prime Minister Edouard Balladur. Any official military assistance from the French Government to Angola would require the support of the French Minister of Defence, who at that time was one of the strongest supporters of UNITA in Paris. Official channels of support were thus closed.

Jean-Christophe Mitterrand allegedly then introduced businessman Pierre Falcone to engineer a solution. Falcone headed a group of companies under the umbrella, 'Brenco International', whilst simultaneously working as 'key advisor' for Sofremi, a security export company that was controlled by the French Interior Ministry, then headed by Minister Charles Pasqua.

Pasqua's team immediately saw this as an opportunity to head off US oil dominance in Angola. According to the press, though Falcone had been brought into the discussion courtesy of the French Political left, he now received endorsement from Pasqua's team on the right, and was thus tasked to provide a solution to Angola's weapons and finance requirements, on the proviso that supplies did not come directly from France.

According to numerous French press articles, Falcone then formed a partnership with Russian òmigrò and businessman Arkadi Gaidamak (also spelt 'Gaydamac'). In a telephone conversation with Global Witness, Gaidamak claimed that at that time, both he and Falcone travelled to Angola where they were provided with Angolan diplomatic passports, after which they operated as de facto Angolan officials. During this conversation and in earlier press reports, Gaidamak claimed that the purpose of their cooperation related to the provision of oil-backed loans for Angola, and he denied that they had been involved in the supply of weapons. In a later conversation with Global Witness, Gaidamak subsequently admitted that arms had been supplied, though he denied direct involvement. His justification was that these deals had been arranged with a legitimate government.

The French press describe a series of contracts that both Falcone and Gaidamak reportedly put together to supply arms to Angola during 1993 and 1994, totalling some US$633 million. Documents detailing some aspects of these contracts have been published and although they appear to contain Falcone's signature, Gaidamak is conspicuous by his absence.

L'Express reports that Falcone and Gaidamak were the 'tandem who would deliver arms to the Angolan regime' and to do so, they took 'defacto control of a company, ZTS-Osos, based in the Slovak Republic.'5 The paper refers to arms including 'tanks, rockets, helicopters, combat vehicles and troop transporters, all of which were of Russian manufacture', being delivered in reference to contracts from 1993 and 1994, and that negotiations were 'conducted in Paris and the money transited through a Banque Paribas account in the capital.'5

Banque Paribas, now taken over and subsumed into the group BNP-Paribas, was also one of the key banks involved in the provision of oil-backed loans to Angola. According to Gaidamak, both he and Falcone were effectively given control over the disbursements of funds from such loans exercising, as he put it, their duties as effective representatives of the Angolan Government.21 Were any of the loans provided by Paribas used to fund arms supplies through the arrangements discussed above? Regardless of whether or not this has happened, another major question arises: given the high exposure of banks to risks associated with bad loans, why was Paribas willing to be involved in the provision of substantial loans to a government that was, at that time, by no means sure of its own survival?

Did Angola get value-for-money?

It is not clear if arms supplied from these contracts represented value-for-money for Angola. Weapons clearly were supplied during this period that were of sufficient quality to change the fortunes of the Government, allowing it to fight back to a position of stalemate with UNITA, which in turn led to the Lusaka protocol agreement in 1994. However, the issue of arms supplies to Angola in general throughout the 1990's, together with the supply of other commodities, have been dogged by claims low quality. These claims have ranged from shipments of rotting meat being imported, solely for the commission involved, to the delivery of tanks and other heavy equipment, of such low quality that they had to be removed from their delivery vessels by chains, whereupon they were transported to 'tank graveyards', outside Luanda.

The situation across Africa

This is a pattern that does not affect Angola alone. Investigations conducted by Global Witness into a number of different African conflict hotspots suggest that in many cases, arms deals are often extremely bad value for money. For example, in a number of deals, arms have been supplied worth a fraction of the money ultimately used to pay for them. On one occasion, the government concerned paid their suppliers approximately 35% of contract face value, whereupon the latter delivered weapons worth around 25% of contract face value, generating an immediate 10% profit on the deal. As if this was not bad enough, the suppliers then arranged additional financing from a number of banks, secured by revenue from natural resource extraction, up to the value of the contracts. These additional funds, essentially worth 65% of contract face value, were then added to the 10% profit already generated from the up-front payments. The result - the country concerned obtained weapons worth a quarter of what they paid, generating enormous profits along the way for those involved in the deals. 

Beyond Angolagate - arms trafficking following 1993/4 

Global Witness' investigations revealed that at least one further arms supply contract was put together by ZTS-Osos in 1995 or 1996. Though the date of the contract is not clear, it is possible that this contract, worth approximately US$44 million, was agreed at roughly the same time that Paribas provided its 19th September 1996 oil-backed loan of US$135 million.

Interestingly, Gaydamac's (sic) signature appears to have been included alongside Falcone's on this 1995/6 ZTS-Osos contract, reproduced on page 16. Well-placed sources have suggested that it was very rare for Gaidamak to sign documents. However, based on available documentary evidence, Falcone's signature appears to be genuine; if it is, then Gaidamak, at the very least, should explain how his name appears on this document. 

Investigations also revealed that in addition to arms, a similar method of financing and supply has been used to provide food, medicines and other commodities required by the Angolan Government in its war effort. One of the key vehicles used to supply food and medicines for the Angolan armed forces is a subsidiary of Falcone's company Brenco International, called Companhia Angolana de Distribuiô„o Alimentar (CADA), that reports have suggested gained a monopoly of supply to the Government Forôas Armadas de Angola (FAA) for a period of five years.

The scene unfolding before our eyes is overwhelming. At the heart of the State [France], Socialist and neo-Gaullist networks joined hands to enrich themselves by facilitating sales of heavy Russian arms to a country ravaged by war and misery. It is a disgrace for France and Africa.

- Reuters, quoting from Le Monde editorial, December 200092 

A lesson in transparency - do you keep accounts like this?

Global Witness' investigations have also identified the existence of a bank account - number 15468991 - held at the so-called 'First Virgin Bank' in the British Virgin Islands (BVI). This account held approximately US$1-1.1 billion during 2001, with two high-powered Angolans acting as signatories. The true identity of the 'First Virgin Bank' remains a mystery. (For further information, see Whose billions are in this bank account? - page 22.)

Angolagate and legal action

Following a complex series of judicial investigations, described later in this report, Pierre Falcone was arrested on 1st December 2000. His arrest, together with interviews and searches at the offices and residences of other individuals allegedly connected to this scandal, precipitated press reports and speculation about Angolagate. Prominent individuals, including Jean-Christophe Mitterrand, Jacques Attali, former advisor to President Mitterrand and first Director of the European Bank for Reconstruction and Development, and some lesser-known individuals were subsequently arrested and charged for a variety of alleged offences. During 2001, both former French Interior Minister Charles Pasqua and his right hand man, Jean-Charles Marchiani, were also formally cautioned and questioned in relation to this issue; the latter two appear not to have not been formally arrested because they enjoy immunity of prosecution as Members of the European Parliament.

An international arrest warrant, number 0019292016, was issued for Arkadi Gaidamak on 11th January 2001. Nevertheless, it appears that Gaidamak currently enjoys the protection of Israel. Well-placed sources have suggested that he continues to travel freely between Israel and Angola, to South America and into the UK. 

After numerous legal challenges, Falcone was finally released on 1st December 2001, after spending precisely one year in prison. His release was accepted on a bail posting of 105 million French Francs (US$14,351,000),6 more than ten times France's previous highest bail demand. Nouvelle Observateur reports that the Court of Appeal reduced Falcone's bail demand to —5 million (US$4,309,000)7, which it says is to be paid by Angola's State oil company Sonangol, as a mark of Angola's solidarity with Falcone.8

The Brenco group and links to the United States

Reports in both Arizona Republic and in Newsweek Magazine suggested that Falcone is well established in the United States and that he has strong connections with the US political elite. In late 2000, Falcone purchased an immense mansion in Paradise Valley, Arizona, for a reputed US$10.6 million, the highest value personal property purchase in Arizonan history. Interviews in Arizona Republic with individuals claiming familiarity with Falcone and his Bolivian beauty queen wife Sonia, suggested that they led a dream life, circulating within the party circuit of Arizona's elite, and spending significant funds on a variety of philanthropic ventures.9 

Sonia de Falcone runs Essantò, a Utah-registered company specialising in health and beauty products, and of late, a range of products aimed at enhanced sexual pleasure. The company was incorporated in Delaware on 6th April 1994, with Sonia and Pierre Falcone listed as directors.10 Essantò is also connected to the Brenco group in terms of shareholdings and common addresses, both in the UK, and for holding companies in the British Virgin Islands. According to both Newsweek Magazine and Arizona Republic, and supported by US Federal election funding records, Essantò donated US$100,000 to George W. Bush's election campaign. This money was returned in January 2001, with the Arizona Republic quoting Newsweek 'the money was returned to avoid questions about whether an international weapons merchant was trying to buy influence with the new Bush Administration.' The Arizona Republic reported that Falcone family spokesman, Jason Rose, 'scoffed at that insinuation.' Newsweek's January 2001 article referred to both the donation and to Falcone's December 2000 arrest in France.9

The US publication In These Times furthered the discussion about Essantò's donation to Bush's campaign. In an article entitled 'The arms dealer next door', In These Times reports claims by Sonia Falcone that '...her husband had no connections to Essantò and that the company's political contributions came out of corporate profits.'10 The article went on 'more significantly, Essantò, which has been losing money for the past seven years, has no profits from which to make political contributions.' The article then provides comments attributed to the legendary Hollywood PR agent, Lee Solters, which reportedly claimed that 'Essantò spent its first six years, and US$6 million, developing its product line. Sales only began in earnest last September, after Essantò threw a three-day launch party at the Paris Hotel in Las Vegas.10 In These Times concludes by quoting a source which it described as 'familiar with the family' 'the company [Essantò] has come a long way with Pierre's generosity, but after a few years he'd like to see some profit. It rubs him the wrong way, but out of love for his wife he's done it with a smile on his face.'10 

Had Newsweek not raised the issue of Falcone's arrest, together with Essantò's donation, would the money have been returned by the Bush campaign? According to In These Times, 'The GOP [Republican Party] returned the contributions following Pierre's detention - "to avoid the appearance of impropriety," in the words of a statement issued by the Republican National Committee.'10

According to Swissinfo, a Swiss-based web site covering Swiss affairs, on the 16th March 2001, 'Justice authorities in the Canton Geneva [...] launched another money laundering investigation involving alleged arms trafficking to Angola.' The article described how this initiative 'follows an earlier money laundering investigation, also involving alleged arms trafficking to Angola, which was launched by Geneva's top prosecutor, Bernard Bertossa, in January [2001].'11 According to Swissinfo, as part of this investigation, '...several Geneva banks have been ordered to reveal whether any of the people or businesses on the list [a list of individuals and companies forwarded to the Geneva prosecutor by the French investigating judges] have ever held accounts with them.' It continued, 'if so, officials are expected to request account statements dating back to 1990, when Swiss money laundering laws came into effect.' According to Swissinfo, 'one of the most prominent names on the list is that of the former French Interior Minister, Charles Pasqua, and his son, Pierre Pasqua. European Deputy Jean-Charles Marchiani, and Sonia Falcone, wife of the alleged arms dealer Pierre Falcone, are also on the list.'11 There are no suggestions of any charges against or wrong-doing by Sonia Falcone - it appears this request relates to the investigation into her husband.

Further US connections - a smoking gun?

Shortly prior to Falcone's arrest in December 2000, judicial investigations in France led to a raid on the apartment of Falcone's secretary. According to French press articles, investigators located some 26 diskettes, containing significant quantities of documents detailing activities, contracts and letters relating to Falcone's activities in Angola. Given that these diskettes provided sufficiently good quality primary information that led to the subsequent questioning, and in some cases arrests of, amongst others, Jean-Christophe Mitterrand, Jacques Attali, Charles Pasqua and Jean-Charles Marchiani, it is logical to assume that the information they contain is considered reliable by the investigating Judges.

Allegedly, amongst these documents, investigators discovered a letter inviting then US Presidential candidate, George W Bush for a meeting with Angolan President dos Santos at Falcone's Arizona ranch. Global Witness understands that this meeting did not actually take place, though the reason why is not clear. However, given the Bush Campaign's acceptance of Essantò's money until it was publicly embarrassed, one might conclude that the meeting may not have taken place due to scheduling reasons, rather than for any specific distrust of Falcone, or his overtures.

In a late December 2000 article, the French publication, La Nouvelle Observateur, implied yet another close link between the Falcone and Bush families. The magazine suggested that, in addition to campaign financing, Laura Bush and Sonia Falcone are friends. Meanwhile the publication, In These Times, suggests any such relationship is due more to connections generated by Arizona State Senator Bundgaard, and because of funds provided to Bush's election campaign, than out of any real friendship. Regardless of the reality of any such relationship between the two families, it is not difficult to imagine that Falcone might have been in a position to arrange meetings with the future President of the United States.

It seems likely, however, that Falcone's potential influence did not end with political donations to the Bush campaign alone. In These Times reports that a meeting took place between Falcone and three un-named high-level Phillips Petroleum Corporation executives in June 2000, some five months prior to Falcone's arrest in Paris.10 Phillips Petroleum Corporation holds a 20% stake in Angola's Block 34, allocated in 2001, but for which negotiations were already well-underway at the time of the company's alleged meeting with Falcone. The article states that Phillips refused to comment on the meeting.

Global Witness sought clarification about what role, if any, Falcone might have played regarding the acquisition of Phillip's stake in Block 34. Bryan Whitworth, Executive Vice President and General Council for Phillips, responded in January 2002, stating that he was unable to identify a meeting in Scottsdale in June 2000, but that there was a meeting in September and a follow-up in Washington in October 2000, '...to determine whether or not Phillips wanted to utilize Mr. Falcone as a consultant [...] it was concluded that Mr. Falcone should not represent Phillips.' Further, the letter stated that 'Mr. Falcone has never been employed by Phillips Petroleum Company nor represented Phillips in any respect on any matters.' This response, of course, raises the question as to why Pierre Falcone should have been considered as a possible consultant in the first place, and on what basis did Phillips come to the conclusion that he was inappropriate for such a job afterwards?

Michael Austin, an Arizona-based friend of the Falcone family and domain name holder of a website in support of Falcone wrote to Global Witness in an e-mail, '...Pierre derives a great deal of income from Exxon Block 33 located within the boundaries of Angola.' Given the apparent meetings between Falcone and Phillips, and given ExxonMobil's operatorship of Angola's Block 33, ExxonMobil should clarify what, if any role is, or has been played by Falcone in Block 33. In particular, ExxonMobil should clarify if it has also held meetings with Falcone, and if the latter played any role in advising, or facilitating the company's acquisition of its operatorship of Block 33. Global Witness sought clarification from ExxonMobil on 23rd January 2002, and has yet to receive a response. 

Following Falcone's arrest in December 2000, the Sunday Times hinted at possible links between Vice-President Dick Cheney, in his role as CEO of the oil services company Halliburton, and Angolagate. The paper commented that '...as Defence Secretary, Cheney had been an outspoken supporter of UNITA ... he now finds himself in the intriguing position of having recently headed a company that pursued contracts aggressively with UNITA's sworn "enemy."' According to the Sunday Times, during the American election campaign, Cheney was reportedly 'accused of using his connections as a former Defence Secretary to secure the company [Haliburton] contracts.' 80 Given the suggestion from the Sunday Times that 'French authorities [connected to the Angolagate investigation] are scrutinising the activities of several oil companies that provide Angola with most of its foreign revenues - including Haliburton Co,...', a key question arises: Did Pierre Falcone play any role in securing contracts for Haliburton? Vice-President Cheney should immediately clarify Haliburton's success in Angola.

It is obvious from the Enron scandal that influence peddling is a major problem in the United States. Interestingly, Enron CEO Kenneth Lay's US$100,000 donation to the Bush campaign is strikingly similar to the Falcone's US$100,000. We have seen what Enron managed to achieve through its 'donations' - what was Falcone hoping to achieve, and perhaps more to the point, what would he have achieved, had the embarrassment of his arrest not facilitated the belated return of his money? It is a matter of urgency that a full and thorough investigation into the reaches of Angolagate is conducted in the United States. It is clearly good, for legitimate US domestic concerns, that the current spate of Enron investigations might lead to a clean up and end to efforts by companies to buy influence in Washington. However, given the plight of Angola's population, suffering from nearly 40 years of fighting, and given the strategic value and benefit accrued to the US from the exploitation of Angolans' resources, nothing less than a full investigation will do. What did the key players know, and when did they know it?

Russian debt and guns

Sources suggest a strong Russian involvement in ZTS-Osos, the Slovak-based supplier of arms involved in Angolagate; including significant shareholding in the company by a number of Russian State arms production companies (See Russian State interests in ZTS-Osos - page 17).

According to a number of press reports, both Falcone and Gaidamak were involved in a deal to renegotiate Angola's US$5.5 billion debt to Russia. According to a February 2002 article in the Geneva publication Le Temps, 'in 1996, the pair [Gaidamak and Falcone] negotiated the re-purchase of Angola's debt to Russia: the latter was intended to receive US$1.5 billion instead of the US$5 billion owed by Luanda's Government.' The paper continued, 'the Angolans agreed to reimburse this amount, thanks to the country's oil revenues.' Commenting on those involved in the deal, the paper reported 'swiss-based companies took part in the operation: Glencore, in Zug, traded the oil; Paribas (Switzerland), together with other banks, advanced the money promised by Angola.'12

The role of Falcone and Gaidamak in this operation is not clear. However Le Temps commented that 'Pierre Falcone was in charge of the distribution of revenue from the debt repurchase amongst Angolan dignitaries, while Arkadi Gaidamak did the same thing for the Russian side.'12 Both Falcone and Gaidamak have commented on this deal, with Falcone suggesting he made a modest, 'less than US$15 million,'13 for his services - ironically, roughly the amount required to post his bail demand on the 1st December 2001. Gaidamak has boasted, 'as a matter of fact, I even supervised the relations between Russia and Angola, looking after the interests of both parties.'14

Whatever the truth of this arrangement, it is clear that the IMF is concerned about what really went on. By December 2001, the IMF had been unable to obtain any clarification about these arrangements, either in Luanda, or Moscow. It is time, not only for the Russian and Angolan Governments to be transparent about this arrangement, but also for all the banks that have participated in oil-backed loans to Angola since 1996, to provide details of what they know of this situation.

The French connection

Numerous detailed French press articles leave the reader little alternative but to conclude that at the start of the 1993/4 finance and weapons supply programme described earlier, a number of top level officials, both closely connected to then President Mitterrand and within Prime Minister Balladur's party, were intimately aware of what was going on. 

A number of questions have yet to be asked. What happened after the end of the Mitterrand Presidency? What did President Jacques Chirac, Mitterrand's successor, know of these events and when? These questions are especially poignant given that loans continued to be provided, together with the provision of arms and other commodities to Angola, well into the period of Chirac's Presidency.

Falcone wrote personally to President Chirac both in 1997 and in 1998, and these letters provided considerable detail about projects underway. Further, sources suggest that during President Chirac's state visit to Angola in 1998, at least one meeting was held in Luanda between Chirac and dos Santos in which Falcone was present.

Another area of concern relates to the 1995 release of three French pilots, who had been shot down over Bosnia. According to press reports General Gallois, who was the main negotiator, had successfully secured their release but he was formally instructed to terminate discussions prior to bringing them to their conclusion. A few weeks later, Gaidamak reportedly stepped in to secure the hostages' freedom, which resulted in their arrival in Paris, shortly prior to a post-Dayton peace conference on Bosnia, hosted by newly elected President Chirac.

According to Le Monde, the former Prefect of the Var Region, Jean-Charles Marchiani, presented Gaidamak with the 'Order of Merit', in recognition of his services in the release of the hostages. However, a January 2002 article in Le Monde stressed that General Gallois deplored the existence of 'parallel negotiations', and stressed that he did 'not understand why Gaidamak and Marchiani intervened after [him], it did nothing. It only had the effect of slowing down the release of the hostages.'15

In an article about the 22nd May 2001 indictment of Jean-Charles Marchiani, Le Monde reported that, 'the former Prefect of the Var is also suspected of having received a financial compensation for the attribution, in 1996, of the Ordre National du Mòrite to Mr Gaidamak, which was agreed by the President of the Republic, Jacques Chirac.'16 Le Monde stressed that Marchiani vigorously denied all allegations that have been laid against him.16

Given recent articles about corruption and the 'Travelgate' affair during Chirac's tenure as Mayor of Paris, any potential involvement of Chirac, or his knowledge about arms trafficking and state looting in Angola, is of major concern. To date, President Chirac has simply side-stepped all questions relating to his tenure as Mayor citing Presidential immunity. This has led, for example, to the bizarre situation with 'travelgate', where other members of Chirac's family have been required to respond to questions from investigating Judges, whilst the President himself is able to maintain his silence.

It is time for all to come clean

The essence of corruption in Angola, is that instead of relatively small sums, or petty personal advantage as epitomised by 'Travelgate', here we are talking about Mobutu- and Abacha-scale state looting. This is a process which has been intimately tied to the conduct of war in Angola and perpetuated by the highest-level elites for personal and political gain. It is the general population of Angola that has had to pay a terrible price - that includes more than 500,000 killed from 1992-1998 alone, approximately 480 children dieing every day of preventable causes, a quarter of the population displaced, and more than a million citizens entirely dependent on emergency food aid; conditions, which despite suggestions of a ceasefire, appear set to get worse before they improve.

It is imperative that decisions should be made on an international basis to ensure that the events and actions discussed in this document can never again be repeated. Part of this process of change could so easily be instituted through the suggested actions and recommendations in this report with little or no pain for any corporate or national interests, excepting those that currently profit from the Angolan shadow state. 

In this regard, it is imperative that responsible leaders must come clean about what they know of events relating to the arming and financing of Angola's war machine. For example, President Chirac is facing the electorate during 2002, and the conduct of the democratic process in France cannot tolerate the continued concealment of vital information central to unravelling these events, especially when a lack of information undermines the capacity of Angolans to hold their Government to account for its actions. The cost to Angolans of international oil and political interests in Angola is too high.

...that gentleman [Falcone] dealt with sensitive matters which had the consent of the French authorities and were very useful to Angola. We interpreted his action as a gesture of confidence and friendship by the French State and, for this reason, my Government took decisions that permitted spectacular growth of cooperation with France in the area of oil and economically and financially.

President dos Santos, confirming the vested interest of France, behind the activities of Falcone et al. 

4	Angolagate - the full story

Angolagate broke to the world's media with the arrest of Jean-Christophe Mitterrand, the son of the former French President Franôois Mitterrand, on 21st December 2000. Jean-Christophe Mitterrand's incarceration followed the earlier arrest on 1st December 2000 of the lesser-known Pierre Falcone, named in Global Witness' December 1999 report A Crude Awakening as a member of Angola's 'oiligarchy'. 

The story began in 1992 when Jonas Sambivi and UNITA reneged on their commitments under May 1991's Bicesse Accords after failing to win victory in Angola's first national elections. UNITA's renewed insurgency proved relatively successful because most of the group's elite units had remained fully armed and operative. In contrast, Government's troops (the FAA) had disproportionately demobilised their forces and so were comparatively weaker. For the first time, UNITA was able to besiege and hold large cities, capturing five of the eighteen provincial capitals in one the most brutal stages of the country's (then) thirty-year civil war. The UN estimated that some 300,000 civilians were killed between 1992 and 1994 by direct shelling of cities or indirectly through landmines and starvation.17

At the time, with the collapse of its major supporters in the Soviet Union, the Government lacked the weapons and the finances to turn the situation around. By the spring of 1993, the war was going badly for President dos Santos' Government, with UNITA controlling large swathes of Angolan territory and looking like a potential victor. According to Le Monde, in an effort to turn the war back in the MPLA's favour, dos Santos decided to appeal for aid to French Socialist sympathies under the Presidency of Franôois Mitterrand.18 A call was made to Paris to the former French Socialist Party Southern Africa expert, Jean-Bernard Curial, who was asked to come to Luanda immediately.18

Curial's visit witnessed a dire military situation; however, generating assistance for Luanda at this time of need was not, according to Le Monde, to be a simple task.18 Mitterrand's centre-left Presidency was going through its second period of cohabitation, which involved power sharing with the centre-right Government of Edouard Balladur. How would it be possible to obtain official French Government assistance, when the key to such assistance would require agreement from the then French Defence Minister Franôois Leotard, who was well-known at the time as one of the strongest supporters of UNITA in Paris?18 

Following his return, Curial met the President's son, Jean-Christophe Mitterrand, in Paris.16 By this time, Jean-Christophe had already left his post as 'African Advisor' to his father's Elysòe Palace. Though he could no-longer directly help, Mitterrand suggested that Curial should contact Pierre Falcone, the head of a group of companies under the umbrella 'Brenco International', based in Paris. Falcone was also a key advisor to 'Sofremi' (the 'French Company for the Export of Goods, Systems & Services'),18 which was a part-private, part-state run organisation operating under the auspices of the French Interior Ministry that, at the time, was headed by Interior Minister Charles Pasqua.

The timing of the request for help could not have come at a better time given Pasqua's policy of promulgation of French interests across Africa. From the early 1990s, the United States' policy towards Angola had gradually shifted away from support for UNITA, to a policy overture to the Angolan Government. It was clear to Pasqua and his team that it was US oil interests that were responsible for this change. Although the US company Chevron already dominated Angolan oil production, it was felt that this policy swing would deliver further advantage to US companies, posing a serious threat to France's own oil ambitions in the region. In short, it was time for a change in France's own position to engage with the MPLA. Following the arrest of Jean-Christophe Mitterrand in December 2000, Africa expert and former head of military police, Paul Barril, confirmed the selling of arms to Angola was part of a strategy to ensure access to a significant part of Angola's oil production.19

There are differing accounts regarding the first meeting of Jean-Christophe Mitterrand and Pierre Falcone. According to his lawyer, Mitterrand first met Pierre Falcone following his departure from the Elysòe, but according to Le Monde, a former employee of Falcone places Mitterrand's first visit to Brenco International's offices, then at 56 Avenue Montaigne in Paris, prior to July 1992;18 in other words, when Jean-Christophe Mitterrand was still his father's African Advisor. Sources report that it was a Mr Jallabert, at the time in charge of international affairs at the French arms and electronics company Thomson CSF, who introduced the pair whilst Jean-Christophe still worked at the Elysòe.20 

According to Le Monde, about a week after their first meeting Pierre Falcone contacted Curial to let him know that he was able to help.18 Things moved quickly. By 7th November 1993, the first deal with the Angolan Government had apparently been concluded, according to Le Monde.18 This first deal, worth approximately US$47 million, delivered ammunition, mortar rounds and various artillery pieces by mid December 1993.18 More was to come. Le Monde reports that on the 22nd April 1994, the scale of Falcone's arrangement with Luanda was massively expanded by an 'amendment,' or further deal worth some US$463 million.18 On this occasion, the deal was to include fighter aircraft and tanks. By late 1994, according to Le Monde, Pierre Falcone had been involved in the selling of weapons to Angola worth some US$633 million.18 Sources indicate that although the face value of these contracts may have been as high as US$633 million, a significant proportion of the weapons listed in contracts were delivered much later than this date.

According to Le Monde, Falcone's Angolan contact in Paris was El‰sio de Figueiredo who had become the 'third Angolan Ambassador' in Paris through a formal request by dos Santos, in addition to Angola's formal Ambassador and the UNESCO representative.18 This unorthodox arrangement provided for de Figueiredo,20 who had previously been Ambassador in Paris, to take on the role of roving Ambassador, without portfolio and act as dos Santos' go-between.

Pierre Falcone and Sofremi

Sofremi is the French acronym for the 'French Company for the Export of Goods, Systems, and Services'. It was set up in 1986, under the jurisdiction of the French Interior Ministry, at that time headed by Charles Pasqua, who had been appointed by then French Prime Minister, Jacques Chirac.125

Sofremi was established to promote the expertise of the French Interior Ministry in the field of security, and to negotiate contracts to sell communication and security equipment to overseas police forces.126 Such deals could only be put together between Sofremi and the government, or state institutions of the target countries, and any resultant contracts required the final approval of CIEEMG, i.e. the Inter-Ministerial Commission for the Study of the Trade of War Material.126 This oversight approach was established to ensure that Sofremi could not become involved in arms trafficking. Since its establishment, its activities have varied considerably, with a main focus on Latin America and the Middle East.

According to Le Monde, Pierre Falcone became one of the most significant advisors to Sofremi, between 1989 and 1997, with his introduction to the company coming through an intermediary of then director Philippe Melchior. 127 After the March 1993 elections, newly installed Interior Minister Pasqua replaced Melchior with Bernard Poussier. Poussier then served as director of Sofremi until 1997.127

On 14th December 2000, Poussier was interviewed under caution by the Judges investigating the Angolagate case. Le Monde reported he was then 'placed in custody [at la Santò Jail in Paris] for 'misuse of social benefits, abuse of trust, influence peddling and aggravated influence peddling.''81,128 Poussier was then release on 12th January 2001.

The allegations against Poussier appear to centre around a 1998 payment of approximately one million French Francs (US$167,000)129 in cash to Poussier by Pierre Falcone.81 In a 17th January 2001 interview with Le Monde, Poussier clarified 'It [the money] was a loan of "honour" from a friend to whom I confide my problems. Therefore, as soon as my bank was telling me that I was overdrawn, I was talking to him. He then gave me money that I put into my account.'130 

Poussier also insisted that Sofremi did not mix its business interests with those of Pierre Falcone. He said, 'It [Sofremi] was never involved in any manner with the sale of Russian arms. In any case at that time M. Falcone was mostly dealing with financial engineering in the petrol industry.' 130

On 28th October 1997, following the elections, Henry Hurrand was appointed the new head of Sofremi. Brought in by Lionel Jospin to clean up the company, he promptly sacked Poussier. According to Le Monde, he was surprised to discover that Falcone's name 'features on every single contract.'127 Le Monde implies that the new director came to the conclusion that commissions paid to Falcone were 'excessive', and that this might have been one of the reasons for the fact that Sofremi had been running at a deficit during 1996 and 1997. 127

On 9th January 2001, Le Figaro carried an interview with Henry Hurand. One of his first acts as head of Sofremi had been to conduct an independent audit. 'The most significant point was the omnipresence of Pierre Falcone,'131 adding, 'the general rule was that for each market there was to be a different representative, but from 1992, Falcone became the only representative of the Sofremi. It is totally abnormal. He received outrageous fees for every operation.'131 When asked about the termination of Sofremi's relationship with Falcone in 1997, he said, 'Once I took my decision we had a long discussion. I do not think that he understood my determination. In fact I think that he was convinced that nothing will ever change, that his friends will always protect him and that he was above the law.'131 When asked what was meant by the comment 'his friends', Hurand replied, 'I have the conviction that during all these years, Falcone greased the palm of everyone.'131

As of February 2001, Sofremi ceased to exist and has been replaced by a new structure within the Interior Ministry called Civipol, which will no longer be involved in the sale of arms.127

Introducing Acardi Gaidamak - is he part of Brenco?

Reports suggest that Pierre Falcone did not manage this process alone. Falcone appears to have formed a partnership with Arkadi Gaidamak, a Russian òmigrò who had spent sufficient time in Israel to pick up an Israeli passport before moving to reside in France. Le Monde suggests that Gaidamak had joined Falcone's company Brenco, and together they had become representatives of a Slovak arms production factory, ZTS-Osos, which was to supply the bulk of the arms to Angola.18 

An interesting aspect of this stage of the operation is the absence of Gaidamak's signature on the documentation published by Le Monde, which would suggest that Gaidamak was not involved in these shipments. Gaidamak confirmed to Global Witness in a telephone conversation that he had been involved with Pierre Falcone at this time, but that their operation only concerned the provision of pre-financing arrangements against future oil production through the French bank, Banque Paribas21. He strenuously denied that this operation had anything to do with the sourcing of weapons for Angola.21 However, in a later conversion, Gaidamak admitted that weapons had, in fact, been supplied, though he denied direct involvement. His justification was that these deals had been arranged with a legitimate government.35 

But all is not roses!

Although it would seem that these deals provided a firm footing for Pierre Falcone and Arkadi Gaidamak in Luanda, their operation was not without problems. On 29th November 1994, Charles Pasqua's loyal lieutenant, Jean-Charles Marchiani, allegedly visited Luanda to conclude what Le Monde refered to as a 'global agreement' - an all-encompassing agreement with President dos Santos18 that not only provided the basis for further weapons procurement and oil-backed financing to the Angolan Government, but also benefited French business interests.

The timing of Marchiani's visit seems to have upset the apple cart. Because of the impending French Presidential elections, due in May 1995, tensions had been growing for some time between Jacques Chirac, who saw himself as the next French President, and Charles Pasqua. According to Le Monde, Chirac had long been convinced that Pasqua would officially support his opponent, Edouard Balladur.18 The paper continued, 'if this were to happen, a grip on Angola would be a major asset,' and then taking the argument further stated 'as a result, and because Pasqua did offer his support to Balladur, Chirac's supporters provided information about Gaidamak and Falcone to the French Inland Revenue.'18 Subsequent investigations by the Inland Revenue remain a bitter controversy to this day. According to Le Monde, 'even though the arms did not transit through France, the Inland Revenue is using this particular point to recover unpaid taxes, because they claim the deal was signed in Paris.' However Allain Guilloux, Brenco's lawyer in Paris, has reportedly claimed the deal was signed in Luanda.18

The freezing of bank accounts

Sources suggest that the French Financial Brigade removed some 50,000 documents from a variety of offices and other premises connected to both Gaidamak and Falcone during raids in early 1996.20 According to Le Monde, the first raid by the Financial Brigade took place at the offices of Brenco on 11th December 1996, which reportedly led to the French Inland Revenue freezing Brenco account number 0042856 Q, held at a rue d'Antin, Paris, branch of Paribas in late 1998.20 An earlier report in Le Monde stated that an account belonging to ZTS-Osos held at a branch of Paribas was frozen in December 1996.22 It has not been possible to determine whether the two accounts referred to are in fact the same.

In a separate article, Le Monde reported that a 'fiscal enquiry' into a ZTS-Osos account, held at Paribas, resulted in the account being 'closed down ...in December 1996.' 22 Le Monde explained that the fiscal enquiry had shone light on 'transactions with Angola, through an intermediary of the State company, Sonangol, which remunerated ZTS-Osos through a bank account opened in Paris, at a Paribas branch, in 1994.' According to the article, 'Falcone and Gaidamak, who retained a procuration on the account, did not declare the revenue.' Sources indicate, however, that this might represent an over-simplification of French Financial Brigade's interest in the activities of Falcone and Gaidamak. Reportedly, control visits were made by the Financial Brigade in 1992 and then during those that took place in 1996, some 80 different accounts were identified.20 

In late 1998, the French Inland Revenue Service demanded Brenco should pay back-taxes totalling 1,256,766,403 French Francs (approximately US$222 million),23 which if successful, would make this the biggest payment of back-taxes ever to have taken place in France.18 A tax bill of US$222 million on trades worth some US$633 million seems extraordinarily high: could the size of this tax demand indicate either that trade with Luanda was substantially higher than previously documented during this period or that substantial shipments of materiel continued beyond the end of 1994? 

The house of cards starts to fall

Though the arrest of Pierre Falcone was widely reported in the French media, it took the arrest of Jean-Christophe Mitterrand on 21st December 2000 to make the story of Angolagate international news. What went wrong with Falcone and Gaidamak's operation and led to the arrest and, in some cases, incarceration of numerous prestigious individuals at La Santò jail in Paris? 

Although both Gaidamak and Falcone had previously been investigated, enquiries did not result in any charges. It is clear from numerous articles that both had strong political allies.24 Despite the fact that sources and articles indicate that the Financial Brigade demonstrated a persistence in their investigations,20 they were ground down by political opposition. Indeed, it was not until additional evidence of alleged impropriety was uncovered through a series of unrelated investigations that political resistance seems to have finally given way.

So far, the reader will have the impression that the Angolagate story is one of finance, arms supply and tax evasion during 1993 and 1994 - this is certainly how it has been portrayed in the French media. However, Global Witness believes that the real story of the financing of Angola's war effort goes far beyond 1993 and 1994, and for that matter, beyond simply French and Angolan national interests; perhaps even to the heart of international policy of oil interests. The following sections provide some insight into these events.

The story of the 'big French ears for Angola'

According to L' Express, an un-named informer provided detailed testimony to Judge Marc Brisset-Foucault, relating to a secret deal involving efforts by the French company 'Communication et Systòmes' (CS) to export communication intercept equipment (the 'big French ears') to Angola, L' Express did not suggest that charges have been levied in this matter.25 It seems likely the 9th May 2000 raid on the offices of both Falcone and the Vice-Chair of CS, former General Claude Mouton, in response to the informer's evidence, provided significant information of use to more recent investigations into the wider operations of Falcone.25 Interestingly, in July 2000, Mouton became a Director of Brenco France.26 

The raid on the CS offices reportedly involved an argument between the police and Raymond Nart (who is not under investigation), former deputy director of France's DST internal intelligence agency, and at that time, head of international relations at CS.25 It was Nart who later provided a letter of testimony (i.e. a character reference) for Arkadi Gaidamak during the latter's September 2000 libel action against the French publication, La Lettre du Continent.20 

Allegedly, this deal involved two different kinds of communication monitoring equipment: the Murene system used for monitoring GSM-type mobile phones and the more sophisticated Menta system, which is used to monitor satellite phones.25 Another report adds further details about this equipment;27 in addition to its capacity to tap satellite phones, the Menta system is also able to provide triangulation points, enabling the location of specific satellite phone users - a surely useful attribute for the Angolan Government in their efforts to locate Jonas Savimbi in the bush.27

L'Express reported that the second deal, though approved by the French Ministry of Defence, had been put together without being approved by the Inter-Ministerial Commission for the Study of the Trade of War Material (CIEEMG),25 whose approval is required prior to the export of sensitive military equipment. L'Express also reported that a sum of US$7 million disappeared, and that 'without reservation, the structure of the deal did not allow the payment of hidden commissions.'25 Claude Mouton denied any illegality had taken place25 and to date, Global Witness is not aware of any published comments from Falcone about this issue. 

An unrelated case leads to Angolagate

In November 1999, investigating Judges Philippe Courroye and Isabelle Pròvost-Desprez inherited an investigation into a case of suspected money laundering in Morocco.22,28 This investigation soon pointed them towards Allain Guilloux, a well-known tax lawyer.22,29

Guilloux had included several well-known personalities in his client list. These included Jean-Claude Mery who, prior to his death, recorded the now famous video-cassette of corruption allegations concerning Jacques Chirac's tenure as Mayor of Paris.28 Le Monde reported that Guilloux was also acting on behalf of Gaidamak and Falcone,22 it seems after 1996, in order to deal with the issue of the frozen bank accounts at Banque Paribas18,22 (See The freezing of bank accounts - page 13). According to Le Monde, following the investigators' discovery of files at Guilloux's office that related to the Brenco/Paribas case, the Financial Brigade police, once again, raided Brenco's premises.

The 26 diskettes and the fall of the mighty

According to Le Monde, one such raid took place in September 2000 at the apartment of Pierre Falcone's secretary, Isabelle Delubac22,30 who investigators discovered had hidden some 26 computer-diskettes on Falcone's orders. The diskettes provided a detailed case-by-case history of Brenco's deals involving Angola from 1997-1999, and named numerous individuals and companies as well as providing details of specific payments.22

These diskettes, together with other sources of information, provided the Judges with food for further investigation, and this in turn led to searches of various premises and the interrogation of a number of individuals named on the diskettes. In some cases, these procedures led to individuals being charged with a variety of offences. Prior to discussing the arrests and charges that have been brought by the investigating Judges, the next section provides further details about deals with Angola.

The Brenco network and deals with Angola

So what were Falcone and Gaidamak up to? The Brenco group of companies, Pierre Falcone and his relationship with Arkadi Gaidamak and the Slovak based company ZTS-Osos have been the subject of significant press speculation since the breaking of the Angolagate scandal in late 2000. This section draws these sources together and provides supplemental information. 

The main parent company of the Brenco group appears to have been Brenco International, which was based, together with Brenco-France, at a number of different addresses in Paris. In December 2000, Liberation provided an insight into the possible number of Brenco subsidiaries and their location worldwide. This is likely not to be an exhaustive list but it included:31 

Brenco Trading Ltd in the Isle of Man, UK; Brenco Investment in Montreal, Canada; Brenco Ltd in London, UK; Brenco Coren SA in Bogota, Colombia; and unnamed subsidiaries in Burma and Argentina. The article refers to Brenco operations in Colombia, Guinea, Madagascar, Russia and Khazakstan.31

Some reports have suggested that Brenco is a subsidiary of ZTS-Osos, whilst others have suggested the opposite. Despite the reported connection between the two companies, Global Witness' investigations have not been able to uncover any on-paper formal link between them.20 Nevertheless, according to Le Monde, during 1996, both Gaidamak and Falcone were signatories on a Brenco account number 0042856Q at the Paribas branch on the rue d'Antin.20

During the first few arms contracts between ZTS-Osos and Angola in 1993 and 1994, Brenco France was located at 56 Avenue Montaigne in Paris. It is interesting to note that this address and Brenco's telephone and fax numbers, are included on the initial US$47 million ZTS-Osos contract, together with Pierre Falcone's signature, suggesting a close link between Brenco and ZTS-Osos. The ZTS-Osos stamp, adjacent to Falcone's signature, is annotated with the legend 'Russian-Angolese Affairs'.18 

In December 1996, L'evenement du Jeudi published a copy of this first ZTS-Osos contract with Angola32 and included a breakdown of the material provided: 

30 tanks T-62, manufactured between 1961 and 1972, 115mm gun, range 500 km.

40 armoured vehicles BMP-2 with 4 anti-tank missiles, a 75mm gun and a 7.62 mm machine gun.

24 howitzers, 2S1 Gvozdika, fixed on tank chassis, manufactured in 1970.

artillery guns M-46 (130mm).

18 artillery guns DCA ZU-23/2 (23mm).

12 multiple rocket launchers Grad P.

50 automatic antipersonnel grenade launchers AGS-17 Plamya (30mm)

250 light machine guns RPK.

500 mortars PKM.

150 bazookas Schmel.

5,500 kalashnikovs: 7.62 mm AKM and 5.45 mm AK-74, with the Kastor grenade launcher fixed under the gun.

13 million rounds of ammunition (7.62mm).

750,000 rounds of ammunition (5.45mm).

10,000 offensive and defensive grenades.

21,000 grenades (30 and 40mm).

5,000 mortar shells (82mm).

50,000 30 mm armour piercing shells.

10,700 projectiles (115, 122 and 130mm).

1,500 MPB detonators, B429 and B90.

According to L'evenement du Jeudi, military specialists suggested that such a list could supply a motorised division of 8,000 men. However, the paper suggested that the ammunition content was not sufficient to supply an offensive action for a significant period, hinting at the likelihood of further contracts and by the end of 1994, as already described, the total value of contracts with Angola allegedly stood at US$633 million.18, 32

L'evenement du Jeudi's article referred to a previous article that it had published two months earlier about a shipment of Russian trucks to Angola, stating, 'L'evenement du Jeudi explained the circumstances in which Falcone and Gaydamac sold...Russian trucks to Angola, the same ones that the Russian army uses.'32 The paper continued, 'already at the time, we mentioned the contract [arms contract for US$47 million - the subject of this later article] between Russia and Angola.'32 The paper reports that at the time of the original article 'Falcone and Gaydamac' vigorously denied being involved, insisting that they were both 'disgusted by the arms trade.'32

Later in the article, having published details of the US$47 million contract for arms, which the paper claimed demonstrated that Falcone must be an arms dealer, Falcone is quoted 'one has to read between the lines of this contract,' and 'we came to the rescue of a legal government, the one of President dos Santos. The moral is on our side'.32 Though the article suggests that Gaidamak continued to deny knowledge of the contract, he was reported as saying, 'if this contract exists, you will notice that it helped bringing back the peace. It is the only thing that matters.'32

Following the 1993 and 1994 deals, Brenco's headquarters moved to the very prestigious address of 64 Avenue Klòber in Paris, adjacent to the Argentinian Embassy, and within short walking distance of the Angolan Embassy on Avenue Foch.

Paris as a location for deal signing?

To date, the press has discussed arms trafficking with Angola that took place in 1993 and 1994. The press has also raised the fact that Brenco, Falcone and Gaidamak have all been pursued for alleged non-payment of taxes related to these deals.

The distinctly French character of the original US$47 million contract should be noted, undermining claims that the deals were conducted in Angola. Not only was the document written in French, but it was allegedly also sent to El‰sio de Figueiredo who was based in Paris.18 The then Paris address for Brenco appears on the contract, together with Pierre Falcone's name, signed under the inscription 'Pour ZTS-Osos.'18,32 It is these collective aspects of the document, together with information from sources, that suggested it is likely this contract was signed in France.20 Presumably, it is these factors that explain the efforts of the Financial Brigade to bring charges of non-payment of taxes.

Another ZTS-Osos contract with Angola - Gaidamak comes on board?

Global Witness can reveal the existence of a further weapons contract worth US$44,925,000 that dates from 1995/6.33 It is possible that this contract was put together at approximately the same time as a 19th September 1996 agreement between Banque Paribas and the Angolan State oil company Sonangol for a loan of US$135 million which saw oil trading company Glencore International AG tied in to lift a specified volume of future oil production to repay the loan.34

In a telephone conversation with Global Witness, Gaidamak stressed that both he and Pierre Falcone had been made Angolan citizens and that they had been given diplomatic passports, after which they were both 'made signatories on the accounts' that they had set up with Banque Paribas for the process of generating oil-backed loans.21 Gaidamak was saying that he and Falcone had been given control over funds obtained from the loans, which were, in effect, a significant part of the Angolan State budget, located and disbursed entirely offshore from Angola itself. During this first conversation, Gaidamak was keen to point out the finance side of their relationship to the Angolan Government, denying that arms were involved.21

The 1995/6 arms deal shows some important stylistic differences from the earlier contract. Most obvious is the change of language to Portuguese. This time the contract is concluded 'Pela ZTS-Osos' and both the names Pierre J. Falcone and Arcady Gaydamac (sic) appear on the document. Against each of these names, a signature is provided. Some sources have suggested that Gaidamak rarely, if ever, signed anything. However, the signature provided against the name Pierre J Falcone appears genuine when compared to original signatures provided in the official year-end filings of Falcone's UK-based companies.

The logo on the company stamp for this new document no-longer states 'Russian-Angolese Affairs,' but now has the legend 'Vrutky Slovakia.'33 This time, the shopping list included combat vehicles and troop transporters, annotated in Portuguese [Global Witness headings added] and including:33

Item	Quantity	Unit cost (US$)	Total cost (US$)

Carros De Combate 

BMP-2	35	350.000,00		12.250.000,00

BMD	30	153.000,00		4.590,000,00

Transporte De Tropas & Cargas

?RAL 4320	100	65.000,00		6.500.000,00

?RAZ 260 ND	200	59.125,00		11.825.000,00

??AZ Cavalo mecanico	10	80.000,00		800.000,00

All question marks indicate where the text was unreadable (see below). 

The document refers to additional equipment listed below the text described above. Although some of this text is unclear, items such as 'T54/55 E T62', a reference to tanks, could be distinguished. Against these items, a zero was included, and no price was given, which may suggest that although these items could be supplied, none were ordered on this occasion.

The total value of items listed was US$35,965,000, whereas the total amount charged was US$44,925,000. Another figure of US$8,960,000 was added in between the two totals. It is not clear what this additional sum represents, though it could be a commission charge of almost a quarter of the value of the items ordered. 33

It is not clear if Banque Paribas' US$135 million loan was used to finance this contract. However, given that funds raised from oil-backed loans in which Paribas participated, were then subsequently used by the Government for the purpose of financing arms supplies in 1993 and 1994, and given that Gaidamak and Falcone, according to Gaidamak, had become the authorised signatories on Paribas accounts relating to loans provided,21 the possibility that at least some of the US$135 million loan could have been used to finance this arms contract can not be ruled out. Banque Paribas should provide information to the investigating Judges concerning what, if anything, it knows about these loan arrangements and what other contracts may have been put together. They should also provide information about the exact roles of Gaidamak and Falcone in both the negotiation of loans and their control over subsequent account structures.

Has Angola obtained value for money in its arms supply programme?

To produce a definitive answer to such a question clearly requires more than a simple comparison of shopping lists from contracts relating to arms supplied by from either ZTS-Osos, or any other key suppliers to Angola. Clearly, the age of the items supplied, together with their condition are also key factors in determining a product's true value. For example, some supplies to Angola have included forty-year-old tanks [here we are not referring to arms supplied by ZTS-Osos], which not only clearly do not offer a decisive tactical advantage, but may even prove to be a dangerous liability in any modern mobile warfare situation.36 

In the past, sources in Angola have talked of the existence of equipment graveyards, full of tanks and other military hardware located just outside Luanda.36 Far from being the victims of war, it seems these items had been brought straight to their final resting place by truck, because they were in such poor condition that it had not been possible to remove them from importing ships under their own power. Thus, effectively useless imports were brought to Angola by a variety of arms dealers, primarily because of the commission available to those involved in the deals.

From additional research in other African conflict hot-spots, Global Witness has become aware of arms being supplied through over-priced invoices, that in some case indicates that the country concerned was obtaining supplies worth perhaps only one fifth to one quarter of their real value. In this example, the vast profit margin, enabling kick-backs to be generated for all involved in the deals, was the primary motive for the deals to take place at all.56 

Russian State interests in ZTS-Osos

In an article published on the 22nd January 2001, the Czech Republic based CTK Publications reported significant Russian State interests behind ZTS-Osos.37 If true, these connections add further light to the nexus of interests in Angola and its oil wealth, and would be consistent with Russia's apparent willingness to renegotiate US$5.5 billion of debt owed by Angola. In addition, such connections would suggest that President Putin's deplorable policy of peddling arms to Africa may, in fact, have begun during the Yeltsin regime.

According to a journalist at CTK Publications,38 the Slovak state registry of companies records a name change for 'ZTS-Osos Martin' to 'Osos Vrutky', in December 1994. This would explain the change in the company stamp for the later deal (reproduced above left and on page 16), and supports the notion that this document falls outside of the 1993/94 period, which the French press have dubbed Angolagate. CTK reported that this new structure is 46% owned by Slovak companies (which are not named) and employees of Osos Vrutky, with 10% being held by the Czech firm Marden. The article also includes comments that were attributed to Osos-Vrutky General Director, Jan Valenta, who is reported to have stated that 'about 44 percent of shares of the Osos Vrutky ...company...is (sic) owned by the Russian Kurganmash and Rosoboronexport arms companies.' Valenta reportedly stated that 'the Russian State weapons export company Rosoboronexport has about 16% of the shares of ZTS-Osos Vrutky,' with 28% being held by the Russian company Kurganmash.37 The latter company manufactures armoured troop carriers, of the same type as those mentioned in the contracts of 1993/4 and later in 1995/6 (BMP-2s and BMP-3s). CTK also stressed that Valenta 'denied that ZTS-Osos Martin, or Osos Vrutky had ever traded in weapons', although, he said, 'Osos Vrutky has had a licence for such a trade since 1998.'37

CTK were unable to obtain confirmation from either of the Russian companies as to their stake in Osos Vrutky, and Kurganmash was unwilling to divulge its beneficial owners.38 However, official Slovak Government records show that in May 1993, 18.97% of ZTS-Osos Martin was sold to the Russian State company Specvnestekhnika Moscow, a precursor to the Rosvoruzhenye company, which itself was one of two precursors of the Russian state arms company Rosoboronexport, mentioned above as a 16% shareholder of Osos Vrutky. 37,38 According to CTK journalists, another angle is provided by the Russian magazine, Moskopvskye Novosti, which in December 2000, reported that the Russian secret service purchased 67.5% of ZTS-Osos stock in 1993, through Specvnestekhnika.38 

If suggestions that there is a significant interest held by Russian State-owned arms production companies in ZTS-Osos are true, it implies knowledge, and perhaps approval, of the activities of the company and its associates in Angola by high-level Russian Government officials. Russia's current administration should clarify what it knows of these activities.

Falcone and Gaidamak work on Angola's US$5.5 billion debt to Russia

According to a number of press reports, both Falcone and Gaidamak were involved in a deal to renegotiate Angola's US$5.5 billion debt to Russia, where Russia would receive US$1.5 billion, through financing obtained from oil-backed loans.

According to Le Temps, a Geneva-based judicial enquiry into this issue has resulted in the freezing of approximately US$750 million. Le Temps reports, 'the enquiry taking place in Geneva has allowed the reconstitution of the pathways followed by [the first] half of the proceeds of this deal; i.e. US$750 million.' Le Temps continued, 'instead of being deposited in favour of the Russian State, in theory the owner of this debt, the bulk of this amount was deposited into the accounts of high ranking officials of the two countries.'12

Le Temps reported comments attributed to a source close to the Angolan Government, who reportedly stated, 'the accounts of the dignitaries of the regime, some of which are now frozen in Swiss banks, contain 'official money' that these dignitaries were charged to 'carry' for the Government.'12 

Le Temps refers to 'Vitaly Malkin, a banker who figured amongst the ten "oligarchs" closest to Yeltsin, who held power of attorney over a UBS account, in the name of a company called Abalone Investment Ltd'. The paper continued, 'this account, number CO - 101436, was allegedly used as a receptacle for funds coming from the debt repurchase operation.'45

According to Le Temps, 'Vitaly Malkin was allegedly a shareholder of Abalone, together with two main characters involved in the affair [the debt deal], the arms dealer Pierre Falcone, and the Russian billionaire Arkadi Gaidamak.'45 Le Temps' reference to Gaidamak's business relationship with Pierre Falcone in Abalone Investment Ltd is interesting, in light of his comments in an interview with Le Parisien, where he reportedly stated, 'Pierre Falcone and myself have never been associated in any company.'46 A December 2000 Rossiyskiy Kredit Bank - News press release stated, '...the newly elected Council of the Bank held a session which elected Arkadiy Gaidamak [SIC] Chairman of the Council (President) of the Bank. The former chairman of the Council, Vitaly Malkin, has become his deputy.'47

As a concluding remark, Le Temps comments 'a person with detailed knowledge of the investigation suggests that the Russian debt re-purchase deal by Angola...may have been used to finance the re-election campaign of Boris Yeltsin in 1996.'45 

CADA, a Brenco subsidiary, is the key to FAA food and medical supplies

In 1999, the Angolan newspaper Angolense, published an article about CADA (Companhia Angolana de Distribuiô„o Alimentar),48 suggesting that this previously unheard of company was in fact an operation conducted by various un-named generals of the Angolan Armed Forces (FAA). The article stated that the contract obtained by CADA was worth US$720 million, and left the company the sole supplier of food to the armed forces over a five-year period.48

However, Global Witness can reveal that CADA belongs within the Falcone's Brenco group of companies, and is not connected to Angolan Generals. CADA appears to have assumed control of all food, medical and uniform supplies to the FAA.20 Andrò de Fiori, director of the London branch of CADA, known as Companhia Angolana de Distribuiô„o Alimentar Limited (CADA Ltd), provided an interesting clarification about this arrangement in a letter from 1998.49

The letter (see opposite page top) is written on Argo letterhead, a company based in S„o Paulo, Brazil. Mr de Fiori explains that Argo is the Brazilian representative office of the 'Brenco Group.' He provides further clarification, claiming the company is a 'European based international business group [Brenco Trading Ltd - BTL the holding company is based in London as Brenco France - the administrative headquarters - are located in Paris] specialized in the development of operations requiring the intensive use of financial and commercial engineering in "difficult countries."'49 He explains, 'Brenco has been operating successfully in several countries such as China, Mainland (sic), Cazakistan (sic), Russia, Bulgaria, Colombia, Mexico and Venezuala (sic).' 

Further, de Fiori states that, 'one of its [i.e. Brenco's] off-shore companies, CADA ...has recently [early 1998] signed a supply contract with an Angolan state-owned corporation and will be the company that will actually purchase the goods and having the same re-invoiced to the Angolans. Argo acts as the trading group coordinating the procurement and negotiations for the several items on behalf of CADA.'49

De Fiori concludes that CADA will issue 'confirmed letters of credit at sight, based on means of payment and guarantees provided by Brenco...'49

In a 14th January 2000 article linking the 'Kremlingate' scandal to Angola,50 the Portuguese daily Pßblico also commented on CADA. In an effort to determine the role of CADA in Angola, Pßblico asked a number of detailed questions of the Angolan Presidency. The paper made considerable effort to secure answers, but despite several faxes, phone calls and emails, did not receive an answer to the questions.50 Pßblico also sent, amongst others, questions to Andrò de Fiori, director of CADA Ltd. With the exception of a comment to the effect that CADA supplied the Angolan State-owned procurement company Simportex, no answers were received:50

Sources within the international food trade industry also provide an interesting insight into the privileges accorded to CADA's operations in Angola. One of the key problems encountered by food traders doing business with Angola is the over-pricing of goods at the Angolan import end of any trade deal;51 a problem which is, to an extent, moderated by the presence of the Swiss inspection company SGS, which provides what is known as a 'Clean Report of Findings.'51 This is a verification process designed to ensure that products supplied are of sufficient quality and quantity to justify the price being charged. 

According to commercial food company sources experienced in doing business with Angola, 'imports involving CADA are not subject to such controls.' On one occasion a CADA/ARGO representative stated, 'don't worry about SGS, because we don't need any Clean Report of Findings.'51 Commercial food companies have informed SGS about this practice.51 Global Witness urges SGS to make public what it knows about the operations of CADA in Angola.

Companies House documents show that CADA Ltd in London is located at 40 Queen Anne Street, London W1. CADA Ltd was established in 1996, and de Fiori is listed as Director.52 The company is listed as a subsidiary of a company called Copper Financial Inc, located in Tortola, British Virgin Islands; the latter having been established by Henry Guderley, who is also listed as Company Secretary of London-based CADA Ltd. Guderley also appears in Companies House listings as Company Secretary for a number of other Brenco affiliated UK based companies, including: Brenco Ltd; Essante Ltd; Invest Time Ltd; Clearhall Ltd; and Brenco Aviation Consulting Ltd.53

Searches in Companies House did not reveal either the current or former existence of a company called Brenco Trading Ltd, registered in the UK, despite de Fiori's reference to this being the name of the holding company for the Brenco Group. However, a Brenco Trading Ltd was listed in Douglas, Isle of Man in 2000. The publication listing Brenco Trading Ltd, indicates that both Clearhall Ltd and Invest Time Ltd are subsidiaries.54 Both of these companies are registered at Companies House in London.55 Another Brenco Trading Limited is located in Tortola, British Virgin Islands, at the same address as Copper Financial Inc, the holding company of CADA Ltd in London - it is not clear how Brenco Trading Ltd in the Isle of Man is related to the company of the same name in the British Virgin Islands.

Liquidation of Brenco France

As de Fiori already described in his 1998 letter, Brenco France played the key administrative function for the group. According to sources within the legal profession in Paris, this seems to be a fact not lost on those keen to see the current investigations into Angolagate brought to a hasty conclusion. According to one lawyer, 'Brenco France was placed under "liquidation judiciare" [or made bankrupt] on 5th February 2001, and this has resulted in the disappearance of significant quantities of company documents,' adding another layer of procedural confusion to the task of the investigating Judges. Global Witness has visited the offices of Brenco France in Paris on several occasions since this date, and the evident lack of activity, including uncollected post, would seem to support these comments. Global Witness has also checked company records in France and Brenco France is listed as being placed under 'Liquidation Judiciaire du 05/02/2001, with the "Liquidateur" listed as SCP Girard Levy, of Paris.'57

Gaidamak's business empire

The French press has described how Gaidamak started his business life in Paris through the establishment of a translation service company. Much has since been made of his extensive wealth, and the speed by which it was generated.

Gaidamak is listed as the Chief Executive of a Luxembourg holding company called Finegos International SA56 and as Director, together with his son, Alexandre Gaidamak, of another Luxembourg holding company, Pivoine SA.56 The Gaidamak family also appear to be connected to a number of London-based companies. These include: Monarch Fiduciary Ltd, Mondiale Property Ltd and Mondiale Management Ltd.39 Until recently, all these London-based companies were located at 8 Carlos Place. Mondiale Management Ltd is ultimately owned by a Jersey-registered holding company, Tuderose.39 The function and ownership of Tuderose is not clear.

A further two companies in London, Sonus Ltd and Europitex Ltd, also appear to be connected through shared directorships and shareholding to the companies mentioned above.40 In 'Notes to the Financial Statements' of Europitex in 1998, a 'Mr. A. Gaidamak' is specifically referred to as the 'ultimate controlling party of the company'. Both Sonus Ltd and Europitex Ltd were dissolved in March and July 2001 respectively, and Alexandre Gaidamak ceased to be a Director of Mondiale Property Ltd on 24th April 2001.40 Arkadi Gaidamak became a fugitive from an international arrest warrant, issued on 11th January 2001.

Although the status and function of some of the companies that appear to be connected to Gaidamak either directly, or through his son Alexandre, are not clear, some do appear to be involved in property investments. Amongst the property portfolio, was one large apartment block in London's exclusive Mayfair, sold at the end of 2000. Sources have also suggested that Gaidamak has substantial property interests in the exclusive Kensington area of London.56 Indeed, in court documents pertaining to Gaidamak's law-suit against the French NGO Survie, his UK address is listed as '3 A Kensington Garden No 8.'41

Gaidamak in Israel

In 1998, Gaidamak legally changed his name in Israel to Arye Barlev. In early 2000, the Tel Aviv newspaper Yedi'ot Aharonot's Leshabat supplement, reported that 15% of the shares of the Israeli public company Africa Israel, which were controlled by businessman Lev Leviev had been acquired by Gaidamak.14 It seems that Gaidamak had been introduced to Leviev in 1999 by Dani Yatom, the former head of the Israeli intelligence agency Mossad.42 According to Ha'aretz, in January 2002, Gaidamak has since sold his stake back to Leviev for US$75 million, the same amount he paid for it.43

In a January 2000 statement to the stock exchange, Africa Israel allegedly stated that Gaidamak 'owns numerous real-estate properties in Western Europe and several other businesses in infrastructure, investment properties, and energy.' The statement went on, 'Mr Leviev's decision to sell some of the company shares to international businessman Arkardy Gaydamak (sic) was made in view of his relative advantages, which can bring added value to the realisation of the company's business aims. Leviev believes that the company can reach international achievements in energy, real estate and investment assets following the partnership with Gaidamak.'14 After only a few months, the Angolan Government announced that it was awarding exclusivity on the sale of the country's diamonds to Leviev's company. It is not known what role, if any, Gaidamak might have played in delivering control over Angola's diamond production to Leviev.

Since this first announcement, the relationship between Gaidamak and Leviev appears to have grown to other business sectors, including fertiliser and uranium production in Khazakstan, with possible further ventures into gold production.44 Of particular note is the acquisition of the chemical treatment complex of Tselina, known as Kazsabton, which was allegedly one of the key companies in the production of nuclear weapons in the Soviet Union.42,44 Given reports that Gaidamak sold his stake in Africa-Israel back to Leviev, it is not known whether he continues to retain the apparent Leviev/Gaidamak joint investments in Khazakstan in his portfolio.

Deals and connections to other countries

Press coverage, especially since the arrest of Pierre Falcone on 1st December 2000, provides an insight into other arms deals that appear to be related to Brenco. In addition to the fact that Brenco deals in countries ranging from Colombia and Mexico, to China and Khazakhstan, as referred to by Argo's Andrò de Fiori in his 1998 letter (See CADA, a Brenco subsidiary, is the key to FAA food and Medical Supplies - page 19), Brenco, or some component of the Brenco/ZTS-Osos operation appears to be connected to arms and other equipment deals in Burma, Cameroon and Congo-Brazaville.

Brenco's company, Setraco, takes part in deals with SLORC in Burma

In 1992, French oil company Total completed its contract for the Yadana gas pipeline in Burma, reportedly through the assistance of a Brenco subsidiary, or affiliated company, Setraco, which supplied 24 Soviet-era helicopters to SLORC, the Burmese military junta.58 The helicopters were supplied, reconditioned in Warsaw, following the failure of earlier efforts to secure helicopters from Vietnam. At that time, the business card of Jean Pichon, director of Setraco in Rangoon (and former military attachò in France's Bangkok embassy), showed not only the company's Vietnamese offices and an address in Geneva, but also Setraco's 'French liaison office', located at the same address as Brenco France, then at 56 Avenue Montaigne, Paris.

The official Polish position is that these helicopters were delivered direct, without the need for intermediaries. However, a Polish diplomat at that time said, 'the Burmese paid us with Total money.'59 Here, the suggestion is not that Total paid directly for these helicopters, but that SLORC used Total's signature bonus payments for its Yadana pipeline deal, possibly mixed with funds derived from SLORC's involvement in the international heroine trade, and that these payments were then paid through a joint-venture bank account in Singapore. 

Thierry Desmarest, CEO of the combined group TotalFinaElf, should clarify what he knows of arrangements that were made to supply helicopters in connection to the Yadana gas pipeline project.

Deals with Cameroon

In early 1994, Cameroon was involved in a sovereignty dispute with neighbouring Nigeria over the oil-bearing Bakassi region. According to an AFP report filed in the publication Jeune Afrique, a letter from Pierre Falcone to Edouard Mfoumou Akame, then the Minister delegate to the Cameroonian Presidency, shows that ZTS-Osos obtained a deal to supply weapons to Cameroon. 60

According to the publication La Lettre du Continent, a letter from Falcone on 24th March 1994 with a 'ZTS-Osos' letterhead provides details of the arms purchase, claimed to be worth US$71,608,700. The deal included: US$19.6 million for IGLA-IE anti-aircraft missiles; US$9.3 million for three combat helicopters; US$6.27 million for 'Faktoria' anti-tank missiles and US$2.29 million for their launchers; US$5.4 million for 'Mòtis' anti-tank missiles and US$1.9 million for their launchers; US$6.28 million for ammunition; US$2.7 million for 10,000 Kalashnikovs.61 The list was reportedly later increased through the inclusion of additional hardware, including rocket launchers, costing an additional US$495,000.61 The total value of the items listed comes to US$54.24 million, suggesting that other items or hefty commissions must have been included in the total charge.

According to La Lettre du Continent, Falcone sent a second letter on 11th April 1994 to Akame, requesting confirmation of a transfer of US$1,513,300 to ZTS-Osos, courtesy of the Moskva Bank.61 In a third letter to Akame (by this stage, Cameroonian Finance Minister), dated 3rd May 1994, Falcone reportedly enthused, 'we are delighted that you have received your order, and as you know, we are entirely at your disposal should you require any logistic help at a later stage.' The article continues, 'as a "reminder", Pierre Falcone reminds the addressee of "our account" Menatep at the Bank of New York.'61 

Note, the Russian bank Menatep had its banking licence stripped in May 1999,62 and by August 1999, in the wake of the so-called Bank of New York scandal, the bank was openly being associated in the press as having acted as a conduit channel to launder money from Russia into accounts overseas.63,64 Some 99% of Menatep's shareholders voted to bankrupt the bank in September 1999.64

Deals with Congo-Brazzaville

According to La Lettre du Continent, on 15th June 1995, Martin Mberri, then State Minister for the Republic of Congo, in charge of development and regional planning, wrote to Arcadi Gaydamak (sic), who he referred to as 'director of the company ZTS-Osos.'65 Mberri expressed his interest in purchasing some 150 Ural trucks, '...providing that you quickly submit to us the text of the final contract...'65 According to the article, 'a sale contract was prepared for the acquisition of 100 Ural 420 trucks, 25 Ural 420 water tank trucks, and 25 Ural 420 fuel tank trucks.'

50% of the sale was to be financed through the delivery of oil with a 'guarantee of delivery issued by the Republic of Congo and endorsed by Elf Congo.' The article concludes, 'the lawyers of Pierre Falcone and Arkadi Gaidamak have protested to the tax office that this contract did not come to fruition.'65 Given the lack of transparency about this issue, TotalFinaElf should clarify what, if anything, it knows of any such arrangements.

Whose billions are in this bank account?

Global Witness' investigations have also identified the existence of a bank account - number 15468991 - held at the so-called 'First Virgin Bank' in the British Virgin Islands (BVI). This account held approximately US$1.1 billion during 2001, with two high-powered Angolans acting as signatories.56

The true identity of the 'First Virgin Bank' remains a mystery. Enquiries made to the Inspector of Banks, Trust Companies and Company Managers in the BVI, solicited the response, 'First Virgin Bank is not licensed under the Banks and Trust Companies Act, 1990, to carry on banking business within or outside the Virgin Islands'. If this 'bank' is not licensed to operate as a bank, what is it? 

Sources have suggested that the most likely explanation is that it is an account in the name of 'First Virgin Bank', held at another legitimate bank in the BVI. Authorities in the BVI should immediately undertake to investigate the true nature of this account. Given the unique relationship between the UK and the BVI, the relevant UK authorities should take the necessary steps to ensure that the BVI authorities do conduct a thorough investigation. Such a move is essential given the clear need for international tax payers to assist Angola's development. Any failure will leave the BVI dangerously exposed once again as a 'non-compliant' jurisdiction in terms of the OECD's efforts to clean up off-shore tax havens.

In addition, whilst the UK's influence in such matters is being discussed, it is essential that the UK and BVI authorities provide all necessary assistance and information pertaining to the ongoing Angolagate investigation in France. This is especially important, given the myriad of Brenco related companies that are located in the BVI.

Does Angolagate reach the United States?

T he arrest and incarceration of Pierre Falcone in December 2000 raised eyebrows in Arizona high society within which, according to the publication Arizona Republic, Pierre Falcone and his former Bolivian beauty queen wife Sonia enjoy the reputation of seriously wealthy, part-time resident philanthropists. Arizona Republic has asked a number of questions about the source of their wealth, referring to the fact that they have been able to '...make the most expensive home purchase [allegedly at US$10.6 million] in Arizona History.'9 According to the paper, Al Molina, a Falcone confidante and prominent local jeweller stated, in response to the scandal, 'I am very upset about what's happening right now ... Knowing the man, I have a hard time believing he would do anything unethical.'9 

Arizona Republic paints a picture of 'philanthropy and glitz,' together with friends and associates who seem to know little about the Falcones.9 As the paper says, 'even the home ownership seems intriguing. Their residence for several years is owned by a British Virgin Islands company, Gabrielle Investments Ltd, which could not be traced. The recorded owner of their new US$10.6 million estate at the base of Camelback Mountain, SPEP LLC, is a controlling trust with a mailing address in the Turks & Caicos Islands, British West Indies.'9 

Sonia de Falcone is President and co-founder/director of Essantò Corporation, a Utah-based purveyor of health foods and prophylactics incorporated in Delaware on 6th April 1994. The company claims a mission: 'the word Essantò is French. Translated into English, it means "the essence of total health." That is my mission, to bring vibrant health to the world through whole-food nutritional therapy.'66 It all sounds reasonable enough and, indeed, is an admirable task. Essantò Corporation even enjoys the PR expertise of The Lee Solters Company, a Beverly Hills based PR agency, who's past and present client list includes Frank Sinatra, Barbara Streisand, Michael Jackson, Bob Hope and The Harlem Globetrotters.67

Essantò's web site helpfully provides 'corporate biographies' of those whose role is to help Sonia Falcone in her mission. Alongside a description and photograph of the company's Vice President of Marketing, Arthur T. Chester, is a blurb and picture of Henry Guderley, Chief Financial Officer, who is described as 'certified as a Fellow of the Institute of Chartered Accounts in the UK, with a speciality in international business.'68 Unfortunately, the site fails to inform the reader of Guderley's role as Company Secretary for numerous other companies within the Falcone empire (see below and CADA, a Brenco subsidiary, is the key to FAA food and medical supplies - page 19).

Henry Guderley is also the company secretary of the London-based Essante Ltd, which is located at 40 Queen Anne Street, London W1. Sonia Falcone, of Paradise Valley, Arizona, is listed as the sole director of the company. The shareholding is more surprising: Sonia Falcone is listed as holder of one ordinary share, the other being held by Brenco Trading Limited, of Trident Chambers, PO Box 146, Road Town, Tortola, British Virgin Islands;69 an address shared by Copper Financial Inc, the listed owner of CADA Ltd (part of the Brenco network in Angola), of which Guderley is also the Company Secretary.52

According to a Swiss-based web site on money laundering issues, Geneva's Chief Prosecutor, Bernard Bertossa, began investigations in January 2001 to determine whether Swiss banking facilities were held by individuals and companies whose names featured on a list for whom information was being sought. 'Sonia Falcone' is one of the names reportedly included on the list, though it should be noted that there is no suggestion that she has, or is likely to be, charged with any offence and neither is she under investigation for any wrongdoing.11 Other names on the list reportedly included former French Interior Minister, Charles Pasqua, his son Pierre Pasqua, and Jean-Charles Marchiani.11 As of going to press, these investigations continue.

The whole point of the Enron affair is that it discredits the rules of the game. It exposes the institutionalised corruption at the heart of US politics - a casual exchange of money and power that Bush has made his trademark.

- Julian Borger in 'Bush, the corporations flag-carrier', The Guardian, January 200276

Influence peddling US style?

In January 2001, the Arizona Republic reported the return of a US$100,000 donation to the Bush campaign by the Essantò Corporation, much of which was allegedly given days after President Bush's election victory.70 The paper reports the Falcone family spokesman, Jason Rose, as saying that '...any insinuation that the couple was trying to buy influence with the new President is unfortunate, false and wrong.'70

In These Times10 reported that these donations were broken down into one payment of US$20,000 that was made in May 2000, followed by a second US$80,000 payment in November 2000. Interestingly following the May payment, Scott Bundgaard, local State Senator and Bush supporter, arranged for Sonia to join a select group to meet with then candidate Bush, as he flew in to Phoenix Airport.10 

Sonia Falcone claimed the donations were to '...increase Latino awareness in the Republican Party;'10. At the time, she claimed that Pierre Falcone was not connected to Essantò and that the donations were financed from corporate profits.10 In fact, the company was incorporated in Delaware on 6th April 1994 with both Sonia and Pierre Falcone listed as directors.10

Le Figaro reports that amongst the files contained on the 26 Brenco diskettes, found by the investigating Judges in the apartment of Pierre Falcone's secretary, were references to payments from Brenco to a number of coded accounts held variously at UBS in Switzerland, Bank Leumi in Tel Aviv and Banque Rothschild in Monaco including an account called 'Essante.'5

In These Times suggests that the real source of Essantò's donations to the Bush Campaign was Pierre Falcone himself.10 According to an unnamed source, 'the Company [Essantò] has come a long way with Pierre's generosity, but after a few years he'd like to see some profit. It rubs him up the wrong way, but out of love for his wife, he's done it with a smile on his face.'10

Enron's influence trading - Is Falcone's donation part of a pattern?

Under a barrage of criticism across the global press, it seems abundantly clear that Enron's US$5.8 million in political donations (73% going to the Republicans)71 over the past 12 years bought the company significant influence over policy outcomes. Of particular note is the US$826,000 that the company gave to George W Bush over his political career from his start as Governor of Texas right through to his run for US President. Two members of the Bush Cabinet - the Commerce Secretary, Donald Evans, and the Attorney General, John Ashcroft - have had to stand aside from current investigations because they received close to US$100,000 in political donations from Enron. Enron CEO, 'Kenny Boy' as President Bush dubbed his close friend Kenneth Lay, personally gave Bush US$100,000.72

Vice-President Dick Cheney, facing the threat of civil litigation to break his silence over the Enron scandal, also appears to have close connections to the company.73 It seems that links between Enron boss Lay and Vice-President Cheney go back to Cheney's time as CEO of oil services company Halliburton, when both were based in Houston, Texas.74 Once Cheney came back into Government as Vice-President, he took charge of the co-called 'National Energy Policy Development Group,' which was responsible for drafting the President's energy policy75 - whose output is represented by a bill currently before Congress.

Cheney held six meetings with Lay and other Enron executives to discuss America's emergency energy plan: the end result was that, as UK-based paper The Observer reports, the plan 'contains 17 detailed points, all 'virtually identical to positions Enron advocated' - mostly concerned with deregulation and increased capacity...'.73 The Washington Post comments that Cheney and other key Bush Administration officials also aggressively lobbied the Indian Government on behalf of Enron over the company's attempts to sell its interest in a power plant project. The company wanted to bring in US$2.3 billion from the sale, just weeks before filing for bankruptcy.77

Angolagate and the Enron scandal - by nature, the same problem?

If anything is clear from the Enron scandal, it is that the capacity to buy influence and achieve strategically beneficial changes to legislation is not restricted to countries so far rocked by the Angolagate scandal. Influence peddling is thriving at the centre of the US political system.

Enron also raises further questions about the level of influence Pierre Falcone, through his donation, was hoping to achieve. It is noticeable that Enron boss, Kenneth Lay's donation of US$100,000 to Bush's campaign is strikingly similar in size to the US$100,000 that was donated by the Falcones. If Enron was able to figure at the forefront of the Bush team's political and legislative agenda, what did the Falcones expect from their donation? Following the 'return' of their donation, the Administration now has the capacity for plausible deniability - but what would the situation have been, had Newsweek not pointed out problems associated with this donation in the first place?

It seems likely, however, that Falcone's potential influence did not end with political donations to the Bush campaign alone. In These Times reports that a meeting took place between Falcone and three un-named high-level Phillips Petroleum Corporation executives in June 2000, some five months prior to Falcone's arrest in Paris.10 Phillips Petroleum Corporation now holds a 20% stake in Angola's Block 34, allocated in 2001, but for which negotiations were already well-underway at the time of the company's alleged meeting with Falcone. The article states that Phillips refused to comment on the meeting.10

Executive Vice President and General Council Bryan Whitworth responded Global Witness' enquiries in January 2002, stating that he was unable to identify a meeting in Scottsdale in June but that there was a meeting in September and a follow-up in Washington in October 2000 '...to determine whether or not Phillips wanted to utilize Mr. Falcone as a consultant [...] it was concluded that Mr. Falcone should not represent Phillips'. So why was Pierre Falcone chosen as a possible consultant in the first place and why did Philips not consider him appropriate for this job after these meetings?

An Arizona-based friend of Pierre Falcone, who established a website in support of his activities,78 volunteered that '...Pierre derives a great deal of income from Exxon Block 33 located within the boundaries of Angola.'79 Though it is difficult to interpret the true meaning of this statement, in light of apparent meetings between Falcone and Phillips, it is logical to enquire what, if anything, ExxonMobil knows of the activities of Falcone with regard to Block 33. Did Exxon meet with Falcone, and did he play any role in advising, or facilitating, the company regarding its acquisition of the operatorship of Block 33? ExxonMobil has declined to respond to enquiries.

In December 2000, shortly after Pierre Falcone's arrest in Paris, the Sunday Times was of the opinion that Angolagate led directly back to the United States. The paper suggested that the French investigation into Angolagate had started to look into the activities of a number of companies involved in Angola, including Vice-President Cheney's former company Halliburton.80

The paper also hinted at potential close links between Falcone and Bush commenting, 'Falcone was sufficiently friendly with Bush to attempt to arrange a meeting between the presidential candidate and another of his contacts, Josò Eduardo dos Santos, the Marxist President of Angola. French news reports claimed last week [the last week of December 2000] that the meeting never took place, and the full extent of Bush's contacts with Falcone remains unknown.'80

It continued, 'Angola surfaced briefly in the American election campaign when Cheney, who resigned as Halliburton's Chief Executive in July [2000], was accused of using his connections as a former defence secretary to secure the company contracts.'80 Certainly, Halliburton has done extremely well in Angola. The paper went on to state that 'as Defence Secretary, Cheney had been an outspoken supporter of UNITA ... he now finds himself in the intriguing position of having recently headed a company that pursued contracts aggressively with UNITA's sworn "enemy."'80 This raises questions as to how Halliburton, headed by a known UNITA supporter, could have engineered such success in Angola?

It is essential that the key individuals and companies that appear to have connections to Pierre Falcone clarify the nature, if any, of their relationship with him. We have seen the implications of major influence-peddling in the case of Enron, where significant private gains for top executives appear to have been engineered on the back of massive public losses and where whole rafts of legislation have been constructed to the exclusive benefit of the company whilst ordinary employees and the investing public have been hung out to dry. If the impact of influence peddling can be so severe for US company employees - a domestic audience - imagine its effect on the Angolan population, suffering from decades of conflict, instability and massive state looting. All concerned must clarify what they knew and when did they know it.

The sections that follow provide detail about the formal questioning, and in some cases the arrest, of individuals alleged to be at the core of the Angolagate scandal. The reader should note that what is provided here consists of information that has been published in the international media. We have also supplemented the various media comments and opinions with additional data obtained through investigations.

I acknowledge that by giving me money, Falcone had in mind to ask me sooner or later to introduce him to people who could be of some use to him. Each time he was giving me money, I was aware that I was increasingly linked to M. Falcone.

- Jean-Noël Tassez's 15th December 2000 comments about his relationship with Pierre Falcone, reported in Le Monde 89

The searches and arrests begin

On 29th November 2000, Financial Brigade Police raided the home of Jean-Charles Marchiani, now an MEP from Charles Pasqua's Rassemblement pour la France (RPF) party.22 Simultaneously, the investigating Judges together with investigators from the General Council of Hautes-de-Seine also searched both Charles Pasqua's home (now also an MEP), and the headquarters of Pasqua's RPF Party.22 

According to Liberation, items recovered from Marchiani's house, together with information from the 26 Falcone diskettes, then led investigators to Jacques Attali, a former close advisor to President Franôois Mitterrand and the first Director of the European Bank for Reconstruction and Development (EBRD). The same sources of information also precipitating interest in Jean-Christophe Mitterrand.28 As a result, both Attali and Mitterrand were interviewed by the investigators between 30th November and 1st December 2000.81 

On 1st December 2000, Pierre Falcone was 'placed under examination' by Judges Courroye and Pròvost-Desprez.22 Later the same day he was charged with 'illegal arms trading, fiscal fraud, misuse of social benefits, abuse of trust and influence peddling,' and sent to La Santò jail in Paris.22,83

Arkadi Gaidamak and his international arrest warrant

At the same time, Arkadi Gaidamak was also summoned to appear before the Judges, but did not show up. According to the French press, an international warrant for his arrest was then issued on 6th December 2000.18

On 8th December 2000, Le Monde published an interview with Gaidamak, which apparently took place in the Dorchester Hotel in the Mayfair area of London.84 In the interview Gaidamak stated that the French judiciary and tax authorities have persecuted him for years. He claimed that London had been his main residence for the past ten years and that despite paying yearly some six million French Francs in taxes to the British authorities, this did not appear to be enough to persuade the French authorities that he was no-longer resident in France.84

Gaidamak provided a litany of complaints against the investigating authorities and painted a picture of his persecution, all the while he insisted that he was innocent of any wrongdoing. As if to back up his claim, he stressed his tendency to sue for defamation. In conclusion, Gaidamak stated that he would be prepared to meet with Judge Courroye provided, '...he ensures I am going to be treated correctly. For the moment,' he stressed, 'this is not the case.' This interview paints an extraordinary situation where the presence of a witness to a legal process stresses the conditions by which he will agree to be questioned.

Shortly after the interview, sources suggested that Gaidamak left the UK