Press Release / Feb. 22, 2002

Difficult questions for Bush and dos Santos on Angolan oil sleaze, starving children, and billions of disappearing dollars

On Tuesday 26th February, President Bush will meet with the unaccountable leader of a country that “tolerates starvation” and is “not transparent”. However, he is not from North Korea but from oil-rich Angola.

When they meet, President Bush must call President dos Santos of Angola to account over Angola’s failed state and the full-scale embezzlement of oil money by its ruling elite. Global Witness director Simon Taylor said, “this is a great chance for President Bush to provide a clear message about the importance of corporate transparency in the post-Enron era”.

Global Witness investigations have revealed that individuals connected with Angola’s Presidency benefit financially from nearly every item consumed in the war against UNITA. This vested economic interest in the continuation of Angola’s 40-year conflict shows that the disorder from the war is being exploited to loot the Angolan state. Information leaking out of the Angolan oil diagnostic study suggests that US$1.4 billion – almost a third of state revenue – went missing in 2001. Meanwhile, the UN was left to scrape together US$200 million to feed the one million displaced people who depend on emergency food aid in Angola.

CADA (Companhia Angolana de Distribuição Alimentar), a company associated with individuals close to the Presidency and one of the main suppliers to the Angolan Armed Forces, is connected to the Brenco group of companies at the centre of ‘Angolagate’, the arms-to-Angola scandal that broke in France, December 2000.

Although oil revenues constitute between 80%-90% of Angola’s income, international oil companies such as ChevronTexaco and ExxonMobil refuse to publish what they pay to the country, meaning that ordinary Angolan citizens have no information to call their government to account over the misuse of state funds. “International oil companies in Angola deliberately reject the transparent behaviour that is accepted as normal in the developed world. Meanwhile, one child dies every three minutes of preventable causes in this war-ravaged country whilst the ruling elite embezzle the funds that would keep these children alive”, said Mr. Taylor.

President Bush himself was tainted by Angolagate when it was revealed that his election campaign received a US$100,000 donation – the same size as that given by Enron’s Kenneth Lay - from a company run by the wife of Pierre Falcone, the alleged arms dealer who is currently on bail in France for “illegal arms trading, fiscal fraud, misuse of social benefits, abuse of trust and influence peddling” related to the affair. President Bush subsequently returned the donation after Newsweek publicised the link in January 2001.

Global Witness is calling on the Angolan Government to be open and transparent over its management of oil revenues and for President Bush to take a lead in getting US oil companies to publish what they pay to the Government in Angola and everywhere.

Please contact Simon Taylor on +44 (0)207 6731 or ++44 (0)7957 142 121.

Editor’s notes:

(1) Global Witness focuses on the links between the exploitation of natural resources and the funding of conflict and corruption. It is non-partisan in all its countries of operation. In Angola, Global Witness has previously highlighted how the traffic of conflict diamonds funds UNITA’s continued insurgency as well as questioning management of oil revenues by the Government.

(2) Angolan President dos Santos is in Washington this week. Along with Joaquim Alberto Chissano of Mozambique and Festus Gontebanye Mogae of Botswana, he will meet with President Bush on Tuesday 26th February to discuss issue of importance to Southern Africa. Vice-President Cheney will subsequently meet with dos Santos alone.

(3) 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. The latest figures from the UN show that three-quarters of the population are forced to survive in absolute poverty on less than one dollar a day; one child now dies every three minutes of preventable diseases and malnutrition (480 every day) and over 30% of all children die before reaching the age of five; overall life expectancy is a mere 44 years; and some 4 million civilians (almost a third of the country’s population) have fled their homes due to the war.

(4) Major oil companies operating in Angola are: Chevron-Texaco, TotalFinaElf and ExxonMobil, BP-Amoco, Norsk Hydro, Statoil, Shell, Agip, Petrobras and Petrogal. BP-Amoco created a precedent on transparency in February 2001 by stating that it will publish what its pays in Angola and it revealed its share of the signature bonus for Angola’s concession Block 31. Information has yet to be provided regarding tax payments to the Angolan Government from the company’s shareholding in Block 17, which commenced commercial operations in December 2001.

(5) Brenco boss Pierre Falcone was arrested in France under suspicion of “commerce illicite d’armes, fraude fiscale, abus de biens sociaux, abus de confiance at traffic d’influence”. He was released on bail of about US$15 million (more that ten-times France’s previous highest bail demand) and has yet to be convicted of any of the charges.