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| Isabel dos Santos, Africa's Richest Woman |
LAST DECEMBER Isabel dos Santos commemorated her tenth wedding
anniversary to Congolese businessman Sindika Dokolo with a party.
Subtlety wasn’t on the menu. She jetted in dozens of friends and
relatives from as far as Germany and Brazil, who joined with hundreds of
local guests in Angola for three days of lavishness, including a bash
at the Fortress of Sao Miguel in the capital city of Luanda and a
beachside Sunday brunch on the posh Mussulo peninsula. The invitation,
according to one attendee, came in a sleek white box, promising a
celebration of “a decade of passion/ a decade of friendship/ a decade
worth a hundred years. …”
A decade worth $3 billion is more like it. At 40 Dos Santos is
Africa’s only female billionaire, and also the continent’s youngest. She
has quickly and systematically garnered significant stakes in Angola’s
strategic industries–banking, cement, diamonds and telecom–making her
the most influential businessperson in her homeland. More than half of
her assets are held in publicly traded Portuguese companies, adding
international credibility. When FORBES outed her as a billionaire in
January the government disseminated the news as a matter of national
pride, living proof that this country of 19 million has arrived.
The real story, however, is how Dos Santos–the oldest daughter of
Angolan President José Eduardo dos Santos–acquired her wealth. For the
past year FORBES has been tracing Isabel dos Santos’ path to riches,
reviewing a score of documents and speaking with dozens of people on the
ground. As best as we can trace, every major Angolan investment held by
Dos Santos stems either from taking a chunk of a company that wants to
do business in the country or from a stroke of the president’s pen that
cut her into the action. Her story is a rare window into the same,
tragic kleptocratic narrative that grips resource-rich countries around
the world.
For President Dos Santos it’s a foolproof way to extract money from
his country, while keeping a putative arm’s-length distance away. If the
71-year-old president gets overthrown, he can reclaim the assets from
his daughter. If he dies in power, she keeps the loot in the family.
Isabel may decide, if she is generous, to share some of it with her
seven known half-siblings. Or not. The siblings are known around Angola
for despising one another.
“It is not possible to justify this wealth, which is
shamelessly displayed,” former Angolan prime minister Marcolino Moco
tells FORBES. “There is no doubt that it was the father who generated
such a fortune.”
Isabel dos Santos declined to speak with FORBES for this article. Her
representatives failed to respond to detailed questions sent months ago
but last week issued this statement: “Mrs. Isabel dos Santos is an
independent business woman, and a private investor representing solely
her own interests. Her investments in Angolan and/or in Portuguese
companies are transparent and have been conducted through arms-length
transactions involving external entities such as reputed banks and law
firms.” In turn, the spokesman accuses this article’s coauthor, an
Angolan investigative journalist, of being an activist with a political
agenda. The Angolan government jailed Marques de Morais in 1999 over a
series of articles critical of the regime and has brought new criminal
defamation charges against him over his 2011 book, Blood Diamonds:
Corruption and Torture in Angola .
Finally, a representative of Mrs. Dos Santos said that any
allegations of illegal wealth transfers between her and the government
are “groundless and completely absurd.” That could well be. When your
father runs the show, and can dictate which national assets are sold and
at what price, what’s theft of public resources in one country can be
rendered legal with a swipe of the pen.
President José Eduardo dos Santos could not be reached for comment.
That is unfortunate, because the Dos Santoses, as Moco notes, have “some
explaining to do.”
FOR THREE CENTURIES the Portuguese extracted wealth
from this mineral-rich country on Africa’s southwestern coast. Almost
immediately after Angola won independence in 1975, various internal
factions began battling one another for the right to do the exact same
thing. From this chaos, which lasted 27 years, Dos Santos, who had
studied oil engineering in Soviet Azerbaijan and served as foreign
minister upon independence, eventually emerged as president in 1979.
He’s held on to power ever since, making him the planet’s
third-longest-serving nonroyal head of state.
The president met his first wife (he’s been married at least twice),
Tatiana Kukanova, while a student in Azerbaijan, and his first
child–Isabel–was born there. By age 6 Isabel dos Santos was in Angola’s
presidential palace, and while the family’s lifestyle wasn’t
over-the-top by profligate African dictator standards (save the
president’s dalliances–at least five of his children are from various
mistresses), the family had Christmas trees flown in from New York and
$500,000 worth of bubbly imported from a Lisbon restaurateur. There was
decadence enough for Isabel to earn the nickname “the Princess.”
During Isabel’s upbringing the Angola economy sputtered, crippled by
two factors: ongoing civil war and Dos Santos’ socialist policies. “In
the 1980s you’d go to the supermarket and there would only be noodles on
the shelves. There wasn’t much there,” says University of Southern
California associate professor emeritus Gerald Bender, who’s been
studying Angola since 1968. For cloistered Isabel that reality was
likely invisible; she eventually attended King’s College in London,
where her mother, now a British citizen, lives, and earned an
undergraduate degree in engineering.
However, as civil war resumed by the end of 1992, Isabel left for
Angola’s capital city, Luanda, in a rush, allegedly after receiving
death threats in London.
By the late 1990s, when the civil war was winding down –a ceasefire
was formally declared in 2002–President Dos Santos, like the Soviets he
had studied under in the 1960s, was embracing a grab-what-you-can form
of capitalism. Over the past decade Angola has been one of the world’s
fastest-growing economies. GDP grew at an 11.6% annual clip from 2002 to
2011, driven by a more than doubling of oil production to 1.8 million
barrels a day. The government budget sits at $69 billion, up from $6.3
billion a decade ago.
But predictably, precious little of the windfall has made it to the
people. Some 70% of Angolans live on less than $2 a day. And by the
government’s own count, 10% of the country’s population is scrambling
for food due to drought and bureaucratic neglect. So where’s the money
going? Start with a paranoid president-for-life. The state security
apparatus sucks more funds from the budget than health care, education
and agriculture combined. A lot is clearly stolen: Between 2007 and 2010
at least $32 billion of oil revenue went missing from the federal
ledger, according to the International Monetary Fund, which later
tracked most of the money to “quasi-fiscal operations.” Angola comes in
at 157 out of 176 nations ranked by Transparency International’s
Corruption Perceptions Index. It trails shining stalwarts of
participatory democracy such as Yemen and Kyrgyzstan. And it’s within
this environment that Isabel dos Santos has surfaced with an estimated
net worth of $3 billion.
ISABEL DOS SANTOS’ formative business experience
came at Miami Beach. Not the Florida city, but rather a rustic chic
beachside bar and restaurant in Luanda that tries to emulate its
namesake, down to the mediocre food and indifferent service. In 1997 the
owner, Rui Barata, was having issues with health inspectors and taxmen.
His solution: bringing in Isabel dos Santos, then 24, as his partner,
with the idea, contemporaries say, that her name would keep pesky
government regulators at bay. Her initial investment was negligible,
according to a source with knowledge of the deal, and the restaurant
thrived: Sixteen years later it’s still a weekend hot spot.
The lesson–the equity stake available to those with a gilded
name–couldn’t have been lost on Isabel dos Santos, who was entering
adulthood at the exact same time Angola’s riches were being unlocked.
Here’s what followed:
First, Grab the Diamonds. Angola is the world’s
fourth-largest diamond producer, selling an estimated $1 billion in gems
every year from mines situated in the country’s northeast. The mines’
exclusive concession-holder is the state-owned company, Endiama.
In 1999 President Dos Santos pushed Endiama to form a diamond-selling
partnership. Three Israeli diamond merchants, including Lev Leviev, who
FORBES now estimates is worth $1.5 billion, promised contacts and
expertise. The power behind the venture, according to British court
records, was Russian arms dealer Arkady Gaydamak–a former confidant of
President Dos Santos during the civil war of 1992-2002. The new company
would be called Ascorp.
Leviev and his partners, including Gaydamak, would wind up with 24.5%
of Ascorp. The government would retain 51%. The most surprising major
shareholder? Isabel dos Santos, who emerged with a 24.5% stake through a
Gibraltar investment company, Trans Africa Investment Services, that
she had set up with her mother, according to TAIS’ annual report.
(Leviev did not respond to a request for comment, and Gaydamak could not
be reached at press time.)
Angola’s 2010 constitution bars the president from stealing public
money and acts of corruption, which would seem to prohibit the use of
his position for the private enrichment of his family. No matter:
Angola’s Council of Ministers, controlled by her father, approved the
Ascorp deal anyway. “In a country with separation of powers and real
democracy, these presidential actions to enrich his family would have
caused legal procedures for his impeachment,” says lawyer Salvador
Freire, president of the human rights group Maos Livres. “In Angola he
is the law.”
Ascorp was a cash cow, yielding millions of dollars in
dividends per month, according to British court documents, but as the
“blood diamond” business attracted international scrutiny in the middle
of the 2000s, Dos Santos transferred to her mother total control of
TAIS, now renamed Iaxonh Limited, according to Gibraltar’s Registry of
Companies records accessed by FORBES. It’s quite a parking spot, safely
under the control of a British citizen, with Isabel dos Santos
conveniently sitting in Angola as her mother’s sole heir. The mother
could not be reached for comment.
Telecom: Father Knows Best. In 1997 President Dos
Santos issued a decree concerning the increasingly valuable
telecommunications spectrum it controlled: The government must undertake
a public bidding process for new telecom licenses.
Two years later he defied his own decree–by issuing a new one. The
government could grant such a license without a public tender, as long
as the grantee was a joint venture with the state. Eleven months after
that the president, backed by his rubber stamp Council of Ministers,
granted Unitel the right to be the first private mobile telephony
operator in the country–with the condition that he had sole power to
approve the project and to decide on the shareholding structure of the
company, since it involved state funds. The state-owned oil company got a
25% stake, and Isabel emerged with her own 25% stake. A spokesman for
Isabel dos Santos said she contributed capital for her Unitel stake but
declined to specify how much. A year later Portugal Telecom paid $12.6
million for another 25% stake.
It was one hell of an investment. Mobile phones have revolutionized
Africa, and as one of just two mobile phone networks in Angola, Unitel
had amassed 9 million subscribers. Revenue last year was $2 billion,
making it Angola’s largest private company.
Her share is worth at least $1 billion, based on discussions with several analysts who follow Portugal Telecom.
Banking: A Friend in Europe. As Isabel dos Santos
diversified her Angolan business interests, in 2005 she diversified her
network of powerful patrons. Enter Americo Amorim, a Portuguese
billionaire worth $4.3 billion who has spent his life expanding his
family’s business empire from cork to real estate, tourism and,
especially, oil. The billionaire, who did not comment for this story,
was early to seek deals in Angola after hostilities ended. When the Dos
Santos clan made a move into banking in 2005, they did so in partnership
with Amorim and Fernando Teles, a Portuguese national who had been CEO
of another Angolan bank. They formally opened Banco Internacional de
Credito, known as BIC, according to the company’s annual reports.
The hand of Isabel’s father again played a role: President Dos
Santos, as head of the Council of Ministers, formally authorized the
foreign investment in the capital of the bank. Specifically how it was
financed is murky, as there is no public record showing who put money
into the bank. BIC’s latest annual report shows that Amorim owns 25% of
the bank. Various documents reveal that another 25% is held through an
investment vehicle controlled by Isabel dos Santos. Her spokesman says
she was a founding member of the bank and had independent means to pay
her share from her early business ventures.
Regardless, BIC was a hit, in large part because of a deal to lend
money to … the Angolan government. BIC made loans to the state worth
$450 million, in addition to more than $350 million made to private
ventures. BIC had assets of $6.9 billion in 2012. Isabel dos Santos’
stake is worth at least $160 million, FORBES estimates, based on the
bank’s book value listed in its latest annual report. BIC officials
could not be reached for comment.
Oil: A Strange Partnership. Oil is Angola’s greatest
natural asset. The country produces 650 million barrels per year, most
of it exported. The state-owned oil firm, Sonangol, is so profitable
that it was only a matter of time before the Dos Santos family would
start looking for ways to hitch a ride on its success. Isabel’s banking
partner, billionaire Americo Amorim, would play the key role.
In 2005 Amorim set up a subsidiary, Amorim Energia. He would control
it with a 55% stake. The remaining 45%, at least originally, went to
Sonangol via a Netherlands holding company called Esperaza Holding B.V.
At the end of that year Amorim Energia went shopping, acquiring 33.3% of
Galp Energia, Portugal’s former state-owned oil company, for roughly $1
billion, according to press reports. At the end of 2006, according to
investigative not-for-profit Global Witness, 40% of Sonangol’s stake in
Esperaza ended up with a Swiss company called Exem Holding. No documents
could be found that definitively tie Exem Holding to Isabel dos Santos,
but her fingerprints are everywhere. Her husband, Sindika Dokolo, was
put on the Amorim Energia board at the request of Esperaza, according to
Global Witness. And the chairman of Isabel dos Santos’ holding company
is also on the boards of Fidequity, a subsidiary of Exem Holding, and
entities called Exem Energy and Exem Oil & Gas, according to public
filings. Last year Amorim Energia paid $726 million for an additional 5%
of Galp. Isabel’s estimated 6.9% stake in Galp is worth a recent $924
million.
Cement: Safeguarding the “Public Interest.” For most
of President Dos Santos’ reign there’s only been one cement factory in
Angola, owned by a firm called Nova Cimangola. By mid-2004 the
government owned 39.8% of it, state-owned oil company Sonangol’s captive
bank, BAI, owned 9.5%, and the remaining 49% was owned by Swiss firm
Scanang, which was in the process of being taken over by Portuguese
cement company Cimpor. The government began demanding a bigger stake,
arguing that the factory was a strategic asset for national
reconstruction in the aftermath of the war. On Oct. 29, 2006 the
president’s Council of Ministers’ Resolution 78/06 approved a $74
million payment to buy out Cimpor, declaring that the expenditure was
necessary to safeguard “public interest, to restore the legality and to
maintain the shareholding control of Nova Cimangola by national
entities, incorporated in Angola.” The $74 million payment, according to
an Angolan newspaper, came from BIC, the bank half-owned by Amorim and
Isabel dos Santos. The government would now own 89%, while BAI and
Angolan individuals would control the remaining 11%.
What followed, however, showed that the larger goal wasn’t to give
Angola a larger stake but rather certain Angolans. Prior to the
council’s approval a company called Ciminvest was incorporated in
Angola. Ciminvest was initially fronted by the president’s former legal
counsel, according to the articles of incorporation he signed. At one
point Portuguese billionaire Americo Amorim owned an estimated 30% of
Ciminvest, but his representative confirms that he transferred his stake
in 2009. He would not comment on who took over the stake or what was
paid for it. The real owners are now widely understood to be Isabel dos
Santos and her husband, though documents detailing ownership are not
publicly available. However, Isabel admits on her resume that she chairs
the board of Nova Cimangola, which she controls through Ciminvest.
Without much ado, at no apparent cost, the company that was
presidentially mandated to be controlled by “national entities” had
become controlled by Isabel dos Santos.
ISABEL DOS SANTOS’ holdings are more than just
squirreled away assets to be unearthed in case of a rainy day. They
throw off hefty dividends that allow her to buy yet more assets in
businesses seemingly unrelated to the exploitation of Angolan
properties, such as her $500 million stake in Portuguese media firm ZON.
Meanwhile, her father has taken steps to legally protect himself from
all the plundering. Under Angolan law President Dos Santos’ decision to
grant a license to Unitel for the personal benefit of his daughter
could be considered an abuse of power. To cover his legal bases, in 1992
the president fiddled with the law to reduce it to two grounds: taking
bribes or betraying the country. Technically, he can argue, neither was
violated in the case of Unitel.
The larger strategy, though, is to portray Isabel as a hero. In
January, after FORBES declared her a billionaire, the Angolan regime’s
mouthpiece (and the country’s only daily newspaper), Jornal de Angola ,
claimed that “while we give our best for Angola without poverty, we are
elated with the fact that businesswoman Isabel dos Santos has become a
reference in the world of finances. This is good for Angola and it fills
Angolans with pride.” Angolans should be mortified, not proud.
Source: Forbes
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