Report on Angolan oil industry urges freezing of stolen assets

Mar 25, 2002 01:00 AM

A report on Angola's oil industry published will demand the freezing of stolen assets and investigations into worldwide links between money and political influence, as well as an overhaul of international financial regulation. London-based Global Witness, which launched the influential campaign against the trade in conflict diamonds in 1998, builds on information exposed in the "Angola gate" arms-for-oil and influence-peddling scandal in France to describe a hidden world of money and influence that reaches across Europe to the US, Israel and Russia.
Angola gate represents "but a small proportion of a much wider international scandal", it says, adding that perhaps $ 1.4 bn (£ 1 bn, EUR 1.6 bn), or nearly a third of Angolan state revenue, went missing last year. It identifies a billion-dollars bank account in the British Virgin Islands with two signatories close to the Angolan presidency.

With rising hopes for a lasting peace in Angola, following the killing of Unita rebel leader Jonas Savimbiin an army ambush last month, diplomats say the government's use of its oil revenue will now come under greater scrutiny. The report calls for a thorough investigation in the US into questions such as why the Republican party received $ 100,000 from a company closely linked to Pierre Falcone, a businessman who was recently imprisoned in France for his role in arms supplies to Angola. The donations were returned after they were reported in the press.
The report also demands full disclosure of information from a series of oil-backed loan transactions in recent years, including more than $ 1.7 bn in lending involving France's Paribas (now BNP-Paribas) and the commodities trader Glencore, and a related $ 5.5 bn debt deal with Russia in 1996.

The IMF has tried to discourage Angolan oil-backed borrowing of this kind, which is not illegal in itself but generates huge accounting problems in Angola's financial system, allowing the large-scale diversion of money. Transparency in bank lending to Angola is as important as that from oil companies, Global Witness says.
BP promised a year ago to publish what it pays Angola, but other companies failed to follow its example after receiving ferocious warnings from state oil company Sonangol, which says all such payments are confidential and disclosure should take place only through a "diagnostic study" of the oil sector agreed with the IMF. The ongoing diagnostic study's results remain a state secret, however, and its implementation is delayed.

Global Witness singles out TotalFinaElf, ExxonMobil and ChevronTexaco for secrecy in Angola, although it recognises that the Angolan government pressure has made it hard for companies to make a stand on this issue. The way forward, it says, is for stock exchange regulators to require listed companies to disclose payments.

Source: The Financial Times
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