State Oil Company is Main Focus of Investigation
December 21, 2011

Angola’s government has taken credit for improving transparency over its oil revenues and auditing the state oil company. But the disappearance of $32 billion raises serious questions about its efforts and underscores the need for public accountability

Arvind Ganesan, business and human rights director

(Washington, DC) – The government of Angola should promptly provide a full public accounting for US$32 billion in missing government funds thought to be linked to the state oil company, Human Rights Watch said today. A December 2011 report by the International Monetary Fund revealed that the government funds were spent or transferred from 2007 through 2010 without being properly documented in the budget. The sum is equivalent to one-quarter of the country’s Gross Domestic Product (GDP).

“Angola’s government has taken credit for improving transparency over its oil revenues and auditing the state oil company,” said Arvind Ganesan, business and human rights director at Human Rights Watch. “But the disappearance of $32 billion raises serious questions about its efforts and underscores the need for public accountability.”

Human Rights Watch has identified a previous major gap in funds, in which more than $4 billion in oil revenues from 1997 through 2002 disappeared, pointing to mismanagement and suspected corruption. Human Rights Watch has also reported on subsequent improvements in Angola’s management of its lucrative oil sector that were prompted by past problems. Human Rights Watch has also criticized the government for not adequately addressing serious economic and social rights problems in the country. Despite the country’s vast oil wealth, social indicators remain low in Angola and the population has limited access to social services.

According to the International Monetary Fund (IMF), recent actions by the Angolan Finance Ministry to monitor more closely the state oil company, Sonangol, following a 2010 legal reform have led to the discovery of financial flows into foreign escrow accounts beyond what can be explained by Angola’s debt service obligations. Such as-yet-unexplained transfers account for $7.1 billion. The government is investigating those outflows, as well as trying to identify what happened to the remaining $24.9 billion that appear as an unexplained discrepancy in government accounts. One possibility identified by the IMF is that Sonangol has understated the funds it receives, including in connection with economic activities not currently reflected in the budget.

The government has pledged to prepare a report matching budgetary information with data on funds received from Sonangol ahead of the next IMF review under its $1.4 billion Standby Arrangement with the government that is scheduled to be completed by February 2012. It is also due to continue publishing budget reports and independent external audits of the state-oil company.

Since March 2011, rallies inspired by the pro-democracy movements in North Africa and the Middle East have been organized by youth in protest against corruption and misrule under President José Eduardo dos Santos, in power for 32 years. Human Rights Watch has documented efforts by the Angolan authorities to curtail media coverage of the demonstrations and the use of excessive force against protests on March 7, September 3, and December 3 in the capital, Luanda.

“Tens of billions of dollars could be used for the benefit of the Angolan people – instead the government can’t account for them,” Ganesan said. “Angolans deserve a full public explanation for where those billions went.”