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VI. Government Attempts to Restrict Information

The government not only mismanaged public resources, it enacted domestic laws that criminalized possession of information and restricted its distribution. On the international level, the government often refused to provide information about its use of revenue and its expenditures, and attempted to prevent other institutions from disclosing information or conducting investigations. This was true with the IMF, private companies, and even other governments. In no case did the government take steps to provide adequate information to counter serious allegations of misuse of public funds.

Domestic Laws that Would Criminalize and Restrict Information

The government passed three laws—the Access to Administrative Documents Bill, the National Security Bill, and the State Secrecy Bill—during 2002-2003 that could severely restrict access to information. Of particular concern is the State Secrecy Bill, passed on July 19, 2002, which criminalizes possession of documents that the government considers sensitive, even if obtained lawfully by individuals not employed by the government.

The law defines how state secrets will be determined, who makes such a determination, and provides penalties for breeching its terms. There are some extremely troubling provisions of the bill in the context of transparency and freedom of information. Article 2 of the law states that “financial, monetary, economic, and commercial interests of the State” can be classified as secret, broad terms that invites application of the law to data on oil revenues, IMF documents, or other documents that should be in the public domain in order to further public oversight.105 Any civil servant or political appointee can be punished with up to two years imprisonment for divulging information classified as a state secret.106 Individuals who are not government officials can also be penalized for possessing or republishing “state secrets,” regardless of how they received them. Article 26 of the law states:

Those who are not civil servants or holders of public office, and who have access to classified information and materials, irrespective of the manner and source, and disclose such information publicly without being so authorized to do by the relevant bodies, shall be subject to the penalties set forth in Articles 24 and 25 of the present act, according to whether they acted with intent or through negligence.107

The penalties enumerated in articles 24 and 25 of the Bill are six months to two years imprisonment for an “intentional breach of state secrecy,” or six months imprisonment for an unintentional, but “negligent” breech of state secrecy.108 This could have a chilling effect on the Angolan press and civil society since they are subject to the same penalties as government officials if they report on government activities.

Moreover, the law has provisions for extraterritorial prosecution of individuals. Article 3 of the law states that “[s]tate secrecy shall cover all persons within or beyond national territory, irrespective of whether they are employed by the public administration and who, for any reason, come into contact with materials deemed to be State secrets under the terms of the present act.”109 Some observers have interpreted these provisions as an attempt to prevent representatives of multilateral institutions, international NGOs, international press, or other institutions from publishing materials that may be sensitive or embarrassing for the government.110 The Economist Intelligence Unit reported that “[o]ne aim of the bill is believed to be to prevent damaging information, such as that regarding the “Angolagate” arms and banking scandal in France and the secretive and controversial Russian debt deal, from leaking out” (for more on these issues, see chapter TK, below).111 Human Rights Watch believes that the Oil Diagnostic reports, revenue data, expenditure data, and debt figures should never be classified as state secrets and that the government should clarify this immediately.

Failure to Provide Information to the IMF

A major source of tension between the government and IMF was the government’s repeated unwillingness to provide basic information to the Fund. For example, when the IMF sought an exact figure for the signature bonus payment paid for Block Thirty-Four112, the government did not provide accurate information and underreported the amount that had been paid. The Fund said:

Oil exploration bonuses, or up-front payments from the oil companies to the government for exploration rights, have been a common feature in Angola’s oil contracts in recent years. The allocation of these bonuses is decided by the presidency in conjunction with Sonangol, and even though they are identified as income in the budget, their use is not normally recorded in the fiscal accounts. The most recent bonuses involved a large ultra-deepwater block auctioned in September 2001 [Block 34]. The authorities reported receiving U.S.$285 million for this block in October 2001 and are planning to transfer these funds to the budgetary accounts in March or April 2002. The delay in effecting this transfer could not be explained, except by the fact that these funds are outside the control of the treasury. More important, this amount is lower than the payments for the treasury of about U.S.$400 million (not including additional payments of nearly U.S.$100 million to Sonangol’s Social Fund and other funds) reported to the staff by the oil companies for the same concession.113

When IMF staff asked the government for an explanation of the U.S.$115 to U.S.$215 million difference between what the government said it had received and the companies said they had paid, the government officials said that they “could not provide any supporting documentation on these payments because of confidentiality agreements with the oil companies.”114 In 2003, the IMF said that the bonus payment was U.S.$327.7 million based on information from Sonangol. But because of repayments back to oil companies for services and prior debt, the net amount was U.S.$278.6 million. However, the IMF could not determine the use of those funds; did not comment on the U.S.$100 million social bonus payment that it had previously reported; or reconcile the discrepancy between what Sonangol said it received as a bonus payment in 2003 and what the companies told the IMF they had paid in 2001.115 As recently as November 2003, a representative from a company that is a partner in Block 34 told Human Rights Watch that the partner had paid the “largest” bonus payment in Angolan history that totaled about U.S.$500 million, of which about U.S.$100 million was a social bonus payment.116 Despite more details from the government it still did not fully disclose the amount and use of that payment.

Similarly, the government refused to fully disclose the details of suspicious transactions related to frozen assets in Swiss banks. In 1996, a “secret” rescheduling of Angola’s approximately U.S.$5 billion debt to Russia was negotiated between the Angolan and Russian governments. The debt was largely related to arms purchases made between 1980-1991.117 The debt rescheduling reportedly involved U.S.$3.25 billion in debt forgiveness and repackaging the balance into a U.S.$1.5 billion loan that was payable by 2016 through a series of thirty-one promissory notes were payable to the Russian Ministry of Finance and issued by the Banco Nacional de Angola (BNA), the Angolan central bank. Russia reportedly sold the debt at a sizable discount to Abalone, a private company, in August 2001. Two principals in the company were businessmen with close ties to the Angolan government. The company and the government of Angola then reportedly secured a series of oil-backed loans that were worth at least half of the promissory notes. Those payments eliminated the debt to Russia since the debt was purchased at a discount.

However, Daniel Devaud, a Swiss magistrate, then froze at least U.S.$700 million held in account at the Geneva branch of a Swiss bank in February-March 2002. Devaud found that “hundreds of millions of dollars” were allegedly paid to “Russian and Angolan dignitaries” and blocked payment of the remaining promissory notes. Only about U.S.$161 million had been paid to Russia’s Finance Ministry, while at least U.S.$257.6 million went to Angolan government officials and private businessmen. Devaud also found that three accounts had been opened at a bank in Luxembourg registered to Panamanian companies but whose beneficiaries were allegedly the two businessmen, and Angolan President José Eduardo dos Santos.118 According to the Economist Intelligence Unit, there was “a strong suspicion that the value of the loans greatly exceeded the reduced value of the debt bought by Abalone” which raised suspicions that the balance of those oil-backed loans, guaranteed by the government of Angola’s oil, fell into private hands at the public’s expense. One of the businessmen told the French newspaper Le Monde that the Angolan government approved of the operation and that it benefited both Russia because it recovered debt and Angola because its debt was reduced.119

When the IMF first asked the government to provide details of the Russian debt transactions in mid-2001, the government refused. 120 According to one participant in those meetings, when an IMF official asked for details, the government official would look through documents that appeared to have contained many of the details of the transactions, but provided only cursory information. The IMF official abruptly ended the meeting and left out of frustration over the lack of disclosure.121

After details of the Russian debt transactions were widely reported in the French and Portuguese press in early 2002, the government was more forthcoming with the IMF. However, when the IMF asked the government for supporting documentation for these transactions and other oil-backed loans in order to reconcile them with a database of the country’s external debt, the government refused “because it would infringe on national sovereignty.”122 The IMF then said that “[g]iven the increased secrecy of Angola’s external borrowing practices…all external public sector loans [should] be documented, disclosed to the public, and submitted to the National Assembly for approval.”123 Once again, however, the government refused because it “felt that such a level of transparency vis-à-vis parliament and civil society would be too intrusive on government affairs.”124

Threats Against Governments

The Angolan government’s repeated denunciations of arms or possible corruption investigations abroad only underscored the government’s hostility to greater transparency. In particular, the government could have offered assistance to determine how hundreds of millions of dollars were allegedly stolen or whether bribes had been paid. Instead, it condemned the Swiss and French governments for investigating those activities.

Switzerland

In response to Switzerland’s investigation into the Russian debt transactions and its freezing of assets, the Angolan government announced on June 5, 2002 that it would “take legal action against Swiss judge, Daniel Devaud, for defamation of the image and prestige of the Angolan authorities, particularly the Head of State, José Eduardo dos Santos.”125 The government also said that it had withdrawn its ambassador to Switzerland in protest. President dos Santos reportedly said that he “considered judge Daniel Devaud’s attitude as arrogant and an abuse of power and a violation of the principles of international law on the basis of which the relations between Angola and Switzerland were established.” 126 At this writing, the government had not filed a case against Devaud and the government funds are still frozen in Switzerland. Swiss and Angolan authorities were negotiating a settlement that would involve the release of the funds on the condition that the banks would initially release only U.S.$37 million to U.S.$74 million and only to be used for social or humanitarian purposes. The agreement reportedly has been delayed because Angolan authorities apparently rejected those conditions.127

France

A corruption trial related to the events in Switzerland that involved former officials of Elf Aquitaine (now part of Total) and others, continued to cause tension between France and Angola. On March 17, 2003 a corruption trial began in Paris that involves thirty-seven defendants who were accused of obtaining approximately U.S.$430 million from Elf Aquitaine for “personal enrichment and political kickbacks during the late 1980s and early 1990s.”128 Among the defendants was former French interior minister, Charles Pasqua, who allegedly supported questionable arms sales to Angola in 1993 and 1994. The French media refer to these events colloquially as “Angolagate.”

The Elf trial also shed light on some of the companies alleged payments to heads of state in Africa because of the alleged activities of one of its defendants, André Tarallo. Tarallo, the former head of Elf-Gabon, was nicknamed “Mr. Africa” because he allegedly funneled tens of millions of dollars in “commissions and “subscriptions” to heads of state in Angola, Cameroon, Congo-Brazzaville, and Gabon in exchange for influence and lucrative oil deals.129 Tarallo first made these allegations to French investigators in July 2000 and they quickly were reported in the international media.130 Shortly after the allegations became public, the Office of President dos Santos issued a strong denunciation of the allegations rather than offering to assist the investigation. The statement said that:

The Cabinet of the Presidency of Angola was appalled to learn through the press, of the declarations that have allegedly been made by Mr. André Tarallo [sic], former Director for Africa of the Elf Aquitaine [sic] Group, to French judicial authorities. These declarations gravely denigrate the person and reputation of several African Chiefs of State and their families, among whom his Excellency José Eduardo dos Santos, President of the Republic of Angola…Considering the dubious and irresponsible character of such declarations lies at the root of the defamation campaigns and accusations that have been launched against the Chief of the Angolan state, this Cabinet feels the obligation to forcefully repudiate such allegations, with which Mr. Tarallo [sic] may be trying to disguise possible criminal actions committed by himself or his colleagues at ELF…The Cabinet of the President of Angola believes Mr. Tarallo’s [sic] attitude to be unacceptable and unfair, given that the Angolan authorities granted him, in good will, all manner of assistance to ensure the success of ELF’s operations in Angola and its good performance, which allowed France to occupy the second position in the Angolan oil industry, with obvious benefits.131

The government also said that it “reserves the right to take, if deemed necessary, the appropriate measures to ensure the defense of the Angolan state.” 132 The Economist Intelligence Unit also reported that President dos Santos had repeatedly declined invitations to France and that the government had delayed approvals for a major Total oilfield in Angola because of displeasure over the legal proceedings.133 Nevertheless, French courts convicted Tarallo of corruption for misusing Elf’s funds and sentenced him to five years imprisonment and fined him €2 million on November 12, 2003. Tarallo maintained that bribing government officials in Africa was not a misuse of funds since it led to business deals for Elf.134

Efforts to Prevent Companies from Publishing Data

The government was also hostile towards company efforts to publish their payments to the government. Following pressure from NGOs, and after negotiations with Sonangol and the government, BP’s spokesperson told Global Witness on February 6, 2001, that it would annually publish financial data on Angola, though without specifying when or in what format this would be done.135 In particular, BP committed to publish the total net production by exploration/production block; aggregate payments made by BP to Sonangol; and the total amount in taxes and levies paid to the Angolan government. Additionally, BP noted that the amount of the signature bonus payment it made for the offshore concession, Block Thirty-One, was recorded in the 1999 annual report for BP Exploration (Angola) Limited available, at Companies House in London.136 BP paid a signature bonus of U.S. $111,089,000 for Block Thirty-One, according to the annual report.137 KPMG reported that all of the joint venture partners in Block Thirty-One, including BP, paid a total bonus payment of approximately U.S. $335 million.

However, the Angolan government had either not agreed or changed its mind regarding the publication of payments. In response to BP’s effort at openness, Manuel Vicente, the Chairman and Chief Executive Officer of Sonangol, issued a harsh letter to BP that threatened to cancel its multibillion dollar contracts in the country if BP proceeded with the publication of data. The letter was also sent to all of the other companies operating in Angola as a warning not to follow BP’s lead. The letter read:

The Sonangol Letter to BP138

Dear Sir,

It was with great surprise, and some disbelief, that we found out through the press that your company has been disclosing information about oil-related activities in Angola, some of which have a strict confidential character.

According to the media, your company promised to continue to supply further such information in a letter dated 06/02/01 and signed by Mr. Richard Oliver [sic], thereby seriously violating the conditions of legal contracts signed with Sonangol.

As a result, we are making enquiries to confirm the veracity of information that has been published which, if confirmed, is a sufficient reason to apply measures established in Article 40 of the PSA [Production Sharing Agreement] i.e. contract termination.

We are aware that some oil companies have been under pressure by organized groups that use available means in an orchestrated campaign against some Angolan institutions by calling for “pseudo-transparency” of legitimate government actions.

As the national authority that awards concessions, Sonangol is fully aware that its economic link with your company should not be mixed with other relationships that seriously violate existing contracts in order to attract bogus credibility.

Given this situation, we highly recommend that your company scrupulously respect the agreements that it has signed with Sonangol, as well as Angolan legislation relating to the confidentiality of information.

May we recall that there are specific channels, which should be respected, to release any type of authorized information.

Given the seriousness of this situation, if the provision of information by your company is confirmed and we observe moral or material damage thereof, we reserve the right to take appropriate action. The same is valid if you repeat such practices in the future.

Finally, and in the hope of maintaining the good relations that we have always had with the oil companies that operate in Angola, we strongly discourage all our partners from similar attitudes in the future.

In closing, please accept our best wishes.

[signed]

The President of the Administrative Council

Manuel Vicente

The letter had an obviously chilling effect on the industry and efforts to promote voluntary transparency. No other company has tried to undertake a similar effort on Angola. BP has continued to promote transparency and publishes data in its filings in Companies House in the United Kingdom. It has not, however, published its production data by oil block as it previously promised. Other companies often cite the response by Sonangol as the reason that they will not publish this data voluntarily. For example, Lee Raymond, the Chairman and Chief Executive Officer of ExxonMobil told The Financial Times that ExxonMobil rigorously followed confidentiality clauses with the Angolan government.139



105 State Secrets Bill, art. 2.

106 Ibid., art. 24 and 25.

107 Ibid., art. 26.

108 Ibid., art. 24 and 25.

109 Ibid., art. 3.

110 Human Rights Watch interview, Luanda, December 9, 2002.

111 Economist Intelligence Unit, “Angola: Country Report,” August 2002, p.16.

112 Norsk Hydro (30 percent), ConocoPhillips (20 percent), Sonangol (20 percent), Royal Dutch/Shell (15 percent), and Petrobras (15 percent) are the companies involved in Block Thirty-Four; and “Angola: Staff Report for the 2002 Article IV Consultation,” pp.19-20.

113 “Angola: Staff Report for the 2002 Article IV Consultation,” pp.19-20.

114 Ibid., p. 20.

115 International Monetary Fund, “Angola: Staff Report for the 2003 Article IV Consultation,” statistical appendix, July 11, 2003, pp. 77-78.

116 Human Rights Watch interview, London, November 12, 2003.

117 For more information on arms procurement and military expenditures see the following Human Rights Watch reports and backgrounders: Angola: Arms Trade and Violations of the Laws of War Since the 1992 Elections (New York: Human Rights Watch, 1994); Between War and Peace: Arms Trade and Violations of the Laws of War Since the Lusaka Protocol (New York: Human Rights Watch, 1996); Angola Unravels: The Rise and Fall of the Lusaka Peace Process (New York: Human Rights Watch, 1999); “The International Monetary Fund’s Staff Monitored Program in Angola: The Human Rights Implications,” backgrounder, April 2000; and “The Oil Diagnostic in Angola: an Update,” backgrounder, March 2001.

118 Economist Intelligence Unit, “Angola: Country Report,” May 2002, pp.28-29.

119 Ibid., p. 29.

120 “Angola: Staff Report for the 2002 Article IV Consultation,” p. 20.

121 Human Rights Watch interview, Luanda, December 9, 2002.

122 “Angola: Staff Report for the 2002 Article IV Consultation,” p. 20.

123 Ibid.

124 Ibid.

125 “Government to Sue Swiss Judge,” ANGOP, June 6, 2002.

126 Ibid.

127 Christina Katsouris, “Money Spinners,” Energy Compass, June 27, 2003.

128 Martin Arnold, Rebecca Cockburn, and Robert Graham, “The Elf Affair-Who’s Who,” Financial Times, London, April 15, 2003.

129 Ibid.

130 For example, see, “Former Executive of Elf Reveals Alleged Kickbacks-Tarallo Says Bribes Went to Christian Democrats,” Wall Street Journal Europe, July 12, 2000.

131 Office of President José Eduardo dos Santos, “Office of the President Repudiates Accusations by Former Elf Employee,” press communication, Luanda, July 19, 2000.

132 Ibid.

133 Economist Intelligence Unit, “Angola: Country Report,” May 2003, p.18.

134 Robert Graham, “French Court Jails Elf Officials for Corruption,” Financial Times, November 13, 2003.

135 Global Witness, “All the President’s Men: The Devastating Story of Oil and Banking in Angola’s Privatised War,” March 2002, p. 41.

136 Letter dated February 6, 2001 from BP to Global Witness; and "Campaign Success: BP Makes Move for Transparency in Angola," Global Witness press release, February 12, 2001.

137 BP Exploration (Angola) Limited, "Annual Report and Accounts 1999," October 16, 2000, p. 11. BP published this payment because it was considered a "material payment" that had to be disclosed to Companies House in London.

138 Letter from Manuel Vicente to BP, February 2001.

139 David Buchan and Sheila McNulty, “A Dinosaur Still Hunting For Growth: Interview Lee Raymond, ExxonMobil: The Oil Chief Makes No Apology for His Company’s Dominance—or for His ‘Political Incorrectness,’” Financial Times, March 12, 2002.


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January 2003