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The Oil Diagnostic in Angola: An Update
Human Rights Watch, March 2001
(Download PDF Version - 17 Pages)

First Page

Further Details on the Oil Diagnostic

The Cooperation of Corporations

Arms, Oil, and a Lack of Government Transparency and Accountability

Signature Bonus Payments and Arms Procurement after the Collapse of the Lusaka Peace Accords in 1998

Arrests over Arms-for-Oil Deals in 1993-1994

Recent Arms Flows to the Angolan Government

Oil Mortgaging

Government Attempts to Limit Public Criticism Over the Use of Oil Revenues


Arrests over Arms-for-Oil Deals in 1993-1994

One of the joint-venture partners in Block Thirty-Three is Falcon Oil, a company reportedly controlled by Pierre Falcone, a Franco-Brazilian businessman who is alleged to have engaged in arms brokering.46 On December 1, 2000, French authorities arrested Falcone on tax fraud and other charges in connection with his alleged involvement in brokering an arms-for-oil deal with the Angolan government in the early 1990s. According to The Washington Post, Falcone's company, Brenco International, brokered arms deals involving the sale of surplus Russian military equipment to the Angolan government. The first deal, the newspaper said, was worth approximately U.S. $47 million and took place on November 7, 1993, while a second deal, worth some U.S. $563 million, took place in 1994.47 In both cases, the weapons purchases were reportedly paid for with Angolan proceeds from oil sales - with Sonangol, for example, paying some of the money for the 1994 transaction to French bank accounts controlled by a Czech firm, ZTS OSOS, that provided some of the weapons.48 Falcone has denied the charges and stated that he "is innocent on charges and will be proven so in French courts."49

Angolan President José Eduardo dos Santos acknowledged that the arms deals between ZTS OSOS, Falcone, and the government took place, but said that the deals were legitimate. Dos Santos went further, praising Falcone for his efforts because they helped to preserve "democracy and the rule of law" in Angola. He described Falcone's actions as a "gesture of confidence and friendship on the part of the French State" toward the Angolan government that had helped facilitate the "spectacular growth in cooperation with France in the petroleum sector" and in other economic activities. Dos Santos also questioned why the French authorities were investigating and had arrested Falcone since the arms were not bought from French companies or in France, but from companies in Eastern Europe.50

The French authorities examined Falcone's computer records after his arrest and, according to Agence France-Presse, issued an international warrant for the arrest of Arkady Gaydamak, a Russian-born businessman, on December 8, 2000.51 Gaydamak was said to have been one of Falcone's partners in the 1993 arms deal with the Angolan government.52 On December 29, 2000, Agence France-Presse reported that Gaydamak was then in Israel, and that he denied that he was guilty of tax fraud and arms dealing.53

    French authorities also arrested Jean-Christophe Mitterrand, son of the late, former French President Francois Mitterrand, in connection with the arms deals on December 21, 2000. According to the Washington Post, Jean-Christophe Mitterrand had allegedly helped facilitate the 1993 transaction between Brenco International and the Angolan government when he was then his father's presidential adviser on African affairs. He allegedly received payments totaling U.S. $1.8 million in 1997 and 1998 for his services.54 Mitterrand was released on January 11, however, after his mother posted U.S. $725,000 bail.55 Prosecutors requested the court to drop the charges of arms trafficking because of procedural errors in filing the case, but a French court denied their request on February 23, 2001.56 Jean-Christophe Mitterrand has denied all the charges and stated that the payments he received were consulting fees for an oil mortgaging deal between the Angolan government and Brenco International.57 The case is still under investigation by French authorities.58

    Controversy over Falcone's activities spread to the United States because he maintains a residence with his wife, Sonia de Falcone, in Arizona.59 Ms. Falcone gave substantial campaign contributions to various politicians and political parties, some of which were ultimately returned. According to U.S. Federal Election Commission filings, Ms. Falcone, through her Essante Corporation, gave U.S. $20,000 and U.S. $80,000 to the Republican National Committee (RNC) on May 19, 2000 and November 16, 2000, respectively.60 She also donated U.S. $2,000 to the Arizona Republican Party on June 8, 2000 and U.S. $1,000 to the Governor George W. Bush Presidential Exploratory Committee on April 14, 1999.61 The Arizona Republic reported that current president Bush's father, former president George H.W. Bush, attended an exclusive U.S. $10,000 per person fundraiser on October 6, 2000 that Ms. Falcone also attended. The proceeds of the fundraiser were intended for George W. Bush's presidential campaign.62 Falcone's Arizona spokesperson, Jason Rose, told the Arizona Republic that any suggestion that these donations were an attempt by the Falcones to gain influence with Bush was "unfortunate, false, and wrong."63 Human Rights Watch contacted the RNC to determine the status of these donations and was told by an RNC spokesperson that all of Falcone's campaign contributions were returned in early January 2001 to avoid the appearance of impropriety.64

Other candidates and parties received money as well. The 2000 presidential campaign of current Arizona senator, John McCain, received a total of U.S. $2,800 from Ms. Falcone from April 1999 to April 2000. Filings with the Federal Election Commission show that all of these funds were subsequently returned.65 The Democratic National Committee (DNC) received a U.S. $2,000 contribution from Ms. Falcone on May 24, 1999.66 A DNC spokesperson told Human Rights Watch that there was no indication that the money had been returned since there was no reason to suspect that it might have been an improper donation when it was received in 1999.67