Angola Corruption Report

Corruption remains widespread within the Angolan police and corruption risks are high. Police officers frequently supplement their income through the extortion and solicitation of bribes from the public (HRR 2015). Crime and violence sometimes impose costs on businesses and businesses lack confidence in the reliability of the police to enforce law and order (GCR 2014-2015).

Corruption is a very high risk when dealing with licenses, permits or other public services. The reported recurrence of bribes and irregular payments in connection with public utilities is among the highest in the world (GCR 2014-2015). Local administration formally exists but is underfunded, politicized and inefficient so that the delivery of basic services such as water, electricity, health, and education is meager, especially in peri-urban neighborhoods as well as in rural areas (BTI 2016).

The regulatory system for most sectors is opaque and complex and its enforcement is inconsistent (ICS 2016). The one-stop shop Guichê Único da Empresa (Single Booth Company) (in Portuguese) illustrates a degree of political will to simplify investment procedures for the benefit of companies; However, obtaining the necessary permits and business licenses are still time-consuming processes (ICS 2016). After visiting the Guichê Unico, new businesses must still undergo additional processes at the Ministry of Commerce, the tax office, as well as in the provincial court where the business is located (ICS 2016). Overall, starting a business takes more time than elsewhere in the region, but is slightly less costly (DB 2016).

Corruption in public procurement is a very high risk in Angola. Public funds are very commonly diverted to companies, individuals or groups in an illegal manner (GCR 2014-2015). Moreover, favoritism is commonly shown to well-connected firms and individuals when deciding upon policies and contracts and in few other countries do business executives perceive bribery in relation to the awarding of contracts to be as widespread as in Angola (GCR 2014-2015). When the government awards contracts to cronies and families this happens with a high level of impunity: Legally public servants may not be involved in the contracting process if a relative “up to the third collateral degree” has a financial interest in the contracting process; However, such contracting law is routinely violated by the president himself, who signs decrees awarding public contracts to his children, siblings or (ex-)spouses, without any of these companies being barred from being privileged in subsequent tenders (Global Integrity 2016). In this way, an oligopoly of enterprises, all of which are connected to the ruling elite, dominates the Angolan economy and its most profitable sectors (BTI 2016). The daughter of the president of Angola, Isabel dos Santos, owns shares in energy, telecoms, and financial companies and is often cited as symbolic of grand corruption in Angola.

Companies are recommended to use a specialized public procurement due diligence tool to mitigate the corruption risks associated with public procurement in Angola.

Corruption is a very high risk for companies operating in the Angolan natural resource sector. Nepotism, cronyism, and patronage pervade the oil industry. Illustrative of this is the appointment of President dos Santos’ daughter Isabel dos Santos in June 2016 as Chairmen of the Board of Directors of the state oil company Sonangol, an act that was deemed unconstitutional by anti-corruption activists in the country (Maka Angola, Jun. 2016). Another issue is the lack of transparency in the accounting of oil revenue: In 2012 the International Monetary Fund reported that billions have disappeared in the past years from the state-owned energy company (Reuters, May 2012). Sonangol by law holds 51% of any oil concession (BTI 2016). The rest of the shares in exploration and production are publicly tendered; However, the shareholder structure often includes a “silent” Angolan minority partner who usually holds around 10 to 15% of the concession (BTI 2016). These companies, in turn, then have a questionable operational track record and are held by politically connected individuals (BTI 2016).

An ongoing investigation of the US company Cobalt Energy by US regulatory authorities demonstrates the risks of doing business with anonymous companies: When Cobalt received oil exploration licenses, stakes were also awarded to mysterious local companies, connected to Vice President (then Sonangol CEO) Manuel Vicente, and Generals Manuel Hélder Vieira Dias “Kopelipa” and Leopoldino Fragoso Nascimento “Dino” of the president’s security cabinet (Global Witness, Oct. 2015). International companies are advised to be cautious when seeking to do business with local partners, where beneficial ownership information has not been disclosed (Global Witness, Oct. 2015).