Beautiful Horizons: Even More On Corruption in Angola

Per a report via Human Rights Watch in 2004, from 1997 to 2002 some US$4.22 billion of revenue from oil went completely unaccounted for:

The sums involved are staggering.From 1997 to 2002, unaccounted for funds amounted to some U.S.$4.22 billion.In those same years, total social spending in the country-including Angolan government spending as well as public and private initiatives funded through the United Nations' Consolidated Inter-Agency Appeal-came to $4.27 billion. In effect, the Angolan government has not accounted for an amount roughly equal to the total amount spent on the humanitarian, social, health, and education needs of a population in severe distress.

Due at least in part to such mismanagement and corruption, the government also has impeded Angolans' ability to enjoy their economic, social, and cultural rights.It has not provided sufficient funding for essential social services, including healthcare and education. As a result, millions of Angolans continue to live without access to hospitals and schools, in violation of the government's own commitments and human rights treaties to which it is a party.

So in the six years since then have things gotten better? Faintly so:

The Angolan government has taken a number of steps to improve transparency in its accounting of incoming oil revenues. The most notable and widely praised is the detailed publication of oil revenues on the Ministry of Finance's website. More recent is the implementation of the Integrated Financial Management System(Sistema Integrado de Gestão Financeira do Estado, SIGFE) to allow the government to better track its use of funds. The government has also undertaken audits of Sonangol and other institutions. And in 2009, President dos Santos began to publicly denounce government corruption.
However, these steps toward transparency have not been as successful as stated. Nor have they led to greater accountability or major gains in the realization of rights for Angolans. This is due to the fact that some efforts are not working, such as SIGFE, and important data has not been made public, including audits of Sonangol. As detailed in the next chapter, it is also because the government has done little to improve transparency on the expenditure (as opposed to the revenue) side: government expenditures too often continue to be too opaque for Angolans to discern how money is spent.

This is the key: if there is no public accounting for government expenditures, then it's impossible to develop an audit trail and it renders effectively irrelevant how much revenue is received by the government for oil. Then there's this from the same report:

The president's statements and subsequent actions by government officials may signal a new commitment to cracking down on corruption. However, they should be treated with a high degree of skepticism considering that the president and ruling party have been in power for more than three decades, including throughout the entire period in which oil-fueled corruption has been rampant. Moreover, the pronouncements come in a context in which, following 2008 parliamentary elections, the president and ruling MPLA party have secured a near stranglehold on political power in the country: they have almost complete control over the pace of reforms and the extent to which they will allow themselves to be held accountable.

Indeed, it would be the height of either naivete or the sycophancy of a supine apologist to accept President dos Santos' recent railing against corruption as little more than opportunistic, especially as noted above, he was in power when billions of dollars appear to have simply disappeared:

Between 2002 and 2009 the IMF and Angola continued to discuss cooperation, but very little materialized. The principal reason for the lack of lending was that the government was bolstered by revenue from skyrocketing oil prices and did not want to submit itself to IMF requirements for greater transparency. As recently as July 2009, for example, the Economist Intelligence Unit noted that, "Although Angola is continuing with the IMF's Article IV consultations, it has never had a full programme with the Fund, reflecting fundamental differences over economic policy, opposition from vested interests and the Fund's limited influence in the face of high oil production."[79]
However, by August 2009 the government acknowledged that its economic circumstances had precipitously deteriorated. The fall in world oil prices brought on by the global economic crisis had significantly weakened the government's fiscal position and it sought an emergency loan from the IMF.[80] On November 23, 2009, the IMF announced that it had reached an agreement for an approximately US$1.4 billion Stand-By Arrangement with the government.[81]
Full disclosure of the government's oil revenues, a public audit of Sonangol, and, critically, audited accounts of its expenditures are vital measures that should be part of an agreement.
As noted earlier, the government continues to publish oil revenue data on the Ministry of Finance's website. There is a two to three-month lag on the publication of data, but it does do a reasonably good job of making that data available.
The Stand-By Arrangement specifically includes a commitment that the government will publish a 2008 audit of Sonangol that was due to be completed by mid-November 2009.[82] This measure, if implemented, would shine a much needed light on the activities of the notoriously opaque state-owned oil company. The IMF did not require an audit of government expenditures as part of the arrangement, but it urged the government to conduct a mid-year review of its budget to ensure that it is adhering to its commitments.[83] While this step is useful, especially when combined with other efforts to make basic budgetary data public, it is insufficient given the massive levels of corruption and mismanagement in Angola. Still, if the commitments under the Stand-By Arrangement are fulfilled it will be a significant step forward for accountability in Angola. But there is reason to be vigilant; the government has committed to reforms before and has not implemented them. In its 2009 report, the IMF noted that many reforms suggested to the government as early as 2004, including the auditing of budgets and timely disclosure of accounts, have not been implemented or have barely begun to be implemented.[84] The $1.4 billion is supposed to be disbursed in seven tranches from November 2009 to December 2011. The IMF will conduct a performance review under the program and the Fund's board will have to approve each disbursement.[85] Human Rights Watch urges the IMF and its board members to make subsequent disbursements contingent upon full public disclosure of the Sonangol audits and accurate accounting of expenditures through regular disclosure and updating of the government's actual budget expenditures.

Simnply put, when oil revenues were sufficient, dos Santos did not need the IMF and had no use for their demands to increase accountability. Now that he needs the IMF, he is interested in fighting corruption - to a point:

"There needs to be concrete action by the president and his inner circle to end corruption," said Antonio Ventura, director of the Luanda-based Association for Justice, Peace and Democracy.
"Every one in Angola knows that when you are close to the president or the ruling party you can do big business," he said.
The privately owned weekly newspaper Agora last week published a list of Angola's 12 richest people which included dos Santos, his eldest daughter, several ministers and members of the ruling MPLA party at the top.
The paper's managing editor Aguiar dos Santos, who is not related to the president, told Reuters that he compiled the list based on shareholdings of some members of Angola's ruling party and other prominent national figures.

But has this really hurt average Angolans? Let the numbers from the HRW report convince you:

When the country was wracked by civil war and its economy was less than one-tenth its current size, Angola ranked 157th out of 175 countries in the United Nations Development Programme's Human Development Index (HDI). In 2006, the country ranked 161st out of 177 countries.[3] In 2007 and 2008, the country ranked 159th out of 179 countries.[4] While in 2009 it improved to 143rd out of 182 countries,[5] it still ranked 162nd out of 180 countries in Transparency International's 2009 Corruption Perceptions Index.[6] That was a worse corruption ranking than in 2008 when the country ranked 158th out of 180 countries.[7] It has been among the most corrupt countries in the index since the index first appeared in 2000.
Moreover, President dos Santos and his ruling Popular Movement for the Liberation of Angola (Movimento Popular de Libertação de Angola, MPLA) are more entrenched in government than ever before. The party won an overwhelming parliamentary majority in the September 2008 elections, gaining control of 191 out of 220 seats. In January 2010, the parliament ratified a new constitution that eliminates presidential elections and allows President dos Santos, assuming he remains party leader, to remain in power until 2022, 43 years after he first came to power.

And, as I mentioned before, just this year the UN reported that 8.2% of children from six months to five years suffer from acute malnutrition while 29.2 percent have chronic malnutrition caused by inadequate diet and/or infectious disease. In addition 12 million of the 19.7 million Angolans are vulnerable to food crises and 75% of them are women and children.

It's indefensible.

3 Comments

These posts on the intractable problems by corruption have caused me to spend a great deal of ponderence this past week.

So in way I thank you and I don't thank you at the same time.

Here the best solution for Angolans is Revolution to replace the government with a popular nationalist. As we know in Africa, as well as many other places, a popular leader- one who retains the wealth in commonwealth- is usually toppled in favor of a more pliant autocrat; in short, the sort of government that Angola has now.

A second thought which occured to me- one that might be brokered at the UN- is to create a Trust for infrastructure development. Here the proceeds from mineral and forestation extraction would be helf by a third party administrator who would disburse monies for development projects within Angola.
No doubt that this type of arrangement would end rampant corruption...but as you have shown us in your reports on BH, success can be measured in the reduction of corruption.

A third possiblility comes directly from a law school course in Remedies: A constructive trust. When it can be shown that monies held by an individual can be fairly traced to wrongdoing, a court may place a lis pendens on the account to protect dissapation of the funds until a hearing on the merits is concluded. A good venue is the ICC.

International treaties codifying my points two and three would blunt the necessity of my first point which, at present, seems like the best short term option.

Posted by: pablo | July 27, 2010 at 12:22 PM

Again, Angola is doing better than most in Africa since the end of the civil war. They have been growing in excess of 10% a year (2nd in Africa) since 2001 and are one of only 3 countries on the continent that have made considerable gains in poverty aleviation. Their overall development indicators have increased faster than most as well. Going from 161 to 143 is in 3 years is nothing to sneeze at.

Posted by: av2ts | July 29, 2010 at 12:46 PM