Angola: Oil Wealth Eludes Nation?s Poor - Government Needs to Take Effective Action to Combat Corruption, Mismanagement

The government of Angola has not done enough to combat pervasive corruption and mismanagement, Human Rights Watch said in a report released today. Even though the oil-rich country’s gross domestic product has increased by more than 400 percent in the last six years, Angolans are not seeing their lives improve accordingly, Human Rights Watch said.

The 31-page report, “Transparency and Accountability in Angola: An Update,” documents how the government took only limited steps to improve transparency after Human Rights Watch disclosed in a 2004 report that billions of dollars in oil revenue illegally bypassed the central bank and disappeared without explanation. The report details newly disclosed evidence of corruption and mismanagement and includes recommendations for reversing the pattern.

“The government needs to take strong action to combat the corruption and secrecy that undermine Angolans’ rights,” said Arvind Ganesan, director of the Business and Human Rights Program at Human Rights Watch. “Here is a nation with a wealth of resources while its people live in poverty.”

Human Rights Watch said that a recent agreement with the International Monetary Fund (IMF), enacted in the wake of the global financial crisis and drop in the price of oil, offers some hope for improvement if its provisions are carried out.

The government has improved the publication of oil revenue figures, the Human Rights Watch report says, but human indicators in Angola remain abysmal and have not been commensurate with the rapid growth in Angola’s national wealth. Angola is the largest producer of oil in sub-Saharan Africa, yet millions of Angolans have limited access to basic social services. Angola ranked 143rd out of 182 countries in the United Nations Development Programme’s Human Development Index.

Angola’s ranking in Transparency International’s 2009 Corruption Perceptions Index is growing worse, from 158th out of 180 countries in 2008 down to 162nd in 2009.

The report also details new evidence of corruption and mismanagement, including that of Dr. Aguinaldo Jaime, who served as the governor of the Angolan Central Bank from 1999 to 2002. As documented by a February 2010 US Senate report, Jaime initiated a series of suspicious $50 million transactions with US banks. For each attempt, the banks, concerned about the likelihood of fraud, ultimately rejected the transfer or returned the money shortly after receiving it. During Jaime’s three-year tenure as central bank governor, the government could not account for approximately $2.4 billion.

Recent statements by President Jose Eduardo dos Santos seem to indicate a willingness to combat government corruption. He has called for a “zero tolerance” policy against corruption. And as the US Senate conducted its recent investigation into corruption in Angola and elsewhere, he announced a new Law on Administrative Probity, to reduce corruption by government officials.

However, given that the president and ruling party have been in power for more than three decades, including the entire period in which oil-fueled corruption has been rampant, skeptics will wait to see whether meaningful action will accompany these statements, Human Rights Watch said. Further, a new constitution was recently enacted that will enable dos Santos, in power now for 30 years, to remain in power for 13 more years.

“Dr. Jaime’s activities underscore the need for accountability,” Ganesan said. “If the Angolan government is serious about transparency and reform, it should rigorously investigate government officials, publish audits of its expenditures, and act on President dos Santos’ pledge of ‘zero tolerance’ for corruption.”

While the recently announced reforms have not gone far enough, a new Stand-By Arrangement with the IMF offers both the framework and international impetus to make substantive improvements and combat corruption in Angola.

This may be an opportunity for the Chinese government to address problems with transparency and accountability, Human Rights Watch said. The Chinese government and Chinese companies are some of the largest investors, trading partners, and consumers of Angola’s oil. The Chinese government and Chinese companies have invested billions in oil-for-infrastructure deals while remaining relatively silent on governance in Angola and elsewhere.

The China Investment Fund, a prominent private Chinese company that has extensive ties to Sonangol, the Angolan national oil company, is of particular concern. It has been controversial in Angola and other countries, such as Guinea.

Human Rights Watch said that IMF board members, such as the United States and China, should ensure that Angola complies with provisions of the Stand-By Arrangement, specifically by making public the audits of the state oil company Sonangol and providing regular updates detailing Angola’s expenditures.

In addition to the role of the United States as an IMF board member, the Obama Administration has been outspoken about corruption, but some of its policy proscriptions are unlikely to have a significant impact. Instead, Human Rights Watch urged the administration to fully implement the recommendations from the US Senate to combat the use of US financial institutions by foreign kleptocrats to spend their money in the United States.