Angola

Angola Corruption Report

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Snapshot

Angola_250x165.pngCorruption remains widespread in Angola due to a lack of checks and balances, insufficient institutional capacity and a culture of impunity. Practices of nepotismcronyism and patronage pervade procurement rendering the procurement process opaque and corrupt. The oil and mining sector in Angola are considered especially high risk areas for corruption. Clientelistic networks generally govern the way business is conducted in Angola with many Angolan companies functioning as front organizations for government officials whose integrity and accountability are frequently questioned by observers. Active and passive bribery, illicit enrichment and conflict of interest are criminalized by the Probity Law, but offences are rarely prosecuted. Gifts and facilitation payments are a common part of doing business in Angola.

Last updated: August 2016
GAN Integrity

 Judicial System

Corruption in Angola's judicial system is a very high risk. Companies frequently pay irregular payments or bribes to influence judicial decisions (GCR 2014-2015). Business executives indicate that Angola's courts are not efficient and are subject to political influence by members of government, citizens and companies (GCR 2014-2015). The judiciary is also perceived by companies as weak when it comes to settling commercial disputes and challenging government regulations (GCR 2014-2015). Thus, most companies avoid taking commercial disputes to court (ICS 2016). Many municipalities lack prosecutors or judges, so that citizens frequently have to turn to informal courts or the police to resolve civil conflicts in rural areas (HRR 2015). Angola ranks among the most difficult countries for businesses to enforce a contract (DB 2016). On average enforcing a contract take 1296 days (DB 2016).  

Angola is not a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Award (1958 New York Convention) or a member state to the International Centre for Settlement of Investment Disputes (ICSID Convention).

Police

Corruption remains widespread within the Angolan police. 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). 

Public Services

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).  

Land Administration

Corruption, especially in the form of cronyism and patronage, is a persistent high risk in Angola's land administration. All land legally belongs to the state, but can be leased long-term (BTI 2016). Nevertheless, the country suffers from land grabs by high-level figures, although a land law protecting pastoral communities forbids third parties to use areas inhabited or used for cultivation, cattle breeding or the population's livelihood (BTI 2016). Nepotism and cronyism also pervade the construction sector (BTI 2016). Foreign investors are better off when they form partnerships with local gatekeepers (BTI 2016). The Brazilian company Odebrect, for example, enjoys privileged market access due to its long tradition in the country and a personal friendship between President dos Santos and former CEO Emílio Odebrecht (BTI 2016). Consequently, fair competition in this sector is limited (BTI 2016).   

Registering property takes 190 days which is more than three times the regional average (DB 2016). Time consuming in this process is especially obtaining an updated tax certificate from the Tax Office (DB 2016). 

Tax Administration

Corruption in the Angolan tax administration is a high risk. Undocumented extra payments or bribes are common in connection with annual tax payments (GCR 2014-2015). In 2008, Angola’s tax courts were ruled unconstitutional, leaving companies with no legal recourse to dispute taxes levied by the Ministry of Finance other than to refer to the Ministry of Finance, but it is common for foreign companies to operate under some form of tax waiver (ICS 2015). Preparing, filing and paying taxes takes an executive in Angola on average 282 hours per year (DB 2016).

Customs Administration

The customs administration presents business with high corruption risks as the border administration in Angola does not always operate in a transparent manner (GETR 2014). Companies need to be aware that irregular payments are commonly needed to export and import goods (GCR 2014-2015). The customs administration's propensity towards corruption is fueled largely by the costly and time-consuming import and export procedures, increasing the likelihood of extracting bribes and facilitation payments from importers and exporters (GETR 2014; DB 2016). 

In 2011, Halliburton, a US-based company, voluntarily disclosed to US regulatory authorities that it was investigating whether it had violated provisions of the Foreign Corrupt Practices Act in relation to certain customs issues in Angola (Trace International Compendium 2016). The internal investigation is still on-going (Trace International Compendium 2016).

Public Procurement

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. 

Natural Resources 

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 disclose (Global Witness, Oct. 2015).

Legislation

The government of Angola has a put a comprehensive legal anti-corruption framework in place, however implementation remains poor (HRR 2015). Corruption offences are addressed in the Penal Code, the Public Probity Law, the Contracting Law and the Law on the Criminalization of Infractions Related to Money Laundering (How We Made It In Africa, Dec. 2015). The Public Probity law addresses general principles relating to public service and proper conduct of public officers and crminializes conflict of interest, active and passive bribery and more generally unlawful enrichment (Global Integrity 2016). It furthermore requires senior government officials to declare their assets to the attorney general (HRR 2015). Despite proclaiming a "zero tolerance" policy on corruption, cases of abuse of office or corruption are rarely prosecuted in Angola (BTI 2016). There is no legal protection for whistleblowers reporting on corruption (Global Integrity 2016).

The Public Contracting law contains a chapter of ethics in the procurement process which aims to safeguard transaprency and fair and equal competition. Unlike the Probity Law, the Contracting Law addresses the public and private sector by criminalizing not only the request and acceptance of bribes by public officials but also the solicitation and offer of undue benefits by private sector agents (How We Made It In Africa, Dec. 2015). Moreover, the law on the Criminalization of Infractions Related to Money Laundering criminalizes the receipt or solicitation of undue advantages, influence peddling and illicit actions to obtain, maintain or alter an international contract or business (How We Made It In Africa, Dec. 2015). 

Angola has signed and ratified the UN Convention against Corruption and has signed the African Union Convention on Preventing and Combating Corruption.  

Civil Society

Freedom of expression and press are guaranteed by the constitution, but severly restricted in practice (HRR 2015). The government controls the largest media outlets in the country and favors state-owned media (FotP 2015). Despite the freedom of information law, it is difficult for journalists without government connections to access government-generated documents (FotP 2015). Self-censorship is common, not only in state-owned media but also in private outlets (FotP 2015). The government uses criminial charges of defamation and libel to intimidate independent reporters and outlets (FotP 2015). In a widely publicized case, 2015 investigative journalist and activist Rafael Marques de Morais was handed a six-moth suspended jail sentences for defamation, after he published a book ("Blood Diamonds: Corruption and Torture in Angola") alledging human rights abuses and high-level corruption in Angola (Transparency International, June 2015). The convcition, which was meant to silence whistleblowing gave international attention to the journalist and received wide critiscism (Financial Times, May 2015). Marques currently directs the website Maka Angola, which offers various current articles and reports on corruption in the country. Overall, the stauts of the press is considered "not free" (FotP 2015). 

The law provides for freedom of assembly and association, but in practice demonstrations and organizations frequently face intimidation and harrasment by the police or the government (FitW 2015).  Despite pressure from the government, many NGO's are active in the country and campaign for transparency, human rights and political reform (FitW 2015). In many instances the government has promoted civil society organizations, which it can control and which are active in "non political" areas (BTI 2016). 

Sources

Topics: Sub-Saharan Africa