Isabel dos Santos, the eldest daughter of José Eduardo dos Santos– the former longtime Angolan president, was ranked on the Forbes list as the richest woman in Africa in 2014. She had approximately $3.7 billion at her peak.
Daddy Becomes King, Princess Takes Advantage
José Eduardo dos Santos served as Angola’s foreign minister when Angola gained independence in 1975. He became the president in 1979, where he reigned for close to four decades.
His reign was plagued with controversy and corruption, clambering the country’s economy. The former president’s socialist policies, coupled with civil wars, also contributed to the economic downturns in the country.
Dos Santos embraced capitalism after a ceasefire was declared in 2002. Angola then became one of the fastest-growing economies over the next ten years. The country’s GDP rose at an 11.6% annual rate between 2002 and 2011, with the national budget hitting $69 billion from $6.3 billion. However, the gold rush ended in the hands of a few, while the majority remained impoverished.
For instance, International Monetary Fund (IMF) reported nearly $32 billion in oil income disappeared from the federal ledger between 2007 and 2010. IMF tracked the missing money, linking most of it to quasi-fiscal operations.
Despite the revenue that streamed in after embracing capitalism in 2002, 10% of the population still scrambled for food, infested by bureaucratic neglect and drought. In fact, 70% of the population still live under $2 per day.
For a start, the state security milked more cash compared to the sum budget allocated for education, agriculture, and healthcare. The country ranked 136 out of 180 countries with a 29/100 (0 being very corrupt and 100 spotlessly clean) score in corruption in 2021 according to Transparency International’s Corruption Perception Index, two places up.
This background led to Isabel dos Santos’ wealth that gave her the ‘richest woman in Africa’ title in Forbes rankings.
However, her empire came under fire when her father left the top office. In addition, the incoming president vowed to fight corruption and redeem Angola’s past glory. The former Angolan president died earlier this month, aged 79, from a prolonged illness.
Leeway to Riches
The Portuguese powers exploited Angola’s wealth for three centuries. Upon their departure, the country’s resources were up for grabs. Disputes ensued among internal factions almost immediately for control over the same wealth the Portuguese exploited. It is from this chaos that Dos Santos emerged as the country’s foreign minister and later president.
During her father’s time in power, Dos Santos quickly and strategically amassed stakes in the country’s vital industries. These strategic industries, like cement, banking, telecom, and diamond, purportedly contributed to her influential status in Angola and worldwide.
She wittingly made over half her assets publicly traded Portuguese firms to make them credible internationally. However, her wealth was either influenced by a signature from ‘Daddy’ or by taking huge stakes in companies intending to do business in the country.
Hers is not a different story from the resource curse, or the paradox of plenty, plaguing most resource-rich nations with kleptocratic narratives. Countries like the Democratic Republic of Congo have continued to languish in poverty despite their mineral-rich status. For instance, between 1999 and 2002, the Kabila regime in DRC allegedly transferred over $5 billion from the public sector to private firms under its control.
Princess’s Loot Begins
Isabel was 24 when Rui Barata, Miami Beach owner, approached her to partner in the rustic chic bar looking to live up to its Florida-based namesake. The move was to keep health inspectors and tax collectors at bay.
Essentially, her name was enough to tame public regulators since her investment was almost insignificant. The beachside bar has continued to thrive to date, proof that gilded names have direct tickets to equity.
Diamond for Grabs
Angola ranks the fourth-largest diamond producer worldwide, boasting $1 billion in annual sales. José Eduardo dos Santos, then president, forced Endiama to a diamond-selling partnership. The state-owned Endiama company became an exclusive contractor of Angola’s northeast mines.
The partnership would birth Ascorp, engineered by three Israeli diamond merchants, and Arkady Gaydamak, a Russian arms dealer and former Dos Santos confidant during the civil war. The partners owned 24.5% of the company, while the government retained 51%.
Despite the Angolan 2010 constitution barring the president from using his status to privately benefit his family, the country’s Council of Ministers still approved the Ascorp deal. It is no surprise that Isabel dos Santos had the biggest stake in the company, a 24.5% share. Isabel acquired the stake using Trans Africa Investment Service, a Gibraltar investment firm set up by her mother.
Ascorp yielded millions of dollars in incentives every month. When the blood diamonds started attracting too much attention, Isabel transferred Iaxonh Limited, formerly Trans Africa Investment Service (TAIS), complete ownership to her mother. Iaxonh Limited is a safety net since it is controlled by a British citizen, Isabel’s mother, with Isabel as the sole heir to the fortune.
Telecom is the Voice
President Dos Santos issued a decree in 1997 requiring the government to participate in public bidding processes for new telecom permits. The telecommunication sector was becoming one of the valuable industries controlled by the government.
Two years later, the president defied his own decree and issued a new one. The new decree allowed the government to grant permits without participating in the public bidding process. However, the grantee had to be a joint venture with the government.
Eleven months into the new decree, Unitel became the first private telecom operator in Angola, a tender granted by the president and his Council of Ministers. The grant was given under the condition that he had the sole power to approve or disapprove the project. And because the deal involved government funds, he also had a say in the company shareholding structure.
Therefore, Isabel had her smooth 25% stake, and the state-owned oil company claimed 25%. Unitel would then pay a 24% stake worth $12.6 million. Confronted, Isabel’s spokesperson claimed she provided the capital for her stakes at Unitel.
Unitel became one of the largest private telecom companies in Angola in 2012 with a revenue of $2 billion and a user base of 9 million subscribers. The company currently claims a 73% share of the telecom market. Isabel’s shares in the company were worth approximately $1 billion in 2013.
Conquering the Banks
Diamonds, telecom, and the hospitality industry were just the tip of the iceberg. In 2005, Isabel extended her network to European banks for powerful patrons. Portuguese billionaires like Americo Amorim quickly sought deals in the country immediately after the civil war ended and capitalism took center stage.
Amorim had spent most of his life diversifying his wealth, from real estate, tourism, diamonds, oil, etc. Hence, when the Dos Santos family showed interest in the banking sector in 2005, he did not hesitate to find a partner in them.
They were also joined by Fernando Teles, a then CEO of an Angolan bank with Portugal origins. They launched Banco Internacional de Credito (BIC) and Isabel’s father pulled the strings to fund the project. However, there was no public record tracing who rolled out the cash. Amorim and Isabel dos Santos claim a 25% stake each in the bank.
BIC quickly became a hit, especially by extending loans worth $450 million to the state. It also bestowed $350 million to private enterprises. By 2012, the bank had assets worth well over $6.9 billion, with Isabel’s stake reading approximately $160 million.
In 2008, BIC expanded its operations to Portugal. The Princess’ stake in the bank increased to 42.5% by 2014. The bank continued opening subsidiaries in Cape Verde, Mozambique, and Namibia.
In 2009, she purchased a 2.9% stake in Portugal’s Banco BPI. By 2014, she had become the second-biggest shareholder in the bank, having garnered an 18.6% stake. However, she sold her stake in 2017 when Caixa Bank took over the financial institution.
While most banks feared associating with her name when scandals of the Luanda Leaks began following her, BPI and BIC gave her a smooth sail.
Oil Begins to Drip
Angola has over 5 billion barrels of oil reserves, the country’s biggest natural asset so far. It is also the largest oil producer in Africa, past Nigeria. The country currently produces over 1000 barrels of crude oil per day. The mining operations are overseen by state-owned Sonangol. It was only a matter of time before the Dos Santos dipped their feet in the profitable venture.
Americo Amorim played a major role in the minting from the success of the oil industry. First, he set up an office for Amorim Energia in Angola, retaining a 55% stake so that he would control it. The remaining stake went to Sonangol. The same year, Amorim privatized Portugal’s state-owned Galp Energia for a $1 billion deal.
By the end of 2006, 40% of Sonangop’s shares in the deal went to Exem Holding, a Swiss company, with no documents tracing back to Isabel. However, in 2012, Amorim Energia made a $726 million payment to acquire an extra 5% of Galp. Isabel’s stakes at Galp Energia were estimated to be 6.9%, worth over $924 million by 2013.
Cementing the Wealth
Nova Cimangola was the only cement factory operating in Angola during the Dos Santos reign. It’s easy to guess how things went down.
Before 2005, the state had a 39.8% stake in Nova, while Sonangol’s bank– BAI and Scanag, owned 9.5% and 49% stakes, respectively. Dos Santos’s government started demanding more stakes, capping the factory as a strategic asset in the national reconstruction after the war.
Since Cimpor, a cement factory in Portugal, was on the verge of taking over Scanag, the state made a $74 million disbursement to buy them out. The expenditure was claimed to be an act of safeguarding the national interest to retain a shareholding control of the cement factory.
The payment was made through Isabel- and Amorim-owned BIC. The government now had an 89% stake in the company, with BAI and other Angolan nationals claiming the remaining 11%.
However, the plan was always to give a larger stake to certain individuals. Guess who chaired the Nova Cimangola board, via Ciminvest? Ciminvest was known to be fronted by President Dos Santos. Amorim allegedly transferred his 30% stake in this company to Isabel and her husband.
Zooming Out
After Joao Lourenco took power from José Eduardo dos Santos in 2017, he vowed to crumble the empire erected by his predecessor. The big squeeze had begun. He started by firing Isabel from her chairperson position at Sonangol.
In addition, the Luanda leaks shed light on her ill-gotten wealth while most of the citizens struggled to survive under $2. Her assets were subject to worldwide sanctions after the big reveal. Banking patrons also refused any associations with her.
Isabel told Reuters in January 2020 that the witch hunt is intended to use her as a scapegoat for the country’s economic failure.
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