$4 Billion Missing From Angola Oil Money

by Emad Mekay

In a report released Jan. 13, Human Rights Watch (HRW) said the lost oil revenues equalled all government spending on social programs in the same period, a staggering figure for a poor nation that has just emerged from a 27-year war.

The New-York based group called on the government in Luanda to correct its practices and demanded consistent pressure from the international community.

"In addition to decades of war and humanitarian crisis, the Angolan public has had to bear the brunt of government mismanagement of billions of dollars in public funds," said the 93-page report.

"Such mismanagement has contributed to woefully inadequate social spending and under-funding of institutions necessary to protect human rights."

The report, 'Some Transparency, No Accountability: The Use of Oil Revenue in Angola and its Impact on Human Rights', details the revenues and spending in the poor nation and suggests ways of correcting the imbalances.

Angola is sub-Saharan Africa's second largest oil exporter after Nigeria. State oil revenues surged after oil companies such as BP, ExxonMobil and Total expanded their Angolan operations in the late 1990s, and more firms are likely to enter the country as the United States pushes to diversify its oil sources.

According to the report, oil revenues totalled $17.8 billion from 1997 to 2002, or about 85 percent of total government revenue.

But an analysis of figures from the International Monetary Fund (IMF) shows that $4.22 billion of that total went missing, or roughly 9.25 percent of the country's gross domestic product (GDP) annually.

The report accuses the Angolan government of allowing the judiciary to become dysfunctional, undermining the country's ability to hold government officials and others accountable for the money. Worldwide, governments with oil wealth have faced a barrage of criticism for their tendency to be corrupt and undemocratic.

In August, Catholic Relief Services (CRS) said in a report that oil money is liable to hinder democratization and has been the a source of wealth for a host of authoritarian rulers.

In its latest report on bribery, Transparency International (TI) said that, after arms deals, the oil and gas industries produce the biggest kickbacks for corrupt governments. Angola was no exception.

In August 2002, the IMF pointed to a total of four billion dollars that had gone missing over five years, and criticized pervasive corruption and mismanagement at the top of Angolan society.

The Angolan government later promised the IMF it would disclose relevant oil-related financial information and publicly audit the operations of Sonangol, the state oil company.

In its recommendations, HRW advises Luanda to further follow the IMF guidelines on transparency despite vocal criticism from non-government institutions that say the fund's advice often results in a widening gap between the rich and the poor and a growth in poverty.

"Regardless of what one may think of the overall economic prescriptions of the IMF, it is clear that the fund has been one of the most consistent and forceful proponents for government transparency in Angola," conclude the report's authors.

The study also says the African nation, whose national per capita income is only $500 a year, should not receive further international assistance without first improving its record on transparency -- a demand that the administration of President George W. Bush has made before.

"The Angolan government says the international community should do more to fund schools, hospitals and courts, but it refuses to explain where billions of dollars of government revenue went," said Arvind Ganesan, director of the business and human rights program at HRW.

"Any further aid to Angola should be conditional on very strict requirements for transparency in the government budget," he added in a statement.

HRW also called on rich nations to develop mechanisms mandating that international oil companies disclose their payments to governments.

Dozens of non-governmental organizations (NGOs) have made similar calls, urging trans-national companies to publish what they pay to developing nations before pressing them for democratic reforms.

Many of those groups joined international financier George Soros in June 2002 in the Publish What You Pay appeal to oil corporations.

The campaign was raised to meet growing concerns that multinational oil and mining firms were paying corrupt governments billions of dollars a year, some of which was financing illicit arms purchases in conflict areas.

UK-based Global Witness, one of the leading NGOs fighting for these corporate disclosures, argues that too often institutions managing the revenues are unaccountable to ordinary citizens and become vehicles for embezzlement and fraud.

The group says it wants stock market regulators in rich nations to require the companies to report net payments to all governments and national authorities as a condition for being listed on the exchanges.

Angola, with a population of 13.6 million people, is still one of Africa's poorest nations and its life expectancy is among the lowest on the continent, despite its rich natural resources, including oil and diamonds.

Although the 27-year civil war ended in 2002, an estimated 900,000 Angolans are still internally displaced. Millions more have practically no access to hospitals or schools.

According to United Nations estimates, almost one-half of Angola's 7.4 million children suffer from malnutrition.