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The blockades and the reform of the Angolan justice system

  1. Introduction. The focus on justice

The initial vision of the role of justice in Angola was established in the initial constitutional law following independence in 1975, the Constitutional Law of November 11, 1975. This fundamental law considered the courts as organs of State, having the exclusive responsibility of exercising the jurisdictional function with a view to achieving democratic justice (Article 44), ensuring that in the exercise of their functions judges are independent (Article 45).

Interestingly, the basic principle referring to the judiciary is not very different from that currently enshrined in the 2010 Constitution of the Republic of Angola (CRA), despite the changes in the political system that have taken place in the meantime. The courts continue to be sovereign organs with the competence to administer justice on behalf of the people (articles 105 and 174) and “in the exercise of their jurisdictional function, the courts are independent and impartial, being subject only to the Constitution and the law.” (Article 175). There is structural continuity in the essential conceptualization of the judiciary since independence, although its forms and practices have varied over time[1].

In terms of relevance, perhaps the so-called “fight against corruption” announced in 2017 by President João Lourenço has brought a focus to justice that had never existed before, and that is why today it is essential to discuss the reform of justice.

From what can be seen from the summary reference made to the constitutional texts, over time there was no special doctrinal or even practical concern with judges and the application of justice. In fact, in 1977, it became famous for the saying attributed to the then President of the Republic Agostinho Neto, regarding the events of the 27th of May, in which a multitude of people were shot: “We are not going to waste time with judgments[2]”. Justice has always played a secondary role in the main concerns of Angolan governments and probably public opinion.

It was only after the initiation of lawsuits against the “famous” (Filomeno dos Santos, Augusto Tomás, Manuel Rabelais, and Isabel dos Santos) and some accusations and trials that justice became the stage of political struggle and focused attention. It is a very interesting fact that João Lourenço has chosen to hand over the fight against corruption to the ordinary justice and, therefore, challenging it to be effective. Later, the political struggle entered the courts even more, with the famous ruling by the Constitutional Court on UNITA which declared the election of Adalberto da Costa Júnior null and void[3].

These two converging facts, the handing over of the fight against corruption to the ordinary courts and the dismissal of Adalberto da Costa Júnior by the constitutional court, gave rise to two innovative phenomena in the Angolan judicial world.

First, a kind of very strong light was turned on, which began to illuminate the activities of the judiciary. What used to happen in the obscurity and unintelligibility of legal language became visible to the general public, and many defects in the system emerged with the naked eye: slowness, lack of technical specialization or the absence of material means.

Second, the courts became the object of strong attack from all those who did not agree with the decisions or were not afraid of being covered by them. Thus, a large part of the Angolan elite, which is afraid of going to court, began to fiercely criticize the courts, their decisions, their functioning, their independence. The objective of these attitudes is very simple: to delegitimize court decisions, devaluing their weight. Added to this are the bombastic statements of many of the defense lawyers, who do not hesitate to criticize decisions that do not benefit their constituents. At the same time, this dislike and anti-court “campaign” was accelerated by discontent with the constitutional court’s decision regarding UNITA.

Consequently, the courts became a field of political and legal struggle. It is false and wrong to assert that old jargon that “justice and politics don’t mix”. In fact, in Angola they are quite mixed, as in Portugal or the United States[4].

All these facts lead to questioning the role of justice in Angola, underlining, above all, its slowness and eventual politicization. In fact, this discussion turns out to be beneficial because from the questioning, discussion and the need for reform arise.

What should be guaranteed is that this justice, which politics has entered, remains impartial and independent, taking its decisions without influence, in a transparent and technically based way. It is with this desire that Angolan justice could be reformed.

2. The blockades: the legal paradigm, the material means and budget, corruption, the political issue.

In order to propose an adequate reform of the Angolan justice system, it will be necessary, as a matter of priority, to identify the obstacles and impediments to its proper functioning, as it will be in these “Gordian knots” and not in general and abstract declarations that the reformist process should focus.

             We have identified five blocks that impede the proper functioning of justice in Angola:

             1-The inadequate legal paradigm;

             2-Lack of material resources and efficient budget management;

             3- Corruption;

             4- The political issue.

              Let’s analyze, albeit briefly, each of these blocks.

2.1- The inadequate legal paradigm

The first blockage of the Angolan judicial system is the one that cannot be seen, as it involves the entire system and therefore there is no perception of its existence. This is the legal paradigm in which Angolan law moves. It is easy to understand that despite some proximity to Marxist formulas between 1975 and 1992, Angolan law remained essentially identical to Portuguese law, whether in the major legislative bodies, whether in doctrine or training.

In terms of legislation, it is a fact that for decades after independence, Portuguese laws continued to be Angolan laws. The Civil Code and the Code of Civil Procedure are still those received from Portugal in the 1960s, while the Penal Code of the Monarchy and the Code of Criminal Procedure at the beginning of the “Estado Novo” were only replaced in 2021, and by very similar texts, when not copies, of texts approved in Portugal after April 25, 1974.

 If, at the legislative level, Portuguese influence prevails, the same happens at the doctrinal level. Portuguese teachers are the most cited in Angolan jurisprudence. Suffice it to exemplify with the ruling of the Constitutional Court referring to UNITA (Rule No. 700/2021), whose doctrine cited is mainly Portuguese. Antunes Varela, Miguel Bezerra and Sampaio da Nora, Carvalho Fernandes, Abílio Neto, Alberto dos Reis, Ana Prata, all Portuguese, are mentioned to substantiate the deliberation of the judges. Only one Angolan, Raul Araújo, is mentioned. Naturally, this small doctrinal detail reveals how much Angolan law is still subsidiary to Portugal.

The same is true in terms of training. A good part of the Manuals used in teaching is still written by Portuguese authors or written in collaboration between Angolans and Portuguese, which is already an evolution. In constitutional law, the manual of Professor Bacelar Gouveia, Portuguese, or professors Jónatas Machado, Nogueira da Costa and Esteves Hilário, here a mixed collaboration between Portugal and Angola, as in the fundamental manual of administrative law by Carlos Feijó and Diogo Freitas do Amaral. At the same time, it is still regarded as the most prestigious graduation to obtain a master’s or doctorate in law at the universities of Lisbon or Coimbra.

There would be no special problem here if Portuguese law responded to the demands of modernity and its practice were simultaneously translated into something fair and effective. The problem is that Portuguese law, and by absorption of Angolan law, live in a bureaucratic and impractical paradigm. The norms and ways of acting in Portuguese law are out of date, the interpretation of the law has become exaggeratedly subjective, never knowing exactly what is coming, procedural norms imply long trials, and the tendency, in the criminal area, has been to reduce rights of the defendants, reaching a situation in which the processes do not end in good time for justice, nor do the defendants already have adequate defenses and guarantees. Portuguese criminal law has fallen into the worst of all worlds, slow processes, inquisitions and defendants without rights, depending on the common sense of the magistrates and little else. It’s an unfair law. In turn, procedural law was transformed, above all by the famous Coimbra professor Alberto dos Reis, into a too elaborate science to which few insiders have access, cluttering up the processes, and in which the goals of speed and justice ceased to exist.

The Portuguese legal system, in whose paradigm Angola moves, is slow, confused and not very adequate to present times, generally not being fair or fast, leaving everything too much in the hands of the judges. This is the main problem facing the Angolan judicial system and the first blockade to overcome.

2.2-Lack of material resources and efficient budget management

The contention that the Angolan justice system is depleted and has no means has been persistent. In the now distant year of 2017, on May 26, a request from the Angolan Judges Association had entered the Provincial Court of the District of Luanda, with a view to the procedure of a “separate judicial notification” to the Republic of Angola in the persons of its Justicea and Finance ministers. This notification reminded that several legally provided subsidies and other instruments necessary to carry out the work of magistrates were not made available by the political power. According to the description of the judges, the day would not come far when they would be living in houses without electricity and water, and when they would not be able to go to court, as they did not have a car or any other means of travel[5]. The judicial magistrates stated that, since 2013, they have been obliged to defray the cost of work material. Specifically: paper, ink cartridges, photocopies of processed sheets (with the letterhead of the various models used in the courts), travel by bailiffs for the purposes of citations and notifications, purchase of cell phones and a monthly recharge plan to assist with citations/notifications of the lawyers and users, fuel for the generators (in the rooms where they exist). Even at the time, they mentioned that the Judgment Room, located in Zango 3, in Viana, had no regular electricity during the office hours. This made it impossible for the magistrates to fully perform their functions, forcing them to draft the hearings by hand, namely interrogations, trials, procedural instructions, social inquiries… The generator was out of order. Furthermore, due to the distance, the employees who worked there were transported in one of the institution’s vehicles, whose fuel and maintenance was supported at their expense.

The situation has not significantly improved since then, despite the new focus on justice. In July 2021 there were public protests by judges and prosecutors; complained about the “lack of technical conditions and even low salaries (…) The president of the National Union of Magistrates of the Public Ministry (SNMMP), José Buengas, even stated that most of the courts and prosecutors” in Angola operate with money from the magistrates who “take out of their pockets to buy paper and ink. The day you stop doing this and wait for a ream of paper for the entire month to arrive to print all the documents, constituents, lawyers and the population will wait, with all the consequences that may result. [6]

 The State General Budget (SGB) for 2022 foresees an allocation of 1.21% of the revenues for the judicial bodies, equivalent to 113,777,899.457,00 Kwanzas. This represents an increase of more than 100% compared to the year 2020 when only 0.37% of the revenues were imputed to Organs judicial bodies, representing 49,414,027,773.00 Kwanzas. Considering that inflation accumulated in this period will have ranged between 45% and 48%, the truth is that we have a real increase in spending on justice above 50%.

Comparing, in turn, the current year (2021) and the forecast for 2022, we have an expected monetary expenditure of 133.8 billion kwanzas, against 55.9 billion kwanzas in 2021. This corresponds to a nominal increase of 103 .5%. And it corresponds to 1.2%, 0.6% and 0.2% of fiscal expenditure, fiscal expenditure and percentage of GDP, respectively[7].

Therefore, we have here a certain paradox that becomes an obstacle to the efficient functioning of justice. On the one hand, there is a persistent and constant complaint by magistrates, which can be visually proven in many courts, about the lack of material means, on the other, there is an effective effort by the State to increase the means available to the justice sector, having proceeded to a budget that provides for the doubling of spending on justice in two years (2020-2022), which in fact accelerates in the transition from 2021 to 2022.

2.3- Corruption

Corruption in the Angolan judiciary is a little-studied but much talked about phenomenon. A short closed inquiry carried out by this center in relation to corruption in the Angolan magistracy among judicial operators led to the conclusion that the majority believes that judges are influenced by monetary or political reasons (the latter we will see below), and in that sense many decisions are taken on the basis of these influences, disregarding the applicable law. There were even references by magistrates of several attempts to offer gifts or monetary amounts.

This survey does not have a sufficiently large sample to allow scientific conclusions to be drawn, it only gives us an impression of the existing opinions among lawyers, magistrates and court officials.

On another level, the investigative journalist Rafael Marques’ portal, MakaAngola, has told several stories of inexplicable court decisions, which possibly could only have been taken due to external stimuli.[8]

What is certain is that this is a situation that is talked about a lot, but about which there is little information, but it has created an image of legal uncertainty among legal operators and investors and that is why it is essential to overcome it.

2.4- The political issue

On the agenda is the issue of politicization of Angolan courts. There is no day that doesn’t show up a published opinion, generally linked to the opposition, indicating the lack of credibility, above all, of the higher courts, and in these, of the constitutional court, due to its politicization[9].

          The argument focuses on two fundamental axes.

The first axis is linked to the party affiliation of judges. The case of the present President of the Constitutional Court, Laurinda Cardoso, has been invoked by society, as until the moment of her appointment she was affiliated with the MPLA and in addition to being a member of the government of João Lourenço, she was also in higher organs of the party. The fact of having her membership suspended has not absolved her of criticisms of political commitment, especially given that one of her first acts was to sign the aforementioned judgment nº. 700 that removed Adalberto da Costa Júnior from the leadership of UNITA.

The second axis is of a more institutional nature, and is based on the argument that, directly or indirectly, the vast majority of judges end up depending on the nomination of the President of the Republic or of the majority party in the National Assembly, the MPLA. In fact, at the level of the Constitutional Court, the CRA determines that four judges out of eleven are appointed by the President of the Republic and another four by a 2/3 majority in the National Assembly, which the MPLA has always held. To that extent, at least 8 of the 11 judges would be aligned with political power. As for the Supreme Court, the President and Vice-President are appointed by the President of the Republic from among 3 candidates selected by 2/3 of the Counselor Judges in effective functions.

Given these various factors, the feeling of dependence of the judiciary on political power has grown in some public opinion, serving for various attacks that delegitimize judicial decisions.

3. The axes of judicial reform: legal paradigm shift, reinforcement of material resources and new public management, fight against corruption, transparency in politicization: the German model.

Legal paradigm shift: the “de-Berlinization” of Law

The first priority of a reform of the judicial system is the change of the legal paradigm, or in other words, the modification of the legal mentality and the standards used. We argue that the excessive copying of Portuguese models, norms, doctrines and teachers is harmful to Angola, as it does not provide the country’s legal culture with instruments and ways of thinking that are adequate to the concrete challenges in which it is involved.

So, we have to look for new inspirations elsewhere. A wide-ranging investigation should be carried out in relation to cases of stability and/or success in Africa itself, as is the case in Namibia and above all in Botswana. It seems to have a legal logic to verify the type of principles and norms, as well as the judicial organization adopted in Botswana and adapt what is understood for Angola. Another legal order that could be explored in greater depth, particularly with regard to the judicial and procedural organization, as well as criminal law, is Brazil, especially from the perspective of combating corruption and the various normative instruments that it has “imported” of US law.

As far as the fight against corruption is concerned, the Angolan legal system has to “Americanize” itself, investing in the right to prizes, the plea bargain, the sentence agreements, and the specific police forces.

In order to accelerate the paradigm shift at the level of judges, judges should have specialized advisors who study and prepare decisions in accordance with the new legal paradigm.

One suggestion would be to institute a law reform commission not only containing Angolan luminaires advised by Portuguese, as is currently the case, but admitting multinational contributions. Thus, the law reform commission should contain Angolan and Portuguese experts, but also from Botswana, Namibia, Brazil and, if possible, from the United States of America and Great Britain. Most important of all, there is a renewal of the plurality of contributions and meta-legal sources for Angolan law.

Reinforcement of material resources and new management model

Regarding the reinforcement of material resources and a new management model, there will be three items to consider[10].

The first is natural and concerns the strengthening of the State Budget for justice. It should be noted that the government seems to have been sensitive to this aspect, since, as mentioned above, in 2022 we have a projected monetary expenditure of 133.8 billion kwanzas, against 55.9 billion kwanzas in 2021, more than a doubling of the funds allocated to justice, which is to be applauded.

A second step has already been taken, and it is also to be applauded, except for one detail. At issue is Presidential Decree Nº. 69/21, of March 16, which approves the reimbursement scheme attributed to the administration of justice for financial and non-financial assets recovered by them. The underlying idea is positive. It is about delivering to the justice bodies some of the assets obtained in the fight against corruption, creating a stimulus for effective and efficient action in the recovery of assets, in addition to providing justice with means that it would not otherwise have. This disposition is right. The justice bodies must benefit from the assets they seize, only the judges who decide the seizures and losses in favor of the State should have been left out, as it can be argued that their impartiality would be obstructed when deciding that someone loses a certain asset, knowing that eventually a certain magistrate would benefit directly or indirectly from it. Expressly safeguarding this aspect, this idea is to be fostered, and follows on from what we have upheld in previous reports in the sense that it is necessary to place the funds obtained in the fight against corruption at the direct service of the public interest.

Lastly, in addition to the reinforcement of funds, whether through the General State Budget or through assets recovered in corruption processes, a new model for the management of legal funds should be considered that guarantees rationality and efficiency in the allocation of resources.

The handover of management to judges is not supported. But the creation of an autonomous institute with transparent management of the administration of justice, which would manage budget revenues, revenues from the fight against corruption and could have its own revenues linked to the activities of justice. This institute would have professional managers and would be audited by an international auditing firm. Its operation would be decentralized with a manager attached to each district court and higher court.

Thus, in addition to the increase in funds, there would be autonomy in the management of funds from the courts, which would be administered by an institute with professional managers constituted for the purpose and which would work in a decentralized manner in each court.

Fighting Corruption in the Judicial System: an own Police Dependent on the National Assembly

This is a difficult topic. As seen above, it is a topic that many talk about, but there is no concrete evidence. Furthermore, it is complicated to have a system to combat corruption within the judiciary that does not in any way affect the independence of judges or is seen as an intrusion on the judiciary. However, believing in self-regulation in terms of combating corruption in the judiciary does not seem to remedy the problem either, as there will be a tendency towards corporate solutions to cover up.

We are prone to a radical but provisional solution. This solution would be the creation of an Anti-Corruption Police in the Magistracy (PACOM) dependent on the National Assembly; the legislative power is directly dependent on the sovereign popular will and therefore has the legitimacy to syndicate judges. PACOM would be created for seven years, with magistrates’ investigative powers limited to situations of corruption (it would have a very restricted mandate to avoid accusations of interference) and would be controlled by the National Assembly as well as civil society. Control by civil society would be through an American Grand Jury-style system. Any investigation that PACOM decided to carry out against a judicial magistrate would only proceed after being validated by a group of 12 members of civil society who would function as a filter and monitor of the anti-corruption Police’s intentions in relation to the magistrates.

Therefore, the investigation of the corruption of a certain judge would not only be a police decision, but also a decision of society. This system would provisionally operate for seven years, after which self-control systems would be implemented within the magistracy itself, hoping that at the end of that time a new pedagogy and practice would have been adopted.

Transparency in politicization: the German model

The politicization of Angolan justice, especially the higher courts, is the accusation that is most frequently heard today. However, this issue is not typical of Angola, there are several countries, especially when court decisions have political consequences or there is a certain judicialization of politics in which the politicization of courts is a recurrent theme. This is the case in the United States, where President Trump conducted an intense campaign to create a right-wing majority in the Supreme Court and where this court is under intense scrutiny to see whether or not it enters a political drift with such a right-wing majority, noting a strong commitment by its president, John Roberts, to seek balanced solutions in decisions and to avoid these accusations of politicization[11]. Politicization was also one of the most used epithets by former president Lula in Brazil to confront the court decisions that were unfavorable to him regarding the Lava-Jato operation.

Not being an Angolan monopoly, the reality is that the issue of political influence in court decisions has often been brought up. The solution generally suggested to solve this supposed political influence has been the modification of the ways in which the judges of the superior courts are appointed by the political power, be it the executive or the legislature. It is stated that the fact of being the President of the Republic or the qualified majority of two-thirds of the deputies of the National Assembly always amounts to the same: the MPLA designating the heads of the higher courts, and in the case of the constitutional court, its large majority .

As an alternative, it is proposed that there be a self-selection system for the choice of judges, or a public competition/independent commission-style model, and that institutional mechanisms are created to guarantee the independence of judges, which make them autonomous and insulate them from political influence. Basically, these solutions turn out to be corporate: judges choosing judges and judges controlling judges. And to that extent, they have a legitimacy problem. There is no good reason why the judges should choose their peers or that they form a tight circle in which no one has a say.

 The magistracy, like any sovereign body, must have a political justification that legitimizes its choice. In the system idealized by Plato of the philosopher king[12], one could think of a kind of high qualification exams in which those who proved to be the wisest would become judges. We would have the platonic legitimacy of the philosopher-king, which in a way, was also adopted by the Confucian formulas of the mandarinate in China, from the Sui dynasty, and only based on merit after the Song[13]. However, one lives neither in the model idealized by Plato, nor in imperial China, but in democratic states of law. And the reality is that the prevalence of the democratic principle imposes that judges ultimately establish their legitimacy in the democratic process. And to that extent, political power should always intervene in the choice of judges. To remove political power from the judicial choice is to remove democracy from it, hence legitimacy. Political power must be present in the process of choosing magistrates, as that is where its popular and democratic legitimacy derives.

On the other hand, it does not seem that the formula for choosing judges or the control and management bodies are truly determinants of their independence. It turns out to be better to have transparency, to know what each judge thinks and defends and to assess their work by analyzing the grounds of the decisions they take, than to create countless mechanisms that only serve to confuse. It is better to have a President of the Republic or a Parliament appointing a judge, which mediately confers democratic legitimacy to the judge and to know which party the judge belongs to, than to create fictions of independence that only make appointments and decisions opaque.

What is essentially of interest to society is to assess the judge’s independence in their judicial decisions. Therefore, these must be published, known and subject to discussion; apart from that, the judge is a woman or man like any other and this must be assumed and said.

In this sense, the system in force in the Federal Republic of Germany turns out to be the most honest. In this country, which has one of the most reputable magistrates in the world,” magistrates are allowed to be affiliated with political parties as well as publicly speak out on political issues. Judges with aspirations to be appointed to the higher courts may even consider party affiliation to some advantage, particularly if it is in one of the two largest parties (SPD and CDU). In this legal framework there is also no impediment for a judge to hold a position in a political party”[14]. For example, section 36 of the Deutsches Richtergesetz (German Judges Act) allows a judge to stand as a candidate for parliament, granting him the vacation necessary to prepare his election in the last two months before the election, without compensation.

The German system, as bizarre as it may sound, has two advantages. The first one already mentioned is that of transparency. The second is more technical and requires that the law be said in a universally accepted and understandable way, subject to greater discussion and critical publicity. What is intended is that judges are independent technicians in their decisions, so there will be decision models and legal logic that everyone will follow, adopting the highest criteria of the science of law. What matters here is that the judge decides according to the law and in a methodologically correct way, hence the importance of the rules of methodology and interpretation in German doctrine. The aim is to apply a conduct of syndicable reasoning that guarantees autonomy. The training and technical preparation of judges are the guarantee of their independence[15].

It seems to us that this method would be more honest for Angola, a legal requirement and disregard for political aspects that will hardly exist.

Conclusions

Given the above, a real reform of Angolan justice will involve changing the paradigm of legal culture, the “de-Berlinization of law”, looking for other new influences besides the Portuguese ones, such as successful neighboring African countries such as Botswana, in addition to Brazil and the United States.

To this will be added the budget reinforcement and the creation of an autonomous and decentralized institute for the financial administration of justice.

It also advocates its own police based on the National Assembly and with the participation of society to fight corruption

And finally, the assumption of the German model of transparency and technical requirement to guarantee the non-politicization of court decisions, admitting that judges may be affiliated with political parties.


[1] On the evolution of Angolan constitutional texts, see Adérito Correia and Bornito de Sousa, (1996), Angola. Constitutional History. Almedina.

[2] There are numerous references to this statement by Agostinho Neto, see for example Edgar Valles, (2020), 27 May: reconciliation and forgiveness in Angola? PÚBLICO, https://www.publico.pt/2020/05/27/opiniao/noticia/27-maio-reconciliacao-perdao-angola-1918297

[3] Decisoion No. 700/2021 of the Constitutional Court, https://jurisprudencia.tribunalconstitucional.ao/wp-content/uploads/2021/10/ACORDAO-No-700.pdf

[4] J.A.G. Griffith,(2010), The politics of the judiciary, Fontana Press; Rui Verde, (2015) Juízes: O Novo Poder

Ensaio sobre a acção e reforma do poder judicial em Portugal. RCP Edições

[5] MakaAngola (2017), A reivindicação dos juízes. https://www.makaangola.org/2017/06/a-reivindicacao-dos-juizes/

[6] Deutsche Welle, Borralho Ndomba (2021), Falta de condições para juízes põe em causa combate à corrupção em Angola, https://p.dw.com/p/3yYSJ

[7] Ministério das Finanças de Angola, https://www.minfin.gov.ao/PortalMinfin/?fbclid=IwAR1C597oUjdNas8WFrR9R4u0B_1gb_NH-82fQEVyUGl52HUBcazWITEYo4I#!/materias-de-realce/orcamento-geral-do-estado/oge2022

[8] Cfr. for exemple, Rui Verde, (2019) Ignorância ou corrupção na justiça, MakaAngola, https://www.makaangola.org/2019/01/ignorancia-ou-corrupcao-na-justica/ or Moiani Matondo, (2020),A droga de justiça, MakaAngola, https://www.makaangola.org/2020/07/a-droga-da-justica/

[9] Example: Sousa Jamba, (2021) Tribunal Constitucional. MakaAngola (2020), https://www.makaangola.org/2020/07/a-droga-da-justica/ or Kajim Ban-Gala (2021) Laurinda Cardoso: antinomia, filiação partidária e incompatibilidade, https://www.correioangolense.co.ao/2021/12/27/laurinda-cardoso-antinomia-filiacao-partidaria-e-incompatibilidade/

[10] See about the topic Nuno Coelho (2015), Gestão dos Tribunais e Gestão Processual, CEJ, http://www.cej.mj.pt/cej/recursos/ebooks/outros/Gestao_Tribunais_Gestao_Processual.pdf and E B McConnell (1991), Court Management: The Judge’s Role and Responsibility, Justice System Journal Volume: 15 Issue: 2.

[11] See analysis SCOTUSBlog. https://www.scotusblog.com/2021/12/the-lives-they-lived-and-the-court-they-shaped-remembering-those-we-lost-in-2021/ 

[12] Eric Brown, (2017) “Plato’s Ethics and Politics in The Republic”, The Stanford Encyclopedia of Philosophy, Edward N. Zalta (ed.), https://plato.stanford.edu/archives/fall2017/entries/plato-ethics-politics/

[13] Mark Cartwright (2019), The Civil Service Examinations of Imperial China, https://www.worldhistory.org/article/1335/the-civil-service-examinations-of-imperial-china/

[14] Vânia Gonçalves Álvares (2015), O governo da justiça: O Conselho Superior da Magistratura. Universidade Nova. P.33.

[15] On the training and preparation of judges in Germany see: Johannes Riedel, (2013). Training and Recruitment of Judges in Germany. International Journal for Court Administration, 5(2), pp.42–54. DOI: http://doi.org/10.18352/ijca.12

The economic and financial sector in the Angolan constitutional review – In particular, the enshrining of the independence of the central bank

1. Introduction. Constitutional review in Angola

The present Angolan Constitution (CRA) dates from 2010 and has never been revised. Recently, President João Lourenço announced that he had taken the initiative to propose a constitutional revision.

A first comment that this action raises is that the Angolan president has a courageous policy facing the several challenges that have been placed on him: combating corruption, economic reform, quick reaction to Covid-19. At the moment, the fruits of this determined confrontation are not yet reaping, and there lies some paradox, a reformist president risks being submerged by his own reforms.

The present proposal for constitutional revision is minimalist, and so it was assumed by the government. In this sense, it risks creating expectations in the population that later will not be met. However, it represents a very important step in the discussion of the Angolan political model and the fact is that the constitutional discussion will be more important even though the effective changes that will eventually be inserted in the Constitution.

The purpose of this text is to highlight and analyze the main proposals for constitutional revision in the area of ​​economics and finance.

2. The proposed constitutional review law in the economic and financial area

The first proposed modification is found in article 14 of the CRA, which concerns private property. The expression “promotes[1]” is introduced, with the meaning of being a function of the State in addition to guaranteeing and protecting private property and free enterprise, also the promotion of private enterprise. Positive State behavior is introduced, that of promoting free private initiative.

Later on, a new number 4 is added to Article 37 that regulates the “Right and limits of private property”. This number establishes the possibility of nationalization in the case of “ponderous reasons of national interest”. It also introduces confiscation as a sanctioning measure, which is permitted when there is a serious offense against laws that protect the economic interests of the State.

Naturally, it is in the Title about the Economic, Financial and Tax Organization that some modifications in the economic area are added. Article 92 will contain new paragraphs 2 and 3. The new wording proposed for paragraph 2, aims to “clarify the scope and meaning of the principle of community property, as a type of property enshrined in Article 14 of the Constitution, which defines the nature of the economic system by calling the regulation of the exercise of this type of property the rules of customary law that do not contradict the economic system, the social market regime and the fundamental principles of the Constitution ”. Paragraph 3 establishes the legal existence of the unstructured sector of the economy, i.e., it refers to the informal economy, pointing to its progressive institutionalization.

Then we have article 100 on the National Bank of Angola (BNA). In paragraph 1 of this article, it is determined that the BNA will be the “central bank and issuer of the Republic of Angola” and will have as primary functions: to guarantee price stability in order to ensure the preservation of the value of the national currency and ensure the stability of the financial system. Therefore, the BNA’s functions are limited to combating inflation and the stability of the financial system.

Then, in paragraph 2, “the new legal nature of BNA is enshrined, as an independent administrative entity, with an eminently regulatory nature, and the content of the principle of independence of this type of entities is signaled”. “Transmission of recommendations or issuance of directives to the governing bodies of the BNA on its activity, structure, functioning, decision-making” is hereby prohibited on the priorities to be adopted in the pursuit of constitutional and legally defined attributions, by the Executive Branch or any other public entity.

Subsequent paragraphs of the same article state that: “The Governor of the National Bank of Angola is appointed by the President of the Republic, after hearing in the National Assembly’s Specialized Labor Committee.” And they stipulate a detailed procedure for that appointment. There is a duty of parliamentary hearing, but the final decision rests with the President of the Republic.

Another change concerns the General State Budget (GSB). Article 104 proposes an amendment “in order to remove a current idea that the budget of local authorities is part of the GSB”. The GSB will provide for transfers to be made to municipalities, but not their income and expenses.

3-Analysis and comment on the proposed changes to the economic and financial Constitution

The articles to be amended are 14, 37, 92, 100 and 104.

ARTICLE 14

In relation to article 14, the State will be responsible for promoting private initiative. In addition to the rhetorical aspect of such a statement, in practical terms, this rule allows the State to assist the private sector in a consistent manner, for example, expanding free zones and tax benefits for the private business, subsidizing private companies, creating partnerships with the private sector. The State shouldn’t be merely passive and adopt a positive and active attitude towards the private sector. It is a good sign for the market.

ARTICLE 37

Article 37 is of a different nature and constitutes the only constitutional amendment directly related to the fight against corruption. In the face of a constitutional gap, the general principles on which nationalization and confiscation can take place will now be established. This last part is essential to achieve the recovery of assets that is underway in which it becomes very difficult to understand the legal framework.

It is now clear that the state can confiscate assets when there has been a serious offense against laws that protect its economic interests. In simple language, it is now clear that those who have been charged at the expense of public funds may be without these assets, with no need for a final criminal case, but only the conclusion that they have carried out a serious offense against the laws that guarantee economic interests of the State. This rule is to be applauded in the present context of combating corruption.

ARTICLE 92

If the promotion of private initiative and the speeding up of the recovery of assets obtained from corrupt activities are measures that deserve praise, more doubts raises the rule of article 92 regarding the informal economy. More than “its progressive framing in the structured economy system” (proposed wording of Article 92, paragraph 3), which essentially means the payment of taxes and fees, what the Constitution should advocate was the adoption of supportive policies to the informal sector of the economy, which is a real buffer from the lack of work and an incubator for potential successful small and medium-sized companies[2].

It has already been pointed out that in southern Africa, the informal economic sector is a crucial element of survival, given that 72% of all non-agricultural employment resides in the informal sector and the majority of new jobs show up there. The informal economy provides income and employment to all people, regardless of education or experience. In Angola, the majority of employed people are also involved in the informal economy, as otherwise they would not be able to support all of their expenses. To that extent, it is necessary to be very cautious in establishing rules about the informal economy because it helps the Angolan government[3].

ARTICLE 100

In terms of public opinion, the core of the constitutional change in economic and financial terms will be found in article 100 referring to the BNA. This article contains three main lines:

  1. The BNA is the “guarantee price stability in order to ensure the preservation of the value of the national currency and ensures the stability of the financial system”. Thus, the BNA’s functions related to inflation and the financial system are precisely determined;
  2. The BNA becomes an independent administrative authority and therefore “independent in the pursuit of its duties and in the exercise of public powers”. It is the famous independence of the central bank, which today is defended by most economic doctrine.
  3. The Governor of BNA is appointed by the President of the Republic, after hearing the National Assembly. It should be noted that the National Assembly has no right of veto, but of hearing.

The enshrining of central bank independence corresponds to the modern dominant trend in economic doctrine. The arguments in favor of central bank independence can easily be summed up. Governments are thought to tend making wrong decisions about monetary policy. In particular, they are influenced by short-term political considerations. Before an election, the temptation is for the government to cut interest rates, making economic cycles of expansion and retraction more likely. Thus, if a government has a history of allowing inflation, inflation expectations start to rise, making it more likely.

An independent central bank can have more credibility and inspire more confidence. Having more confidence in the central bank helps to reduce inflationary expectations. Consequently, it becomes easier to keep inflation low. Thus, there is an attempt to introduce additional credibility in monetary policy and to increase the fight against inflation. It should be noted that inflation is an evil that has endured in the Angolan economy for too long.

This measure is correct and should be considered positive.

ARTICLE 104

The last change concerns the clarification of the differentiation between the General State Budget and the Municipalities, as part of the material preparation for the installation of the municipalities.

Conclusion

Minimalist, the proposed constitutional revision in the area of economics and finance aims to reinforce the signs of the market economy and macroeconomic stability, highlighting as an essential element of this law the consecration of central bank independence and its focus on combating inflation.

*****

Attachment: New proposed wording of the norms referring to the economic and financial sector

“Article 14

(Private property and free enterprise)

The State respects, and protects the private property of natural or legal persons and promotes free economic and business initiative, exercised under the terms of the Constitution and the Law ”.

“Article 37

(Right and limits of private property)

1. […].

2. […].

3. […].

4. Own law defines the conditions under which the nationalization of private goods can occur for ponderous reasons of national interest and of confiscation for serious offense to the laws that protect the economic interests of the State ”.

“Article 92

(Economic Sectors)

1. […].

2. The State recognizes and protects the right to community property for the use and enjoyment of means of production by rural and traditional communities, under the terms of the Constitution and the law.

3. Own law establishes the principles and rules to which the unstructured sector of the economy is subject, aiming at its gradual inclusion in the structured economy system ”.

“Article 100

(National Bank of Angola)

1. The National Bank of Angola, as the central bank and issuer of the Republic of Angola, guarantees price stability in order to ensure the preservation of the value of the national currency and ensures the stability of the financial system, under the terms of the Constitution and the law.

2. As an independent administrative authority, the National Bank of Angola is independent in the performance of its duties and in the exercise of public powers to which it is concerned, in accordance with the Constitution and the law.

3. The Governor of the National Bank of Angola is appointed by the President of the Republic, after hearing the Specialized Labor Committee of the National Assembly, competent by reason of the matter, under the terms of the Constitution and the law, observing, for this purpose, the following procedure:

a) the hearing is triggered at the request of the President of the Republic;

b) the hearing of the proposed entity ends with the vote on the report in accordance with the law;

c) It is up to the President of the Republic to make the final decision in relation to the nomination of the proposed entity.

4. The Governor of the National Bank of Angola sends to the President of the Republic and to the National Assembly, a report on the evolution of monetary policy indicators, without prejudice to bank secrecy rules, the treatment of which, for the purposes of control and inspection by the National Assembly it is ensured under the terms of the Constitution and the law ”.

“Article 104

(General State Budget)

1. […].

2. The General State budget is unitary, estimates the level of revenue to be obtained and sets the authorized expenditure limits, in each fiscal year, for all services, public institutes, autonomous funds and social security and must be prepared in such a way as to that all the expenses provided for therein are financed ”.

3. The State Budget presents the report on the forecast of funds to be transferred to local authorities, under the terms of the law.

4. The law defines the rules for the preparation, presentation, adoption, execution, inspection and control of the General State Budget.

5. The execution of the State Budget complies with the principles of transparency, accountability and good governance and is supervised by the National Assembly and the Court of Auditors, under the terms and conditions defined by law ”.


[1] All citations without a specific source mentioned are from the 2021 Constitutional Review Law Proposal Rationale Report made public by the Government.

[2] Alain de Janvry e Elisabeth Sadoulet, Development Economics, 2016, p. 19

[3] Moiani Matondo, Em defesa das zungueiras e da economia informal, MakaAngola. https://www.makaangola.org/2020/04/em-defesa-das-zungueiras-e-da-economia-informal/

A radiography of the fight against corruption

1- Introduction. The discussion on fighting corruption in Angola

The fight against corruption was established as a main goal in the beginning of João Lourenço’s presidential term. What we want to know in this analysis is whether this fight has gone from rhetoric to practice, and, above all, what elements can identify a clear response to a theme that has become the subject of political dispute in Angola. To reach provisional conclusions – since the process against corruption has not ended yet – we will analyse some structural elements of the fight against corruption, such as the discourse of political power, the legislation adopted, the bodies created, international cooperation, the cases under investigation, the asset recovery and the universe of legal charges. Balancing all these elements together we will draw a picture of the current fight against corruption.

This text seeks to ascertain whether there is a fight against corruption in Angola, using the mentioned index elements. It does not take a general assessment of this fight, this will only be done at the end of the presidential term, nor does it investigate the failures and improvements necessary for that fight, which has been done in other studies. Here we want to gather elements and conclude about the praxis of fighting corruption in Angola.

2- Structuring elements of the fight against corruption

2.1- The political discourse

The fight against corruption began with a strong appeal from the political power that started with the inauguration of the President of the Republic. At that time, in September 2017, João Lourenço elected the fight against corruption as one of his priorities, stating that he will confront the corruption that “rages in state institutions.” The President emphasized the “direct negative impact on the State” of corruption, saying that it threatens “the foundations of the country” and concluding that this will be “one of the most important fronts of struggle in the coming years”[1]. Later, in February 2020, after several speeches of the same content, when the possibility of an agreement between the State and Isabel dos Santos was publicly raised, the President went out on a rally to vigorously reaffirm the priority of fighting corruption and denying any agreement with Isabel dos Santos[2]. Recently, on the anniversary of the Attorney General’s Office (AGO), he reaffirmed his commitment to this fight and praised the role of the AGO[3].

Three different moments, and three clear and solemn speeches on the fight against corruption by the President of the Republic and the holder of the executive power. The same rhetoric has been followed by other policy makers over the past few years. There have been no hesitations or setbacks in grammatical constructions. Therefore, from the point of view of political discourse, there is no doubt that there has been a strong and permanent commitment since 2017 in the fight against corruption, with the first analytical element being fulfilled. It is necessary to comply the following elements.

2.2.- Anti-corruption legislation

The political discourse was accompanied by legislation with a focus on combating corruption. The government passed two laws on the repatriation of capital, which it considered to be the cornerstone of its anti-corruption policy. These laws are the Law on the Repatriation of Financial Resources, alias the Law on Voluntary Repatriation (LVR), Law No. 9/18, of June 26, and the Law on Coercive Repatriation and Extended Loss of Assets, alias the Repatriation Corercive Law. (RCL), Law No. 15/18, of 26 December. These laws will represent the executive’s commitment to ensure that funds diverted by corruption, return to their rightful owner, the State. We will see further below which are the effects of applying these laws in terms of values. Later, in 2020, the National Assembly passed a new Penal Code and a new Penal Procedure Code. Although these laws are structuring for the entire State and the legal system, it should be noted that the new Penal Code has a specific chapter on Crimes Committed in the Exercise of Public Functions and in Prejudice to Public Functions (articles 357 to 375) which includes corruption (art. 358 to 361), undue receipt of advantages (art. 357), influence peddling (art. 366) and embezzlement (art. 362), among others. The entire sanctioning typology of criminal law has been revised and systematized to make it easier to understand and adapt.

Also, in the area of ​​public contracts, there were several changes aimed at strengthening transparency and the fight against corruption. Public contracting legislation was amended by Law No. 41/20, of 23 December. In 2018, the government approved the Primer on Ethics and Conduct in Public Contracts, the Practical Guide for the Prevention and Management of Risks of Corruption and Related Infractions in Public Contracts and the Guide for Reporting Corruption and Related Infractions in Public Contracts. In the area of ​​financial information, mechanisms to control illicit flows and to prevent money laundering were clearly reinforced. Note should be taken about Law No. 5/2020 of 27 January on the prevention and fight against money laundering, the financing of terrorism and the proliferation of weapons of mass destruction, resulting from the ratifications of the United Nations Conventions against Illicit Traffic in Narcotics and Psychotropic Substances, against Transnational Organized Crime and on the Suppression of the Financing of Terrorism. Important, too, was Presidential Decree No. 2/18 of 9 January, which approved the Organic Statute of the Financial Information Unit, hereinafter referred to as the FIU and the Supervisory Committee, as a public service specialized in the coordination at national level of reinforcements for the prevention and repression of money laundering, financing of terrorism and the proliferation of weapons of mass destruction.

We see, therefore, there is a massive update of legislation against corruption and money laundering. The rhetoric was lumped by the legislative act, the words to the norms. The next element of analysis concerns the organic.

2.3- Anti-corruption agencies

The government chose not to create new bodies, and to base the execution of the anti-corruption policy on the already existing institutions: Attorney General’s Office (AGO), Banco Nacional de Angola, Financial Information Unit, Criminal Investigation Service (CIS), etc.

However, at the level of the AGO, it created a sub-body with specific functions in the fight against corruption: the National Asset Recovery Service. This service was created by Law 15/18, of December 26, Law on Coercive Repatriation and Extended Loss of Assets. According to article 13 of that Law, the main task of this National Service is to proceed with the location, identification and seizure of assets, financial and non-financial assets or products related to crime, whether those assets are in Angola or abroad. In addition, the Service has the expertise to ensure international cooperation among its counterparts, as well as to exercise the other attributions conferred by law, in which it is worth mentioning the initiation of any civil, administrative or fiscal action in order to recover the assets taken out illegally from the State.

The practical functioning of the Service has been based on the opening of patrimonial investigations attached to the criminal proceedings that are under terms in the judicial authorities, to investigate and identify the location of assets that may be the subject of a confiscation order and the adoption of measures necessary for its recovery. Within this scope, the Service carries out all necessary measures (sending rogatory letters to its counterparts, ordering seizures and requesting foreclosures) to ensure that the assets do not dissipate. It should be noted that this body does not act alone, but in cooperation with the bodies that have the main processes. However, the truth is that it has stood out for the amount of seizures and measures taken.

There are several examples of the Asset Recovery Service’s activity. In July 2020, it ordered the seizure of three buildings, office and residential, called Três Torres, in Luanda. The buildings, known as Três Torres and recently built, include Torre A Offices, and Torre B and C Residencial, are located in the urban district of Ingombota, in Luanda, the country’s capital. At the time, Deutsche Welle said that: “The name of Manuel Vicente, ex-president of Sonangol and ex-vice president of the country, is pointed out, on the grapevine, as being connected to the buildings[4].” In September 2020, the Service determined the seizure of the minority shareholding of 49% of AAA Ativos in the SBA, as well as buildings of the AAA group, belonging to Carlos São Vicente, within the scope of the patrimonial investigation process linked to the criminal process that it concerns. In 2021, five housing projects were seized, namely Tambarino Project (Lobito, Benguela), Palanca Negra (Malanje), Mifongo Project (Malanje) and the Ex-Petro projects, in Golf II and Nova Vida III, both in Luanda. At the same time, as part of a lawsuit against the former chairman of the board of the Banco de Poupança e Crédito (BPC), Paixão Júnior, the Service also seized containers of material for the erection of a yoghurt factory in Benguela that was delivered to the Smart Solution company.

These are mere examples of a broad work that is being developed by this service dynamically directed by Public Prosecutor Eduarda Rodrigues. This Service could possibly be the embryo of a more global and comprehensive anti-corruption body, as we have argued.

2.4.- International judicial cooperation

Along with the asset recovery work carried in the sub-organ described above, there has been a wide appeal to international judicial cooperation. First, it is important to highlight the requests addressed and fulfilled to Portugal. The activity with Portugal has been immense, since the rogatory letters referring to Isabel dos Santos and her associates that have already led to multiple “freezes” of social participation in Portuguese lands. It was recently reported that the Central Court of Criminal Investigation (TCCI) arrested the bank accounts in Portugal of three Isabel dos Santos’ friends, at the request of the judicial authorities of Angola. The seizure of the accounts of Mário Leite da Silva, Paula Oliveira and Sarju Raikundalia was carried out in the context of a rogatory letter sent from Angola to Portugal in January 2020. In that letter, the Angolan authorities requested the preventive seizure in Portugal of assets by Isabel dos Santos and his three friends up to a total value of 1.15 billion euros, as a guarantee of possible future compensation to Angola[5].” Carlos São Vicente and others were also the subject of rogatory letters and requests to Portugal.

The Angolan AGO reported days ago that requests for cooperation have already been made to Switzerland, the Netherlands, Luxembourg, the United Kingdom, Singapore, Bermuda, the United Arab Emirates, Mauritius, the Kingdom of Monaco, Malta, the Isles of Man and others. Within the scope of international cooperation, the Attorney General’s Office has already requested the seizure of assets worth approximately US $ 5 billion.

3- Benchmarks

3.1.- Quantitative indices

All the activity that has been described has shown quantifiable results that are reproduced here:

• Since the beginning of the fight against corruption, the Angolan State has definitively recovered in cash and assets a total of around 5.3 billion dollars.

• In addition, it asked to seize US $ 5.4 billion in foreign jurisdictions.

• In Angola, assets worth around US $ 4 billion have already been arrested and seized. Such assets are still subject to the respective lawsuits still pending, awaiting a final decision at first instance or on appeal.

• 1522 criminal cases were opened regarding corruption-related crime and alike.

3.2. Qualitative indices

In terms of criminal charges, the prosecutor’s office has handed down charges against a variety of senior dignitaries. Noteworthy are the accusatory orders against: General Sachipengo Nunda, former Chief of Staff of the Armed Forces, Norberto Garcia, former director of the External Investment Agency, Valter Filipe, former Governor of the central bank, José Filomeno dos Santos, former CEO from the Sovereign Fund, Augusto Tomás, former Minister of Transport, Manuel Rabelais, former Minister of Social Communication, Carlos São Vicente, former President of the AAA Group.

In addition to these public figures, there are a myriad of cases at the provincial level that are replicated in each one. Recently, it was noted that the former director of the Regional Office Planning, Urbanism and Environment in the province of Bengo was sentenced to two years in prison for the crimes of active and passive corruption and undue receipt of 125 million kwanzas. In the same process, the former director of the legal office of the Provincial Government of Bengo, and the ex-director of the office of the former governor were also sentenced to one year in prison for the crimes of passive corruption and degree of influence and having benefited from monetary values in the business.

In what concerns the “freezing” of assets, the assets of Manuel Vicente and generals Dino and Kopelipa, among others, were seized or handed over. Regarding the latter two, it should be noted that as representatives of the companies China International Fund Angola – CIF and Cochan, SA, the generals handed over the shares they held in the company Biocom-Companhia de Bionergia de Angoala, Lda., in the Kero Supermarket chain and in the company Damer Gráficas-Sociedade Industrial de Artes Gráficas SA. Still in relation to Manuel Vicente, the President of the Republic determined the nationalization of 60% of the shareholdings of the commercial company Miramar Empreendimentos, SA “, which covers” 43% of the shares belonging to the Suninvest — Investimentos, Participações e Empreendimentos, SA “and” 17% of the shares belonging to Sommis, SGPS. These shares belong to Manuel Vicente.

Obviously, it is also necessary to mention the seizures of assets referring to Isabel dos Santos and her associates.

4-Conclusions

In this study we tried to assess, with precise elements, the reality of the fight against corruption in Angola at this moment. Take an “x-ray”. We conclude that there is a powerful rhetoric to support the fight against corruption, that appropriate legislation has been passed, a specific sub-body has been created with a view to recovering assets, an entity that has shown itself to be quite committed. International judicial cooperation is quite broad. From the asset recovery point of view, between seizures and definitive deliveries, perhaps US $ 10 billion have already been obtained. Various accusations have already been made against several senior individuals.

What is to be concluded from this list is the scope of those who have already been the target of an accusation or action to recover assets. It cannot be said that there is selectivity, because in fact we have a representative sample of the former senior officials, nor can it be said that there is no action. There were many and diverse. It does not mean that the scope of the fight cannot and should not be extended. In sum, there is a wide-ranging fight against corruption in Angola, which translates into the elements that we have identified here.

However, this does not mean that this fight does not need several improvements and has several flaws, which we have already identified in previous studies, namely, the lack of specialization and of its own extensive investigation and justice bodies, the need for promptness, and the creation of modern mechanisms to prevent the continuation of corrupt practices.

Fig. nº 1-  Table of Contents to Combat Corruption

Supporting political SpeechYES
Adequate new legislationYES
New OrganicYES/Partial
International Judicial CooperationYES
Asset RecoveryYES
Criminal chargesYES/Need for specialization and promptness

[1] https://www.publico.pt/2017/09/26/mundo/noticia/joao-lourenco-promete-combater-a-corrupcao-que-grassa-o-estado-1786811

[2] https://www.dw.com/pt-002/jo%C3%A3o-louren%C3%A7o-quebra-o-sil%C3%AAncio-e-fala-%C3%A0-dw-sobre-isabel-dos-santos/av-52240806

[3] https://novojornal.co.ao/politica/interior/joao-lourenco-elogia-pgr-no-combate-a-corrupcao-uma-das-suas-prioridades-anunciadas-quando-tomou-posse-101998.html

[4]  https://www.dw.com/pt-002/angola-pgr-apreende-tr%C3%AAs-pr%C3%A9dios-em-luanda/a-54272442

[5] https://angola24horas.com/component/k2/item/20926-justica-portuguesa-arresta-contas-bancarias-de-amigos-de-isabel-dos-santos

Sonangol: the need for a new strategic vision

The Annual Accounts: 2019

On 22 September 2020, Sonangol presented its annual accounts with reference to 31 December 2019[1]. The net result was USD 125 million (one hundred and twenty-five million US dollars), equivalent to AOA 45 854 million (forty-five thousand, eight hundred and fifty-four million kwanzas), with EBITDA (Results before Interest, Taxes, Depreciation and Amortization) of USD 4,779 million, representing an increase of 10% in relation to the previous year.

Revenues were identical to 2018, while operating costs fell 11%.

Oil production was also similar to the previous year while gas production increased by 6% and LNG by 8%. The production of refined products grew 37%, after resuming operations at the Luanda Refinery.

This is the accounts’ summary as announced by the Company’s Board of Directors[2].

Fig. 1 – Summary of Sonangol 2019 Accounts according to the Board of Directors

ITEM  NET RESULTS
Net Profit  125 M USD
EBITDA  4,799M USD
Oil Revenue and Production  Similar 2018
Gas  +6%
LNG  +8%
Refined Products  +37%

The accounts make ample references to the ongoing Regeneration Plan, which has as essential goals to place the company’s focus on the activities of the oil industry value chain, that is: prospecting, research and production of crude oil and natural gas, refining, liquefaction natural gas, transportation, storage, distribution and marketing of derivative products[3].

Combating corruption at Sonangol and strengthening the role of Non-Executive Directors

The key issue of these accounts begins to be formal, as, finally, accounting reserves that lasted for 15 years were eliminated and the financial reporting is endowed with enhanced transparency.

An effort to eliminate Sonangol’s role as an “epicenter of corruption” is visible[4], that is, as the main public financier of the business and private pleasures of the Angolan ruling elite.

This can be seen in the attempt to improve the transparency of financial reporting and in the appointment of non-executive directors such as Marcolino Moco and Lopo do Nascimento, two individuals with recognized integrity. These are moves to ensure that Sonangol’s revenues are not used for these private businesses.

To these measures are added the termination of Sonangol’s functions as a National Concessionaire and the privatization of several expensive units of the group, which in many cases were only vehicles for withdrawing public money for private purposes.

However, within this framework it would be important that the Non-Executive Directors, in addition to publicly signing the report and accounts, issued a declaration of verification that there was no significant and visible appropriation of public funds by private entities. Transparency has to go further.

Fig. No. 2- Measures to combat corruption at Sonangol

Sonangol’s weaknesses:

If the first task of the Government and of the Sonangol’s governing bodies is to eliminate corruption[5] within the company, the second and no less important task is to make the company profitable and with prospects for the future.

And here despite the implementation of the so-called Regeneration Plan, this is not enough. A full qualitative leap is needed at Sonangol.

If we look at the company’s net profits, they dropped in 2019 to 46 billion kwanzas (about $ 125 million) compared to the 80 billion kwanzas ($ 316 million) in 2018. There are several reasons why this happened, from the low price of oil to the cessation of receiving supplies as a National Concessionaire. However, this number represents an additional weakness of the company.

In a study recently issued, Reuters[6] reported that Sonangol’s core activities in 2019 lost 351 billion kwanzas ($ 995 million), compared with a profit in 2018 of 69 billion kwanzas ($ 274 million) ). In 2019, debt payments were spent US $ 1.8 billion, while operating profits from oil production, sale and refining of US $ 1.570 million.

In addition, the total liabilities in 2019 were US $ 36 billion, referring to loans, risk provisions and accounts payable.

It should be noted, moreover, that the final net profit mentioned above is the result of unrepeatable extraordinary results such as cancellation of old debts and sales of some assets. They do not result from the central activity of the company.

KPGM points out that Sonangol’s liabilities or obligations exceed its assets, something that has not happened since 2016.

This means that the company’s core business is not competitive. Therefore, modeling the Regeneration Plan in a mere return to the core business isn’t the best solution.

This means that it is not enough for Sonangol to focus on its core business, as indicated by the Regeneration Plan. It is not enough and it cannot happen.

Fig. No. 3- Sonangol: Compared data between 2018 and 2019 (millions of dollars)

In addition, in 2019 Sonangol had sales of US $ 10 billion, 4% less than in 2018, which is understandable, as mentioned above, since in the middle of the year it stopped receiving earnings as a National Concessionaire. However, in addition to sales being stagnant, the production of barrels of oil is also stalled at 232 thousand barrels per day. In addition, it is feared that in the future oil will lose its importance in the world economy.

If we look at the amount of expenditure in the Angolan State Budget for 2020 in the revised version, it is US $ 23 billion. As only a part of Sonangol’s sales accrues to the State, we have a direct contribution from Sonangol to the national economy much lower than in the past. It should also be noted that the Angolan GDP is around US $ 105 billion. In this sense, Sonangol’s total sales do not reach 10% of GDP.

These elements lead us to two conclusions:

I) Sonangol’s oil activity is stagnant;

II) the company no longer has the magnitude to be the driving force of the Angolan economy.

These two conclusions have repercussions for the national economy and for Sonangol itself.

As far as the national economy is concerned, the solution is clear and is already beginning to be taken: broadening the national productive base, diversifying the sources of public income, promoting the creation of a strong agricultural and livestock support in the country, promoting the opening of companies, investment and competition in the market. It is a painful and difficult process, but a necessary one.

Harmonium Strategy. Going beyond the Regeneration Plan

Regarding Sonangol, it is understood that it is not enough and it is not the best idea to just focus on oil. The company’s reform has to be more ambitious and forward thinking.

On that matter we have already advocated in previous work[7] and it lays on the partial privatization of the company. The privatization of 100% of the company is not advocated, but the privatization of 33% of its capital in order to bring international investment, involvement of Angolan capital and motivation of its workers. These three objectives would be achieved through the following partial privatization model. Of the 33% of share capital to be privatized, 15% would be for foreign investors and would be the subject of an OFS (Public Offer for Sale) on an international reference exchange with abundant liquidity. The other 10% would be for national investors and would be subject to an OFS in Luanda. And finally, the remaining 8% would go to Sonangol workers, who would also become owners of the company for the ownership of their shares.

There would be new money, fresh ideas and people without connections to the past. This would allow a different approach to the problems and a renewed vision of the future.

However, in view of the negative evolution of the world and Angolan situation in recent months, partial privatization alone will not suffice, as the Regeneration Plan is not enough.

A new strategy for the company is vital.

The strategy no longer involves excessive attention to the oil focus. That which is not profitable and in which the company is not competitive must be sold. Free the company from its weaknesses. Decrease. But at the same time, increasing the company’s capacity and scale. Hence this option is designated as the Harmonium Strategy.

The remaining activities are expected to remain at Sonangol, while a renewal strategy is launched, based on developing a stronger downstream business, increased refining capacity, expansion for chemical products, and investing abundant renewable energy in Angola, such as sun and water, at the same time. time creating new technologies through its R&D efforts and developing new lines of business through investments and acquisitions. This means that there must be a transformational effort by Sonangol and not a mere reduction or dismantling.

It is necessary to follow what many large foreign oil companies, whether dominated by the state like Aramco (Saudi Arabia), or private like BP, are doing.

And this is turning the oil company into an integrated energy company driven by the production of resources focused on providing energy solutions to customers. Construction on a scale of investments in renewable energy and bioenergy, initial positions in hydrogen and creation of a global portfolio of gas customers; there are several options that Sonangol faces to become a modern and competitive company.


[1]https://www.sonangol.co.ao/Portugu%C3%AAs/ASonangolEP/Relat%C3%B3rio%20de%20Contas/Paginas/Relat%C3%B3rio-de-Contas.aspx

[2]https://www.sonangol.co.ao/Portugu%C3%AAs/Not%C3%ADcias/Paginas/Not%C3%ADciasHome.aspx?NewsID=472

[3]https://www.sonangol.co.ao/Portugu%C3%AAs/ASonangolEP/Estrat%C3%A9gias%20Corporativas/Paginas/Estrat%C3%A9gias-Corporativas.aspx

[4] See for example on the topic: https://www.makaangola.org/2020/09/sonangol-o-epicentro-da-pilhagem-de-sao-vicente-parte-1/

[5] We use the word corruption not in a technical sense, but in the current common sense in Angola, like all illicit private appropriation of public values, basically corresponding to what is criminally referred to as embezzlement, abuse of trust, economic participation in business, fraud, etc.

[6] https://www.reuters.com/article/angola-oil-sonangol/angolan-energy-giant-made-no-money-from-oil-in-2019-as-debt-bites-idUSL8N2GP4V2

[7] https://www.cedesa.pt/2020/01/29/um-modelo-de-privatizacao-da-sonangol/