Global Policy Forum

By David Leigh

Hundreds of millions of pounds supposedly being paid by western oil companies to the government of Angola have been discovered going into secret offshore accounts in Jersey. The Lloyds TSB offshore accounts in the name of the Angolan state oil company, Sonangol, include cash payments by the companies to the government in return for exploration permits in the booming Angolan deep water oil fields.

The Angolan government - faced with growing international pressure on oil firms to disclose these huge "signature bonus" payments - has been strenuously trying to keep the amounts secret. The existence of the Jersey accounts has been discovered by two Washington-based members of the International Consortium of Investigative Journalists, Laura Peterson and Philip van Niekerk, who are due to publish their detailed findings in the US today.

It is estimated that - quite apart from normal oil revenues and taxes - almost £800m has been scooped up in the last three years by the regime of President Dos Santos by auctioning exploration blocks off the west African coast.

The BBC this month quoted a leaked study by the IMF alleging that in 2001 alone around £600m had apparently disappeared from the state's coffers, although the Angolan government said as far as it was aware no money had disappeared.

The IMF report, which Angolan ministers described as "slanderous", singled out the state oil company, alleging: "Reported revenues from Sonangol cannot easily be reconciled with its share of oil receipts ... further complicating the monitoring of oil revenues from Sonangol, the company assumed complete control of foreign currency receipts from the oil sector, and stopped channelling them through the central bank."

The Angolan regime has repeatedly come under fire over allegations of corruption and under-the-counter arms deals which it has always denied. The London-based group Global Witness calls the situation "wholesale state robbery".

Its director, Simon Taylor, said yesterday that the role of the British bank was also key: "This parallel economy is not accountable. Lloyds TSB may have inadvertently ended up allowing this process to go on."

His group, along with international financier George Soros, are mounting a Publish What You Pay campaign. So far only the British oil giant BP has cooperated.

When it disclosed a signature bonus payment of approximately £75m, however, Sonangol threatened it and other oil firms with reprisals.

The Jersey bank statements show the way that Texas-based Marathon Oil made dollar payments of its own £28m signature bonus in three instalments.

For example, on July 15 2000 the firm sent US$13,717,989.31 to a Sonangol account in the Channel Isles. The cash was immediately transferred to another Sonangol account in an unknown location. Although such payments are not prohibited there is a call for greater transparency.

The Jersey accounts handled about £100m in the three month period in which that Marathon payment is recorded. Much of the other money that flowed in appeared to be loans obtained from Swiss banks. UBS paid over £24m in that quarter alone.

Angola is also accused of mortgaging future oil production by running up debts on huge oil-backed loans, which then disappear. To guarantee they get their money back foreign banks have arranged some of the offshore accounts as trust systems into which oil receipts can be paid directly.

Sonangol's chief executive, Manuel Vicente, says that it was to maintain foreign investment that the government opened up a series of bank accounts outside Angola. Other accounts are in Switzerland and Portugal, he says. He denies the accounts were operated improperly.

Jersey is developing an ugly reputation as an offshore home for controversial cash. The secretive tax haven is estimated to be sheltering £400bn. ANZ Grindlays Trust bank caused a diplomatic row when it decided to report "suspicious transactions" last year on accounts which had received around £100m in total from European arms companies. The account's owner turned out to be the foreign minister of Qatar.

The questioned payments included an alleged £7m from the British arms manufacturer BAE Systems, from whom Qatar had agreed to make large purchases. Both BAE and the minister denied any impropriety Lloyds TSB yesterday refused to discuss its Jersey Sonangol accounts or even to admit they existed - on grounds of client confidentiality. But oil industry sources said the bank's relationship with Angola dated back to 1983, when it started offering credit lines for British exports, and then arranged big loans for Sonangol itself.

Competition among western banks for lucrative Angolan government business is keen, provided they can enforce repayment. Although most Angolans live in extreme poverty after 27 years of civil war, the country's oil reserves are said to be bigger than those of Kuwait.

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