Examination of Witness (Questions 524
- 539)
TUESDAY 16 JANUARY 2001
MR SIMON
TAYLOR
Chairman: First of all, could I thank
you very much indeed for the evidence you have given to this Committee
in writing, and we now would like to talk to you more about the
details of the very alarming conditions which you have described
in Angola, and Tony Worthington is going to lead us off on this
subject.
Mr Worthington
524. Basically, you describe a situation where
a country has enormous resources of oil, and since the discovery
of that oil its leaders have taken it downhill at incredible speed,
the country has got poorer and poorer, and the root cause of this,
summarising your report, is corruption. Is that a fair summary?
(Mr Taylor) First of all, I would like
to say thank you very much for giving us the opportunity to come
to speak with you. I think that is not an entirely fair assessment.
I would say that is a fair assessment for the period during the
1990s, but I think one has to see the nineties as a continuation
of what happened in the eighties, namely, Angola is a front-line,
cold war, fought over state, and obviously suffered very badly
because of it. So I think it would be hard to say that corruption,
as an issue relating to the conduct of the war, was a real problem
in the eighties, I think it was a very different set of circumstances.
But, I think, from the nineties, certainly from about 1993 onwards,
corruption has become an increasingly severe problem and I would
say it escalated in its severity, in terms of its implications
for the state, from probably late 1997 onwards until the present
day.
525. Can I ask you, from your report, you refer
to the allocation of Blocks 31, 32 and 33, deep water blocks,
oil blocks, and you say that three companies, BP-Amoco, Elf and
Exxon, paid a total of 870 million dollars in signature bonus,
of which Global Witness, your organisation, estimates that between
400 million and 500 million was "disappeared" through
the Presidency, so that the bulk of the money does not go into
any transparent accounting at all, basically it goes into private
hands. Is that a fair summary?
(Mr Taylor) More or less; it is much more complicated
than that. Of course, I tried to simplify things. But those three
blocks were finalised in July 1999, at which point the money was
paid, but the estimate of how much disappeared, if you like, relates
to a number of different sources, many of which were inside Angola,
in key departments, ministries, and so on. But, in addition to
that, certainly in the last year, I have been continuing with
investigations and dealing with lots of different people who have
access to documentation, and so on, some of which, with a bit
of luck, I should be able to get hold of, but I cannot yet access,
some of which I have seen as well. I think the first thing to
say is I am not suggesting that those companies, I think it would
be naive in the extreme to suggest that they did not have a good
idea that a lot of money was going to disappear, simply because
of the way things were being conducted during that period, I think
it would be naive in the extreme of those companies not to have
had any concept of what might happen. But if you go back to that
period you had a sort of set-up in Angola known as the Bermuda
Triangle, where you had the Presidency and you had the National
Bank and you had the state oil company Sonangol, forming this
Bermuda Triangle. In more recent times, so since about early last
year, we have seen the replacement of the National Bank Governor,
so that the BNA, as it is called, the National Bank, has kind
of come out, we think, of the Bermuda Triangle set-up. But what
has often happened in the past, and certainly happened occasionally,
is that the Presidency demands and receives access to resources,
both out of the state budget and also from monies that do not
even enter into the state budget in the first place; and this
is where things start to get very complicated, which relates to
why we have a problem with the conduct of the IMF, and so on,
but I will probably talk about that later. I know, for example,
that, of the 870 million dollars, some 630, or thereabouts, went
through an account at a branch of ABN AMRO, in Amsterdam, and
all evidence of the existence of that account has subsequently
vanished, it is no longer there. So there are a number of questions
that come out of that. One is, why did only that much of the 870
go through this account; the second one is, who removed the existence
of the account at all, because if you inquire you will find there
is no evidence that it ever existed. And I think the third point
is, where did that extra money go to. So I suspect the extra money
may have disappeared via I do not know where, but, of that which
went through, some of it was siphoned off straight into the Presidency,
and basically that is what happened.
526. Also in your report, you say, "For
several years the IMF" and you refer to the IMF, "has
been attempting to introduce the concept of transparency into
Angolan financial management." And then you say, "The
international oil industry," which includes BP, where we
may have some influence, "and finance institutions that have
provided oil-backed loans have undermined this effort by the IMF
to bring transparency into the oil operations of Angola."
Can you substantiate that?
(Mr Taylor) Yes. I think there are two clear areas,
and, first of all, I think, to look at the banks, banks have made
substantial loans, such as Banque Paribas, in Paris, really starting
in about 1993. And I can talk a little bit more about that, but
I have to be a bit careful because of current court cases going
on in Paris, and also there are certain individuals connected
to the conduct of how these loans were arranged through this bank,
who, to say the least, are pretty unsavoury characters, and I
do not want particularly to be sort of knocked off my bicycle,
jokes aside, on another occasion. But suffice it to say that banks
such as Paribas, UBS is another one, a whole raft of different
banks, many of which we collated in this report, we did a very
brief summary, in the back, of the different loans that have been
provided since the early nineties, they have been provided with
no transparency, there is an occasional report you can find, if
you really look for it. But the money, certainly in the Paribas
set-up, has been controlled by individuals who have been brought
in, given Angolan citizenship and made signatories of the account;
in fact, one of the characters involved is currently on the run,
with an international arrest warrant pursuing him, one hopes,
and he told me, about three weeks ago, that he is a signatory
on one of the accounts. And yet he and his partner, who is in
prison in Paris right now, pending investigations, continuing
investigations, into money laundering, embezzlement, illegal arms
trading, and so on, the two of them, were the signatories on the
accounts, that were put together by them. So, in effect, they
were brought in, made Angolan citizens, as foreigners, then they
set up the loans, and then they controlled those loans, the deployment
of those loans, and subsequently they deployed those loans to
purchase weaponry through companies that they owned. So they controlled
the entire system from start to finish, and none of this money
went through the national budget at all. So there is a gripe over
banks, in the lack of transparency; so that is that side of it.
There is something to add, as well, about the oil companies; but
go on.
527. You refer to the "untouchable oiligarchy",
which is a nice line, and in that is a Pierre Falcone, who ran,
therefore, Simportex and Falcon Oil, and had a 10 per cent share
in Exxon's involvement in ...
(Mr Taylor) It is much harder to explain than that.
Pierre Falcone and the running of Simportex was a mistake in our
report, there are probably some other mistakes, no doubt, but
we confused an Angolan parastatal company called Simportex with
another company called Simpatex. As it happens, he and other individuals
ran something called Simpatex, he did not run Simportex, so that
was an error we made in here; but what he did do was supply weaponry
through Simportex, and Simportex was an Angolan parastatal company.
So it was at the end of the procurement exercise.
528. So are you still saying that there is a
Brazilian individual?
(Mr Taylor) He has a French passport and he comes
from Brazil.
529. A French passport; that there is an individual
who has a share in Exxon who is involved in arms deals?
(Mr Taylor) No. He is involved with a company called
Falcon Oil, which is based in Paris, and which, that company,
has an equity stake in Exxon's Block 33. But if you ask the international
oil industry, nobody has any idea who Falcon—
530. But his name, Falcone, and the name Falcon
Oil and a share in Exxon, that is ...
(Mr Taylor) Not in Exxon, in Exxon's Block.
531. In Exxon's Block, in Angola?
(Mr Taylor) Yes. I think one has to distinguish between
the two.
532. And is involved in arms deals as well?
(Mr Taylor) Pierre Falcone is involved in arms deals,
yes, and companies connected to him have been involved at the
supply end of weapons to Angola, and he is involved with a company
called Falcon Oil, which has an equity stake, a 10 per cent equity
stake, in Exxon's Block 33. They are a de facto partner
of Exxon, whether Exxon likes it or not; they are not part of
Exxon, they are simply an equity partner. In the way the blocks
are structured, you have an operator, and, in the case of the
three blocks you mentioned before, BP is the operator, so kind
of the head company, if you like, for Block 31. Elf, as it then
was but is now TotalFinaElf, is the head company for Block 32,
and Exxon is the head company for Block 33. Now, within there,
they have a series of equity partners, who, on the one hand, are
supposed to contribute development costs to the field, and, in
return, as the field becomes active and produces oil, they then,
in theory, should share, according to their equity stake, in the
profits that come out. So Falcon Oil is a 10 per cent equity partner
in Exxon's Block 33, but the company is connected to Pierre Falcone,
who is connected to companies, or, in fact, runs companies, which
have been supplying weapons to Angola.
533. This is very serious research, is it not,
that here you have a huge world name in the oil industry.
(Mr Taylor) Exxon is very embarrassed about it as
well.
534. One of whose shareholders is part of the
process by which oil money is converted into arms, on behalf of
the Angolan Government; that is what you are saying?
(Mr Taylor) I would not say shareholders, I would
say equity partners. I think it is important to distinguish between
the two. Not to be too pedantic about it.
Ms Kingham
535. I want to go into this in some depth, if
I may. Are there not certain value judgements being made here?
I have noticed in your statement that you state that it is widely
accepted there is no military solution to the conflict. I would
dispute that that is widely accepted. There is also an alternative
point of view, that if the Angolan Government, which is, after
all, an elected Government, was allowed to have got on with it
then maybe they would have been given adequate arms and actually
they could have dealt with the situation, and not have the UN
interfering and therefore ending up in the situation they are
in now. So that is a counter assumption to the one that you have
made in this statement. There is also no arms embargo against
the Angolan Government; so how are you linking the situation of
corruption with buying arms for the Angolan Government, which
is legitimately allowed to purchase arms to continue its fight
against UNITA? So I would like to get your feedback on that, because
those two have been linked together. And, in addition to that,
I would also like to ask you, when you say money has disappeared
in Angola, I have also worked with Angola for many years and I
think it is fair to say that anybody dealing with the country
knows that the accounting systems and situations within ministries
are not the most ideal, including trying to get things out of
Customs, and from a donor point of view it is not ideal either,
so what evidence do you have that this money has actually disappeared?
And you say it is going to the Presidency, what do you think has
happened to it? So, first of all, the assumption that arms for
the Angolan Government is wrong, what are you basing that on and
how are you linking that with corruption? And, secondly, how can
you identify that this money has actually disappeared, and what
do you believe it has been used for; and what evidence do you
have it has been used corruptly within the Presidency?
(Mr Taylor) Quite a pile there. I think the first
thing I should say is, from our perspective, we absolutely have
no problem with the Angolan Government, the elected Government's
right to procure weapons. I think our question here is the basis
by which it has been undertaken. It is the methodology that has
been deployed to do it which is the point we are trying to raise.
536. Can you expand on that?
(Mr Taylor) Yes.
537. The links in here seem to be that it is
going to arms sales, i.e. that is bad?
(Mr Taylor) I think it becomes a problem when you
look at the individuals who have been involved in that procurement
process, and the way in which they have siphoned off revenue through
a whole series of offshore company structures, which are in places
from the Isle of Man, to Jersey, there are company structures
here in London.
538. Revenue for personal use, this is?
(Mr Taylor) No, these are kickbacks, off the back
of arms deals, these are enormous kickbacks off the procurement
process. So we are not saying it is wrong for the Angolan Government,
the elected Government, to buy weapons in its fight against UNITA.
And I should balance that up by saying, we are still pursuing,
as we have been for some time, which I hope some of you know,
the whole diamond issue, so we are trying to look at this from
both sides.
539. So are you saying the Angolan Government
does not get value for money on its arms deals?
(Mr Taylor) I think it is an appalling value for money,
actually. We know numerous instances of whole shipments of products,
which are, quite frankly, totally useless, ranging from rusting
tanks, that had to be dragged off the ship, which are sitting
in tank graveyards outside Luanda, surely someone should have
recognised that there was no point in buying them, to shipments
of rotting meat, in containers that left Portugal when rotten
already, to, you name it, stuff has been shipped on that basis.
And it is because of the individuals and the company structures
that have been evolved in this procurement process, that is where
the problem is. And where things escalated and got worse was around
late 1997, early 1998, I do not have a date, but roughly that
period, where the procurement programme was removed from Simportex
and given to another entity, which I referred to as Company X,
I can talk to you more frankly about that later, if you like,
and that company is a subsidiary of the company whose director
is currently sitting in prison in Paris for illegal arms deals,
embezzlement, money laundering, and so on, and his partner, who
is on the run. It is not just weapons we are talking about here,
it is also food supply as well, through a sister company, Company
Y, which I can also talk to you about, which is again a subsidiary
of the parent company, whose director is in prison, which has
been supplying food on the same basis. Now up to about late 1997,
1998, these individuals and these company structures supplied
through Simportex, and that in turn produced a kickback process,
which was relatively well shared, I would say, between the military,
on one side, and the Presidency and key entourage around. But
after 1997/98, that situation changed and there was a kind of
de facto centralisation of control, if you like, of this
process, for food and weapons, through these two companies, X
and Y, effectively cutting out the military sharing side and centralising
that disbursement process, if you like, around the Presidency
itself. So I think we do not have a very good handle yet on how
money disappears within lots of areas within the Government structure,
but we have a very good idea how money disappears through this
procurement process. We are also very aware, but I do not know
particularly many specifics about it, in the enclave economy that
there is there, virtually everything that comes through the port,
from trucks, I am talking about non-military supplies here, or
supplies that do not ultimately end up with the military, there
is also a process of revenue being siphoned off, taxes being applied,
and what have you, everything from school books to, you name it.
That is kind of the gist of how it works. I can be more frank
perhaps in private about that. In terms of the military situation,
even Joao de Matos has stated publicly, "We've gone as far
as we can, it's now up for a political solution." So I am
not advocating that the Angolan Government does not have the right
to say, "Okay, we're going to bash UNITA, because we don't
like UNITA and they've run out of the peace processes on two occasions
before," my sympathy is absolutely on that side; it just
seems to us that, certainly given our Cambodian experience, we
are now at a situation where there seems to be a sort of stalemate.
They have gone through the process of destroying UNITA's military
capacity in a conventional sense, and what have they got left,
they have got a guerilla force running around now. If they are
lucky enough to capture Savimbi, or whatever, and perhaps a few
other individuals who may be key to the continuation of UNITA's
arms struggle, then maybe things change. But one could have said
that in 1993 about Pol Pot and his guys; and because the international
community did nothing, despite the mandate to do it, with Resolution
792, to close off timber trading, the war carried on, every year,
during the dry season, and it took us, coming up in 1995, to expose
the role of the Thai Government and Thai military in facilitating
timber exports from the Khmer Rouge area. So we have seen it before.
And I think all I am cautioning is, maybe we are lucky and maybe
the war ends, but actually it could carry on for years, and if
it does carry on for years we have got this same necessity of
the state to require the kind of maximum security apparatus and
the maximum weapons procurement programme. And it is that programme
and that instability which is, on the one hand, I think, the excuse
for the continuation of current practices, but also provides the
process by which all this money is being siphoned off. Does that
answer your question?
Ms Kingham: It does, I think, yes. Thank
you.
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