Chuck Collins - The Wealth Hoarders

After 39 years, dictator President Jose Eduardo dos Santos was turned out of office. In May 2019, the new president of Angola, Joao Lorenco, canceled the contracts for the redevelopment scheme, charging corruption, “over-invoicing,” and “disproportionate compensation.” But the village was destroyed and the money is gone.

Angola is a country with tremendous natural resources, including diamonds and oil. But it is also one of the most unequal nations in the world, with more than half the population living in extreme poverty. A colony of Portugal until 1975, post-independence Angola was plunged into decades of civil war and conflict. But, by the millennium, Angola was making advances in controlling its own economic destiny. On January 20, 2020, the world learned that Angolan Isabel de Santos, now the wealthiest woman in Africa, used her position to extract hundreds of millions – if not billions – of dollars in wealth for personal gain. Dos Santos, taking advantage of being the daughter of Angola’s autocratic leader from 1979 until 2017, allegedly used her public role as head of Sonangol, Angola’s state oil company, and other state enterprises such as Urbinvest, to enrich herself and family members.

Thanks to the Luanda Leaks, a disclosure by a Portuguese whistleblower of 715,000 pages of documents, we have learned a great deal about the unseemly mechanisms that wealthy elites around the world use to steal and hide wealth. 2While great wealth was plundered during the colonial period, the use of shell companies and secret transactions are the newest form of neocolonial kleptocracy. In the aftermath of the Luanda Leaks, there were many photos of Isabel dos Santos throwing lavish parties at the Cannes Film Festival, posing next to US heiress Paris Hilton.

However, more troubling is the Wealth Defense Industry, the tax lawyers, accountants, consultants, and wealth managers who facilitate this system and enable this looting process. These professional enablers are private companies, many headquartered in the UK and the United States, and they play an essential role in the global plundering apparatus. They are, as sociologist Brooke Harrington describes them, the “agents of inequality.” 3

While global banks such as Deutsche Bank, Barclays, and Citigroup refused to do business with Isabel dos Santos, a number of the world’s professional service firms were happy to oblige. Without the aid of the Boston Consulting Group, McKinsey & Company, and accounting giant PwC (formerly known as PriceWaterhouseCooper), dos Santos’ wealth extraction would not have been possible. PwC acted as dos Santos’ consultant, tax advisor, and accountant, assisting with at least twenty companies controlled by her and her husband. McKinsey and Boston Consulting were hired by dos Santos to restructure the state oil company Sonangol. But these consulting firms were paid by shell companies based in Malta controlled by dos Santos, not through official state channels, an obvious warning sign for those monitoring money laundering.

“Paying huge and dubious consulting fees to anonymous companies in secrecy jurisdictions is a standard trick that should sound all alarm bells,” said Christoph Trautvetter, a forensic accountant based in Berlin, to The New York Times . 4

PwC claims it has terminated all work for companies controlled by the dos Santos family and begun an investigation. PwC chairman Bob Moritz told the Guardian that heads could roll at his company. “We’ll wait for the investigation, I don’t want to rush,” he said immediately after the disclosure. “But we need to move with speed to take action to regain confidence.” 5

The US and the European Union both require banks to report suspicious activities and transactions. But, unlike the European Union, the US does not impose the same requirements on accounting, legal, and consulting firms. The Luanda Leaks provide a clear rationale for expanded oversight of the Wealth Defense Industry. In February 2020, Portugal froze all of Isabel dos Santos’ bank accounts in the country, at the request of Angola, in the hope of someday recovering some of the looted funds after due process. 6Angola has revised their estimate of embezzled funds upward from their initial claim of $1 billion to more than $5 billion.

Dos Santos continues to plead her innocence, calling the investigation a “witch hunt.” She has hired a London-based PR firm headed by Rory Godson, a former Goldman Sachs executive, known as Rupert Murdoch’s “man in Dublin.” 7Together with a robust legal team, dos Santos has gone on the counter-attack, accusing the International Consortium of Investigative Journalists of faking documents as part of a “coordinated political attack” by the Angolan government. 8In the meantime, Alexandrino and his family can look across the lagoon at Areia Branca, the sandbar where they used to have a two-story home.

1 1. Juliette Garside and Jason Burke, “‘It’s All Gone:’ Community Bulldozed at Site of Isabel dos Santos ‘Masterplan,’” Guardian, January 20, 2020. https://www.theguardian.com/world/2020/jan/20/fishing-community-bulldozed-isabel-dos-santos-masterplan-luanda-leaks-angola

2 2. “Man Behind Football Expose Revealed as Source of dos Santos Leak,” Guardian, January 27, 2020. https://www.theguardian.com/world/2020/jan/27/football-whistleblower-rui-pinto-behind-isabel-dos-santos-leaks-luanda-leaks

3 3. An interview with Brooke Harrington, “Agents of Inequality: How Wealth Managers to the Super-Rich Undermine Society and What We Can Do About It,” The Nation, June 21, 2017.

4 4. Michael Forsythe, Kyra Gurney, Scilla Alecci, and Ben Hallman, “How US Firms Helped Africa’s Richest Woman Exploit Her Country’s Wealth,” New York Times, January 19, 2020. https://www.nytimes.com/2020/01/19/world/africa/isabel-dos-santos-angola.html

5 5. Larry Elliott, Graeme Wearden, and Juliette Garside, “Heads Could Roll at PwC over Isabel dos Santos Links, says Chairman,” Guardian, January 21, 2020. https://www.theguardian.com/world/2020/jan/21/heads-could-roll-pwc-isabel-dos-santos-links-chairman-luanda-leaks

6 6. Juliette Garside, “Portugal Freezes Bank Accounts of Isabel dos Santos after Angolan Request,” Guardian, February 11, 2020. https://www.theguardian.com/business/2020/feb/11/portugal-freezes-bank-accounts-of-isabel-dos-santos-after-angolan-request

7 7. Ian Guider, “Rory Godson: ‘You Tend Not to Work With People Who You Don’t Like,” Business Post, June 21, 2020. https://www.businesspost.ie/profiles-interview/rory-godson-you-tend-not-to-work-with-people-who-you-dont-like-but-youve-got-to-remember-that-the-client-is-right-1de035938

8 8. AFP, “Angola’s Probe of dos Santos ‘Improper and Unfair’: Lawyer,” EWN-Eyewitness News, June 5, 2020. https://ewn.co.za/2020/06/08/angola-s-probe-of-dos-santos-improper-and-unfair-lawyer; “Rory Godson and the Princess,” The Phoenix, June 18, 2020 https://www.thephoenix.ie/article/rory-godson-and-the-princess/

A family office in 1983 ensures that Dee’s dynastically wealthy New England family will remain wealthy for another century. They deploy “perfectly legal” mechanisms such as trusts to avoid estate taxes.

A Florida man named Joseph Rensin defrauds tens of thousands of working-class customers, but continues to live a luxurious lifestyle with his wealth protected in trusts based in the Cook Islands.

Isabel dos Santos, the wealthiest woman in Africa, plunders billions in wealth that rightfully belongs to the people of Angola and shifts it into offshore accounts.

The common thread in these three stories is the Wealth Defense Industry. None of these arrangements would have succeeded without a militia of tax attorneys, wealth managers, accountants, trust lawyers, and other advisors, that protect the interests of a narrow set of individuals and families against the wider community interest. The gatekeepers of these systems within “the Industry” will take umbrage that these disparate activities are lumped together. There is a difference, they will argue, between the money laundering depicted on Narcos or Ozark and the trust lawyer, sitting in a glass office tower, crafting an asset protection trust. They will argue that all their systems are legal and that they are obeying the law.