The Hidden Relationship between Trafigura and Angola
While Angola is currently experiencing the toughest economic crisis since the end of the civil war, there is one company doing good business in the country: Trafigura.
The oil trade in Angola was dominated by only one company: Trafigura for many years. The links between that mega company and the Angolan political elite were therefore very close, according to the Paradise Papers.
While Angola is currently experiencing the toughest economic crisis since the end of the civil war, there is one company doing good business in the country: Trafigura. The third commodity trader in the world, in the Netherlands especially known for poison ship Probo Koala, had practically a monopoly for oil trade in Angola for many years. Marc Guéniat, a researcher at the Swiss NGO Public Eye specializing in corruption in that country, has suspected that Trafigura has been awarded these contracts for a long time thanks to a close relationship with the Angolan political elite.
The Paradise Papers now show that they are much closer than imagined. These internal documents from Appleby Legal Advisory Office came from the Süddeutsche Zeitung and shared through the journalist consortium ICIJI with media worldwide, including Trouw. The documents show that Trafigura designs, manages and pays companies for one of the most influential people within the Angolan regime. “It is not logical for Trafigura to pay the bills for these companies,” says Professor Marcel Pheijffer, Professor of Accountancy. He calls the findings ‘remarkable’ and ‘certainly researchable’.
It’s all about Leopoldino Fragoso do Nascimento. At first sight, he seems to be an ordinary entrepreneur. With his company Cochan, he invests in Angolan companies, such as supermarkets and telecommunications. A few years ago, little was known about him: there were no pictures of him on Google and his company had no website.
But he is more than a businessman: Fragoso do Nascimento was head of communication for the Angolan president Dos Santos, who resigned in late September after almost 38 years. He was also General in Angola’s Army and closest advisor and friend of Hélder Vieira Dias, Angolan army leader. That is not a man of unmanageable behavior: According to intelligence company Stratfor, which collects and analyzes information for governments and businesses, Vieira Dias is head of a clandestine organization that largely steals government money. And also Fragoso do Nascimento itself has blame, concludes Stratfor in documents that came out of Wikileaks. “The presidential cabinet is a giant roofing machine, and Kopelipa (the choir name of General Vieira Dias, ed.) And his two most important confidants.
The cooperation between Trafigura and Fragoso do Nascimento, also known as ‘Dino’, begins as far as known in 2009. In that year, the Dutch-based commodity trader (see image below) together with Dino puts a company: DT Group. DT is active in various sectors, such as transport, agriculture and mining. But oil trade is by far the most important.
In that year, DT Group acquired a large oil contract in Angola with an estimated value of about $ 3.3 billion. This so-called swap contract allows Trafigura to export crude oil, how precise it is not clear. In return, it has to return the processed oil, hence the term swap contract. Indeed, Angola does not have the capacity to process crude oil into useful products. This contract gives Trafigura a practical monopoly on imports of processed oil in Angola.
Fragoso do Nascimento participates in DT Group through his company Cochan, registered in the Bahamas. According to Cochan’s website, he set up this company in 2001. But from the Paradise Papers it appears that the company was only founded in 2006 and was controlled by Trafigura directors since then. Fragoso do Nascimento did not act as director of his own company in 2010, the year in which he was appointed as General. In 2011 he became sole Cochan driver and gained full control over the company.
But after that, Trafigura remains fully involved in the Dino companies. Cochan Holdings (BVI) Ltd., another company wholly owned by the General, will be governed by Trafigura, Mariano Marcondes Ferraz, as of 2010. Last year, he resigned at Trafigura because he was prosecuted for corruption in Brazil. According to the Brazilian prosecutor, he would have paid a lump sum to Petrobras, a state-owned oil company, including securing contracts for Trafigura.
From the Paradise Papers it appears that the accounts for managing different companies from Dino go to Trafigura. Appleby describes those Dino companies as of the ‘Trafigura Group’, and a Trafigura employee in Amsterdam is the contact person. An example is Transfuel Holdings (BVI) Limited, which is set up in 2012 on behalf of a Trafigura employee, and Dino being the sole director and shareholder. The accounts for the management of the company may be sent to Amsterdam, at the address of Trafigura Beheer BV.
In a reply, Trafigura confirms that it offered “administrative support” to Fragoso do Nascimento. “We have a long-term business relationship with Fragoso do Nascimento and we confirm that we have given him support”, says Trafigura. Trafigura has repeatedly emphasized that Dino is a “regular” entrepreneur. It also states that Dino has resigned as General, but Angolan sources dispute that. Trafigura does not answer questions about Marcondes Ferraz’s role.
The big question, of course, is the precise reason for the close cooperation between Trafigura and Fragoso do Nascimento. Critics, including Marc Guéniat of Public Eye and the Angolan journalist Rafael Marques de Morais, think that cooperation for Trafigura was crucial to gaining the billion-dollar deal for oil trade. Guéniat: “For many years, Trafigura had a practical monopoly on oil sales to Angola, it had hardly any competition. Such a position raises questions, especially in the light of corruption and bad governance in Angola. How did this happen? The fact that Trafigura’s business partner was a senior adviser to the president shows how risky that cooperation is. “
Conflicts of interest
Guéniat has many questions about DT Group, the important joint venture between Trafigura and Fragoso do Nascimento. “These documents show that Trafigura works with a man whose added value in the joint venture is limited to his position in the Angolan government. However, Trafigura chose to allow him to share in the profits of Trafigura’s activities in Angola and abroad. The documents show that the links between Trafigura and the Angolan political elite are far too narrow, “he says.
Guéniat finds the role of Brazilian Marcondes Ferraz, who acted as a driver in Dino’s business, worrying. “Ferraz was the man for Trafigura in Angola. Why should he run a Dino company? In a normal business this would be seen as a conflict of interest. But at Trafigura shows that the roles of Trafigura and Dino run in a dangerous way. This demonstrates a perfect way to influence the Angolan state. “
Marcel Pheijffer, a Dutch professor of accountancy specializing in corruption research, also finds Marcondes Ferraz’s role problematic. “In this case, I see several alarm bells: the country in which business is being done, the persons involved, the type of contract. The fact that the Brazilian authorities Marcondes Ferraz prosecute for corruption does not make matters worse. “That Trafigura pays Dino’s businesses he finds remarkably and certainly worth investigating. “It is not logical for Trafigura to pay the bills for these companies. The statement given by Trafigura is inadequate. It remains unclear whether these costs have been passed on to Dino or that they have remained at the expense of Trafigura.
What the cooperation with Trafigura has just delivered to Dino is not possible from the Paradise Papers. Appleby’s documents do not show any cash flows because Appleby manages the companies only and does not have access to any bank accounts. This also means that Trafigura did not make payments to Fragoso do Nascimento.
Experts do not think that by the recent exchange of power in Angola, with a new president after 38 years, Dino and Trafigura will change a lot. “Although the new president, João Lourenço, will take measures to reduce corruption, it is highly unlikely that he will be responsible for past issues,” says Søren Kirk Jensen, researcher at British think tank Chatham House. “The elite will not have to deliver much of its influence or wealth,” Jensen expects. “It’s a slow but significant change in a country where corruption is widespread.”
Fragoso do Nascimento and his company Cochan did not respond to our questions.
Trafigura was founded in Amsterdam in 1993. In the meantime, the company has become one of the world’s largest commodity traders: in 2016, Trafigura had a turnover of $ 98 billion. 65 percent of this revenue comes from oil trade, the rest of the trade in metals and minerals.
Although Trafigura’s head office has been in Singapore since 2012, about 90 percent of sales still run through Trafigura Beheer BV in Amsterdam, and the company has more than 4000 employees in the Netherlands. According to Quote, Trafigura is the second largest tax evasion of the Netherlands.
Raw material traders like Trafigura originally made oil and other raw materials from A to B. But in the meanwhile, they do much more than that: they win the raw materials, process them into finished products and provide loans to other companies. For example, Trafigura has mines in Spain and Peru, ports in Colombia and Brazil, and provides credits and insurance. As a result, companies like Trafigura have a key position in trade in oil and other raw materials around the world.
Trafigura has been in regular interviews. In the Netherlands, the company became famous for the scandal with the poison ship Probo Koala. This ship, chartered by Trafigura Beheer BV, dumped toxic waste in the Ivory Coast. According to the Ivorian authorities, fifteen to seventeen killed, and about 30,000 people became ill. Trafigura arranged this case with the Ivorian authorities for about $ 198 million.
According to Reuters press office, Trafigura also provided oil to Iraq and Iran while those countries were under sanctions.
Last year, Angola produced most of Africa’s oil, even more than Nigeria. Although the country annually has around $ 36 billion in oil yields, according to the latest countdown, nearly one in three Angolans live in less than two dollars a day. Also, nearly one in three children are malnourished. This is an important part due to corruption. According to Transparency International, Angola is one of the most corrupt countries in the world. Only eleven countries in the world score worse.
Due to current low oil prices, inflation rose sharply this year. As prices rose and wages remained the same, basic needs for many Angolans became unprofitable.
Oil trader Trafigura set up companies for an Angolan former general in tax havens. Thus, the company can influence Angolan politics, experts say .