Jean-Claude Bastos de Morais denies conflict of interest as Paradise Papers show he stands to benefit from investments
The coast of Cabinda is a mass of cranes, lorries, excavators and
high-visibility jackets: all the hallmarks of a construction boom. It is
a remarkable transformation for Angola,
which endured decades of civil war that only came to an end in 2002.
Slowly being assembled on the coastline is Port of Caio, an ambitious
deep-sea harbour project that reflects a vision of the country’s future
as a beacon of prosperity on the west coast of Africa.
Giving an interview
in the middle of the construction zone is Jean-Claude Bastos de Morais,
who is describing how the port will benefit the whole of Angola. As the
owner and manager of the facility, Bastos and his company also stand to
Bastos recounts how after personally spending about $70m (£53m) on
preliminary costs, mostly for various technical studies, “we then looked
for a strategic long-term partner who could help us in the next phases
of this investment”, and as a result, “we invited the sovereign wealth
fund of Angola to invest”.
Although undeniably true, it is an answer that neglects to mention
that the cash of the Angolan sovereign wealth fund invited to invest in
his deep-sea port is managed by a company called Quantum Global, owned
and controlled by Bastos.
He also stands to benefit in other instances, because the investment is one of at least four identified in the Paradise Papers in which Angolan funds managed by Bastos were invested in assets in which he held an interest.
Bastos does not dispute any of this: indeed, in a
letter to the Guardian, he argued that as a shareholder in the
investments, his goals were aligned with those of the fund, and he also
volunteered that new investments were currently under discussion.
“Due to ongoing discussions with various stakeholders to develop new
investment projects where I directly own a stake, I can’t disclose new
details at this point in time,” he said.
However he objected to any characterisation of the above as conflicts
of interest: “We do not view these investments as conflicted. We view
these investments as having aligned interests. All shareholders’
interests are aligned for the growth and ultimate success of every
Though perfectly legal, such arrangements raise uneasy questions
about public accountability, particularly in Angola, where the ruling
elite, and those with whom they choose to surround themselves, have been
able to accrue the most extraordinary private wealth while ordinary
citizens suffer grinding poverty.
José Eduardo dos Santos, the country’s president from 1979 until earlier this year, is the father to Africa’s richest woman, Isabel dos Santos, whose estimated $3.4bn fortune is likely to grow after her father appointed her to run the state oil company.
By contrast, the outlook for ordinary Angolan women is bleak: the
maternal mortality rate is one of the world’s highest at 610 per 100,000
births. Meanwhile, 20% of children die before the age of five, most of
them from malnutrition.
Bastos believes venture capitalism represents a solution to Angola’s
challenges. Born in Switzerland in 1967, he describes how his heritage
inspired him to apply his talent for the world of finance to the
challenge of African development.
“Growing up, I had promised my late Angolan grandmother that I would do my part to give back to Africa,” he says on his website. “I have made it my life’s focus to fulfil that promise.”
He appears to have committed significant personal resources towards
this end, creating the African Innovation Foundation, which awards
annual prizes to inventors, as well as the African Law Library, which
provides free, easy access to legislation.
In 2012, Dos Santos announced the formalisation of the Fundo Soberano de Angola
(FSDEA), a $5bn sovereign wealth fund that would “promote growth,
prosperity and social and economic development across Angola”. Appointed
as chairman of the fund’s board of directors was José Filomeno dos
Santos, 34 – the president’s son.
Selected to manage the fund’s endowment was Quantum Global. Little
known outside its role managing investments for the Angolan central
bank, Quantum received the contract without competitive tender.
This was not uncontroversial: critics observed that Bastos had
previously founded and managed Angola’s first investment bank, Banco
Quantum Capital, where the president’s son was appointed as a director
(he resigned the position and sold his shares upon becoming FSDEA
chairman). The two men are said to be friends, and Bastos has been described as a “mentor” to the younger Dos Santos.
Bastos denied that his relationship with the former president’s son had played any role in the appointment.
“The true reason for Quantum’s selection was that it performed
extremely well on an investment management mandate for the Angolan
central bank during the recession,” he said. The FSDEA said Quantum had
been selected “because of its outstanding performance on previous
mandates with the Angolan authorities”.
$3bn assigned to Quantum was divided into seven funds for different
types of investment including infrastructure, hotels and timber.
In 2014, during which only two of the funds were active for seven
months, Quantum received management fees of $29m. For the same period,
$13m appears to have been paid in dividends to QG Investment Ltd, a
company incorporated in the British Virgin Islands and owned by Bastos.
“As far as the payments to me are concerned, I am earning – as any other
shareholder – the dividends out of the distributions of my companies,”
He said Quantum was compensated according to industry standards and
all fees had been properly disclosed and audited by Deloitte.
The internal mechanics of Quantum were that for each of the seven
funds, an “investment committee” staffed by Bastos and others would
advise on investments. It is the minutes of those investment committee
meetings, contained in the Paradise Papers,
that reveal that on at least three occasions besides Port of Caio,
Bastos’s firm decided the money would be invested in projects in which
he held an interest.
In 2015, it was decided that the hotel fund would invest in the High
Tech Tower in the centre of Angola’s capital, Luanda. Architectural
proposals for the project are breathtaking: two futuristic towers,
intended to be the country’s tallest buildings upon completion, stand
atop a planned four-storey shopping centre.
According to a signed document in the Paradise Papers, the hotel fund
agreed to spend $157m to buy into the project, $100m of which was in the
form of assumption of debt already incurred by another project investor
called High Tech Tower One Ltd. The remaining $57m would be paid in
cash instalments once HTT One received the rights to the land on which
the project would be built, this time from yet another company called
Afrique Imo Corporation SA. The beneficial owner of both HTT One and
Afrique was Bastos.
In another project, the committee decided in December 2014 to recommend
an investment in a proposed three or four-star hotel in Cabinda, near
the Port of Caio development. A total of $20m would be spent to enter an
investment agreement alongside a company called Messo Mi Tchoa SA. That
company’s owner is unknown, and there is no evidence that it belonged
to Bastos. However, the Paradise Papers show he abstained from voting on
the investment on the grounds that he held a “conflict of interest”. More...