Over the past few months, the French media has been smacking its lips over juicy revelations from what has been dubbed The Angolagate scandal - a series of complicated oil for arms deals. It is easy to understand the media interest. The cast of characters being sucked into the scandal is impressive enough - former US President Bill Clinton, his wife Hillary - now a New York senator, Mark Rich - on the wanted list in America before being pardoned by Bill Clinton, Francois Mitterrand’s son, Jean-Christophe -currently out bail, Angolan President Dos Santos, and the principal actor, the flamboyant Pierre Falcone currently serving a prison sentence in France.

The story begins in 1992 in Angola. A fragile cease-fire had led to presidential elections, duly won by Dos Santos. The defeated candidate, Unita leader Jonas Savimbi had cried foul. He tore up the 1991 Bicesse peace agreement and war resumed.

The resumption of the war came at a critical moment for the ruling Movement for the People’s Liberation of Angola (MPLA), which had operated as a single party since independence in 1975.

The economy was in a downturn, the military morale was low and the government armoury was largely depleted. On top of that, most of the Cuban soldiers who had fought alongside the MPLA troops had left the country in the wake of the Bicesse Peace Agreement.

The major headache for Luanda was that the Bicesse Peace Accord included a United Nations ban on arms sales to both sides. It was lifted in October 1992 by Russia, the United Kingdom and partially by United States - but France continued to prohibit the sale of arms to both sides in the civil war.

Enter the French-Brazilian entrepreneur extraordinary - Pierre Falcone and his partner, the Israeli-Russian businessman Arkadi Gaydamak. They came to make an offer which they knew Luanda could not refuse.

Between 1993 and 1997 they arranged the supply of Russian made weapons (including combat helicopters) by the Slovak ZTS-Osos company in an arms for oil deal worth an estimated $600m.

Eyebrows were beginning to be raised. The deal was worth one third the 1994 Angolan national budget. Angola’s human development indicators (literacy, infant mortality, etc) were then and remain, among the lowest in the world. In addition, most of the arms supply took place after the Luanda government and the UNITA rebels had signed the Lusaka Peace Agreement of November 1994.

Jonas Savimbi used these arms procurements and others from the UK, China, Russia and Brazil as pretext for refusing to demobilise his army. He also claimed that Luanda had not fulfiled its part of the demobilisation condition. The Lusaka Peace accord was effectively dead.

The war recommenced in full fury in late 1998. The UN, which had launched a much publicised campaign against ?conflict-diamonds’ sold by the UNITA rebels to finance their war effort, ignored the role of oil in financing the Angolan army.

Angola was not ZTS-Osos’ only African client. Cameroonian officials confirmed French media reports in early 2001 that it had also imported weapons from the Slovak company in 1994, during a border conflict with Nigeria. But the same Cameroonian sources claim there was nothing illegal about the deal, also mediated by Pierre Falcone.

In Angola’s case, the situation was different. Falcone is a French citizen and his oil-backed operations aimed at facilitating the purchase of weapons for Angola were made with the financial support of the French bank, Paribas. For both these reasons, he should have asked for the French Defence and Foreign Affairs Ministries for permission before going ahead with the deals. That he did not is why the French ordered his arrest last December and held him at the La Santé prison in Paris

The French judiciary has other charges against the French-Brazilian jet-setter.

He was also involved at the time with the French government’s security equipment export company Sofremi, which was under the Former Minister of Interior, Charles Pasqua.

Ministry searched

Authorities are currently examining charges that Sofremi was involved in the arms for Angola dealings, and are also investigating allegations that Falcone helped Luanda to acquire sophisticated, unlicensed French-made surveillance systems. Africa Confidential, the London based newsletter, reported that this equipment enabled the Angolan military to track down the coordinates of Savimbi’s satellite phone. On one occasion, an attempt was made to guide a MIG fighter on a mission to kill the UNITA leader.

To make matters worse, Falcone failed to declare the proceeds from the deals to the French tax authorities, and still owes them about $160m in unpaid taxes according to French press reports.

In another twist to the plot, French investigators began looking for links between the Falcone case and a $1.8m transfer from Falcone’s company, Brenco International, to the late Francois Mitterrand’s son, Jean-Christophe, who between 1986 and 1992 acted as his father’s adviser for African Affairs.

Jean-Christophe Mitterrand was jailed by examining magistrates for two weeks in late December and early January, and later released on bail. He faces charges that he received the cash for using his influence and contacts to help Falcone secure the Angolan contracts. While he admits that he did receive the money, paid into a Swiss bank account, he denies any link with the arms deals.

The French courts are also investigating a $200,000 transfer by Brenco to a company owned by the former chairman of the European Bank for the Reconstruction and Development for Eastern Europe, Jacques Attali.

Attali admitted that the money had been transferred to his company, ACA, but said the money was used to finance a study on micro-credit projects in Angola, as requested by President Dos Santos.

But three months later, in March, the French juges d’instruction charged Attali with peddling influence and concealing illegally obtained funds. The prosecution believes that Attali arranged a meeting between Falcone’s lawyer, Alain Guilloux and French Foreign Minister, Hubert Vedrine. The motive, allegedly, was to ask Vedrine to persuade the Finance Ministry to soft pedal on Falcone’s tax evasion charges. Several letters from Guilloux to Vedrine were uncovered by police.

Attali was detained for a few hours on 8 March and released on bail the same day.

The latest but probably not the final episode in this investigation of the French connection occurred on 11 and 27 March when the French Foreign Ministry headquarters were searched by an investigating team after a letter from the Angolan President, José Eduardo Dos Santos to Védrine. was uncovered. The contents of the letter had not been made public at the time we went to press.

Dos Santos angered

The story which has been grabbing headlines in the French press since late 2000 has irritated Angola’s Dos Santos, who has himself become a target of the French judicial investigations. In February the French authorities examined Dos Santos’ accounts in several banks based in Monaco. Outraged, the Angolan President reacted angrily when receiving credentials from the new French ambassador in Luanda, Alain Richard.

These developments, complained Dos Santos during his speech, amounted to a campaign of defamation which harm Angola’s reputation. Beyond that, Dos Santos paid an official tribute to Falcone, whose intervention, he said ?helped preserve democracy and rule of law in Angola?.

The Angolan President made it clear that, in his opinion, prosecutions against Falcone were not justified since the weapons were not made in France and did not even transit through the French territory. To substantiate that, Dos Santos confirmed that the weapons were bought direct from the Slovak ZTS Osos company.

Falcone’s actions were interpreted by the Angolan government as a ?confidence and friendship gesture from France?, said the Angolan President. This was why the Angolan government allowed ?a spectacular rise of the cooperation with France in the oil, economy and finance areas?, explained Dos Santos. He told the French ambassador ?friendship is like a plant which dries up if it is not watered regularly?. That statement was interpreted by Le Figaro, the Parisian conservative daily, as a warning that further media noise about the case and further investigations by the French authorities could be detrimental to French interests in Angola.

The problem is that there is little the French government can do to stop the Justice Ministry from investigating the case, although the French authorities would certainly be delighted if the judges showed a little less zeal. They feel squeezed between the press revelations on the one hand, and on the other hand the embarrassment caused by Dos Santos’ statement that Falcone acted with the blessing of the French authorities (both the Socialists and the Right) at the time of the arms deals (1993 to 1997).

Now, Dos Santos himself is in trouble at home. Late in February, the non armed opposition in Luanda asked for a parliamentary enquiry into the scandal. This is unlikely to take place since the government party retains a solid majority. But Dos Santos implicitly admitted that there was a problem, since he found it necessary to require the Defence Minister, Kundi Paihama, to provide explanations before the National Assembly.

Hillary’s campaign

Angolagate has also spreads its tentacles across the Atlantic. In a report titled Crude Awakening, the British NGO Global Witness had asserted that ?the financing of a $50m contract for the supply of East European weapons from the Czech Osos Praha Company and the Slovak joint stock company ZTS was arranged in 1993 by the Russian-Israeli businessman Arkadi Gaydamak and by his French-Brazilian partner Pierre Falcone, run through the Swiss oil-trading company Glencore founded by Marc Rich?. That was a year before Rich sold his shares in Glencore. At the time, neither Glencore nor Marc Rich denied the Global Witness report.

Gaydamak is currently on the run - the French having issued an international arrest warrant for him.

So far, neither Glencore or Marc Rich have been accused of violating Swiss or French laws, but the conclusion one may draw from the Global Witness report is that Marc Rich might have contributed to the Angolan government’s war effort. Should the US Justice Department find a connection between his ex-wife, singer Denise Rich, and her donation to Hillary Clinton’s New York senate campaign being linked to Bill Clinton’s decision to pardon Marc Rich over a purported $48m tax fraud, that would be more than embarrassing for the former First Lady.

The question is whether or not the former US President, who justified his decision to pardon Rich for his ?positive role’ in the Middle East peace process, can seriously ignore Marc Rich’s role in Angolagate. After all, Bill Clinton, if he wanted to, could have easily accessed all intelligence reports about such an important and controversial player on the world’s oil scene.

Even assuming that Clinton did not know, it will be even harder to convince those black voters who supported Mrs Clinton in New York that she and her husband were ignorant of Marc Rich’s role as a top sanctions busters during the South Africa apartheid era. According to a book, Apartheid’s Oil Secrets Revealed, from the Dutch-based anti-apartheid group Shipping Research Bureau, which monitored violations of the 1979 UN oil embargo, the Swiss-based trader chartered 149 out of the total 865 tankers spotted by the SRB calling at South African ports between 1979 and1993.

Since oil was at the time the only strategic product which South Africa lacked, Rich can be considered as having been instrumental in supporting the apartheid state’s war machine - unleashed against those who opposed this system both inside the country and in the frontline states. The SRB book provides evidence that Rich, who is Jewish and holds an Israeli passport, managed to sell crude from the Arab states of Saudi Arabia, Egypt, Iran, Oman, Qatar, United Arab Emirates and Brunei to South Africa, which had developed close military cooperation with Israel.

Rich also supplied crude from Nigeria, Gabon and the former Soviet Union, who were scrupulously supporting all anti-apartheid resolutions at the UN. Rich, whose operations are afforded an entire chapter of the book, was from the mid 1980s South Africa’s main coal trader, finding alternative markets to those of France and Denmark in Spain, China, Chile, Portugal and Turkey.

Mrs Falcones’ Donations

The US Democratic party do not have a monopoly on receiving funding from dubious characters connected with Angola’s oil barons or the former apartheid regime. The Republicans came close to becoming a recipient when, last January, the Arizona Republic daily revealed that a Utah-based health company, Essante Corp, controlled by Falcone’s wife Sonia Montero, a former Bolivian beauty queen, contributed $100,000 in campaign money to a Republican Party committee just days after President Bush’s election victory. However, the money was returned by Republican officials who became concerned after reporters from Newsweek asked them what they knew of Falcone’s arms-dealing background.

Bush and the Republicans just managed to escape a scandal, but have failed to explain just why Mrs Falcone was quite so generous towards them. In fact, prior to this particular donation, US Federal Election Commission records show that Sonia had already contributed a modest $2,000 to the Arizona Republican Party and contributed the same amount to the Democratic National Committee in May 1999.

A Stranger in Paradise

One explanation for the mystery donations is provided by Simon Taylor of Global Witness. He told African Business that Falcone had plans to organise a meeting between George W Bush and President José Eduardo Dos Santos in the French-Brazilian businessman’s $10.5m Scottsdale ranch located in Paradise Valley, the prestigious Arizona location.

In a radio broadcast on its Portuguese language service, the Voice of America reported that Falcone also tried to invite George W Bush to visit his ranch, which is described with some reason as ?a 1001 nights palace’ by the French satyric weekly Le Canard Enchain.

But a man called Justin Rose, whom the VOA described as the ?Falcone family’s spokesperson? rejected as ?ridiculous and insane? the allegations that the Falcones planned to influence the Bush administration’s Angolan policy or sought United States support to obtain Pierre Falcone’s release from a French prison.

With a projected output of 2mbd for 2005, equivalent to that of Kuwait or Nigeria, Angola is one of the world’s most attractive places for the world’s oil barons. The revenue from oil would go a long way towards improving the appaling living conditions of the majority of Angolans, but given the international web of crooked deals involved, it is unlikely that little more than a trickle will ever reach the people.

Angolagate comes at a very bad time for the Luanda government which has to foot a $2b bill (about one third of the GDP) to its creditors in 2001. Luanda needs to make a deal with the IMF to reschedule its $9.4bn foreign debt, half of which is in arrears.

The US, which imports 8% of its crude supplies from Angola, and France, whose companies are the main oil operators in the ?Kuwait of Africa’, are also keen to see a deal being struck between the IMF and Angola. But they may find it difficult to explain why multilateral and bilateral donors should be so generous with a country led by a regime involved in such a major scandal.

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