Unmasking Angola’s Diamond Giants
Filed Under: Business, World | Posted: 06/20/2011 at 3:38AM
Comments | Region: Angola
Much has been written about the subject of diamonds in Africa, from the plethora of the luxury jewel on the African continent to the human rights abuses that often surround the harvesting of diamonds.
What fewer people know is that diamond-rich countries like Angola survive by arranging complex business deals with resource-needy countries like China and billionaires such as Lev Leviev—a Uzbekistan-born Israeli-based real estate magnate and diamond merchant. Rather than contribute to Angola’s Gross Domestic Product and advance the country’s standing in the global economy, these business deals serve to help those that head Angola’s already lucrative oil companies collect even larger personal profits rather than directing funds to the government and Angola’s citizens.
Lev Leviev’s close ties with Angola’s central government allowed him to gain primary control of the country’s rough-diamond supply circa 2000, according to a profile of Mr. Leviev published in New York magazine. China is where Lev Leviev and Angola collide, via a business called China Sonangol—a joint venture between Angola’s state oil company Sonangol and Hong Kong-based private Chinese investors in the China International Fund. China-Sonangol is part of the 88 Queensway Group—a group of companies named after the address of the building in Hong Kong where they are registered, and which the U.S. government suspects is “nothing more than a cover for activity conducted by the People’s Republic of China’s foreign intelligence.”
Headed by chairman and CEO Manuel Vicente, Sonangol is described in news sources as one of Africa’s “least transparent oil companies.” Case in point, research into the corporate structure of China Sonangol reportedly revealed links to the Chinese state and its agencies. China Sonangol is said to have a “ruthless business style in Africa” that is “reminiscent of some of South Africa’s mining conglomerates,” and to work in alliance with Lev Leviev, who’s regarded with “great suspicion by established industry leader De Beers.” It is through Lev Leviev that China Sonangol bought an 18 percent share in Angola’s largest diamond consortium, Catoca.
A May 31, 2011 news story published on industry website Mining.com reported that Lev Leviev sold his 18 percent stake in Angola’s Catoca diamond mine to China’s Sonangol International for $400 million, having acquired the stake in Catoca in the 1990s for only $20 million. The deal is slated to be wrapped up in June 2011 when Sonangol will become the first Chinese company to own part of a diamond mine. Last year, Catoca had $527 million revenue from rough diamonds and reported a net profit of $111 million.
The end result of transactions like Lev Leviev’s profitable sale of shares in Catoca equates to Chinese intelligence gaining an increasing foothold in Angola, not to mention the United States, where the 88 Queensway Group has acquired a significant amount of property. And if history repeats itself, it looks like the future holds more in store for China and Angola. In April 2011, Chinese Vice President Xi Jinping met with Sonangol’s Manuel Vicente, calling on the two sides to work together to “further enrich the Sino-Angolan strategic partnership.” Unfortunately, rather than enriching underdeveloped countries like Angola, these business deals solely benefit the world’s most powerful CEOs.