The 2013 Budget Trickery and the Looting in the TB Sanatorium
As the current economic crisis in Angola has deepened, citizens are finally beginning to ask how tens of billions of dollars in oil revenues have been spent. In its report on the 2013 state budget spending, the Court of Accounts sheds light on how many members of the government engaged in squandering and pilfering public funds.
The court carried out fact-finding visits to the Ministries of Construction, Health, Education, Transport, Energy and Water, as well as Urbanisation and Housing. The report will be discussed by the National Assembly next June, but Maka Angola is providing an exclusive preview of some of the disturbing findings.
At the top of the list is the Construction Ministry, which entered into contracts to the tune of US $2 billion without “prior authorisation from the CA [Court of Accounts], and which were not submitted to prior oversight” as required by law. The CA highlights the carelessness in the ministry’s management practices with a contract for US$80 million signed in 2006 for the rebuilding of the Lucala-Samba-Cajú-Camabatela-Negage road in Kwanza Norte and Uige provinces. In 2011 the same contract was increased to US$106.5 million, a “fact that contradicts the planned legal guidelines” according to the CA.
While the 2013 budget was already being implemented, the Construction Ministry added and implemented 22 new projects in defiance of the law, to a cost of US$ 333.6 million. The court cited the framing legislation of the State Budget (Law No. 1/10), which prohibits the creation of (new) programmes, projects or activities during the implementation of the budget. The same agency also identified a breach of the 2013 State Budget Act, on budgetary discipline and execution, which concerned the need for expenditure to be provided for in the budget and to be “befitting the financial programme and properly classified and to comply with the principle of economy, efficiency and effectiveness”.
The court also found the Urbanisation and Housing Ministry in breach of the law by carrying out projects not provided for in the budget to the tune of US$915.7 million. The tribunal used the same arguments as in the case of the Construction Ministry.
The investigations also reveal that unscrupulous characters are in charge of public goods in the Transport Ministry. This ministry signed contracts valued at US$156.1 million plus €90.8 million in contravention of the Law on the State Budget of 2013 and Presidential Decree 320/11 on the Rules of Budget Execution. The largest share of this, US$68,9 million was paid to the Brazilian company Odebrecht, while the second largest share, of €41,577,000 went to a Portuguese contractor. According to CA, both companies were contracted for the same project, and with the same terms of reference and tasks, for the building of the Catumbela International Airport.
According to the court , the Minister of Transports had violated the 2013 guidelines on budgetary discipline and execution, which prohibit “making variable spending with values linked to foreign currency”. The tribunal also noted the breach of the Presidential Decree on the Rules of Budget Execution, which forbids entering into contracts or spending in foreign currency with resident companies. Exception can be made to this rule only with the higher authority of the head of government, President José Eduardo dos Santos. The same decree also prohibits resident companies and those acting on their behalf from entering into contracts with non-resident companies with the sole aim of doing business in foreign currency.
The CA also reports that the Transport Ministry entered into contracts to the value of US$35.5 million without subjecting them to prior oversight as required by the law. This sum appears to include US$10 million for the acquisition of 240 buses from Auto-Sueco and Angolauto without legal authorisation.
The fact that minister Augusto da Silva Tomás remains in his post despite these revelations can be read in two ways. Either he had verbal authorisation from his boss, President dos Santos, to break the law and the presidential decree, or the president is purely and simply continuing to ignore the indiscipline, bad management and corruption on the part of members of his executive.
The Education Ministry completed contracts to the value of US$17.4 million in connection with the “Strengthening the Quality of Secondary Education” project and another called “Li-Acções Complementares”. According to the CA, contracts involving such sums of money should have first been submitted for oversight: “The same contracting parties did not comply with the conditions set out in point 11 of article 5 of Presidential Decree 309/10 of 29 December.” This refers to the article that prohibits entering into contracts in foreign currency with resident companies.
On the other hand, every year since the 2011 state budget, the Education Ministry has dedicated the exact amount of US$$1,570,392 for “a service delivery contract with the company LLT Ltd.” This contract has also never been submitted to the Court of Accounts (CA) for evaluation as required by law. It also contravenes the mechanism that prohibits making contracts in foreign currency with a resident company. The CA does not specify the nature of this contract.
The Energy and Water Ministry dismissed the CA’s legal comments. In the area of energy it mentioned the contract of US$6.2 million for reconstruction work on the Matala dam “in favour of the H3P/TILCA/MAXIPRO consortium” which was not submitted for the scrutiny of the CA as the law requires.
In the water sector, the tribunal notes one contract that was issued three times and two others issued twice, simultaneously, for the same job. For example, Cavaco Brothers – Sucursal Angola and Sela Group Ltd each benefited from contracts of US $2.4 million, while Opaia Construções Ltd received US $2.3 million all at the same time “with the same purpose to the contract and in the same location”. The tribunal does not identify the nature of the contract or the location in question.
Sela Group Ltd. was simultaneously involved in another duplication scheme with a contract valued at US$91.2 million, while Janfer Construção e Obras Públicas benefited from the same contract but only valued at US$ 1.9 million “with the same purpose as the contract and in the same location.” In this case too, the court is silent on the nature of the contract and the location.
In another case, the tribunal notes “the existence of two contracts signed on the same date in favour of Ambiáfrica S.A. to the values of 139.7 million kwanzas [US $1.3 million] and 144.1 million kwanzas [US $1.4 million]. Again, the nature of the contract and the location are not specified.
In a further case the tribunal notes “the existence of two contracts signed on the same date in favour of Aretech Solutions Angola Ltd, valued at US$324,119.87 and US$347,081.63, yet with the same purpose for both contracts”.
The hospital for looting
The backview of the Tuberculosis Sanatorium, in Luanda, which has been under repairs since 2004.
When it comes to the Health Ministry, the report highlights the rehabilitation of the Tuberculosis Sanatorium in Luanda. The work began in 2004 “and at present is not getting completed”. The Health Ministry has meanwhile promised that the rehabilitation of the hospital will be complete by 2016. So far, the appalling conditions of the hospital make it ideal as a set for a zombie movie.
Maka Angola has looked at all the annual state budgets since 2004 in order to calculate the ever-rising total of funds allocated to the rehabilitation project. We have compiled the table below, which shows that the hospital has been used as a secret feeding trough by Health Ministry officials. The annual budget allocations are “eaten” there by whoever is in charge. The funds budgeted for the project over the years amount to US$58 million.
Even the economic crisis, which has forced the government to slash 25 per cent of the 2015 budget, has not served to restrain dubious spending. The Health Ministry, headed for almost seven years by José Vieira Dias Van-Dúnem, continues to allocate funds to the never-ending rehabilitation project of the Sanatorium.
The table shows the budget allocations for the unfinished TB Sanatorium repairs, since 2004._580x338.jpg)
The table shows the budget allocations for the unfinished TB Sanatorium repairs, since 2004.
The tribunal makes clear that the issuing of its opinions “does not prevent the Court of Accounts from later evaluating the book keeping and holding public officials to account”.
Nevertheless, this threat by the tribunal is an anomaly in that the heads of the ministries responsible for such indiscipline and the tapping of public funds have not been held politically or criminally responsible. The president, who is also head of the executive, has kept many of these office holders securely in their posts. In the final analysis, corruption is the institution that rules Angola.