Part 2 :The Looting Machine Warlords, Oligarchs, Corporations, Smugglers, and the Theft of Africa’s Wealth....Incubators of Poverty

The Looting Machine 

Warlords, Oligarchs, Corporations, 

Smugglers, and the Theft of Africa’s Wealth 

By Tom Burgis

3 

Incubators of Poverty 

The chief of the border post let out another long sigh. “On attend.” The wait had already lasted hours. Not for the first time I was at the mercy of a temperamental fax machine. I was trying to cross the Nigerian border with its northern neighbor, Niger, where the official language changes from English to French. Someone in the visa section of Niger’s embassy in Nigeria had neglected to send some document or other to headquarters to authorize my visa, and faxing it over was proving complicated. I sat on the stoop of the border post, looking out over the scorched terrain that leads up to the Sahara. Goats, the hungry and the maimed shuffled between breezeblock structures, lashed by the swirling dust. Periodically the chief of the border post would make a call on his mobile phone to check whether I should be allowed to pass. Then he would resume his contemplative silence, speaking only to bemoan “this interminable heat.” The sun was melting the horizon to a shimmer. “On attend.” 

Whiling away the morning beside the taciturn border chief offered me an opportunity to observe one of the few effective institutions in this part of the world: the smuggling racket.1 Dozens of trucks were queuing to cross from Niger into Nigeria. Their contents seemed harmless enough: many contained textiles and clothing bound for the markets of Kano and Kaduna, northern Nigeria’s two main cities. 

Weapons and unwilling human traffic cross Nigeria’s northern border covertly. But the flow of counterfeit Chinese-made textiles has grown so voluminous that it would be impossible to keep it secret even if secrecy were required to ensure its safe passage. All the same, most of the shipments go through under cover of darkness. Those who control the trade  engage in highly organized “settling,” or bribing, of the border officials, smoothing the textiles’ transit. 

The Nigerian stretch is just the final leg of a 6,200-mile journey. It begins in Chinese factories, churning out imitations of the textiles that Nigerians previously produced for themselves, with their signature prime colors and waxiness to the touch. By the boatload they arrive in west Africa’s ports, chiefly Cotonou, the capital of Benin, a tiny country beside Nigeria that has, like Montenegro in Europe or Paraguay in South America, become a state whose major economic activity is the trans-shipment of contraband. At the ports the counterfeit consignments are loaded onto trucks and either driven straight over the land border between Benin and western Nigeria or up through Niger and round to the border post with its taciturn chief. The trade is estimated to be worth about $2 billion a year, equivalent to about a fifth of all annual recorded imports of textiles, clothing, fabric, and yarn into the whole of sub-Saharan Africa.2 

Smuggling is a long-established profession here. Before colonial cartographers imposed the frontier, today’s smuggling routes were the byways of legitimate commerce. The border marks a delineation of what used to be British and French territory in west Africa, but no natural division of language or ethnicity exists. People on both sides speak Hausa, a tongue in which the word for smuggling, sumoga, strikes a less pejorative note than its English equivalent. The textile smuggling bosses are the oligarchs of the northern borderlands. For those in their pay, they can be generous benefactors. 

Not being a roll of fake west African fabric, I was not a priority for processing. Eventually the border chief ’s phone rang. Off we trundled, past trucks with “Chine” daubed on the side, a brazen reference to their cargo’s origin. Another name went unrecorded, that of the trucks’ proprietor. Few dare to speak it openly here. But further to the south, where the truckloads of counterfeit textiles have helped to wreak economic destruction, I had heard it whispered a year earlier. 

A country of 170 million people—home to one in six Africans, four main ethnic groups subdivided into hundreds more speaking five hundred  languages and bolted together on the whim of British colonial administrators; split between a north that largely follows Allah and a south more partial to the Christian God and animist deities; hollowed out by corruption that has fattened a ruling class of stupendous wealth while most of the rest lack the means to fill their stomachs, treat their ailments, or educate their children; humiliated by a reputation for contributing little to human endeavor but venal politicians and ingenious scams—Nigeria has paid quite a price for the dubious honor of being the continent’s biggest oil producer. 

The crude began to flow in 1956, four years before independence from Britain. Almost immediately it started to ruin Nigeria. Two-thirds of the newfound oil reserves lay within the territory that secessionists claimed for themselves when they declared the Republic of Biafra in 1967, raising the stakes in the standoff between the ethnic blocs vying for power in the young nation. Between five hundred thousand and 2 million Nigerians died in the civil war that ensued, many from starvation. Nigeria remained whole, but any hope that it might rise as a black star to lead an independent Africa dissipated as dictator followed ruinous dictator. Instead, it became a petro-state, where oil accounts for four in every five dollars of government revenue and capturing a share of the resource rent is a life-and-death struggle. 

The Niger Delta, the maze of creeks where the River Niger reaches the sea at Nigeria’s southern edge, proved to be a prodigious font of crude. Along with the offshore discoveries that followed, it made Nigeria a major supplier of oil to the United States and the fourth-biggest source of European oil imports. Few countries can claim to be so vital a source of the basic ingredient of the world’s oil-fired economy. Nigeria’s stocks of natural gas, estimated to be the eighth largest on the planet, have scarcely been tapped, but they already account for one in every twenty cubic feet that the European Union imports. 

The insidious effects of oil have permeated outward from the brutalized, despoiled, and destitute Niger Delta. I had been living in Nigeria for less than two weeks when I arrived in Kaduna. The city is the gateway between the Christian south and the northern half of the country, an expanse that stretches up to the border with Niger and used to form part of an Islamic caliphate that the jihad of Usman dan Fodio founded two hundred years  ago. Kaduna lies in the turbulent Middle Belt, prone to spasms of communal violence when patronage politics, dressed in the garb of religion or ethnicity, turns bloody. 

On a stifling Sunday morning a friend took me around Kaduna central market, a teeming grid of wooden booths. Many of the stalls were selling clothes. Some bore the misspellings that are counterfeiters’ inadvertent trademark: “Clavin Klein” read one shirt label. Others carried the equivalent of the appellation d’origine contrôlée badges that French vineyards and cheese makers append to their produce. “Made in Nigeria,” the labels declared. But they were fake too. Aike, a young trader from the East, told me he stocked up on bogus labels when he went north to Kano to replenish his supplies of lace. “Mostly everything is made in China,” explained another trader selling jeans. 

At Raymond Okwuanyinu’s stall I found rolls and rolls of the colored fabric that is used for fashioning a popular style of billowing trousers. Here there was no attempt at subterfuge. Raymond told me it was a matter of simple economics. Nigeria may be the largest source of African energy exports, but it generates only enough electricity to power one toaster for every forty-four of its own people. Billions of dollars assigned to fix the rundown power stations and the dilapidated grid have been squandered or pilfered. A privatization drive in recent years has raised some tentative hope of improvement, but for now Nigeria produces only half as much electricity as North Korea. Even those lucky enough to be connected to a functioning cable face the maddening task of negotiating with what used to be called the National Electric Power Authority, or NEPA (but known as Never Expect Power Anytime). It was rebranded as the Power Holding Company of Nigeria, or PHCN (Please Have Candles Nearby or, simply, Problem Has Changed Name). Most must make do with spluttering diesel generators. In a country where 62 percent of people live on less than $1.25 a day, running a generator costs about twice as much as the average Briton pays for electricity.3 

The crippling cost of electricity makes Nigerian textiles expensive to produce. Raymond, the Kaduna trader, told me he could sell trousers made from Chinese fabric at two-thirds the price of those made from Nigerian fabric and still turn a profit. Hillary Umunna, a few stalls over, concurred.  The government’s attempt to support the Nigerian textile sector by banning imports was futile, Hillary opined, his tailor’s tape-measure draped around his shoulders. “These things now,” he said, gesturing at his wares, “they say it is contraband. They can’t produce it, but they ban it. So we have to smuggle.” 

The cheaper price of smuggled garments relative to locally produced ones was good news, superficially at least, for the traders’ hard-pressed customers but less so for the employees of Nigeria’s textile industry. “It is a pitiable situation,” said Hillary, apparently oblivious to his and his colleagues’ role in their compatriots’ downfall. “All the [textile factories] we have here have shut down. The workers are now on the streets.” 

In the mid-1980s Nigeria had 175 textile mills. Over the quarter-century that followed, all but 25 shut down. Many of those that have struggled on do so only at a fraction of their capacity. Of the 350,000 people the industry employed in its heyday, making it comfortably Nigeria’s most important manufacturing sector, all but 25,000 have lost their jobs.4 Imports comprise 85 percent of the market, despite the fact that importing textiles is illegal. The World Bank has estimated that textiles smuggled into Nigeria through Benin are worth $2.2 billion a year, compared with local Nigerian production that has shriveled to $40 million annually.5 A team of experts working for the United Nations concluded in 2009, “The Nigerian textile industry is on the verge of a total collapse.”6 Given the power crisis, the near-impassable state of Nigeria’s roads, and the deluge of counterfeit clothes, it is a wonder that the industry kept going as long as it did. 

The knock-on effects of this collapse are hard to quantify, but they ripple far into the Nigerian economy, especially in the North. About half of the million farmers who used to grow cotton to supply textile mills no longer do so, although some have switched to other crops. Formal jobs in Nigeria are scarce and precious. Each textile employee supports maybe half a dozen relatives. It is safe to say that the destruction of the Nigerian textile industry has blighted millions of lives.

After I left Kaduna’s market my friend took me to meet some of those who had felt the industry’s collapse hardest. Sitting around on rickety desks in the half-light of a classroom beside the church where some of Kaduna’s Christians were loudly asking a higher power for succor, nine redundant textile workers poured forth their woes. Tens of thousands of textile jobs had disappeared in Kaduna alone, the mill hands told me. I had seen the factory where some of them used to work. The gates of the United Nigerian Textiles plant were firmly shuttered. Jagged glass topped the high walls, and a lone security guard kept watch, protecting the machinery within on the miniscule chance that it would someday whir into action again. No other living thing came or went, save for the yellow-headed lizards scuttling among the undergrowth. 

Father Matthew Hassan Kukah looked pained as he recalled the day when the factory, Kaduna’s last, had closed its doors the previous year. The hymns from his Sunday service had subsided. Like Archbishop Desmond Tutu in South Africa, Kukah is a figure of moral authority in Nigeria—and shares with Tutu a subversive sense of humor in the face of adversity. Kukah’s voice needles the mighty as few others can. The demise of Kaduna’s textile industry had drained the life from the city, he told me, sitting in a sweltering office above his sacristy and dressed in a simple black vestment. “We’ve gone backward twenty years,” he said. “Back in the seventies there were textiles, people were energetic. But that generation was not able to produce the young, upwardly mobile elite. That’s what their children should have been.” Kaduna’s impoverished inhabitants had retreated into their ethnic and religious identities. “Kaduna is now a tale of two cities,” said the priest. “This side of the river is Christians; the other is Muslims.” 

Kaduna’s decline was only one symptom of Nigeria’s descent into privation, Kukah went on. The national political class had abandoned civic duty to line its own pockets instead. The social fabric had been rent. “As a result of the collapse of the state, everybody, from the president down, is trying to find his own power, his own security. People are falling back on vigilante groups.” Violence had become the tenor of life. “Everywhere in the world the ghettos are combustible. The North is an incubator of poverty.” 

The former mill hands among Kukah’s congregation and Kaduna’s Muslims shared in that poverty: buying food, let alone paying school fees that even the dilapidated state-run schools charge, was a daily trial. The mill hands told me they had tried to hold a demonstration outside the state governor’s house, but the police had blocked them. The federal  government had repeatedly promised to bail out the industry, yet little assistance had been forthcoming. The more clear-eyed workers realized that, in any case, the game was up. Even if they could get the factories running again, Chinese contraband had so thoroughly captured the market that it would be impossible for the Nigerian operations to compete. And there was something that had accelerated the mill hands’ consignment to the trash can of globalization. Shuffling their feet and looking warily around for anyone who might be eavesdropping, the men murmured a single word: “Mangal.” 

Alhaji Dahiru Mangal is a businessman whose fortune is thought to run to billions, a confidante of presidents, a devout Muslim, and a philanthropist whose airline transports Nigerian pilgrims to the annual hajj in Mecca. He also ranks among west Africa’s preeminent smugglers. 

Growing up in Katsina, the last outpost before Nigeria’s frontier with Niger, Mangal received little formal education. More cosmopolitan Nigerian businessmen speak of him with a mixture of snobbery, envy, and fear. He got his start as a teenager in the 1980s, following his father into the import-export business, and he swiftly made the cross-border freight routes his own.7 “He is shrewd,” a northern leader who knows him told me. “He knows how to make money.” 

In the shadier corners of the workshop of the world Mangal found the perfect business partners. “The Chinese attacked at the heart of the industry: the wax-print and African-print segment,” a consultant who has spent years investigating—and trying to reverse—the slow death of Nigerian textiles explained to me. During the 1990s Chinese factories began copying west African designs and opening their own distribution branches in the region. “This is 100 percent illicit—but the locals do the smuggling,” the consultant went on. There are, he said, sixteen factories in China dedicated to churning out textiles with a “Made in Nigeria” badge sewn into them. For a time the Chinese material was of a much lower quality than Nigerian originals, but that gap narrowed as Chinese standards rose. The Chinese began to take control of the market, in league with Nigerian vendors. Mangal acts as the facilitator, the conduit between manufacturer and  distributor, managing a shadow economy that includes the border authorities and his political allies. Like many others who profit from the resource curse, he plies the hidden byways of the globalized economy. 

Mangal’s network of warehouses and agents stretches to Dubai, the Gulf emirate where much clandestine African business is done, and beyond into China and India. “You put it in his warehouse, and he will smuggle,” a top northern banker told me. “He controls the import of everything that requires duty or is contraband.” 

From his base in Katsina Mangal arranges the import of food, fuel, and anything his wealthy Nigerian clients might desire. But the staple of his operation is the textiles that have helped kill off the local industry. He is said to charge a flat fee of 2 million naira (about $13,000) per cargo, plus the cost of goods.8 In 2008 Mangal was estimated to be bringing about a hundred forty-foot shipping containers across the frontier each month.9 

Mangal’s fortunes have risen and fallen with Nigeria’s procession of dictators. When democracy—and, notionally, the rule of law—returned in 1999, he needed allies in the new order. He found one in Umaru Yar’Adua. The People’s Democratic Party, the affiliation comprising most of Nigeria’s political elites that would dominate the new dispensation, had chosen Yar’Adua to be the governor of Mangal’s home state, Katsina. Several northern leaders, businessmen, and government insiders told me Mangal was one of the most generous funders of Yar’Adua’s two successful gubernatorial campaigns, in 1999 and 2003. 

The master smuggler’s political largesse did not make him entirely immune, however. Around 2005 Olusegun Obasanjo, the former military ruler then embarking on his second term as elected president, decided to do something about smuggling and the damage it was causing to the textile industry. Obasanjo was told, according to a consultant who was involved in lobbying the president, that Mangal was “the kingpin.” Obasanjo dispatched Nasir El-Rufai, a northern-born minister with a reputation as a reformer, to try to get Mangal to clean up his act.10 El-Rufai told me he reached an agreement with Yar’Adua, the beneficiary of Mangal’s generous campaign funding and his political protector, and the smuggler would endeavor to transform himself into a legitimate businessman. 

El-Rufai recalled that Mangal asked him, “Why does Obasanjo call me a smuggler? I just do logistics. I don’t buy any of the goods that are  smuggled. I’m just providing a service.” Mangal told El-Rufai that he had a fleet of six hundred trucks plying the trade routes. He promised to switch into refined petroleum products, another time-honored money spinner for Nigeria’s politically connected trading barons. But the illicit textile trade continued, and Mangal’s operations remained under scrutiny. Nigeria’s Economic and Financial Crimes Commission, traditionally nothing more than a vehicle for settling political scores, had gained some teeth and a degree of independence under an energetic fraud-buster called Nuhu Ribadu. It began to take an interest in Mangal.11 But then the gods of Nigeria’s petro-politics smiled on the smuggler once again. 

When Obasanjo’s attempts to change the constitution to allow himself a third term as president were thwarted, he sought to maintain his influence from behind the scenes by plucking Yar’Adua from the obscurity of Katsina to be the People’s Democratic Party candidate in the 2007 presidential elections—tantamount, given the party’s dominance, to handing him the keys to the presidential palace. Mangal contributed to Yar’Adua’s presidential campaign, along with other backers who had also attracted the attention of the anticorruption squad. Not long after Yar’Adua took office they got their payback. Ribadu was forced out, and the anticorruption unit’s teeth were pulled. “The moment Yar’Adua became president [Mangal] had a blank check,” El-Rufai, whom Yar’Adua also cast into the wilderness, told me. It was another death knell for the north’s textile industry. 

Mangal and the rest of northern Nigeria’s crime lords can trace their hegemony—and the abandoned textile workers their strife—to the discovery of oil in the Niger Delta. 

In 1959, three years after Royal Dutch Shell struck oil in commercial quantities in the Delta, the company sank another well by the village of Slochteren in the northern Netherlands, in partnership with Exxon of the United States. They discovered the biggest gas field in Europe. A gas bonanza followed. It was not long, however, before the Dutch began to wonder whether the discovery had truly been a blessing. People outside the energy industry started losing their jobs.12 Other sectors of the economy slumped, following a pattern that The Economist would, in 1977, diagnose as “Dutch Disease.”

What happened in the Netherlands was not an isolated outbreak, even if a prosperous European country was better placed than many to withstand it. Dutch Disease is a pandemic whose symptoms, in many cases, include poverty and oppression. 

The disease enters a country through its currency. The dollars that pay for exported hydrocarbons, minerals, ores, and gems push up the value of the local currency. Imports become cheaper relative to locally made products, undercutting homegrown enterprises. Arable land lies fallow as local farmers find that imported fare has displaced their produce. For countries that have started to industrialize, the process goes into reverse; those that aspire to industrialize are stymied. Processing natural commodities can multiply their value four hundred–fold, but, lacking industrial capacity, Africa’s resource states watch their oil and minerals sail away in raw form for that value to accrue elsewhere.13 

A cycle of economic addiction sets in: the decay of the other parts of the economy increases the dependency on natural resources. Opportunity becomes confined to the resources business, but only for the few: whereas mines and oil fields require vast sums of capital, they employ tiny workforces compared with farming or manufacturing. As oil or mining suck the life from the rest of the economy, infrastructure that could foster broader opportunities—electricity grids, roads, schools—is neglected. 

In Africa Dutch Disease is chronic and debilitating. Instead of broad economies with an industrial base to provide mass employment, poverty breeds and the resource sector becomes an enclave of plenty for those who control it. Measured as a share of the overall output of the combined African economy, manufacturing has fallen from 15 percent in 1990 to 11 percent in 2008.14 Telecoms and financial services have boomed, but the path to industrialization is blocked off. During the very years when Brazil, India, China, and the other “emerging markets” were transforming their economies, Africa’s resource states remained tethered to the bottom of the industrial supply chain. Africa’s share of global manufacturing stood in 2011 exactly where it stood in 2000: at 1 percent.15 

There are pockets of Africa where manufacturing has taken hold, notably in South Africa, where platinum is used to make catalytic converters, and in Botswana, where a nascent cutting and polishing industry is retaining some of the value-addition process for diamonds. But far more  common are sights like the defunct General Motors assembly plant that used to hum outside Kinshasa or the uptown Luanda supermarket that boasts eight varieties of tinned peas, none of them homegrown despite Angola boasting enough arable land to cover Germany. The commodity boom of the past decade that has had hedge funds and investment analysts salivating over Africa’s economic prospects might even have made matters worse for those outside the resource bubble. While Nigeria was recording annual gross domestic product growth of more than 5 percent, unemployment increased from 15 percent in 2005 to 25 percent in 2011.16 Youth unemployment was estimated at 60 percent. 

A recalculation of Nigeria’s GDP in 2014, to take into account hitherto under-recorded booms in services such as telecoms and banking, made Africa’s most populous nation officially its biggest economy, surpassing South Africa. The statistical revisions did nothing to make Nigerians less poor, but it did halve the share of oil in GDP to 14 percent. “The new figures show that Nigeria is much more than just an oil enclave,” declared The Economist. 17 “Nigeria now looks like an economy to take seriously.” 

But oil has so corrupted Nigeria that, for those trying to make an honest buck, the outlook is dispiriting. Richard Akerele, a veteran British-Nigerian businessman from an old Lagos family whose latest endeavor has been to establish a new line of passenger suites at African airports, is of an almost unassailable cheery disposition. Yet even he is losing hope. 

“We have everything here, everything,” Akerele told me. “But our people are poor and our society is poor.” We were sitting at a waterside bar on one of the islands of uptown Lagos. The sun danced on the waters that separate the wealthy islands from the heaving mass of humanity on the mainland, with its profusion of crammed yellow buses, its cacophony of Afrobeat and generators, its defiantly sharp-suited slum dwellers. 

For Akerele’s generation there is something deeply poignant about what Nigeria has become. He was right—Nigeria has everything: fertile land, great natural wealth, universities that in the years after independence were the envy of Africa, an abundance of intelligence and ingenuity reflected in the ease with which Nigerian expatriates make headway abroad, Nobel Prize–winning novelists, and savvy businessmen. But oil has sickened Nigeria’s heart. Akerele, who worked for a while with Tiny Rowland of Lonrho, one of Africa’s most successful and contentious mining tycoons, The Looting Machine knows better than most what the resources industry had done to his country and his continent. 

One evening, when he and I were the last two still going at 3 a.m. after a merry evening attempting to skewer Nigeria’s ills, I asked Akerele what he foresaw for Africa. His expression, usually jovial, fell. “Africa will be a mine,” he said, “and Africans will be the drones of the world.” 

The electronics market at Alaba proclaims itself to be Africa’s biggest. It is a sprawling bazaar located close to the clogged road—known, improbably, as the expressway—that arcs through mainland Lagos where most of the city’s 20 million inhabitants live. On sale here are the trappings of a middle-class life: refrigerators and telephones, stereos and televisions. The traders are proud that they have brought the means for a comfortable existence within reach for more of their compatriots, not just the elite who used to be the market’s sole customers before Chinese-manufactured cheaper goods arrived. But, just as in the textile markets of the North, the omnipresence of foreign-made wares testifies to Nigeria’s near-total failure to develop a strong manufacturing sector of its own. 

As I wandered through the stacks of white goods, one of the traders drew me aside. Okolie was fifty-nine. He had spent thirty years selling radios and working out how Nigeria’s petro-politics shapes the dynamics of supply and demand. 

Business was slow just then, Okolie told me. It was May 2010: Greece was on the brink of defaulting on its debts, and I presumed the reason for the slowdown at Alaba was another symptom of the global economy’s travails. I was wrong. “Money is down,” Okolie explained, “since the president is sick.” 

Umaru Yar’Adua’s health had been weak since well before his elevation to the highest office. The state of the presidential kidneys was a favorite topic of conversation among taxi drivers and in the hotel bars where businessmen and politicians gathered. In the final weeks of 2009 Yar’Adua’s heart began to fail. He was rushed to Saudi Arabia for treatment, triggering political paralysis. 

Alaba market was struggling because the patronage system had ground to a halt. It was a perfect illustration of what Noo Saro-Wiwa, the daughter  of the executed Niger Delta activist Ken Saro-Wiwa, has called Nigeria’s “contractocracy.”18 The beneficiaries of the government contracts that spew Nigeria’s oil rent into the patronage system, both the favored contractors and the officials and politicians they cut in on the deals, would, under normal circumstances, spend some of their dubious earnings in places like Alaba market. But Yar’Adua’s long illness and the ensuing power struggle meant that contracts were not getting signed. The outflow of the looting machine had been temporarily blocked. But Okolie was not overly concerned. Soon the contractocracy would resume normal service. The public goods the contracts were supposed to deliver would not materialize—the subsidized fuel would be siphoned off, the potholes would go unfilled, the lights would stay off—but at least the shadow economy would be moving again. “If the government gives money to the contractors, money will reach us,” Okolie said. 

Okolie had grasped a central truth about how resource states work. Demanding their rights from their British colonial rulers, the American revolutionaries declared that there would be no taxation without representation. The inverse is also true: without taxation, there is no representation. Not being funded by the people, the rulers of resource states are not beholden to them. 

Taking Africa as a whole, for every six dollars that governments bring in from direct taxation—taxes on personal income and company profits— they bring in ten dollars from taxes on the extraction and export of resources.19 In Mali gold and other minerals account for 20 percent of government income; in Chad, an oil producer, resource revenues are more than half the total. In Nigeria the sale of crude oil and natural gas generates about 70 percent of government revenue; in newborn South Sudan the figure is 98 percent. Taxes, customs receipts, and revenues from the sale of state assets—the things on which industrialized nations rely to fund the state and that require the acquiescence of the population—matter far less than keeping the resource money flowing. Nigeria’s GDP recalculation in 2014 showed that, once taxes from the oil industry were stripped out, the government relied on the people for just 4 percent of its income.20 

The ability of the rulers of Africa’s resource states to govern without recourse to popular consent goes to the heart of the resource curse. The resource business ruptures the social contract between rulers and ruled—the  idea, shaped by political philosophers such as Rousseau and Locke, that a government draws its legitimacy from the consensual sacrifice of certain freedoms by the people in exchange for those vested with authority upholding the common interest. Instead of calling their rulers to account, the citizens of resource states are reduced to angling for a share of the loot. This creates an ideal fiscal system for supporting autocrats, from the Saudi royal family to the strongmen of the Caspian states. And data collected by Paul Collier, a professor at Oxford University who has spent his career studying the causes of African poverty, suggest a still more insidious effect. “The heart of the resource curse,” Collier writes, “is that it makes democracy malfunction.”21 

Collier estimated that once natural resource rents exceed about 8 percent of GDP, the economy of a country that stages competitive elections typically grows 3 percentage points more slowly than an equivalent autocracy’s economy. Collier’s research suggests that, in countries where a significant share of national income comes from natural resource industries, the purpose of elections is subverted. Normally electoral competition is healthy, ensuring some accountability for elected officials. Political parties can be turfed out of office. In the resource states that go through the motions of democracy, however, the rules governing both how power is won and how it is used are turned on their head. Greater ethnic diversity makes things worse, generating greater demands on the patronage system. “Where patronage politics is not feasible, the people attracted to politics are more likely to be interested in issues of public service provision,” Collier writes. “Of course, for societies where patronage is feasible, this works in reverse: democratic politics then tends to attract crooks rather than altruists.” Collier has a name for this law of resource-state politics: “the survival of the fattest.” 

Maintaining power through patronage is expensive. But self-enrichment is part of the prize. And all that stolen money has to go somewhere. Some of it is used to pay off patronage networks. Some of it buys elections. Much of it goes overseas: according to a US Senate report, kleptocrats from African resource states have used banks, including HSBC, Citibank, and Riggs, to squirrel away millions of plundered dollars in the United States alone, often concealing the origin of their wealth by shifting funds through secretive offshore tax havens.22 But some of it needs to be laundered at home.

An hour or two through Lagos’s suffocated thoroughfares from the electronics market at Alaba, on a leafy avenue close to the financial district, Bismarck Rewane oversees an office full of phenomenally bright young Nigerians trying to fathom the mysteries of the world’s twenty-sixth largest economy. Slick-haired and loudly pinstriped, Rewane is one of Nigeria’s shrewdest financiers and a trenchant critic of the misrule that has turned a country of immense potential into the sorry mess that it is. Some of the distortions that trouble him are glaring: the effects of oil on inflation, the exchange rate, and the financial system. But one of the biggest is almost undetectable: the effect of stolen money being injected back into the economy. 

“Money is trapped in the hands of those who need it for maintaining power through patronage,” Rewane told me. “It can’t be invested openly because it has to be hidden.” The effects of all this clandestine money sloshing through an underdeveloped economy are almost impossible to gauge. Because money launderers are seeking primarily to turn dirty cash into other assets as quickly as possible rather than to turn a profit or invest prudently, they are happy to pay more than a fair price for goods and services. That distorts everything, from banking to real estate. It furthers the accumulation of a country’s prime economic assets in the hands of the minority, just as Sonangol, the Angolan state-owned oil company that is the engine of the Futungo’s looting machine, has expanded into property, finance, and aviation. Then there is the dirty money that is simply parked in bank accounts or basements rather than stimulating the economy by circulating. When I asked Rewane how much money he thought was trapped, he laughed. “That’s the million-dollar question.” I asked him what the consequence of all this skulduggery was for the Nigerian economy as a whole. “When you have an imperfect economy where all money is dirty money, you will just have a completely dysfunctional economic arrangement.” 

Where legitimate business cannot thrive, crime flourishes. Mafias from New York to Naples work by creating scarcity and controlling supply. Northern Nigeria’s Mafiosi are no different. Dahiru Mangal might not have been responsible for the collapse of the electricity network and the crumbling roads that crippled the Nigerian textile industry—Dutch Disease and oil-fueled corruption took care of that. Neither is he the sole corrupter of the Nigerian customs service—Shell has admitted paying bungs worth $2 million between 2004 and 2006 to Nigerian customs officials to smooth the importation of materials for Bonga, its giant offshore oilfield, part of a wider scheme in which the Swiss group Panalpina showered bribes on Nigerian officials, some on behalf of Shell, booking them as “evacuations,” “special handling,” and “prereleases.”23 But Mangal has scavenged the terrain laid waste by Dutch Disease, further weakening northern Nigeria’s chances of recovery. 

From the early 1970s to the mid-1980s, during the period when two oil shocks drove up the price of crude from $3 to $38 a barrel, Nigeria’s currency appreciated dramatically.24 The shift in the real naira exchange rate against the dollar sent a chill wind through the incipient industrial base. “This is what killed industries and agriculture, in conjunction with the power crisis,” Nasir El-Rufai, the former minister, told me. “As industries were collapsing, people like Mangal saw the opportunity.” 

As a political economy took hold that was based on embezzlement and manipulating public office for private gain, government contracts for the upkeep of public goods that support industrialization—a functioning electricity system chief among them—were diverted to the cronies of the rulers of the day. The pattern was the same as in Angola or Congo: the more the non-oil economy withered, the greater the impulse to embezzle, perpetuating the cycle of looting. The deterioration of northern Nigeria’s textile industry created new demand for imported clothes and fabrics, strengthening Mangal’s stranglehold on the market and throttling the indigenous industry’s chances of resuscitation. 

The sheer scale of Mangal’s smuggling operation gave him sway over Nigeria’s northern borderlands, and many of the North’s senior politicians were, I was told, in his pocket. “So many people are benefiting from the [customs] service the way it is and they want to keep it like this,” Yakubu Dogara, a northern member of Nigeria’s national assembly who had chaired an inquiry into the customs service, told me.25 I asked him about Mangal’s role, suggesting he was at the center of the smuggling operation. “Some of the perpetrators are well known,” Dogara said. “Even the customs know them. But they are not empowered to go after them.” He paused. “The person you have just mentioned is untouchable, untouchable.” 

By funding Umaru Yar’Adua’s election campaigns, Mangal had ensured he had a protector at the top of the rentier class that uses Nigeria’s oil to maintain its hegemony. He had also made himself an important beneficiary of the People’s Democratic Party more broadly, securing a hedge against the ceaseless infighting. Mangal became Yar’Adua’s equivalent of Andy Uba. Uba, a Nigerian expatriate in the United States, had ingratiated himself with Olusegun Obasanjo as he came to power in 1999 and served as gatekeeper to the president, becoming a notorious presence in backroom oil deals. Mangal, like Uba before him, earned the moniker “Mr. Fix It.” According to a northern businessman quoted in a US diplomatic cable, Mangal took care of “anything filthy that Yar’Adua needs done.”26 Yar’Adua had grown up in the left-leaning current of northern Nigerian political thought, but he was sickly and either unable or unwilling to break the rule of Nigerian petro-politics, which equates high office with theft. He once described himself as the resident of “a gilded cage,” an apparent reference to the grasping coterie that surrounded him.27 

No sooner had Yar’Adua left the country for a Saudi Arabian hospital than the barons of Nigerian politics began to maneuver for position in the event he should never return. Within weeks Nigeria was in a full-blown crisis. An eruption of communal violence in Jos—a city, like Kaduna, in the combustible Middle Belt—added to the sense that Africa’s oil-fired juggernaut was hurtling toward disaster with no one at the controls. Militants in the Niger Delta abandoned a cease-fire and resumed a bombing campaign. Goodluck Jonathan, the vice president, was theoretically in charge, but he held little sway. The members of Yar’Adua’s inner circle, dubbed “the cabal,” clung to power. For the first, tense months of 2010, they held Nigeria ransom. 

The cabal included a handful of Yar’Adua’s trusted northern aides and two men whose presence illustrated the extent to which organized crime had infiltrated the highest levels of power: James Ibori and Dahiru Mangal. Ibori had come up through the ranks of the Niger Delta’s politics-by-AK47 to secure the governorship of Delta state, one of the oil region’s three main states. An imposing man with an unnerving gaze, he amassed an enormous fortune, a fleet of top-end cars, luxury homes, and a $20 million private jet.28 Although his attempt to secure the People’s Democratic Party’s vice presidential nomination in 2007 narrowly failed, he was said to have been a principal funder of Yar’Adua’s presidential campaign, along with Mangal. 

Well aware that even healthy Nigerian presidents have had their stints in office curtailed by putsches and assassinations, Yar’Adua’s court had hoarded the profits of power greedily, failing to dispense enough of the patronage that keeps rivals at bay. And when Yar’Adua was forced to go abroad—the Nigerian health system, like every other purveyor of public goods, having been left to rot—the cabal’s refusal to yield power began to imperil a larger project. As rumors of coup plots swirled, the kingmakers of the ruling party knew that it would only take one junior officer to decide that the civilians could no longer be trusted to govern, and control of the looting machine would be snatched from them. When the cabal staged a last-ditch attempt to pretend that Yar’Adua might recover by spiriting him back into the country in the dead of night and deployed troops onto the streets of the capital, Abuja, the stunt prompted an unusually blunt public warning from the United States, a major importer of Nigerian oil. “We hope that President Yar’Adua’s return to Nigeria is not an effort by his senior advisers to upset Nigeria’s stability,” said Johnnie Carson, assistant secretary of state.29 It was, but it failed. 

Fearing calamity on a scale they could not control—and rightly suspecting that Goodluck Jonathan would need to put the looting machine into overdrive and distribute the proceeds widely to compensate for his lack of authority—the big beasts of the ruling class lined up behind him. Jonathan was named acting president and, when Yar’Adua finally died, sworn in as president. 

Most of Yar’Adua’s allies were swiftly dislodged; their impunity evaporated. For James Ibori, the game was up. He fled to Dubai, where he was detained and extradited to face trial in London, a rare example of the British authorities going after the foreign loot stashed in the UK capital’s property market. Ibori pleaded guilty to money laundering and fraud and, in April 2012, was sentenced to thirteen years in prison. 

Mangal escaped such a fate. Unlike Ibori, he was not dependent on political favor and intimidation alone. He had Dutch Disease on his side, not to mention a battalion of Chinese counterfeiters, Nigerian textile distributors, and bent customs officials. Goodluck Jonathan had enough rivals  among the Machiavellian state governors and schismatic rebels within his own party that he knew better than to start picking fights with a smuggler who had proved himself a generous benefactor to the PDP in the past. Yar’Adua’s untimely death and Jonathan’s ascent had broken an unwritten rent-sharing rule within the party that rotates power between northerners and southerners, and the new southern president had little to gain by antagonizing an influential northerner. 

Even if the day comes when Mangal’s smuggling empire topples, it would be a monumental task to salvage what remains of northern Nigeria’s textile industry, let alone return it to its former glory. It is the structure of an economy in thrall to oil, more than any one crime lord, that condemned those mill hands to penury. The headline GDP numbers declare that Nigeria is booming, but the North is disintegrating. For the likes of Boko Haram, the northern Islamist terrorists linked to al-Qaeda who have proved more than a match for the security forces, the corruption of the state and the lack of economic opportunity serve as recruiting sergeants. 

The economic distortions of resource dependency create the conditions in which repressive regimes and their allies can thrive. Mangal’s operation is just one example of the kind of networks that emerge to profit from the enclave economies of Africa’s resource states. These networks vary by country, creed, and commodity, but they have some traits in common. They fuse private interests with public office; they operate in the underbelly of globalization, where criminal enterprises and international trade overlap; and they depend on the power of the oil and mining industries to create narrow economies in which access to wealth is concentrated in the hands of small, repressive ruling classes and those who bribe their way to favor. 

Some of these networks date back decades, to before African independence. Others have formed more recently. One in particular was born out of the greatest upheaval in Africa since the end of the Cold War, perhaps even since independence: China’s quest for the continent’s natural resources.

4 

Guanxi 

As the twentieth century drew to a close two decades of rapid economic growth were returning China, home to a fifth of humanity, to the ranks of the great powers. As they balanced the cautious introduction of something resembling a market economy with unstinting political control, China’s Communist rulers, led by President Jiang Zemin, decided that this was the moment to “go out.” Chinese state-owned companies were instructed to surge forth into the world. China’s economy was opening, and domestic companies would face foreign competition once China joined the World Trade Organization. China was hungry for new markets in which to sell the prodigious output of its factories, jobs overseas for its brimming workforce, contracts for its construction groups—and natural resources to feed the economy back home. Between the early 1990s and 2010 China’s share of world consumption of refined metals went from 5 percent to 45 percent, and oil consumption increased fivefold over the same period to a level second only to the United States.1 China’s economy was eight times bigger in 2012 than it was in 2000, and demand for commodities rapidly outstripped China’s own resources. 

When it came to navigating the resource industries, government-run enterprises based in Beijing were no match for Western groups that had been planting imperial flags in oil fields and mineral seams since colonial days. Middlemen were required—especially middlemen who could open the doors to the dictators and kleptocrats who controlled the riches of the soils and seabeds of Africa, home to some of the greatest untapped reserves of commodities. 

To capitalize, would-be middleman needed stocks of an intangible commodity that is highly prized in China. There is no direct translation that captures the meaning of the Mandarin word 关系, or guanxi. It connotes something like the Western ideas of connections or relationships or network, only far more pervasive. To have good guanxi is to have cultivated the personal ties that, though unwritten, carry as much force as any contract. At one level guanxi is a homespun maxim of etiquette: one good turn deserves another. Not to return a favor is a grave social transgression. The bonds extend beyond family to anyone who might be in a position to provide advancement. Like karma or air miles, guanxi is accumulated. When applied to politics and business guanxi can become indistinguishable from corruption or nepotism. Some of the recent slew of corruption scandals involving foreign multinationals in China, such as the slush fund allegedly run by GlaxoSmithKline to bribe doctors and officials and J.P. Morgan Chase’s alleged practice of giving jobs to relatives of the Chinese elite (currently under investigation by the American, British, and Hong Kong authorities), might be regarded as the overzealous pursuit of guanxi. When the Chinese caravan embarked for Africa, one ambitious but obscure man in his mid-forties had amassed enough guanxi to hitch a ride. 

Sam Pa has many names and many pasts. According to the US Treasury, which would put seven of his names on a sanctions list fifty-six years later, he was born on February 28, 1958.2 There is no authoritative version of Pa’s life, only fragments, some of them conflicting, many unverified. Some accounts place his birth in Guangdong, the Chinese province that abuts the South China Sea, possibly in the port city of Shantou. When he was still young his family relocated to Hong Kong, a short move but one that crossed the frontier between Mao Zedong’s People’s Republic of China and one of the last outposts of the British empire. 

From his start in Hong Kong, Pa traveled far and wide. Today he holds dual, possibly triple citizenship: Chinese and Angolan, as well as, according to the US Treasury, and perhaps on account of his roots in Hong Kong, British.3 He speaks English and, one of his business associates told me, Russian. He is a compact man, short with a middling build. His cheeks are rounded, his black hair is receding, and his chin and upper lip are occasionally decorated with a goatee beard. The fixed gaze of his eyes through rectangular spectacles and the thin smile he wears in photographs hint at steel within. He has an explosive temper but can be charming. “He’s a very serious and intense individual at times,” said Mahmoud Thiam, who met Pa as minister of mines in the west African state of Guinea.4 “He has a very ideological view about the role China should play in the world. But he can joke and be personable.” 

Hong Kong company records from the mid-1990s show Pa with a Beijing address as a director of a company called Berlin Limited, which had some Panamanian shareholders. In the late 1990s and early 2000s Pa and his companies were repeatedly sued over unpaid debts.5 Another company filing describes him as a commercial engineer. But Sam Pa was more than just a businessman trying to make his way—he was also a spy. 

A contact of mine, who has for many years been close to African intelligence agencies and arms dealers and whom I will call Ariel, first encountered Sam Pa around the late 1980s. “All his life he’s worked in Chinese intelligence,” Ariel told me. When Ariel met Pa he was based in the intelligence section of a Chinese embassy. He was young, ambitious, and capable. “He’s very serious,” Ariel said. “He knows what he’s doing.” Ariel told me that Pa was seeking to cultivate high-level contacts in Africa, where liberation movements, guerrilla armies, and despots were vying for power during the Cold War. 

Even the most dedicated analysts of China’s intelligence agencies acknowledge that outsiders understand their workings far less than they understand, say, the CIA or MI6.6 Since 1983, when the intelligence arm of the Communist Party of China was absorbed into the newly formed Ministry of State Security, the MSS has been China’s main civilian intelligence agency, the nearest equivalent to the CIA, focused above all on ferreting out foreign links to domestic threats to Communist rule. Like other Chinese institutions, including the Ministry of Public Security, which handles domestic intelligence and policing, the MSS is answerable both to the formal government and the overarching power, the Party itself. Its military counterpart is the Second Department of the People’s Liberation Army’s General Staff Department, better known as 2PLA. This unit employs many of the same tactics as the MSS and intelligence agencies the world over—running agents abroad, intercepting foreign communications, and conducting covert missions—but it reports to the Chinese military, the Party’s guarantor of power. 

Sam Pa’s precise place in the constellation of Chinese espionage is not clear. Chinese agents abroad have been exposed from time to time, and there has been an outcry in recent years over Chinese theft of Western technology and the audacity of Chinese hacking units, but the broader activities of China’s intelligence agencies remain veiled. I have been unable to verify many of the details of Pa’s career in espionage that have been related to me. By some accounts he worked as an asset for Chinese intelligence in the 1990s within the inner circle of Cambodia’s Communist ruler, Hun Sen, helping to repair relations between him and Beijing, which had supported the man Hun Sen overthrew, the genocidal tyrant Pol Pot. What is clear is that Pa mastered what many of his colleagues in the Chinese security services also attempted: translating connections made in the world of espionage into business opportunities. 

When Deng Xiaoping ousted the Maoists and began reforming China’s economy in 1978, he encouraged the military to bring in its own revenues through business, freeing up the national budget to fund development projects. By the end of the following decade the PLA’s network of twenty thousand companies had interests ranging from pharmaceuticals to manufacturing weapons and smuggling commodities. “The profits were meant to fund improved living conditions for ordinary soldiers,” writes Richard McGregor, a former Financial Times bureau chief in Beijing.7 “In reality, much of the money went into the pockets of venal generals and their relatives and cronies.” Those with influence over the PLA’s two arms companies, Norinco and China Poly, could make fortunes from exporting weaponry. “Lots of people from this time started to mix military matters with private business and grew fat—often literally,” Nigel Inkster, a China specialist who spent thirty-one years in MI6, told me.8 

Pa’s career in intelligence was intertwined with the trade in Chinese weapons. “Sam is a big player in arms in Africa,” said Ariel, who told me that Sam had worked with Norinco. “Sam’s contacts in Africa were made during the freedom movements, and now they are diversified into business,” Ariel went on. “It’s a closed club. The world of weapons is a tiny world—everybody knows everybody. You make money for the club, and you make money for yourself. Once you get very high you are allowed to have your own private businesses. Oil, diamonds, and weapons go together.” As globalization replaced ideology as the dominant force in geopolitics, the mission of foreign spooks in Africa evolved. “Today intelligence is not for starting wars,” Ariel said. “Today intelligence is for natural resources.” 

Sam Pa was not the first foreigner in Africa to use espionage and arms dealing as a gateway to Africa’s subterranean treasure. Viktor Bout took weapons into eastern Congo and coltan out.9 Simon Mann, an alumnus of Eton and the Scots Guards, went in search of oil revenues in Angola and diamonds in Sierra Leone at the head of a pack of mercenaries and staged a botched attempt at a coup in the tiny petro-state of Equatorial Guinea.10 Homegrown entrepreneurs have combined arms and resources too: in Nigeria, the ability of a kingpin of the Niger Delta called Henry Okah to supply weapons to the militants who roam the creeks made him a powerful figure in the rackets that feed on stolen crude. But Sam Pa had the advantage of being able to link himself not only to the arms trade but also to a transformation in the world economy. 

After twenty-five years of stop-start civil war, by the end of the last century Angola was broke. As his MPLA government bore down on the Unita rebels, José Eduardo dos Santos appealed to the world for funds to rebuild his shattered country. But the Futungo had already acquired a reputation for corruption. Western donors refused to cough up without reassurances that the money would not simply flow into the bank accounts and patronage networks of dos Santos and his circle. Infuriated, the president looked east. China had backed the rebels in the early phases of the Angolan conflict but later switched its allegiance to the MPLA. Dos Santos visited Beijing in 1998, four years before the end of the war, setting in motion talks that would lead to China’s first mega deal in Africa. 

For his chief emissary to Beijing, dos Santos selected his spymaster. As the head of Angola’s external intelligence service, an agency that reported directly to the president, General Fernando Miala was at the heart of the Futungo. A courteous man, he had grown up poor—“he knows what it is to play football without shoes,” an associate told me—before rising through the military. By the time victory over the rebels of Unita looked assured, Miala had concluded, in the words of his associate, “We have to make money because we have learned that money is power.” 

China had made previous forays into Africa, notably during the Cold War, but the scale of what it now envisaged was unprecedented. The first summit of the Forum on China-Africa Co-operation, held in Beijing in October 2000 to mark the formal start of the Sino-African courtship, was attended by ministers from forty-four African states and addressed by Jiang Zemin, the architect of China’s “go out” policy. The item at the top of the summit’s agenda reflected the scope of Beijing’s ambition: “In what way should we work towards the establishment of a new international political and economic order in the 21st century?”11 

In 2002 Chinese trade with Africa was worth $13 billion a year, half as much as African trade with the United States. A decade later it was worth $180 billion, three times the value of Africa-US trade—although still needing to double again to eclipse African trade with Europe.12 Two-thirds of China’s imports from Africa were oil; the rest was other raw materials, mainly minerals.13 The fates of the world’s most populous nation and the planet’s poorest continent have become wedded, with demand in the former helping to determine the economic prospects of the latter via the price of commodities. When China sneezes, Africa catches a cold. 

China was reshaping Africa’s economy through trade, but it was also investing directly. The biggest deals, replicated across the continent’s resource states, involved a cheap loan, typically in the single-digit billions of dollars, to fund infrastructure built by Chinese companies and to be repaid in oil or minerals. China’s grand bargains came to be known, after their prototype, as “Angola Mode.” The diplomacy of Fernando Miala and other senior members of the Futungo bore fruit on March 2, 2004, when China signed an agreement to lend Angola $2 billion to fund public works, with repayments to be made in oil.14 Over the years that followed, the credit line would grow to about $10 billion (like the rest of Angola’s finances, the details were closely guarded). Angola became the second-biggest supplier of oil to China, after Saudi Arabia. 

In February 2005 Zeng Peiyan, China’s vice premier, shook hands with dos Santos in Luanda and hailed Sino-Angolan friendship.15 Like similar  bargains China struck in central Asia and Latin America, the nine “cooperation agreements” that the two governments signed that day—covering energy, infrastructure, mining, oil exploration, and “economic and technical assistance”—were billed as mutually beneficial pacts. The rhetoric placed China’s agreements with Angola among the founding covenants of a new world order, in which long-downtrodden peoples could unite to ensure their advancement. This was a state-to-state bargain: Chinese finance would fuel Angola to rise from the ashes of war, while Angolan crude would fuel a Chinese transformation that was lifting many millions from poverty. But with much less fanfare, another deal had also been forged, not between two nations’ governments but rather between two shadow states. It was designed to harness Angola’s natural resources to serve the interests of the Futungo and a little-known group of private investors from Hong Kong. 

Sam Pa operates in the borderlands of the global economy, where state power and multinational business intersect. When China went to Africa, his horizons widened to contain vast new frontiers, groaning with oil, diamonds, and minerals. To stake his claim, Pa needed to deploy his guanxi, both in Beijing and Luanda—or, at least, he needed to be able to give off the impression that he enjoyed the blessing of some of the most powerful men and women in both cities. 

During his years in intelligence and arms-dealing Pa had built a network of contacts in Africa, including Angola. When Unita resumed its rebel campaign after the aborted elections of 1992, the MPLA rearmed massively for a final push for victory. Between 1996 and 2000 Angola bought a quarter of all arms sold to sub-Saharan Africa, excluding South Africa.16 The Futungo arranged arms shipments through French intermediaries in what became the “Angolagate” scandal. China was another ready supplier, although far fewer details of sales of Chinese arms in Angola have emerged.17 According to Ariel, Sam Pa was involved in brokering sales of Chinese arms to Angola around this time, a claim others also make but for which, like many of the details of the arms business, there is no firm confirmation. 

Early in 2003, a few months after dos Santos’s forces killed the rebel leader Jonas Savimbi and brought an end to the civil war, Sam Pa turned up at the Lisbon office of Helder Battaglia. Battaglia was born in Portugal,  but his family moved to Angola, then still a Portuguese colony, when he was a year old, and he thinks of himself as Angolan. During the war he had established himself as one of the biggest private investors in Angola. With a Portuguese bank, he had founded Escom, a conglomerate that amassed assets worth hundreds of millions of dollars in diamonds, oil, cement, and real estate in Angola as well as interests elsewhere in Africa and in Latin America. When Pa was looking to make the leap from spook to businessman, Battaglia was a prime potential partner. 

“They came to our office because they said we know a lot about Africa and Latin America, especially the ex-Portuguese colonies,” Battaglia told me years later of his first visit from Sam Pa and his associates.18 “They wanted to make a company with us to explore these markets. I said, ‘Listen, it’s fantastic, we would like to help because China is very important to the development of these continents, but we need to know more about you.’” 

When Pa took Battaglia to Beijing he staged a demonstration of his guanxi, including introductions to people from Sinopec, China’s giant state-owned oil company. “We were received in China very well,” Bataglia recalled. “In the airport we were received in the protocol area by local authorities, guys from Sinopec, everywhere. They say exactly what Sam Pa said to us: ‘Let’s cooperate because we lack experience in this field.’” This was Battaglia’s first time in China, and he was impressed. He and his colleagues ate dinner in the grand halls where Chinese officials receive visiting dignitaries. “Of course, I thought Sam worked for the government,” Battaglia recalled. “His background, I thought, was in the secret services, that he had a mission now to expand China into the world.” When I asked Bataglia whether he was aware of Pa’s arms dealing, he said he knew nothing of it, although Pa had told him that he had met dos Santos many years earlier. “Sam told me that ten or fifteen years ago he was in Angola. In that time, to go to Angola, it must be for official purposes.” 

Battaglia told me he never quite got the measure of Sam Pa. When I asked him what he had gleaned about Pa’s past, he said, “Until today I still don’t understand very well.” He added, “He’s very intense, very well prepared. He has a strong mind.” Battaglia agreed to go into business with Pa. Their partner would be Beiya Industrial Group, one of China’s sprawling state-owned conglomerates to whose chairman Pa had introduced Bataglia  in Beijing. They called the new venture China Beiya Escom and registered it in Hong Kong, where many Chinese companies seeking to do international business form their companies. 

The new venture’s first targets were in Latin America. Battaglia recalls that he and Pa flew to Caracas with a delegation of Chinese state-owned companies to court Hugo Chávez, the socialist, populist, anti-American firebrand who had won the 1998 presidential elections and embarked on a massive program of using revenues from Venezuela’s oil to fund health care, education, and public works. Pa, Bataglia, and their entourage wanted infrastructure contracts to be paid for in oil that would flow back to China. “Our goal was to implement the business they wanted to do, especially railways and construction,” Battaglia told me. 

Chávez announced that he had signed a letter of intent with Portugal and China for assorted projects worth $300 million, with Bataglia signing for Portugal and one of Sam Pa’s key collaborators signing for China. Venezuela’s president styled the agreement as a momentous development in a South American struggle to resist American domination. But little appears to have come of this agreement (though official ties and trade between Caracas and Beijing did subsequently flourish).19 Across the Atlantic in Angola, however, Sam Pa had another play in the works, which would pay off spectacularly. 

If Sam Pa was to capitalize on Africa’s incipient embrace of China, he would need to demonstrate to the rulers of Africa’s resource states that he enjoyed access to the highest levels of power in Beijing. For all the Communist Party’s image of disciplined hegemony, power in today’s China is not monolithic but instead spread between competing strongholds in the Party, the security services, and the increasingly mighty corporations that are state owned but are coming to resemble in their strategies and priorities the multinationals of the West, for whom the pursuit of profit trumps national goals. Pa’s network would need to reach all of them. 

By 2002 Pa had forged an alliance with the woman who would be his principal collaborator. A photograph of Lo Fong-hung shows a petite woman flashing a wide smile and wearing a chunky necklace, with her dark  hair in a bob. The details of her past are as fragmented as Pa’s, and, as with Pa, it is hard to differentiate between genuine connections and an ability to broadcast an impressive aura of guanxi that may overstate the extent of their relationships. Company filings in Hong Kong show no record of any business ventures in which Lo participated before her alliance with Pa. Mahmoud Thiam, the Guinean minister who would work with Lo and Pa years later, was one of several people who heard that she used to be a translator for Deng Xiaoping.20 Between them, Pa and Lo had “extensive business connections in Africa and South America” by the time they came together, according to a court filing years later.21 It was Lo who signed the Venezuela agreement. When she appeared with Hugo Chávez on Aló Presidente, his weekly broadcast, to trumpet the deal, the Venezuelan president told the nation that his guest came from a prestigious military family and was the daughter of a general.22 

Lo exudes an authority that many foreigners who have met her have found hard to decode. She was one of the first people to whom Sam Pa introduced Helder Battaglia in China. Bataglia, like Chávez, believed she was a general’s daughter. “Lo is very polite and a very important lady down there,” Battaglia told me.23 “She’s very calm.” Of her double-act with Sam Pa, Mahmoud Thiam recalled, “Everything indicated that he was the boss. But you got the sense that if he wanted to get rid of Lo, he could not.” 

A Western businessman who had dealings with Pa and Lo went for dinner with them and their subordinates in 2009 in a private room on the top floor of a Hong Kong skyscraper with magnificent views over the harbor. “It’s very clear during the dinner that [Lo] is the matriarch,” the businessman told me. “She is in all black. Sam looks like a guy off the street, with an open collar, like a ladies’ undergarment salesman. He didn’t act nefarious or powerful. The woman, Lo, acted strange.” There was nothing to indicate whether she was wealthy. “She didn’t give off any impression other than a sense of power. She just sits there and listens. Sometimes things are whispered to her. You absolutely get the sense that she was the power behind the throne, and Sam was just a regular Joe.” 

Lo derived a portion of her guanxi from her marriage.24 Her husband, Wang Xiangfei, is a serious businessman with a background in finance who has sat in some of China’s most prestigious boardrooms. He studied  economics at the elite Renmin University in Beijing and became an associate professor of finance there. When his wife and Sam Pa began to craft their business venture in 2002, Wang had already spent two decades at China Everbright, an important state-owned financial conglomerate. Wang joined Everbright in 1983, the year it was founded as an early embodiment of Deng Xiaoping’s desire for China to take its place on the international commercial stage. It grew to hold assets worth hundreds of billions of dollars, including its own bank. Wang served both at the parent group in China and at its subsidiaries in Hong Kong, holding a succession of senior posts. China Everbright’s management reports directly to the State Council, the highest organ of the Chinese government and the most powerful body in the land after the Standing Committee of the Politburo of the Communist Party, and its executives move in the upper echelons of China’s interlocking elites. Among Wang’s colleagues in Everbright’s senior staff was a man who went by the pseudonym Xueming Li. He was the brother of Bo Xilai, the Icarus of recent Chinese politics who soared close to the peak of power before the Beijing establishment purged him. 

Pa and Lo picked an auspicious name for the company that would form the keystone of the corporate network they started to build. On July 9, 2003, New Bright International Development Limited was registered in Hong Kong, one of thousands of companies incorporated there each month. Shortly after it was founded New Bright moved its registered address a couple of blocks across the Admiralty business district to Two Pacific Place, a skyscraper in a redevelopment of what had once been a barracks into smart offices and up-market shops at 88 Queensway. The first seed of the syndicate that would come to be known as the Queensway Group had been sown. 

New Bright had two shareholders. One, with 30 percent of the stock, was Lo Fong-hung. The remaining 70 percent was allotted to another woman, who lacked the credentials of her partner. Whereas Lo exuded regal authority stemming from her apparent connections to the military and Party elites and Wang boasted a glittering CV, Veronica Fung had only one discernible connection of note—to Sam Pa. 

Veronica Fung’s sole recorded business venture before 2003 that I was able to find in searches of company records was a 50 percent shareholding in an obscure company registered in Hong Kong in 1988 and dissolved in 2001, called Acegain Investments Limited. In the company’s annual filing for 1993 Fung gives a Hong Kong address and states her occupation as “secretary” and her nationality as British, this being four years before the British handover of Hong Kong. There is nothing to indicate what Acegain did as a company, but the filing does reveal the identity of the man who held the other 50 percent of its shares. His name is recorded as “Ghiu Ka Leung (Alias: Sam King).” He also goes by other names, not recorded on this filing, including Xu Jinghua, Tsui King Wah—and Sam Pa. 

I have been told that Veronica Fung’s relationship with Pa extends beyond business. She has been described as his girlfriend.25 Pa introduced Helder Bataglia to her in Macau, the former Portuguese outpost and casino hotspot beside Hong Kong, but Bataglia told me that Pa never revealed whether they were a couple nor whether she was the mother of his two children. By some accounts Sam and Veronica are married, although I have never seen a marriage certificate. (When I wrote to the in-house lawyer of China Sonangol, the Queensway Group’s joint venture with Angola’s national oil company, asking him to clarify whether Fung is a proxy for Pa’s business interests, he declined to answer the question.26) 

Sam Pa’s name appears nowhere in the shareholder records of New Bright nor in those of the dozens of other companies that would follow as the Queensway Group took shape. Officially he has no direct stake in the business he founded, though he does receive hefty payments from it and is afforded senior titles at Queensway Group companies in public statements by the foreign governments with which they do deals.27 Normally the allocation of shares in a new company is based on the amount of capital its founding investors put into it or to reward some vital service. But there is nothing to indicate that New Bright had any capital of its own. It was created, the events that followed would show, as the vehicle through which its founders would turn their guanxi into profit. Lo had her 30 percent share of New Bright to reflect her central role; it is hard to see why Veronica Fung was given the majority stake in the company at the apex of its corporate structure if not for her ties to Sam Pa. 

Between them, Sam Pa, Lo Fong-hung, and her husband Wang Xiangfei had sufficient connections to the Party, the military, the government, and business to give them the cover they would need to play the role of middleman in some of China’s most important foreign relationships. They just needed one more slice of guanxi: someone who could introduce them to China’s government-owned giant of an oil company, Sinopec. In 2002 Pa and Lo approached Wu Yang, a man who, by his own account, was a mover and shaker. The address he gave in company filings matched that of the Ministry of Public Security in Beijing, which is in charge of the police and domestic intelligence service, and was also said to house a reception office for the MSS, the foreign intelligence service.28 Wu, according to his own testimony quoted a decade later in a Hong Kong court judgment, had been “active in business circles in the Mainland for some time” and had “strong and useful connections in official circles and with various large companies,” including Sinopec.29 Wu agreed to make some introductions, for which he would be rewarded with a cut of the deal that resulted. 

In late 2003 the competition for Angola’s oil was heating up. The war had been over for more than a year. The world’s biggest oil companies were vying for access to what was becoming one of the planet’s most important energy frontiers, courting the Futungo and spending heavily to pull off the feats of engineering required to send drills into the reservoirs of crude locked deep beneath the seabed. Royal Dutch Shell ranked among the titans of the industry, but it had been slow to gain a foothold in Angola. When it decided to concentrate its investment on Nigeria and put its stake in an Angolan oil prospect up for sale in late 2003, there were plenty of eager bidders. The stake was 50 percent of Block 18, a concession area three times the size of London off the Angolan coast. BP, which held the other 50 percent and was the operator of the project, in charge of hiring the rigs and drilling the wells, had already discovered half a dozen oilfields containing about 750 million barrels of crude. It was shaping up to be another Angolan megaproject, involving the largest corporations in global commerce: that year Forbes rated Shell and BP as the world’s sixth and seventh biggest companies by revenue, respectively. An industry analyst predicted in the trade press that the successful bidder was “highly unlikely to be anyone other than the supermajors,” the half-dozen giants of the industry, including Exxon Mobil and Chevron of the United States and Total of France.30 

But times were changing. New powers were rising, with government-controlled oil companies like Petrobras of Brazil and Petronas of Malaysia that were beginning to jostle the venerable majors. In April 2004 it was reported that ONGC of India had agreed to buy Shell’s stake in Block 18 for $600 million.31 As the weeks went by, however, it emerged that Sonangol, Angola’s state oil company, was refusing to waive its right to purchase the stake itself. By the end of the year India had been gazumped by its gargantuan neighbor. Sinopec, the Chinese oil group that was growing into one of the world’s biggest companies as it snapped up assets overseas, bought Shell’s stake in Block 18.32 It looked like a simple case of one rising power outmuscling another for oil. But that was not the whole story. 

Around the time when Shell had made it known that it wanted to sell its stake in Block 18, a delegation from Luanda traveled to Beijing. The delegation held talks with some of the most powerful people in China, including Zeng Peiyan, the vice premier. Zeng had had an exemplary career in the Communist Party—training as an engineer, serving as a diplomat in the Chinese embassy in Washington, studying at the Central Party School where cadres are groomed for high office, and holding top posts in the Party organs for economic planning, including as deputy director of the commission on the construction of the immense Three Gorges Dam, before graduating to the Politburo in 2002 and the vice premiership in 2003.33 

The delegation who visited Zeng in late 2003 included Sam Pa, Helder Bataglia, and Manuel Vicente, the boss of Sonangol, Angola’s state oil company and the Futungo’s unofficial treasury.34 Pa’s ability to engineer a meeting with Zeng, an elder statesman, was one of the reasons Bataglia became convinced that his new Chinese business partner enjoyed the support of China’s rulers. “More official than that is not possible,” Battaglia told me. In 2005 Zeng would visit Luanda to unveil China’s state-to-state pact with Angola. But first Manuel Vicente and Sam Pa would craft a shadowy alliance that would put the newfound allegiance between China and Angola at the service of the Futungo and the Queensway Group.  

When Shell put its stake in Block 18 up for sale, Manuel Vicente saw an opportunity. As the head of Sonangol, Vicente had ambitions to make Angola’s national oil company into an international force like its counterparts from Malaysia and Brazil. To edge out the Indian bidder that was on the verge of buying Shell’s stake, however, Sonangol needed a financial backer. “We had no money,” Vicente told me, “and we looked for a partner in China to join us and to get that stake, and that’s why we formed this company. They got the loan, we paid Shell. It was, let’s say, 800 [million dollars] something. And after that, later on, we called Sinopec, another Chinese company, one of the biggest.”35 

The partner the Futungo found was Sam Pa and his newly formed Queensway Group. The company they formed was called China Sonangol. China was in the early phases of its thrust into Africa, and it was natural for onlookers to assume that China Sonangol was nothing more than what its name suggested: a partnership between the Chinese state and the Angolan national oil company. But Vicente and Sonangol opted not to deal directly with China’s government and its state-owned oil company, Sinopec. Instead, it went into business with an obscure private company registered in Hong Kong, with no assets other than its founders’ guanxi.36 

On its articles of association, the names of China Sonangol’s two shareholders are handwritten in a spidery script. The minority shareholder, with 30 percent, was Sonangol. The holder of the remaining 70 percent was a holding company owned by the Queensway Group, with Lo Fong hung as its signatory.37 China Sonangol was registered as a company in Hong Kong on August 27, 2004. Seven weeks later, on October 15, a company called Sonangol Sinopec International Limited was incorporated in the Cayman Islands, co-owned by Sinopec, Sonangol, and, although there is nothing in its name to indicate as much, the Queensway Group.38 It was Sonangol Sinopec International Limited that, by the end of the year, had secured Shell’s 50 percent stake in Block 18, with Sinopec arranging more than a billion dollars in finance for the new venture.39 

Manuel Vicente and Sam Pa had constructed an enclave within Angola’s oil industry, a corporate bunker within the already opaque walls of Sonangol. Through a network of obscure companies registered in Hong Kong, the Futungo had plugged itself into an offshore mechanism that channeled  the political power of Angola’s authoritarian rulers into the private corporate empire that Pa and his fellow founders of the Queensway Group had begun to assemble. The Futungo was swapping a Cessna for a Concorde, a trawler for a submarine, and it had poured some Chinese guanxi into the engine of its looting machine. 

With its new partners, BP pressed on with the development of Block 18’s oil fields, and in October 2007 the project began pumping two hundred thousand barrels of oil a day. In 2010 the Queensway Group’s stake in Block 18 was valued at just shy of a billion dollars.40 Its share of the crude was worth about $3.5 million every day.41 (BP declined to answer questions about its relationship with China Sonangol.) 

That was just the beginning. China Sonangol was inserted into a multibillion-dollar financing deal under which banks lent money to Sonangol, to be repaid from the proceeds of Angolan oil sales to Sinopec, once China Sonangol had taken its cut. Over the years that followed the initial Block 18 deal China Sonangol was awarded stakes in nine more Angolan oil blocks in its own right and three via its partnership with Sinopec, a portfolio of assets in one of the world’s fastest-growing oil industries worth billions of dollars. But China Sonangol does not drill wells or pump crude. It is a pipeline for petro-dollars—and a way for the Futungo to use Sam Pa and his associates as a vanguard in Africa’s resource states. “If there is an opportunity for some oil, they call us, taking into account this joint venture we have,” Vicente told me.42 

Isaías Samakuva, the leader of the Angolan opposition political party into which Unita has evolved since its defeat in the civil war, told me that China Sonangol was “the key to all the support that is given to Mr. dos Santos, to his rule” but that understanding how the Futungo drew wealth and power from the company was impossible because “everything is in the dark.”43 

Not quite everything is in the dark. Corporate filings in Hong Kong and elsewhere reveal glimpses of the Queensway Group’s corporate labyrinth. But, as in Dan Gertler’s deals in Congo, many of the trails vanish behind the thick walls of offshore finance. For example, Manuel Vicente and other senior Angolan officials have been named in company filings alongside founding members of the Queensway Group as directors of a company called Worldpro Development Limited. Its registration documents in Hong Kong give no indication of the company’s purpose and state that it is wholly owned by World Noble Holdings Limited, which is registered in the British Virgin Islands, a Caribbean archipelago where companies can keep their owners secret. Manuel Vicente does not dispute that he served as the corporate president of China Sonangol, but he told me he only did so as the representative of Sonangol’s stake in the company, not for any personal benefit. When he switched to his new role in the presidency, his successor as Sonangol boss took over the position in his place.44 

Unlike, say, the concealed stakes that Vicente and his confreres held in Cobalt International Energy’s Angolan oil venture, there is nothing in the reams of company filings that I have scoured to show that anyone in the Futungo directly benefits from a stake in the Queensway Group’s companies. Unita’s Isaías Samakuva was on to something, though: the extra layers of secrecy their arrangements with the Queensway Group provided are valuable in themselves to the rulers of Angola’s “cryptocracy.” They create new hidden passageways for Sonangol, a company at the center of a $32 billion hole in Angola’s public finances. Crucially, these passageways extend beyond Angola’s borders, winding through offshore tax havens and into the global business empire that the Queensway Group would build from its Angolan foundations, stretching from Manhattan to Pyongyang and penetrating other African resource states. A century after King Leo pold was declared the private owner of Congo, China Sonangol became a prime vehicle for those, foreign and African alike, who sought to make the continent and its natural riches their personal possessions. 

From the beginning scandals of financial impropriety swirled around the Queensway Group and companies to which it was linked. The chairman of Beiya Industrial Group, the Chinese state-owned railway company that had ties to Queensway companies in the early days, was jailed for life for bribery and embezzlement.45 In an early oil-trading venture in Congo-Brazzaville, another crude producer north of Angola, the Queens way Group went into business with companies connected to the ruling elite and that would be implicated in a scheme to use sham companies to hide oil revenues.46 Then, in 2007, the Queensway Group’s success nearly came to an abrupt end. 

To begin with, while China Sonangol was no more than an obscure vehicle buried in a complicated oil deal, the Queensway Group’s most prominent face was a company called China International Fund (CIF). Incorporated in Hong Kong in 2003, like its sister company, CIF was frequently mistaken for an arm of the Chinese state, partly because of its name and partly because, in the early years of China’s thrust into Africa, it was perfectly natural, if overly simplistic, to assume that every corporation run by Chinese people was subject to the diktats of the Communist regime in Beijing. Again, though, this was not the case. CIF was wholly owned by the founders of the Queensway Group—Lo Fong-hung; Sam Pa’s partner, Veronica Fung; and Wu Yang, the Chinese oilman who had made some useful introductions in Beijing.47 

CIF’s primary business is infrastructure. Mimicking the Chinese state’s grand pacts in Africa’s resource states, the Queensway Group undertakes, through CIF, to build bridges, airports, and roads, usually alongside oil and mining deals. In 2005 CIF organized a $2.9 billion loan to fund a plethora of contracts from the Angolan government, including a new airport, a railway, two highways, drainage works in Luanda, and a housing project.48 When I asked Manuel Vicente about China International Fund, he told me it was “completely separate” from the Chinese government’s multibillion-dollar oil-backed loans to pay for public works in Angola. But just as China Sonangol was nothing more than a middleman in the shadowy deals that secured its stakes in Angolan oil blocks, CIF was more of a broker than an actual contractor: much of the work was subcontracted to Chinese state-owned engineering and construction groups. 

A special office created in the presidency, the Gabinete de Reconstrução Nacional, or Office of National Reconstruction, marshaled CIF’s projects. Initially Fernando Miala, the president’s spymaster, had been the key man in the Futungo’s relations with the Chinese. When the money began to flow, however, the potentates of the Futungo began a tussle for control over these new, huge flows of cash. Miala was outflanked by General Kopelipa, the security chief and tycoon who would join Manuel Vicente  in questionable business deals, including the Cobalt one. Miala’s fall was swift. He was dismissed in February 2006 and, when he refused to attend his own demotion from general to lieutenant colonel, arrested on a charge of insubordination, accused of plotting against the president. 

At his trial in 2007 Miala broke the Futungo’s code of silence and claimed that Chinese funds meant to rebuild Angola were being abused. Adopting an affronted tone, Angola’s finance ministry, in a rare public statement, professed itself “stupefied” at accusations by former intelligence officials of “anomalies in the handling of the Chinese credit line.” The statement went on to enumerate the Chinese credit lines, public and private, and the various good uses to which they were being put. But it also revealed what had until then only been rumored: China International Fund was in financial straits. 

Through hubris on the part of Sam Pa, disputes with subcontractors, mismanagement by the special Angolan office tasked with overseeing Chinese loans, or, most likely, a combination of the three, CIF’s ambitious infrastructure projects ran into the sand. When contractors stopped being paid, construction work ground to a halt. In Beijing there was mounting concern that a chancer from Hong Kong was imperiling China’s relationship with an increasingly vital oil supplier. The Ministry of Commerce warned Chinese companies to cut back their dealings with CIF. In May 2007, according to a letter I obtained, the Hong Kong corporate regulator opened an investigation into allegations that Hangxiao Steel, the Chinese steel group to which China International Fund had awarded a $5 billion contract for a housing project in Angola, had engaged in stock market manipulations.49 

The backdrop to Pa’s travails was a series of upheavals in the highest reaches of Chinese power. In 2007 Chinese politics was dominated by jockeying ahead of that October’s National Congress of the Communist Party of China, a five-yearly transition that would anoint a new leadership of the Party and the nation. Zeng Peiyan, the vice premier to whom Sam Pa had secured access while he was brokering his first Angolan oil deal, was heading for retirement after the congress. Other big names exited the stage less gracefully. In June Chen Tonghai suddenly resigned as chairman of Sinopec, the state oil group he had helped to make into comfortably  China’s biggest company by revenues and for which the Queensway Group had served as the middleman in Angola. Sinopec’s official statement said Chen had departed for “personal reasons,” but within months he had been arrested and accused of “taking bribes to help others, including his mistress, make unlawful profits,” and leading a “corrupt life.”50 He was later convicted of accepting $29 million in bribes between 1999 and 2007 and handed a suspended death sentence, effectively a life term of imprisonment.51 New faces were in charge in the Party and at Sinopec. As ministries and regulators grew suspicious of the Queensway Group’s activities, the walls were closing in on Sam Pa. His guanxi was depleting rapidly. But he had one card left—and it was an ace. 

Whatever the misgivings about him in Beijing, Sam Pa had made himself an indispensable part of the Futungo’s looting machine. By using China Sonangol and China International Fund as intermediaries in oil deals and infrastructure contracts, Angola’s rulers had created for themselves a new, secretive vehicle to dabble in the oil trade and spray their petro-dollars across the globe. When Sinopec sought to disentangle itself from its joint ventures with Queensway companies in Angola—preferring to cut out the middleman—the Futungo rebuffed them. Alex Vines, whose research into the Queensway Group as head of the Africa program at the UK’s Royal Institute of International Affairs think tank at Chatham House has included interviews with top Chinese oil executives, told me that Manuel Vicente had informed China’s state-owned oil companies that if they wanted to do business in Angola, they would have to go through these joint ventures with Queensway Group companies.52 “Sinopec saw it as a short-term joint venture to get in but then realized they were locked in,” Vines said. When the US ambassador to Luanda privately asked his Chinese counterpart to clarify his government’s relationship with China International Fund, Beijing’s envoy was keen to emphasize that CIF was a “private company” and said his embassy had nothing to do with its dealings with the Angolan authorities.53 What CIF did enjoy, the ambassador said, was a “close relationship” with dos Santos. Sam Pa had become the gatekeeper to Angolan crude, and China was powerless to circumvent him. 

Before long the Queensway Group was, if not back in the fold, at least once more being tolerated by Beijing. China International Fund’s money troubles eased: in October 2007, in the same announcement in which it dismissed allegations of mismanagement of Chinese funds, Angola’s finance ministry revealed that it had issued $3.5 billion in government bonds to bail out CIF’s foundering infrastructure projects.54 The same month BP started pumping oil from Block 18, with the Queensway Group entitled to three in every twenty dollars of the profits. 

There are those who describe the Queensway Group as an angel of Angola’s salvation. “The official Chinese government wanted to do it, and the Angolan government wanted to do it,” said Helder Battaglia, who says he bowed out in 2004 once China, Sam Pa, and the Futungo were on their way to sealing their first deals.55 Battaglia said it was he who persuaded Sam Pa to focus on Angola and that he was proud of having helped to bring some much-needed investment to his adopted homeland. “For me it was fantastic because my main objective was to put the two nations together, because at that time no country was prepared to help them rebuild the country.” As for China Sonangol and China International Fund, he waved away concerns about their interests. “For me, it was a huge success. Of course, I wanted much more, but what they did is very important for the country. I don’t have any regrets. I am very proud of what I did. At the end of the war 150,000 people demobilized. They had to find work for them, to invest in reconstruction.” 

Battaglia went on, “For the average Angolan it has changed a lot—look at the roads, the railways, the bridges. There isn’t a more independent country in Africa than Angola. After China, they developed relationships all over the world. They are fiercely independent. That is very important for the self-esteem of a nation. The Angolans—they are very proud of what they are doing. Of course there are problems, but there are problems in Portugal, in the United Kingdom. When two countries like Angola and China come together to rebuild a country, a company in the middle is not a good thing for either.” 

But there was a company in the middle—the Queensway Group. A decade would pass following Sam Pa’s audacious first deals in Angola before a glimpse of the true nature of its bargain with Angola’s ruler emerged. 

In 2011 Wu Yang, the Beijing mover and shaker who said he had been granted a free stake in the Queensway Group holding company that held its interest in China Sonangol in exchange for helping to fix up the Angolan deal with Sinopec, sued Lo, Veronica Fung, and the holding company itself in Hong Kong. Wu claimed he was owed dividends worth about $40 million but that they had not been paid. He demanded to be able to go through the books of several Queensway Group companies to see where all its money was going. In 2013 a judge in Hong Kong granted him permission to do so. The judge’s account of Lo’s testimony in the case was revealing.

Lo accepted that the Block 18 project, which still yields 180,000 barrels of crude a day, was profitable, the judge wrote, but she said that the profits had been diverted to other uses.56 “The thrust of her evidence . . . is that the money received by China Sonangol went to fund projects in Angola undertaken to build goodwill. She does not identify any particular project or explain with whom [the Queensway holding company in question] was trying to curry favor. These projects were loss making and the implication of her evidence is that funding them used up the profits made on the Block 18 Project.” In short, Lo Fong-hung, Sam Pa’s principal collaborator in the Queensway Group, had acknowledged to a court that its flagship company was diverting money to “curry favor” in Angola. Putting it delicately, the judge went on, “I do not understand it to be in dispute that operating a company in Angola in accordance with what would be considered in Hong Kong to be best business and accounting practices would be very difficult and in some respects impossible.” 

The legal tussles between Wu Yang and the Queensway Group’s founders wore on. But by then Sam Pa had reached new heights. After turning his guanxi into the foundations of a corporate empire, he would use his Angolan experience as a model for deals with the repressive rulers of other African resource states.

next 

When Elephants Fight, the Grass Gets Trampled

122

notes

chapter 3: incubators of poverty 

1. The details of the smuggling operation are drawn from interviews with northern Nigeria politicians, officials, businessmen and textiles consultants in Abuja, Katsina, Kano, and Kaduna between 2009 and 2013.

2. The professional estimates I have seen for smuggling textiles into Nigeria range from $1.5 billion to $2.2 billion annually. The comparison with total sector imports is based on UN Conference on Trade and Development data for 2009. UnctadSTAT database, unctadstat.unctad.org. 

3. The poverty figure is from the World Bank for 2010, the most recent year available, http://data.worldbank.org/indicator/SI.POV.DDAY. 

4. Industry consultant, interviews with author, various locations, 2009–2013; Volker Treichel, ed., Putting Nigeria to Work: A Strategy for Employment and Growth (Washington, DC: World Bank, 2010), 52. 

5. Treichel, Putting Nigeria to Work, 52.

6. UN Industrial Development Organisation, “Textile and Garment Industry Sector Study in Nigeria: Technical Report for the Federal Government of Nigeria,” UNIDO, July 2009. 

7. Hassan A. Karofi and Lawal Ibrahim, “Dahiru Barau Mangal—Enter Yar’Adua’s ‘Mr-Fix-It,’” Daily Trust, August 10, 2008, http://allafrica.com/ stories/200808110682.html. 

8. Northern Nigerian sources speaking to US embassy officials, as reported in US Embassy Cable, “Nigeria: Kano Businessman Alleges Yar’Adua Corruption,” February 21, 2008, WikiLeaks, December 8, 2010, www.wikileaks.org/plusd/ cables/08ABUJA320_a.html. A textile industry consultant corroborates the estimated fee. 

9. Ibid. 9781610394390-text.indd 263 1/13/15 12:15 PM 264 notes to chapter 3 

10. Nasir El-Rufai, interview with author, Abuja, April 2013. 

11. Former EFCC official, interview with author, Abuja, April 2013. A November 2008 cable from the US embassy in Abuja, published in September 2011 by WikiLeaks, reported, “Ribadu also expressed concern for his former EFCC colleague and friend, Ibrahim Magu; he claims Magu is in danger because of his specific knowledge of the President’s relationship with Dahiru Mangal (an influential wealthy northern businessman who is currently under investigation and has ties to the Yar’Adua family and administration) and a money laundering operation which fronts as a legitimate company.” “Nigeria: Further Harassment of Former Efcc Chair Ribadu,” November 25, 2008, WikiLeaks, www.wikileaks.org/plusd/ cables/08ABUJA2307_a.html. 

12. Jan L. van Zanden, The Economic History of The Netherlands 1914–1995: A Small Open Economy in the “Long” Twentieth Century (New York: Routledge, 1997), 165. 

13. A Southern African Development Community study from 2000, cited in Economic Commission for Africa, “Minerals and Africa’s Development: The International Study Group Report on Africa’s Mineral Regimes,” November 2011, www.uneca.org/sites/default/files/publications/mineral_africa_development_ report_eng.pdf. 

14. UN Industrial Development Organisation (UNIDO) and UN Conference on Trade and Development (UNCTAD), “Fostering Industrial Development in Africa in the New Global Environment, Economic Development in Africa Report,” UNCTAD, July 2011, http://unctad.org/en/docs/aldcafrica2011_en .pdf. 

15. Ecobank, “Six Top Trends in Sub-Saharan Africa’s Extractives Industries,” July 23, 2013, www.ecobank.com/upload/20130813121743289489uJudJb 9GkE.pdf; UNIDO and UNCTAD, “Fostering Industrial Development in Africa in the New Global Environment.” 

16. “Equity in Extractives,” Africa Progress Panel, 2013, http://africaprogress panel.org/wp-content/uploads/2013/08/2013_APR_Equity_in_Extractives_ 25062013_ENG_HR.pdf. 

17. “Step Change,” The Economist, April 12, 2014, www.economist.com/news/ finance-and-economics/21600734-revised-figures-show-nigeria-africas-largest -economy-step-change. 

18. Noo Saro-Wiwa, Looking for Transwonderland: Travels in Nigeria (Berkeley, CA: Soft Skull Press, 2012), 241. 

19. Calculations based on data in African Development Bank, “African Economic Outlook 2013,” www.undp.org/content/dam/rba/docs/Reports/African %20Economic%20Outlook%202013%20En.pdf. 9781610394390-text.indd 264 1/13/15 12:15 PM notes to chapter 3 265 

20. See, for example, Razia Khan (head of Africa research at Standard Chartered), An Extra Strong MINT, Chatham House, February/March 2014, www.chathamhouse.org/sites/files/chathamhouse/public/The%20World%20 Today/2014/FebMarch/WT0114Khan.pdf. 

21. Paul Collier, The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It (Oxford, New York: Oxford University Press, 2008), 42ff. 

22. US Senate Permanent Subcommittee on Investigations, “Keeping Foreign Corruption Out of the United States: Four Case Histories,” February 2010. The committee’s findings detail the channeling of ill-gotten funds into the United States by relatives of Omar Bongo of Gabon, Teodoro Obiang Nguema of Equatorial Guinea, and Atiku Abubakar of Nigeria, among others. 

23. In November 2010 Panalpina and its US subsidiary as well as five oil and gas companies, including Shell, admitted violations of the US Foreign Corrupt Practices Act and agreed to pay $237 million in criminal and civil penalties; Panalpina admitted bribery in Angola, Azerbaijan, Brazil, Kazakhstan, Nigeria, Russia, and Turkmenistan. In the words of the US Department of Justice, Panalpina customers, including Shell, “admitted that the companies approved of or condoned the payment of bribes on their behalf in Nigeria and falsely recorded the bribe payments made on their behalf as legitimate business expenses in their corporate books, records and accounts.” US Department of Justice, “Oil Services Companies and a Freight Forwarding Company Agree to Resolve Foreign Bribery Investigations and to Pay More Than $156 Million in Criminal Penalties,” November 4, 2010, www.justice.gov/opa/pr/oil-services-companies-and-freight-forwarding -company-agree-resolve-foreign-bribery. 

24. Martin Meredith, The State of Africa (London: Simon and Schuster, 2006), 276; John J. Struthers, “Nigerian Oil and Exchange Rates: Indicators of ‘Dutch Disease,’” Development and Change 21, no. 2 (April 1990): 318–327. 

25. Yakubu Dogara, telephone interview with author, May 2010. 

26. US Embassy Cable, “Nigeria.” 

27. Tom Burgis and Matthew Green, “Reformist Restrained by ‘Cabal’ Capitalising on His Frailty,” Financial Times, May 6, 2010, www.ft.com/intl/cms/ s/0/646dd1ae-58fb-11df-90da-00144feab49a.html#axzz3EoXwAFEn. 

28. Caroline Binham and Tom Burgis, “Ibori Pleads Guilty to Laundering Public Funds,” Financial Times, February 27, 2012, www.ft.com/intl/cms/ s/0/88bb8bbe-6169-11e1-8a8e-00144feabdc0.html#axzz3EoXwAFEn. 

29. Tom Burgis, “Yar’Adua’s Return Provokes US Warning,” Financial Times, February 24, 2010, www.ft.com/cms/s/0/c628c23c-20d9-11df-b920-00144feab49a .html#axzz3HpltffT1. 9781610394390-text.indd 265 1/13/15 12:15 PM  

chapter 4: guanxi 

1. World Bank, “Commodity Markets Outlook,” January 2014, www.world bank.org/content/dam/Worldbank/GEP/GEPcommodities/Commodity_ Markets_Outlook_2014_January.pdf; US Energy Information Administration, International Energy Statistics, www.eia.gov/cfapps/ipdbproject/iedindex3.cfm ?tid=5&pid=5&aid=2&cid=regions&syid=1990&eyid=2013&unit=TBPD. 

2. On April 17, 2014, the Office of Foreign Assets Control, the division of the US Treasury that handles sanctions, updated its Specially Designated Nationals List—the roster of those subject to financial restrictions and with whom US companies are prohibited from doing business. One new entry in the Zimbabwe sections read, “PA, Sam (aka HUI, Samo; aka JINGHUA, Xu; aka KING, Sam; aka KYUNG-WHA, Tsui; aka LEUNG, Ghiu Ka; aka MENEZES, Antonio Famtosonghiu Sampo); DOB 28 Feb 1958; nationality China; citizen Angola; alt. citizen United Kingdom; Passport C234897(0). (United Kingdom)” (Resource Center, U.S. Department of the Treasury, www.treasury.gov/resource-center/sanctions/ OFAC-Enforcement/pages/20140417.aspx). When the Treasury lists passports and citizenships of overseas nationals on its sanctions list, it does not necessarily mean that they hold those passports and citizenships, merely that the Treasury suspects they might. 3. Ibid. 

4. Mahmoud Thiam, telephone interview with author, December 2013. 

5. Beth Morrissey, Himanshu Ojha, Laura Rena Murray, and Patrick Martin-Menard, “China-Based Corporate Web Behind Troubled Africa Resource Deals,” Centre for Public Integrity, November 9, 2011, www.public integrity.org/2011/11/09/7108/china-based-corporate-web-behind-troubled-africa -resource-deals. 

6. See, for example, Peter Mattis, “The Analytic Challenge of Understanding Chinese Intelligence Services,” Studies in Intelligence 56, no. 3 (September 2012): 47–57. 

7. Richard McGregor, The Party: The Secret World of China’s Communist Rulers (London: Penguin, 2012), 114. 

8. Nigel Inkster, interview with author, March 2014. 

9. See Chapter 2. Senior FARDC officer, interview with author, Goma, July 2013; “Supporting the War Economy in the DRC,” International Peace Information Service, January 2002, www.ipisresearch.be/download.php?id=197. 

10. See, for example, Simon Mann, Cry Havoc (London: John Blake, 2011). 

11. Forum for Africa-China Cooperation website, www.focac.org, accessed May 7, 2014. 9781610394390-text.indd 266 1/13/15 12:15 PM notes to chapter 4 267 

12. IMF Direction of Trade Statistics tabulated in “Trade Levels Rise and Rise,” Africa-Asia Confidential, August 5, 2013, www.africa-asia-confidential .com/article-preview/id/959/Trade_levels_rise_and_rise; see also Sarah Baynton-Glen, “China-Africa—CNY Internationalisation,” Standard Chartered, April 9, 2013, https://research.standardchartered.com/configuration/ ROW%20Documents/China-Africa_%E2%80%93_CNY_internationalisation _09_04_13_08_01.pdf. 

13. Ecobank, “Six Top Trends in Sub-Saharan Africa’s (SSA) Extractives Industries,” July 23, 2013, www.ecobank.com/upload/20130813121743289489u JudJb9GkE.pdf. 

14. Angolan Embassy in London, “Ministry of Finance Denies Misuse of Chinese Loans,” October 17, 2007; Ana Cristina Alves, “Chinese Economic Statecraft: A Comparative Study of China’s Oil-backed Loans in Angola and Brazil,” Journal of Current Chinese Affairs 42, no. 1 (January 2013): 99–130, 108. 

15. “Angola, China Vow to Forge Long-Term Stable Cooperative Relations,” Xinhua, February 25, 2005, www.china.org.cn/english/international/121289.htm. 

16. Pieter D. Wezeman, Siemon T. Wezeman, and Lucie Béraud-Sudreau, “Arms Flows to Sub-Saharan Africa,” Stockholm International Peace Research Institute, December 2011, http://books.sipri.org/files/PP/SIPRIPP30.pdf. 

17. “Angola Unravels,” Human Rights Watch, September 1999, section 141, www.hrw.org/reports/1999/angola; Indira Campos and Alex Vines, “Angola and China: A Pragmatic Partnership,” Centre for Strategic and International Studies, March 2008, http://csis.org/files/media/csis/pubs/080306_angolachina .pdf, 3. 

18. Helder Bataglia, telephone interview with author, February 2014. 

19. Lee Levkowitz, Marta McLellan Ross, and J. R. Warner, “The 88 Queens way Group: A Case Study in Chinese Investors’ Operations in Angola and Beyond,” US-China Economic and Security Review Commission, July 10, 2009, http://china.usc.edu/App_Images/The_88_Queensway_Group.pdf. Quoting Venezuelan Presidential Press, President Chavez: “The FTAA Has Died for the Good of Our People,” April 3, 2004, the “88 Queensway” report says, “In April 2004, a Venezuelan television station reported that President Hugo Chávez had signed a letter of intent with Portugal and China to proceed with investment projects amounting to $300 million in the energy, construction, communications, services, and aluminum sectors. Signing on behalf of Portugal was Helder Bataglia; on behalf of China was Lo Fong-hung, listed as a director of Beiya International Development. Following the signing of the letters, President Chávez announced that ‘The [Free Trade Area of the Americas between Venezuela and the United States] is dead. May the Washington government’s plan to simply impose a model  on us, rest in peace for the good. The signing of this agreement also gives a renewed boost to relations between China and Venezuela.’” 

20. Thiam, telephone interview with author. See also Morrissey et al., “China-Based Corporate Web Behind Troubled Africa Resource Deals.” 

21. Decision of the High Court of the Hong Kong Special Administrative Region, Court of First Instance, HCMP 2143/2011, in Wu Yang v. Dayuan International Development Limited et al., June 4, 2013, http://legalref.judiciary.gov .hk/lrs/common/search/search_result_detail_frame.jsp?DIS=87490&QS=%24 %28Dayuan%2CInternational%2CDevelopment%29&TP=JU. 22. Aló Presidente, transcript of episode 187, April 4, 2004. 

23. Bataglia, telephone interview with author. 

24. Lo Fong-hung is named as Wang Xiangfei’s wife in company filings in Hong Kong for Nan Nan Resources, the Queensway Group’s listed company. The details of Wang’s career are drawn from Nan Nan filings and those of other companies where he serves as a director. 

25. Morrissey et al., “China-Based Corporate Web Behind Troubled Africa Resource Deals.” 

26. Letter from China Sonangol in response to my questions ahead of the publication of a report on the Queensway Group in Financial Times, July 18, 2014, www.ft.com/chinasonangolresponse. 

27. Extracts from the ledgers of Queensway Group companies contained in a court judgment refer to a cash advance by China International Fund of $1.5 million to “Mr. Sam.” See Decision of the Hong Kong High Court. A press release by the Government of Dubai Media Office on September 25, 2013, announcing an agreement for China Sonangol to build an oil refinery, said “Sam Pai, Chairman, China Sonangol Group” signed the memorandum of understanding. A December 11, 2013, press release by Sierra Leone’s State House Communication Unit described a meeting between President Ernest Koroma and “Vice Chairman of China International Fund Limited, Mr. Sam” (http://cocorioko.info/?p=2618). 

28. Levkowitz, Ross, and Warner, “The 88 Queensway Group.” 

29. Decision of the Hong Kong High Court. 

30. Iain Esau, “Shell Goodbye to Greater Plutonio,” Upstream, December 19, 2003. 

31. Carola Hoyos, “Shell All But Withdraws from Angola,” Financial Times, April 9, 2004. 

32. See, for example, “Sonangol Sinopec Acquires 50% Interest in Angola Block 18 from Shell,” Global Markets Direct Financial Deals Tracker, December 30, 2004. 

33. “Zeng Peiyan—Politburo Member of CPC Central Committee,” Xinhua, November 15, 2002, http://news.xinhuanet.com/english/2002-11/15/content_ 631108.htm. 

34. Bataglia, telephone interview with author. 

35. Manuel Vicente, interview with author, Luanda, June 2012. 

36. According to the judge’s account of Wu Yang’s evidence in his dispute with other Queensway Group founders, the holding company through which China Sonangol’s Queensway-based shareholders held their interests “did not initially have any material assets.” See Decision of the Hong Kong High Court. 

37. Beiya International Development Ltd was named as the 70 percent shareholder of China Sonangol in its articles of association. This company’s own company filings show that it had been incorporated a year before China Sonangol, also in Hong Kong. Its shares were also split 70/30, with the majority holding assigned to New Bright, the company owned by Lo Fong-hung and Veronica Fung, and the minority assigned to Beiya Industrial Group, a Chinese state-owned conglomerate. Wu Yang, the Chinese businessman who claims he helped engineer the deal between Sonangol and Sinopec in which China Sonangol served as the middleman, has said in court filings (see Decision of the Hong Kong High Court) that Beiya was merely a nominee for him and his business partner, both of whom were granted a stake in the venture in return for making introductions that led to the deal. Company filings show that the shares were formally transferred into Wu Yang’s name in October 2004, giving him an indirect stake of 21 percent in China Sonangol, through which he also received an indirect stake in Sonangol Sinopec International of 9.5 percent. (Various filings from the Hong Kong Companies Registry, copies in author’s possession.) 

38. Letter from the board of China Petroleum and Chemical Corporation (also known as Sinopec) to shareholders setting out the terms of the transfer Sinopec’s holdings in SSI from a subsidiary to the parent company, April 1, 2010. 

39. Ibid. 

40. In 2010 Sinopec switched ownership of its stake in Block 18 from its subsidiary in Hong Kong to the parent company in mainland China. Sinopec valued its 55 percent of SSI’s equity at $1.678 billion. By that valuation, China Sonangol’s 45 percent stake in SSI was worth $1.373 billion. Through its 70 percent interest in China Sonangol, the Queensway Group’s indirect stake in Block 18 was worth $960 million. See “Sinopec’s First Acquisition of Overseas Upstream Assets,” Sinopec press release, March 28, 2010, http://english.sinopec.com/media _center/news/20100329/download/en-news100329d.pdf. 

41. The average price of a barrel of Brent crude, the benchmark, in 2011 was 9781610394390-text.indd 269 1/13/15 12:15 PM 270 notes to chapter 4 $111, meaning Block 18’s output of some 200,000 a day was worth $22 million. The Queensway Group’s effective share of Block 18 was 15.75 percent. 

42. Manuel Vicente, interview with author. 

43. Isaías Samakuva, interview with author, London, January 2014. 

44. Vicente, interview with author; China Sonangol company filings, from Hong Kong. 

45. On May 11, 2006, the Chinese authorities issued an arrest warrant for Liu Guiting on charges of embezzlement and bribery, for which he was later jailed for life (see “Former China Railway Group Chief Jailed for Life in Corruption Case,” trans. BBC Monitoring, Xinhua, April 1, 2009, http://english.cri .cn/6909/2009/04/01/1241s470616.htm; “Former Chairman of Beiya Group Receives Life Sentence for Embezzlement,” Caijing, April 1, 2009). Liu had been the chairman of Beiya Industrial Group, the Chinese state-owned railway company that had been a minority partner in one of the Queensway Group’s earliest holding companies, Beiya International Development. Through Beiya International Development, the Beiya Industrial Group initially held its stakes in China Beiya Escom, its joint venture with Helder Bataglia’s company, and China Sonangol. Six days after the warrant for Liu went out, Beiya International Development submitted an application to the commercial authorities in Hong Kong to change its name to Dayuan International Development, wiping away any trace of its scandal-struck origins. 

46. Company records show that China Beiya Escom, the Queensway Group’s joint venture with Helder Bataglia’s company, formed another joint venture with Cotrade, Congo-Brazzaville’s state-owned oil trader, called Cotrade Asia. Cotrade Asia was never shown to have done anything illicit, but Cotrade was one of the companies that a British judge found to have participated in a scheme, orchestrated by the country’s elite, to hide money that the country owed to its creditors. “Those involved in creating and masterminding the use of the structure were dishonest in the relevant sense of the word because of this objective when creating and using the sham companies and transactions in question, to avoid enforcement of existing liabilities,” the judge ruled. See the judgment of Mr. Justice Cooke in Kensington International Limited v. Republic of the Congo, November 28, 2005, in the London High Court of Justice. Cotrade Asia is mentioned in subsequent court actions related to the scheme. See the judgment of Judge Carlson in Kensington International Limited v. ICS Secretaries Limited, May 31, 2007, in the Hong Kong High Court of First Instance. 

47. China International Fund is owned through the same structure through which the Queensway Group holds its 70 percent interest in China Sonangol. 271 The holding company, which owns 99 percent of CIF, was originally called Beiya International Development, then subsequently Dayuan International Development. Dayuan is owned 70 percent by New Bright, the Queensway Group company that belongs to Veronica Fung and Lo Fong-hung; Wu Yang holds the remaining 30 percent of Dayuan. Lo also holds 1 percent of CIF shares directly. In 2012, after Wu Yang sued Dayuan, Lo, and Fung, Dayuan’s 99 percent stake in CIF was transferred to another company, Magic Wonder Holdings Limited. The only information available about Magic Wonder is that it was incorporated on April 26, 2012, and that its address is a post office box in the British Virgin Islands. Dayuan International Development and China International Fund company filings in Hong Kong; British Virgin Islands Financial Services Commission, Registry of Corporate Affairs. 

48. Angolan Embassy in London, “Ministry of Finance Denies Misuse of Chinese Loans.” 

49. “Chinese Investors Claim 2.7 mln Yuan from Misleading Company,” Xinhua, December 27, 2007, http://english.people.com.cn/90001/90776/90882/ 6328055.html; “3 Chinese Jailed for Insider Trading, Fined $11.2 mln,” Xinhua, February 4, 2008, http://english.peopledaily.com.cn/90001/90776/90884/6351533 .html. Following the scandal the contract was awarded instead to Citic. 

50. Sinopec, “Announcement on Resignation of Mr. Chen Tonghai as Director and Chairman of the Board,” press release, June 22, 2007, http://english .sinopec.com/media_center/announcements/archive/2007/20070622/download /AM20070622157.pdf; “Former Sinopec General Manager Expelled from Party on Corruption Charges,” Xinhua, January 25, 2008, http://english.sinopec.com /media_center/announcements/archive/2007/20070622/download/AM2007 0622157.pdf. 

51. “Sinopec Ex-Chairman Chen Gets Death Sentence with Reprieve After Reporting Others’ Crimes,” Xinhua, July 15, 2009, http://news.xinhuanet.com/ english/2009-07/15/content_11713262.htm. 

52. Alex Vines, interview with author, London, September 2013. See also Alex Vines, Lillian Wong, Markus Weimer, and Indira Campos, “Thirst for African Oil,” Chatham House, August 2009, www.chathamhouse.org/sites/files/ chathamhouse/r0809_africanoil.pdf. 

53. US Embassy in Luanda, “New China Credit Line Under Consideration,” diplomatic cable, January 27, 2009, WikiLeaks, December 8, 2010, http://www. wikileaks.org/plusd/cables/09LUANDA51_a.html. 

54. Angolan Embassy in London, “Ministry of Finance Denies Misuse of Chinese Loans.” 

FAIR USE NOTICE

This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. As a journalist, I am making such material available in my efforts to advance understanding of artistic, cultural, historic, religious and political issues. I believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law.

In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. Copyrighted material can be removed on the request of the owner.