Chinese Airport Project in Angola Hit by Delays, Corruption

By Frank Fang, Epoch Times
September 11, 2019 Updated: September 11, 2019

An airport project in Luanda, the capital of Angola, Africa, represents one of the many frustrations of locals with China’s presence, since the Chinese company that managed and funded the project has come under scrutiny for its past misdealings.

The firm, known as China International Fund (CIF), led a consortium of Chinese companies, in conjunction with Brazilian conglomerate Odebrecht, to build the international airport, which was designed with 12 gates for airliners, to accommodate 13 million travelers annually. Construction, which began in 2004, was expected to be completed by 2017.

The airport was billed by the Angolan government to be a major hub for sub-Saharan Africa, and a rival to South Africa’s O.R. Tambo International Airport, near Johannesburg, which saw 21.3 million passengers last year.

Delayed Project

Construction delays and an outdated design eventually forced the Angolan government under President João Lourenço—who took office in 2017 after being handpicked by his predecessor José Eduardo dos Santos—to cancel the contract with CIF in February this year, citing nonperformance.

According to U.S. government data, construction was about 60 percent complete as of August, including runways that measure 4,200 meters (about 13,800 feet) and 3,800 meters (about 12,450 feet).

But costs have ballooned.

“Initially, the project was budgeted at $300 million, but it rose to $9 billion. And there is no end in sight,” Angolan reporter Rafael Marques said in a recent interview with German public broadcaster Deutsche Welle (DW).

Another Chinese company, the state-run Aviation Industry Corp. of China, has taken over the project. Angola’s transportation minister Ricardo de Abrea says the airport is now slated to be completed in 2023, according to local daily Journal de Angola.

Marques said the project shows how China has left the country indebted.

“When we look at what has been built so far, it is a project that was made to loot the loans that China granted to Angola for national reconstruction,” he said to DW. “It is a never-ending construction project that, at this point, does not make much sense and leaves the Angolan state highly indebted.”

Debts Owed

China has offered more than $60 billion in loans to Angola since the two countries established diplomatic ties in 1983, according to Chinese government sources—focused on an opportunity to provide the South African nation with funds to rebuild roads, schools, and hospitals following a long civil war that ended in 2002.

Angola’s minister of energy and water, Joao Baptista Borges, told Japanese media Nikkei in December 2018 that China holds nearly 70 percent of the nation’s external debt.

According to the Angola Press News Agency, Archer Mangueira, the country’s finance minister, said in January 2018 that the country’s external debt totaled $38 billion. Several months later, in September, he said that Angola owed China about $23 billion.

There’s been resentment against China’s presence. According to a July 2015 Reuters report, Angolans were angry that many local sectors were dominated by Chinese companies. According to Reuters’ count, 50 state-run and 400 private companies from China were operating in Angola at the time.

Many are also displeased at their government for selling the majority of the country’s oil to China as repayment for Chinese loans—meaning that the money from oil doesn’t enter Angola’s economy.

Angola is the second-largest oil producer in Africa. In 2017, out of a total value of $31 billion in Angolan oil exports, it exported 62 percent to China, according to data from the Central Bank of Angola.

Corruption

Thus, Angola remains a poor country despite its oil resources. Government corruption has plagued the young nation, which won independence from Portuguese rule in 1975.

In a 2019 study of infrastructure development in the country, Alves da Rocha, director of the Angolan Catholic University’s Center for Scientific Studies and Research, estimates that Angola has lost about $20 billion due to corruption in the construction sector alone.

The U.S.–China Economic and Security Review Commission (USCC), in a 2009 research paper, detailed how much of China’s financing for oil and infrastructure projects in Angola are funneled through 88 Queensway Group, a nickname given to a large number of Chinese firms operating in Angola that all register the same Hong Kong address as their headquarters.

Within the 88 Group, two companies are in charge of investments: CIF and China Sonangol International Holding—a joint venture between another Chinese company in the 88 Group and Angolan state-owned oil company Sonangol.

USCC concluded that several key personnel at 88 Group had ties to Chinese state-owned companies, including oil giant Sinopec. The report also traced some personnel to China’s ministries of public security and state security—the latter being the country’s chief foreign intelligence agency.

Posing as private Chinese firms, the companies essentially acted as a front for the Chinese regime.

“CIF loans are administered by Angola’s reconstruction office, Gabinete de Reconstrução Nacional (GRN), and governed with little transparency,” the paper stated.

Among the personnel identified by the paper was Xu Jinghua, chairman of the board at CIF. He went by many aliases, including Sam Pa.

The Financial Times, in an investigation published in August 2014, revealed that Xu had worked for the external branch of Chinese intelligence since the 1980s, citing an unidentified source who had close ties to African intelligence. Xu also sold Chinese arms to former Angolan president José Eduardo dos Santos during the country’s civil war, the source claimed. Dos Santos was the leader of the communist movement that won.

China Sonangol and CIF were implicated in a corruption scandal.

In August 2017, Mahmoud Thiam, of New York, a former Guinean minister of mines and geology, was sentenced to seven years in prison and three years of supervised release, for laundering $8.5 million in bribes paid to him by China Sonangol and CIF, according to a U.S Department of Justice press release.

In return for the bribes, Thiam used his position to influence the Guinean government to enter into lucrative mining rights agreements with both Chinese companies, according to the release. The mines had iron, gold, diamond, and bauxite deposits.

Xu was taken away for investigation by China’s Central Commission for Discipline Inspection (CCDI), the regime’s internal anti-corruption watchdog, on Oct. 8, 2015.

A day before Xu’s arrest, Su Shulin, then-governor of Fujian Province, also was arrested by CCDI. Prior to his governorship, Su worked in China’s oil industry, and had served as general manager of Sinopec until 2011.

According to Chinese state-run media reports, Su was able to successfully acquire oil fields in Angola with the help of Xu.

Su, a member of China’s “oil clique,” a political faction of powerful individuals in China’s oil industry, was sentenced to 16 years in prison for corruption in July 2018. The CCDI said that he accepted bribes and abused his power in overseas deals, but wasn’t more specific.

Meanwhile, Xu’s case hasn’t been formally prosecuted.

Follow Frank on Twitter: @HwaiDer
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