Analysis: The ‘stunning’ Criminal Finances Act, HSBC and the billion dollar fraud
14 Apr 2018

The dramatic events surrounding the fraudulent transfer of hundreds of millions of dollars from Angola to London involving top British banks have the elements of a gripping movie.

There’s news of VIP meetings, midnight flights on chartered jets, political intrigue and twists, including corrupt politicians and the cops heroically swooping in on the looted cash.

It is not, of course, a movie, but a real example of how billions can be looted and laundered from Africa and elsewhere annually through British banks.

This time round, however, British law enforcement moved swiftly, using new powers, and delivered a stunning blow to the fraudsters.

But first, let’s try to understand how it all unfolded.

The plot

There is a well known email scam which goes like this: out of the blue, a stranger contacts you and offers you a huge sum of money.

All you have to do to get your hands on this fortune, they tell you, is to send them a comparatively much smaller amount of money first.

There is no fortune, of course.

Once the scammers are sure they’ve squeezed as much as they can out of you, they will disappear with all of the money sent to them.

The details of the scam change – it might be a ‘Nigerian prince,’ a distant relative you’ve never heard of, or a millionaire philanthropist dying of cancer – but the basic premise of this type of scam, known as an advance-fee scam, remains more or less the same.

What happened in the case of the Angolan and British bank fraud case is essentially an advance-fee scam, but on a truly grand scale.

The alleged actors

One of the figures believed to be central to the case is José Filomeno dos Santos, also known as Zenú.

He happens to be the son of former Angolan President José Eduardo dos Santos, who stepped down in late 2017, after 38 years in power.

Filomeno was also put in charge of Angola’s multibillion dollar Sovereign Wealth Fund.

The Fund was intended to invest some of the profits from Angola’s resources boom for the benefit of all Angolans.

Anyway, moving on to two months before President dos Santos stepped down, and it has been alleged that a top influential politician called the then governor of Angoal’s central bank (Banco Nacional de Angola – BNA), Valter Filipe da Silva, and the Finance Minister, Archer Mangueira, to a meeting.

When they arrived at his office, the politician reportedly instructed them to study an offer of a programme that could provide Angola with much needed funding — US$35 billion in credit.

All the Angolan government had to do to access this $35 billion credit line was transfer $1.5 billion as a guarantee to the mysterious investor consortium making the offer.

You can see where this is going, right? An advance-fee scam.

The action

According to media reports, after “studying” the programme, Governor Da Silva and Minister Mangueira were then ordered to accompany Filomeno on a chartered flight to London that very night to begin immediate negotiations with the supposed investors, who turned out to be a cartel operating through an Angolan shell company.

Filomeno and an associate, who has a senior position with the Angolan central bank BNA, are understood to have explained to Da Silva and Mangueira that the $1.5 billion guarantee was to be transferred to the Angolan Shell company and its UK partner company.

Imagine the surprise of Da Silva and Mangueira when they arrived in London and realised that Filomeno (who at this time was still the head of Angola’s Sovereign Wealth Fund) was not there to act as part of the Angolan delegation.

He was there to negotiate on the part of the investors.

It has now been reported that Filomeno and his BNA associate own the shell company.

It is also understood that Mangueira expressed severe doubts, but was promptly sidelined, whereas Da Silva was more obliging.

In the final weeks before President Dos Santos left office, Da Silva signed the agreement with the Angolan shell company and its UK partner firm, authorising the transfer of $500m, which was the first tranche of $1.5 billion ‘guarantee’ from BNA.

This is the same $500m that landed in a HSBC UK account. It had come from from BNA’s Standard Chartered Bank Account.

Meanwhile, authorities in the UK were suspicious.

The enormous $500 million transaction to an account with HSBC had raised multiple red flags, not the least of which were allegedly faked documents from Credit Suisse attesting to the Angolan shell firm’s liquidity.

After making enquiries with the new government in Angola, HSBC froze the account and is understood to have filed a suspicious activity report with the UK National Crime Agency (NCA), which confirmed that its internal corruption unit was investigating a potential fraud case against the Angolan government.

Using the new Criminal Finance Act, the NCA was able to seize the $500m.

A Standard Chartered spokesman said: “We are aware that our client, Banco Nacional de Angola (BNA), was the victim of an attempted fraud in Angola which involved the transfer of funds from their Standard Chartered Bank account.

“We understand the fraud was not successful and that BNA is conducting its own investigation and has now recovered the monies. This matter is also subject to a criminal investigation in the UK, and Standard Chartered Bank is closely cooperating with BNA and UK law enforcement.”

Efforts to obtain comments from BNA, Mangueira, Filomeno and Da Silva were unsuccessful, however Filomeno has said he is cooperating with authorities, according to Reuters.

The fallout

The political handover from Dos Santos to the newly elected President João Lourenço marked a changing tide in Angola, and set in motion a chain of events which would bring the entire scheme undone.

In his first meeting with Lourenço, Finance Minister Mangueira, who flew to London with Governor Da Silva and expressed concerns about the deal, briefed the incoming President on the nation’s finances including the credit deal with the Angolan shell firm.

President Lourenço reportedly ordered Da Silva to a meeting, where he questioned him and then demanded that control of the deal be handed over to Mangueira.

A month later, he also demanded that Da Silva terminate the so-called deal, take immediate steps to recover the $500m – and hand in his resignation within two days.

Joy in Angola? Not entirely

Yes, what an intriguing tale.

And no doubt there must have been lots of sighs of relief from the Angolans that their looted cash was safely netted by the cops in the UK, who were planning to return it.

Sadly, there is a presidential-sized hole in this otherwise tidy conclusion.

The top politician, the man who brought former central bank governor Da Silva and the senior government official into his office for the meeting to study the proposed credit programme, who put them on that overnight plane, who sidelined the senior official’s criticism of the deal and signed off on Da Silva’s “decision” to transfer the $500 million to the Angolan shell company consortium, has not been charged as he has managed to obtain immunity from prosecution of crimes as part of a deal to hand over power.

There is another, perhaps even darker shadow hanging over this story.

Much of what is know about this case, including facts included in this article, is owed to the courageous reporting of Angolan journalist Rafael Marques de Morais.

Marques has been threatened, harassed and imprisoned for reporting on corruption in Angola in the past, and is currently facing up to eight years in prison on charges of “outrage against a sovereign body” and “insult against a public office holder” for his investigations into a real estate deal involving the former Angolan Attorney General.

In a bitterly ironic twist, in the same week as Filomeno and Da Silva were indicted, Marques himself was standing in the dock.

So long as successive governments continue to prosecute and persecute journalists such as Marques for simply exposing the truth, it is hard to believe that real change is coming to Angola.

A happy ending for the UK?

This is likely to have been a case with a glittery end for the British authorities, if anyone.

It can be viewed as a victory for UK law enforcement, which is often heavily criticised for not doing enough to stop billions of dollars of dirty cash flowing through London’s banks.

This time round, it appears they moved swiftly to block a major fraud.

It’s also a huge plus for the UK’s legislative system, showing just how effective the Criminal Finances Act will become in the fight against money laundering and other financial crime — and importantly, that UK agencies will be quick to use it to combat crime and net fraudsters.

The Act proved to be a somewhat stunner in the case and helped save the day.

The NCA confirmed the major role it played, saying: “In December 2017 and January 2018 the NCA made use of the new provisions within the Criminal Finances Act 2017 preventing the transfer of assets.

“The necessary authority has now been provided for the monies to be returned to the Angolan Authorities. The NCA’s investigation is on-going and we welcome the cooperation with the Angolan Authorities to date to bring about a successful resolution to this matter.”

HSBC, of course, is understood to have spotted the fraud, froze the cash and filed a SAR.

This coming from a bank with a history of helping drug dealers and thugs to launder bricks of dirty cash, is not too bad, I’d say.

 

Elise Thomas Isle of Man analysis

About the writer: Melbourne-based Elise Thomas has a background in international affairs and a strong interest in financial crime, data and technology issues.

 

 

 

 

Read more:

EU Sixth Anti-Money Laundering Directive (6AMLD) – Expert analysis of new EU measures

Confessions of a Compliance Officer: Bewilderment in the corridors of power

Anti-money laundering: Outsourcing — pitfalls to avoid

Advance your CPD minutes for reading this article, by signing up and using the CPD Wallet

FREE CPD Wallet
Must Read

Pursuing unexplained wealth in Nigeria: It’s time to take on the enablers

Despite the efforts of the incumbent President to fight corruption, Nigeria remains one of the countries that constantly top the world’s corruption rankings. According to  Transparency International’s 2017 Corruption Perception Index, Nigeria is one of the most corrupt countries in the world, ranking number 148 out of 180 countries covered… Read More

The perfect AML programme: A ten point guide

Does the ‘perfect’ path to anti-money laundering (AML) exist? The quest for the perfect plan can be traced back to criminals causing immeasurable damage for many economies through money laundering. In response, governments are continuously trying to fight back, issuing a raft of rules and penalties for financial institution (FIs)… Read More