European Commission questions Portugal on Isabel dos Santos' investments
Brussels, 8 February 2016 - In a letter of 05/02/2016, Commissioner Vera Jourova informed MEPs of the European Parliament's Intergroup on Integrity and Transparency, Corruption and Organised Crime that the European Commission has questioned Portuguese authorities on the compliance of European anti-money laundering legislation with regard to the purchase of the Portuguese company EFACEC by Ms. Isabel dos Santos, daughter of Angolan President José Eduardo dos Santos.
The four MEPs sent letters in October of 2015 to the European Commission, the European Banking Authority (EBA), the Financial Action Task Force (FATF) and written questions to the European Central Bank (ECB) requesting investigation on the legality of the purchase of the Portuguese company EFACEC by Ms. dos Santos. Under EU rules, Portugal's obliged entities, namely the financial institutions involved in the operation, have a legal duty to perform enhanced due diligence on any transactions involving Politically Exposed Persons (PEPs) - namely, the duty to establish the source of funds of foreign PEPs, having a clear picture of how the PEP acquired wealth, either generally or for the particular business they are involved in.
According to press reports, Isabel dos Santos acquired 65% of Efacec Power Solutions in partnership with the National Electricity Distribution Company (ENDE), a company owned exclusively by the Angolan State. In June 2015 new reports indicated that EFACEC, after the purchase, would become the supplier of electrical equipment for three dams under construction in Angola, namely Cambambe and Lauca.
After an initial response from the European Commission in December 2015, the MEPs supplied further information attesting the beneficial ownership of the companies involved in the purchase - Winterfell Industries, established in Malta, whose two shareholders are ENDE and Niara Holding SGPS LDA, a company registered in the Free Zone (Zona Franca) of Madeira, Portugal. Niara Holdings is a limited company owned personally by Ms. Isabel dos Santos, majority shareholder, and Carana Management LTD, a company registered in Cyprus since 2010, whose beneficial ownership is unknown.
MEPs had asked the ECB, the European Commission and EBA, as supervisors of the integrity of the European financial system, to determine whether the Bank of Portugal - the national supervisory authority - and financial institutions are effectively complying with European legislation with regard to this acquisition, as well as other significant holdings of Isabel dos Santos in Portugal, particularly in the oil sector, through GALP, in banking through BPI and BIC, and in telecommunications, through NOS operator, as well as other real estate investments.
In a letter of the 28th of December 2015, the Bank of Portugal, referring to the acquisitions of share capital carried out with funding/intermediation of credit and financial institutions that it supervises, stated that, according to its approach to supervision and applicable laws, it is not empowered to suspend or block the execution of the concrete financial transactions intended to acquire or increase the shareholding in a given company, stressing that its supervisory action "necessarily consists of a risk-based approach, whose periodical, ongoing and preventive nature is incompatible with the a priori scrutiny of concrete financial transactions". With regard to the concrete purchase of EFACEC, the Bank of Portugal adds that it did carry supervisory actions it deemed appropriate to obtain detailed information on whether the banks which financed the operation complied with preventive measures under the AML/CFT framework and whether any event should trigger an ad hoc review of the risk assessment of those institutions. Finally, the Bank "also checked the origin of the own funds involved in such acquisitions and that their financing was approved on the basis of a sound analysis and adequate risk procedures (...)".
ITCO welcomes the effort of the European Commission to question the Portuguese authorities and will continue to follow the case closely.