The Angolan sovereign wealth fund, Fundo Soberano de Angola, or FSDEA, manages $5 billion on behalf of Angola.
And there are concerns about how it is managed.
Its chairman, José Filomeno dos Santos, was appointed by his father, then president of Angola, José Eduardo dos Santos.
dos Santos led the country from 1979 until last year.
The younger Dos Santos’ appointment of Jean Claude Bastos, a personal friend, to manage the fund.
The fund included billions of dollars set aside for investment in Africa.
It would use companies in Mauritius to shift part of the funds and that drew the attention of journalists.
The Appleby records show that the law firm did its own research on its new client.
An Appleby employee highlighted the “close personal” friendship between Bastos and José Filomeno dos Santos dos Santos.
Appleby’s customer-screening process also flagged media accounts of Bastos’ past legal problems in Switzerland.
Records show that Appleby’s Mauritius office had classified Bastos as a “risky client ” but moved forward with its new business.
The first step was getting a coveted Mauritius business license.
Appleby’s Mauritius office told regulators that it had “made all reasonable enquiries” into Bastos.
It also supported Quantum Global and their plans to manage the Angolan money.
The application form also showed Bastos had paid a $5,390 fine after a Swiss court convicted him in 2011.
Bastos’ lawyer, however, failed to mention that the Swiss court had also imposed a suspended fine of nearly $188,646.
The application form also didn’t mention that the Swiss court also found Bastos guilty of withdrawals without authorization.
Bastos reckons the suspended fine but says the larger of the two fines did not have to be paid.
Bastos said the suspended fine and convictions have since been expunged from Switzerland’s register of convictions.
“The authorities were informed correctly,” Bastos said.
In an email sent to Appleby’s Mauritius employees to remind them of the sensitivity of their new client, Quantum Global’s lawyer wrote – in boldface type:
“Information on Red Sahara Ltd. (renamed QG Investments Ltd.), was “highly conﬁdential.
“That is to say, please do not share any information.”
Later it was found the company which would receive tens of millions of dollars in dividends, was owned by Bastos.
The Angola fund once paid $20 million for shares in a company incorporated in the British Virgin Islands, Capoinvest, which was helping to finance the development of a major port in northern Angola.
In its 2014 annual report, Angola’s sovereign wealth fund twice mentions Capoinvest, which also owns the Angolan company that is developing the port.
There is no mention, however, of the additional offshore companies that own Capoinvest. Appleby’s files reveal it is owned by a chain of three companies incorporated in the British Virgin Islands and two more in the Seychelles, in the Indian Ocean, all of them ultimately owned by Bastos.
In his statement, Bastos said Quantum Global complies “in all countries with legal, tax and regulatory standards.”
He said, “I have routinely disclosed my shareholding in Capoinvest.”
Mauritius also provided a low-tax haven for substantial fees the Angolan fund paid Bastos’ operation.
The financial statements of QG Investments Africa Management Ltd., Bastos’ Mauritius company, show $63.2 million in management fees throughout 2015, of which $21.9 million is to a Quantum Global company in Switzerland.
“The fees seem extraordinarily high,” said Andrew Bauer, a sovereign wealth fund expert who reviewed the fee payments.
Records show one Bastos-owned company paying dividends to another.
In 2014 and 2015, QG Investments Africa Management paid $41 million in dividends to his QG Investments, based in the British Virgin Islands.
Quantum Global’s advisory fees is “according to standard industry practices, all of which have been and continue to be fully disclosed.”, says Bastos.
He said that “as any other shareholder, I am earning dividends out of the distributions of my companies.” He said his ownership of QG Investments Africa Management is tax-efficient.
Bastos declined to comment on “confidential business matters” that led him to approach Appleby offices in Jersey and the Isle of Man.
Bastos said Quantum Global chose Mauritius because of its low taxes, “excellent infrastructure, relaxed reforms” and advantageous tax treaties, known as “double taxation agreements,” with most African countries.