A state-sanctioned property grab in Angola has put the Africa Growth Corporation in dire straits.
The U.S.-based corporation, which has several Florida investors, builds affordable housing for expatriates and retail office space for foreign companies in Africa.
In 2015, the company made significant investments in the Angolan real estate market, acquiring and developing several properties through wholly owned Angolan subsidiary companies.
But less than two years later, the Angolan government forcibly took over three of the company’s buildings and crafted fraudulent title transfers for the properties, while also seizing bank accounts and other assets at gunpoint.
The seizure has cost AFGC and its investors more than $95 million.
The company has attempted to resolve the issue in Angolan court to no avail. It later filed suit in the U.S. District Court for the District of Columbia. The Angolan government has been a no-show for most of the proceedings though it did file a motion to dismiss the complaint.
A year ago, after the still-pending lawsuit was filed, representatives of the African nation and AFGC brokered a deal in Lisbon, Portugal, that would have seen the Angolan government pay AFGC $47.5 million — about 50 cents on the dollar for the company’s reported losses — to relinquish property rights.
But Angolan Deputy Attorney General Eduarda Rodrigues Neto, who was at the table in Lisbon, has since denied any such deal had been brokered, forcing AFGC to absorb the loss for the time being.
Amid the ongoing dispute, U.S. Secretary of State Mike Pompeo is expected to travel to sub-Saharan Africa, where he will meet with the leaders of Senegal, Angola and Ethiopia.
In Angola, Pompeo is expected to “offer support to democratization and anti-corruption efforts” that have been put in place since the exit of former Angolan leader Jose Eduardo dos Santos. The Secretary of State is also expected to discuss opportunities for investment in the country.
Pompeo’s focus is ironic, considering the consensus among the business community is that Angolan corruption has continued unabated since President João Lourenço came into power a couple of years ago.
If the U.S. government is serious about fighting corruption in Africa, Angola’s illegal seizure of an American company’s assets cannot go unaddressed. In addition, the Secretary of State should not promote investment in Angola while the country’s own government officials corruptly steal from American firms.
The AFGC seizure isn’t a one-off act against an American company. In a 2019 blog post Shutts & Bowen lawyer Ed Patricoff detailed a case where Angola officials withheld nearly $100 million in payments for power supplied by APR Energy and LS Energia.
Though the companies eventually received the payments, Patricoff said issues between Angola and international businesses have not stopped, but “escalated.”
Patricoff is also representing AFGC in its quest to recoup funds.
Angola’s expropriation bears a striking similarity to the land bond default saga playing out between the Peruvian government and American investors. The South American nation’s lack of bond payments has jeopardized numerous American pension funds.
Also similar: Angola is a U.S. trading partner and receives millions of U.S. dollars in aid.
But unlike the troubles in other nations, Angola’s reputation in the international community hasn’t taken a hit commensurate with its actions. For instance, the country is currently being wooed by the United Kingdom as a potential new member of the Commonwealth of Nations — if it was to join, it would be only the third member of the Commonwealth without ties to the British Empire.
Additionally, the U.S. government has yet to weigh in on the dispute despite calls for action from several individual members of Congress.
Between late 2018 and mid-2019, U.S. Reps. Karen Bass, Randy Hultgren, Edward Royce, Christopher Smith and Steve Stivers sent letters to the International Monetary Fund, Lourenço and U.S. Treasury Secretary Steven Mnuchin pleading for a resolution.
However, the U.S. government seems content to embrace Angola for its so-called anti-corruption efforts even as it continues picking the pockets of American companies. If the Trump administration is serious about reducing corruption in Africa and putting American interests first, Angola’s corrupt schemes against U.S. companies, including its seizure of AFGC’s assets, must not be tolerated.