In July 2023, a flagship recognition event African Business Leadership Awards (ABLA) established by the African Leadership Organization and the publishers of the African Leadership Magazine UK was held at the Dorchester Hotel in London. The glorious and representative event was attended by the members of the British House of Lords, ministers, representatives of the royal dynasties of a number of African states, and high-profile leaders of transnational corporations. Two months later, the Special Congressional Commendation for African-US cooperation in the development of the Africa-US relations was handed out at the International Forum on Afro-Caribbean Leadership (IFAL) held at the New York Hilton Midtown Hotel on the sidelines of the 78th Session of the United Nations General Assembly.
One and the same person became the award winner in England and the USA, and press releases and publications about the awards especially emphasized an interesting detail of his biography that he received his basic education in Ukraine and, therefore, owes this country his achievements to some extent. This fact was perceived with a particular emotion in the United States against the backdrop of Vladimir Zelensky’s speech at the 78th Session of the UN General Assembly that ‘accompanied’ the Congress’ awards ceremony.
The winner of these prestigious international awards is Benedito Paulo Manuel and he is the CEO of the Sociedade Mineira da Catoca diamond mining company, 41 percent of which are still owned by the Russian diamond giant ALROSA, the major producer of the ‘Russian blood diamonds’.
Benedito Manuel lived, studied and worked in Ukraine for quite a long time, from 1987 to 1994, he was 20 to 27 years old at that time. His Alma Mater is the Kharkov Institute of Urban Economy Engineers (Construction Department), this university is now called the Kharkiv National University of Urban Economy named after A. N. Beketov. Young Benedito spent his golden student years at this Kharkov Institute when strong business and friendly ties are normally established for a long time, sometimes for life. It’s a good university of a very high reputation, many of its graduates and Benedito’s fellow-students have made good business careers in various fields of public service, and you can meet them among the deputies of the Verkhovna Rada (the Parliament of Ukraine). Of course, the foreign student attracted close attention of the republican KGB (Committee of State Security of the Ukranian Republic) replaced by the National Security Service of Ukraine in 1991. When Ukraine put forward a series of initiatives in the fall of 2022 to impose sanctions against the Russian diamond industry, in particular, against ALROSA’s African projects, many people were surprised how thoroughly the relevant issues were worked out. Did the initiators of sanctions really have rather experienced consultants?
Benedito Manuel was appointed the CEO of Catoca in 2018 when the relations between Angola and ALROSA were still making good headway. It was this year that ALROSA was able to increase its share in the Catoca’s authorized capital from 32.8 percent to 41 percent after purchasing an 8.2-percent share for $70 mn from the Brazilian Oderbrecht Mining Services company that exited the project. From that time, the shares in Catoca were distributed as follows: 41 percent were owned by ALROSA, 41 percent by the Angolan state company Endiama, and 18 percent by LL (Lev Leviev) International Holding. By that time, a name was the only thing that was left of the minority shareholder Lev Leviev because in 2011, LL International Holding was sold to the Chinese company Sonangol International for $400 mn. Taking into account that Lev Leviev acquired the stake in Catoca from ALROSA in 1997 for $20 mn, certainly, he can be considered the Catoca’s most successful shareholder.
The Chinese shareholders were not that fortunate. In 2021, an 18-percent stake in LL International Holding was blocked, and the Angolan state-owned Institute of Asset Management and State Equity (Instituto de Gestão de Activos e Participações do Estado, IGAPE) took control over it. In the fall of 2022, these shares were nationalized and became the property of Endiama whose share in Catoca increased to a 59-percent majority stake. Such a tough decision was explained by only one reason - the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury had imposed sanctions on LL International Holding. The nationalization was carried out without any compensation, the Chinese shareholder did not receive a single cent for its stake, in other words, the company owner was simply robbed in a rude manner, without much ado.
The pressure from the Angolan authorities on the Chinese investors in the diamond project was not anything exceptional. Back in 2020, the Angola’s Prosecutor-General’s Office confiscated hundreds of real estate units owned by China International Fund (CIF, Limited) and China International Fund Angola (CIF, Limitada). It was a stark illustration of the Angola’s shift from their cooperation with China to the partnership with the United States, firmly cemented at the meeting between Joe Biden and Angolan President João Lourenço in November 2023 in Washington. So, Benedito Manuel obviously acted in line with a serious and long-term political trend, and the awards he won in New York and London “in recognition of his outstanding contribution to the development of the Angolan diamond industry” were well deserved.
ALROSA irresponsibly ignored the robbery of the Chinese investor and soon felt the ‘heavy hand’ of the graduate of the Kharkov University’s Construction Department. In late 2023, the Angolan side actually presented an ultimatum to ALROSA - since the sanctions imposed on the Russian company hinder the sales of the Angolan rough diamonds and complicate the Catoca’s operations in the capital market, the Russians should follow the Chinese and exit the project without any compensation. In April 2024, Deputy Russian Minister of Finance Alexey Moiseyev said that the ALROSA’s share in Catoca would have to be sold and the transaction amount was under discussion with “friendly investors” whom he did not disclose.
Considering the Chinese investors’ experiences in the Catoca project, the Russian official’s statement looks extremely optimistic. It is completely unclear what bars the Angolans from ‘freezing’ the Russian stake and then nationalizing it to bring the state-owned share in the project to 100 percent. By the way, such a result could be successfully accepted by the Angolan voters, and the ruling party is obviously interested in their support. And who are the “friendly investors” supposedly ready to buy out the Russian share? Are they the Chinese? But they are unlikely to be eager to fall into the same trap again, and it looks like Russia does not have any other “friends” in Africa. In addition, owning a stake in Catoca automatically makes a shareholder a co-owner of the promising Luele diamond project that has diamond reserves of 628 mn carats, and in which Catoca owns a 50.5-percent stake. It is difficult to imagine the motivation of the Angolan leadership for making a decision - whether to keep the sanctioned ALROSA in the Luele project or replace it with an investor “friendly” to Russia with unpredictable consequences.
When estimating the probability of potential decisions on the ALROSA’s participation in the Angolan diamond projects, the change in the trend of the Angola’s military-technical cooperation (MTC) with Russia and the United States should be taken into account. In late 2022, Angola’s President João Lourenço made it clear that the country was committed to moving away from the Russian-origin military equipment in favor of the US-made weapons as the country would strengthen its ties with the North Atlantic Treaty Organization (NATO), “We, the Government of Angola, would like to invite the US to take part in our rearmament program. As you know, the Angolan Armed Forces (Forças Armadas Angolanas, FAA) have the so-called Soviet-made arms and equipment to this day. We recognize that the time has come to rearm the FAA and acquire NATO arms and equipment, and we believe that the United States is the ideal option to achieve this transition”. It was from this moment that ALROSA started to have troubles in the Catoca project. In Africa, the military-technical cooperation is the foundation, on which the development of any other projects is built, since the arms business is unalloyed geopolitics and has the highest corruption component. Unfortunately, Russia’s position and its prospects in Angola in the military-technical cooperation today does not look bright at all and the Russian side, apparently, has no strong arguments any longer in his respect that could influence the decisions of the Angolan leadership, including those on the diamond projects.
In the event that ALROSA can be driven out of the Catoca project in the same way as the Chinese shareholder was, which is very likely, the losses will be calculated not only by the direct value of its 41-percent stake. This should also include the investments in the infrastructure projects (Hydrochicapa) and the undrawn future dividends from Catoca and Luele. In total, according to the most conservative estimates, possible losses can be estimated at $3 bn to $4 bn. And of course, ALROSA will no longer be able to call itself a ‘transnational company’. No doubt, if this happens, Benedito Paolo Manuel will be awarded another Congressional Commendation to honor his achievements in the African-US cooperation and leadership in the Angolan diamond business.
Sergey Goryainov for Rough&Polished
