On 18 December 2014, at the committee hall in the Portuguese parliament, a muscular man in his early 50s, with rough features and grey wisps in his hair,was facing a grilling from lawmakers. They were trying to understand what was his role in the disappearance of cash from an Angolan subsidiary of a Portuguese bank he managed for over ten years. The man was Angolan banker Alvaro Sobrinho.
The cash amounts under discussion were not insignificant; there was an almost six billion USD black hole in the banking group's finances. Citing evidence from the internal records of the bank, congresswoman Cecília Meireles asked the former CEO if it was common for there to be “cash withdrawals of 525 million dollars?”
“No,” replied Sobrinho with astonishment. “Obviously, it's absurd.” The questioning was part of the deposition of Sobrinho, who from 2001 to 2012 ran Banco Espirito Santo Angola (BESA), the Angolan subsidiary of the Portuguese bank BES. The Government interest in the bank followed the crash of BES in Portugal, alongside the collapse of the entire network of the Espírito Santo Group (GES) of banks, companies and interests, which were active in more than 20 countries.
With losses of 5.7 billion USD in Angola alone, the group was saved after an intervention from the Central Bank of Portugal in August 2014. But this was a humiliating end to a financial empire with more than a century of history. The dodgy balance sheet of its Angolan subsidiary, run by Sobrinho from the capital, Luanda, played a vital role in the group's downfall.
Cecília Meireles's question about half-a-billion dollars in withdrawals was based on BESA's internal records, which suggested that many millions in cash had been walked out of the door.
The interrogation was unlikely to surprise Sobrinho. He was prepared. This was one of the hypothetical questions studied by his lawyers days before the hearing in parliament. In the emails, leaked to the EIC Network, it appears in a slightly different way: “Is it true that 500 million dollars have been withdrawn in cash at the counters?” the lawyers wrote.
Guided by his legal team, Sobrinho could avoid buckling under pressure by declaring that it never happened. He would be telling the truth. The money was never withdrawn at any counter at BESA. No one ever left the bank with bags containing over 500 million dollars.
His disbelief was phoney, however.
The massive cash deposits and withdrawals were fabricated by Sobrinho and his conspirators at BESA to cover their tracks and make it almost impossible to recreate the money trail that led back to Sobrinho.
Newly exposed documents explain in detail how the Sporting Lisbon owner managed to channel hundreds of millions from his employer to mysterious companies he secretly owned in Angola.
Three of these firms received a total of 433 million USD into their BESA accounts.
These payments are in addition to the 182 million USD transfers from BESA to accounts in Sobrinho's own name and two other offshore companies, Grunberg Investments Limited and Pineview Overseas, as revealed by Expresso newspaper in Portugal in June 2014, and now part of a criminal inquiry.
Adding these up means that Sobrinho appears to be the beneficiary of at least 615 million USD of fraudulent loans from BESA, a bank which he built up from the ground as its first CEO, before it collapsed, and needed to be bailed out by the Angolan Government.
Who is Alvaro Sobrinho?
Banker, philanthropist, football magnate and real estate investor Alvaro Sobrinho was born in 1962 in Angola, and grew up witnessing the nascent independence of his country from Portugal in the 1960s. After graduating in mathematics in Lisbon, he landed a job as technician at Banco Espírito Santo (BES), in the Portuguese capital.
A bank source says of Sobrinho at the time: “He was humble, timid but ambitious.” By 2001, after working his way up the ranks of the bank, he landed a dream job: CEO of the new Banco Espírito Santo Angola in 2001, which he steered to become the third largest bank in the African country. He resigned his post in 2012, to start a new bank.
Now Sobrinho lives between Lisbon, Luanda, London, Geneva and Mauritius, with business interests in Kenya, Ethiopia and Indonesia, in addition to the UK, where he is the founder of NGO The Planet Earth Institute. In Switzerland, he created Signet, a wealth management company that manages his real estate investments. In South Africa, he is setting up a joint venture to open an investment bank.
In 2014, he bought 29.85 per cent of the public limited company owning Sporting Lisbon for 20 million Euro, making him the largest individual shareholder . Since then, the 111-year old club has been a regular runner-up or third place in the Portuguese premier league, where it forms one unit of the trinity of Portuguese football greats, alongside Benfica and Porto.
Real estate red flag
So how does a bank manager account for such a massive international investment portfolio?
An alleged scheme of misappropriation, breach of trust and money laundering, for which Sobrinho is the main suspect, has been the subject of a years-long investigation by Portugal general attorney’s special investigation unit, DCIAP. Federal prosecutors in Switzerland are also looking into the banker's affairs.
The department has not yet charged him or attempted to bring the case to trial.
In Switzerland, Sobrinho was the subject in 2015 of a preventive seizure of 150 million Euro he had stockpiled in local bank accounts, but the inquiry is still under way.
As for the Portuguese probe, the case was launched in 2011 when the investigative unit DCIAP became curious after the banker purchased six apartments worth a total of 9.6 million Euro in Estoril-Sol Residence, a luxury building in the upscale Cascais area on the outskirts of Lisbon.
Part of the money for the apartments - 3.6 million Euro - came from a British Virgin Islands offshore company, Grunberg Investments Limited, and caused authorities to be concerned about its origins.
When prosecutors began to investigate, they found that Grunberg made four transfers between December 2007 and July 2008, to a Portuguese subsidiary, Grunberg Portugal. Through this company, Sobrinho bought a rural property in the Douro region in Portugal.
When the BESA collapse hit the pages of newspapers in Portugal in summer 2014, the police suspicions on its former CEO grew more intense.
Suspicious transactions to “mystery” firms discovered
Sobrinho's vast fortune was impossible to build from his official earnings as CEO of BESA alone. Although the banker did not confirm this when questioned in the Portuguese parliament, prosecutors found that his regular monthly salary was around 70,000 Euro. BESA's annual accounts for 2011 and 2012 state that the total payments to all five members of the BESA board of directors was 3.8 million USD a year. This meant the banker's gross annual salary was close to a million dollars per year.
While BESA was suffering from unaccountable withdrawals and transfers, Sobrinho would become a multinational entrepreneur with businesses cropping up in Africa and Europe, while he made his homes in Luanda, Lisbon, London and Geneva.
The three Angolan companies that received 433 million USD from BESA allegedly did so with no proper justification. They were flagged by the bank itself as odd.
The firms were called Ocean Private, Anjog and Marina Baía. All of them were identified as “suspicious” by Rui Guerra, the man who replaced Sobrinho as CEO of BESA in 2013.
The new board connected the Angolan firms to transfers and cash deposits made from accounts held by a group of five other mysterious companies, Socidesa, Govest, Saimo, Vaningo and Cross Fund, which in turn had received over 1.62 billion USD in loans granted by the bank. The five companies are owned through untraceable shares.
This meant there was nothing in the institution's internal records about who were the ultimate beneficiaries of those loans. There was no official knowledge about the people hidden behind the companies, why they had obtained such massive amounts of money, and why no one within the bank had raised the alarm at the time. It was a puzzle.
What Rui Guerra knew about the final recipients of those credits was exposed in two BESA shareholders meetings in Luanda in October 2013. During the meetings, Sobrinho was confronted with the evidence. But the bank's former CEO offered no explanation for the money transfers.
He gave no reason for the 81 million USD he received in his own name or the 63.7 million USD received via the BVI-based offshore Grunberg Investments Limited. Nor could he explain the 37 million USD received through Pineview Overseas, a Panama offshore that he used to enter into the Portuguese media market, by buying the local newspapers “Sol” and “i” .
Angolan money grab
Sobrinho also did not disclose the owners behind three Angolan companies which together withdrew over 400 million USD from the bank.
But we can reveal they belonged to Sobrinho and his family.
The first, Ocean Private, received 226.8 million USD from the bank, according to the then new board of BESA. The second, Anjog, gained 108.8 million USD, and the third, Marina Baía, obtained 97.8 million USD.
According to a certificate of incorporation from a companies registry office in Luanda, obtained by EIC, Ocean Private was created on 4 August 2010. Owning 99.9 per cent of this firm is Jayhill Corporate Limited, an offshore company in the British Virgin Islands.
Jayhill's beneficial owner is Alvaro Sobrinho.
The second company, Anjog - Participações e Serviços, was incorporated on 18 December 2006, according to its registry documents, and its shares were registered to Sobrinho's wife, Ana Madaleno, and their children Gonçalo and Joana, both minors at the time.
The third company, Marina Baia, has shareholders including Sobrinho himself (49.8 per cent), and his brother Silvio Madaleno (49.8 per cent). On 28 June 2011 a new deed was made in which 15 per cent of the shares were given to a very special partner: Tchizé dos Santos, one of the daughters of then Angolan President José Eduardo dos Santos.
A single BESA account in Luanda held in the name of Sobrinho's Ocean Private received deposits totalling 277 million USD, all of which vanished to other accounts and jurisdictions.
Sobrinho: “It was I who ordered it”
Our new information details not only the money flows, but also Sobrinho’s personal involvement in crafting a fake cash withdrawal and deposit operation designed to obscure a scheme which allowed the money to reach his secret offshore companies.
The company Ocean Private was used for this. Emails show Sobrinho and his brother-in-law and main manager of his private business, Manuel Afonso-Dias, discussing the transfers of millions.
On 31 July 2012, while Sobrinho was still CEO of BESA, Afonso-Dias wrote to him to report on some anomalies he found in the BESA accounts, specifically a 50 million movement between a Group Espirito Santo company, Escom, and the shell companies, Saimo and Ocean Private.
“Varito,” he writes, using Sobrinho’s nickname, “I took a look at the account statements from Saimo to check the entrance of $ 49,683,940 from Escom properties and from renting incomes.“
He continues with a confirmation that the money entered BESA “on July 16 by bank transfer from an Escom account but I noticed that a 'cash withdrawal' of $ 49,500,000 was then made” on 7 July.
Some of this money ended up in the Ocean Private account where, he writes, “I found that a cash deposit of $ 24,750,000 was filed on July 7.”
It took Sobrinho a week to reply. When he finally did, it was to confirm that he was behind the operation. “It was I who ordered it,” he wrote. “…As for you not being informed, this operation had to be done in lightning speed. You were out and it had to be done.”
This kind of recklessness seemed to concern the brother-in-law. He warned Sobrinho that he should be more careful.
“I know it was you who ordered the operation… and I even understand the situation. However, it would take only a phone call… to give the right orders. When I returned, I would then have formalised things. There are procedures that we have to start fulfilling if we really want to have companies organised and clear from trouble in the future.”
The discussions between Sobrinho and his brother-in-law are key. It demonstrates that banking records which describe 'cash withdrawals' and 'cash deposits' did not, in fact, involve people carrying money bags through the streets of Luanda. Instead they were a way for someone to register the passage of money from one account to another within BESA without leaving a trace of its origin.
“Give an end to this torment!”
Ocean Private was a kind of piggy bank. The company's first cash inflows took place in 2011, with 183 million USD registered in 13 cash deposits, and continued until 2013. Ocean Private's accounts show that these massive cash inflows were followed by large outflows. According to an analysis made by Expresso, tens of millions were listed as having been withdrawn in cash from Ocean Private. More tens of millions moved from Ocean Private to 15 bank accounts in Switzerland, run by offshore companies whose beneficiary was Sobrinho.
In December 2012, his brother-in-law Afonso-Dias again complained about the chaos created by these atypical cash flows in an email to Sobrinho: “I cannot make 'an' account report for Ocean Private to present to the tax authorities… We have to sit down so that you can help me separate the wheat from the chaff… and give an end, once and for all, to this torment!”
Afonso-Dias had a plan: to clear the current accounts designated as 'Ocean Private Limited' in BESA and create new accounts with the name Ocean Private Luanda or “something similar”.
Eight months later, in August 2013, Afonso-Dias was still cleaning the dirty accounts of their shell companies at BESA by registering payments to Ocean Private not only as cash withdrawals, but as ‘shareholder loans’ in order to “avoid transfers between unrelated companies,” he said.
A shareholder loan is a form of borrowing taken out by a company from one of its shareholders. The repayment of this loan is from the company back to the shareholder. It implies formal relations between the two. But none of Sobrinho’s Angolan companies were ever legally registered as shareholders of Ocean Private. This was a fraud.
On 12 August 2013, Manuel Afonso-Dias agreed to enter the bank in Luanda to facilitate money transfers, and expressed his concerns about the operations between unrelated companies. “I will have to relate Ocean Private to InovHolding and WydeCapital [two of Sobrinho’s offshore companies] and justify this transaction.”
The banker's answer is illuminating: “You don’t have to say anything at the bank,” Sobrinho wrote. “If you happen to be asked, you only have to say that those are debts between companies.”
Sobrinho builds a new bank with family at the helm
At the end of 2012, Sobrinho was removed from the BESA's executive control, but remained as chairman. The banker went on to set up his own bank in 2013, Banco Valor. Sobrinho then transferred some of his own money to this new bank.
In April that year, his brother-in-law informed Sobrinho that he had opened two accounts at Banco Valor for him, one in the name of Anjog, with a 20 million USD deposit, and another in the name of InvestLeader, with ten million USD.
Afonso-Dias asked Sobrinho if he thought it was a good idea to invest the money in fixed-term deposits. Sobrinho replied: “Yes, I agree. Go forward”.
Following the scandal over the collapse of BESA and pressure from the Angolan central bank, Sobrinho was forced to resign as Banco Valor's CEO in September 2014. However he remains the controlling shareholder of the bank through both his own 35.46 per cent holding and the 31.14 per cent held in the name of his close relatives.
To Banco Valor's board, Sobrinho appointed his brother-in-law, Manuel Afonso-Dias, and his former credit director at BESA, Lígia Madaleno, who is married to his brother Emanuel Madaleno. The bank's CEO is the former head of risk assessment at BESA, João Moita.
The same Moita was questioned by a Portuguese parliamentary inquiry committee in 2015. Lawmakers asked him to name the biggest cash withdrawal that occurred at the bank, and he replied that it was always “small amounts”. He added that the bank had “limits and restrictions blocking withdrawals over $10,000 or $20,000”. This means the head of the bank’s risk assessment missed so-called withdrawals worth hundreds of millions, even if they only happened on paper.
In 2014, BESA needed to be rescued by the Angolan state, with the losses covered by a cash injection from the state oil company Sonangol and Chinese investment. Meanwhile in Portugal, this left a three billion Euro black hole in losses at its parent bank.
But no criminal investigation into the mystery of the losses has been opened by the general prosecutor's office in Luanda, and no one involved in this affair was later prevented from working in the banking sector. For Alvaro Sobrinho, this was the beginning of his global investment bonanza.
How does Sobrinho react?
Neither Álvaro Sobrinho nor his brother-in-law Manuel Afonso-Dias answered questions sent to them on 19 February by Expresso on behalf of EIC.
These included the question of whether the banker's intention in the withdrawal-deposit operations was to eliminate the money trail, and hide the origin of the cash.
When Sobrinho testified before the Portuguese parliamentary inquiry committee, in December 2014, the banker denied that he had ever granted loans to himself in BESA. When Mariana Mortágua, a member of the parliament, probed him further, Sobrinho clarified that “Angola has a law that prohibits credits to related parties” before emphasizing: “It was impossible to give credit to companies linked to me”.
Later in that same session, when confronted by member of parliament Pedro Saraiva on the subject of the mysterious companies which received the loans, Sobrinho went on to detail: “In relation to the companies that you mentioned, Socidesa, Govest, Vaningo and Cross Fund, if I have a relationship with them, with these companies, and if a good part of this money benefited my companies, I say no.”
Main photo credit: Luis Barra (Expresso)