Reed Kramer Washington
The Angolan embassy in the US cancelled Monday night’s celebration planned to mark the country’s 35th independence anniversary following a decision by Bank of America to close the embassy’s cheque accounts.
At least 16 other African missions in the US and a similar number from other regions are said to be facing service restrictions imposed by several large US banks, according to US government officials and private sector sources, who refused to be identified due to diplomatic complications the actions are causing.
“The Department of State seriously regrets the inconveniences – in some cases, very serious inconveniences – that African embassies and others have been subjected to as a result of actions by a number of American commercial banks,” Assistant Secretary of State Johnnie Carson said on Monday.
Senior officials reached out to banking institutions to help find a solution, he added.
At the same time, officials stressed that the US government “does not control the banks in this country and cannot dictate to them who they shall have as their customers”.
African diplomats were looking to the administration of President Barack Obama for forceful intervention. Angolan ambassador Josefina Pitra Diakité appealed to Secretary of State Hillary Clinton for assistance.
American businesses with interests in Angola have voiced concern to officials in the government and the banks.
Ambassador Roble Ohaye from Djibouti said he had asked senior State Department officials “to find an interim solution so these countries could carry on their diplomatic activities”.
While some of the affected embassies had not yet had their accounts closed, Angola and several others were now unable to access any of the funds they had on deposit in the US.
Angola last year overtook Nigeria as Africa’s largest crude oil producer and the country has become the sixth-largest supplier of imported oil to the US.
Bilateral relations with the US, which have been generally cordial in the post-Cold War era, moved a step higher following Clinton’s visit to Luanda last year. Since that time, the US efforts aimed at combating HIV/Aids and improving health have increased and working groups to promote co-operation on energy, as well as security cooperation, have been established.
As the country’s oil output has risen, so have allegations of widespread corruption involving both the Angolan government and the rapidly expanding oil and banking sectors.
A US senate investigation subcommittee, chaired by Michigan Democrat Carl Levin, in a February report cited Angola “for an ongoing corruption problem, weak anti-money laundering (AML) controls, as well as a cash-intensive banking system”.
The Angolan embassy began doing business with Bank of America three months ago after HSBC Bank USA closed all embassy accounts, apparently as part of a move to reduce or cut ties with the oil-rich nation.
In a letter dated October 25, Bank of America advised the embassy to stop writing cheques and stated that all embassy accounts would be closed by November 9. But the letter gave no reason for the action.
Embassy funds on deposit with the bank remain frozen, leaving mission staff in Washington without operating funds, according to sources familiar with the situation.
A statement from the bank issued in response to an inquiry from AllAfrica said: “Due to confidentiality, we can’t comment on specific client relationships. In general, Bank of America Merrill Lynch is actively committed to providing banking services for the diplomatic community.
“This includes countries in Africa, where we have a number of clients and are pursuing other opportunities,” it added.
In June, Reuters reported that pressure from the senate might have prompted HSBC to halt all business dealings with an unspecified number of private Angolan banks. HSBC declined comment, according to the news agency, which cited “a source with direct knowledge of the matter” for its report.
On Sunday, the Financial Times reported that the consulting firm Deloitte was carrying out an “independent examination” of AML procedures at HSBC, which faces investigations by federal government agencies.
Banks are facing increasing scrutiny from anti-corruption groups for their activities in many countries.
A March 2009 report on international banking, issued by Global Witness, charges that “dozens of British, European and Chinese banks have provided Angola’s opaque national oil company, Sonangol, with billions of dollars of oil-backed loans, though there is no transparency or democratic oversight about how these advances on the country’s oil revenues are used”.
The 328-page senate investigation issued in February included four detailed case studies to illustrate how politically connected foreign officials “have used US lawyers, property and escrow agents, lobbyists, bankers, and even university officials, to circumvent US AML and anti-corruption safeguards”.
Along with Angola, the case studies focused on Equatorial Guinea, Gabon and Nigeria.
Increased scrutiny from many governments – led by the US – designed to stop money laundering and combat financing of terrorism – has raised the cost for banks of doing business with smaller countries and reduced incentives for handling the once-lucrative accounts.
While no comprehensive list of countries impacted by newly imposed limits from US banks seems to exist, African nations feeling the effects are said to include Burkina Faso, Burundi, Cape Verde, Central African Republic, the Democratic Republic of Congo, Republic of Congo, Equatorial Guinea, Gambia, Lesotho, Madagascar, Malawi, Mauritania, Swaziland, Mozambique, Namibia and Sierra Leone. As many as 20 countries outside Africa are believed to be facing similar difficulties.
With many governments impacted, diplomatic efforts to find a resolution have intensified. UN missions from many countries had also been told by a US bank their accounts would be closed in March, said Ohaye. – Sapa