Five takeaways from the Luanda Leaks

In 2013, National Security Agency contractor Edward Snowden leaked a large volume of highly classified information to investigative journalists, inspiring a new generation of whistleblowers. Since then, we’ve all been given access to the Panama and Paradise Papers. Last week brought the latest revelatory data dump: The Luanda Leaks have provided damaging new insight into business dealings and corporate relationships of Isobel dos Santos, the daughter of Angola’s former president. Here are five takeaways.

The focus on the human rights impacts of anti-corruption is sharpening. While the Panama Papers and Paradise Papers drew attention to the techniques the global elite use to protect their wealth and avoid taxation, the Luanda Leaks have focused public attention on the causal link between kleptocratic governments and the negative human rights impacts on their citizens. The juxtaposition of images showing Isabel dos Santos partying with Paris Hilton, while Angolans lack basic social services such as clean water, is a more effective way to convey this message than thousands of academic papers that describe how corruption drives poverty and harms society.

The spotlight moves to professional services firms. One of the most striking findings from last week’s revelations is that professional services firms that include PwC, KPMG, BCG, and McKinsey were willing to work for entities controlled by dos Santos, even as her options for international banking relationships narrowed and finally disappeared. In 2017, dos Santos gave the keynote speech at a Financial Times conference on African investment. As we saw with Unaoil, showing up in the right places among the right people is an excellent way to deflect sensible scrutiny by compliance teams.

The anti-corruption community, already concerned about “gatekeepers,” will renew its efforts to drive higher standards in the legal, consulting, and accounting sectors. The Luanda Leaks revelations about the willful blindness of respected firms and companies is the natural sequel to recent revelations about the firms that have worked for companies linked to Crown Prince Mohammed bin Salman after Jamal Khashoggi’s murder. These firms should expect rising employee activism among some elements of the workforce to question the clients and customers they choose to serve. Job candidates will be paying close attention to all this.

In opaque jurisdictions, context is key. Comprehending beneficial ownership and reputational risk in opaque jurisdictions such as Angola is extremely challenging. There, the use of low-profile proxy individuals in corporate filings is the norm. Background-checking such people turns up no red flags — but also provides no useful insights into potential relationship risk. Due diligence can be useful in Angola only if it is informed by an understanding of the structure of the country’s political economy: an enormous concentration of wealth in a few politically connected hands.

Although many due diligence providers are capable of delivering this understanding, clients too often instruct them to “stick to the facts.” The product is a picture so incomplete as to lack meaning. Without excusing any decisions to work with dos Santos, whose track record was well-known to anyone with a passing knowledge of Angola, it shines a bright light on the need for the practice of due diligence to acquire a political risk dimension. Such a dimension would have provided at least some firms with the ability to anticipate and interpret the shifts in power within Angola that have left dos Santos in such a precarious legal position.

A new model of journalism has come of age. Transparency alone cannot drive change. Giant data leaks are of limited utility without a herculean effort to interpret and translate the primary findings to the general public. As with the Panama and Paradise Papers, a consortium of organizations that include the ICIJ, the Guardian, the New York Times and Quartz assembled more than 120 journalists in 20 countries to map this vast trove of data and turn it into the revelations we’ve all been reading about. For an era whose journalists are under unprecedented pressure to prove their utility and trustworthiness, the achievement of these media collaborations is a notable bright spot.

Corporate confidentiality is dead. If any company is under the impression that client confidentiality and non-disclosure agreements still offer meaningful protection, the Luanda Leaks drives another nail into the coffin of that misperception. Banks, professional services firms, lawyers, and the large companies they serve should review their client acceptance processes in this light. Whenever you’d be uncomfortable if that relationship were made public, it’s a link you don’t need.