The Queensway Syndicate and the Africa Trade
The Economist investigates the China International Fund, a shadowy Hong Kong-based syndicate accused of a range of misdeeds. These include corruption, profiteering with African natural resources while breaking the terms of license agreements, fuelling conflicts, interfering with elections, illegally trafficking diamonds and even, less plausibly, of being a secret arm of the Chinese government.
WHEN the man likely to become China’s next president meets an African oil executive, you would expect the dauphin to dominate the dealmaker. Not, though, with Manuel Vicente. On April 15th this year the chairman and chief executive of Sonangol, Angola’s state oil firm, strode into a room decorated with extravagant flowers in central Beijing and shook hands with Xi Jinping, the Chinese vice-president and probable next general secretary of the Communist Party. Mr Vicente holds no official rank in the Angolan government and yet, as if he were conferring with a head of state, Mr Xi reassured his guest that China wants to “strengthen mutual political trust”.
Angola—along with Saudi Arabia—is China’s largest oil supplier and that alone makes Mr Vicente an important man in Beijing. But he is also a partner in a syndicate founded by well-connected Cantonese entrepreneurs who, with their African partners, have taken control of one of China’s most important trade channels. Operating out of offices in Hong Kong’s Queensway, the syndicate calls itself China International Fund or China Sonangol. Over the past seven years it has signed contracts worth billions of dollars for oil, minerals and diamonds from Africa.
These deals are shrouded in secrecy. However, they appear to grant the Queensway syndicate remarkably profitable terms. If that is right, then they would be depriving some of the world’s poorest people of desperately needed wealth. Because the syndicate has done deals with the regimes in strife-torn places, such as Zimbabwe and Guinea, it may also have indirectly helped sustain violent conflicts.
The Economist repeatedly put these accusations to the people who feature in this article, asking for their side of the story. But—with one exception, noted below—we heard nothing. In short, it looks as if the fortunes of entire African countries depend to a significant degree on the actions of a little-known, opaque and unaccountable business syndicate. “Buccaneers are cutting themselves a large slice of Africa’s resource cake,” says Gavin Hayman of Global Witness, a watchdog that mapped the syndicate’s deals.
A Sydney Morning Herald article early last year noted the findings of a US congressional body, the US-China Economic and Security Review Commission, regarding the syndicate:
The report traced the web of related Hong Kong entities and concluded that key personnel had links to Chinese state-owned companies and “possibly China’s intelligence apparatus”.
But last month, China’s ambassador to Guinea, Huo Zhengde, was reported to have told international observers in Guinea that the CIF was not a Chinese government entity, so any action against it would not affect relations between China and Guinea.
That is consistent with a series of previous Chinese government statements in response to controversies that have followed CIF around the world ….
“We’re not familiar with China International Fund’s background, but all their projects that have been built in Angola are not good,” a Chinese embassy spokesman in Angola told a Chinese newspaper at the time of the scandal.
The Economist’s Baobab blog concurs that “it would be wrong to assume that the syndicate is controlled from Beijing.”
The Chinese government has made at least three strongly worded statements denying any link with the Queensway syndicate. It has repeated them to Western diplomats in private. China was so wary of corruption surrounding oil deals that in 2004 its secret service supposedly gave the Angolan president a list of 20 top officials who were trying to skim off money.
China’s protestations appear to be mostly genuine … The syndicate looks as if it is a private enterprise. The Chinese state may see it as a necessary evil, letting it operate in Angola and thus insulating Chinese state companies from the corruption that sometimes surrounds large resource deals.
The Queensway syndicate and the Africa trade – The Economist
State or mate? Who’s behind China fund? – The Sydney Morning Herald
Does the government in Beijing control the China International Fund? – The Economist