Angola's Diamond Trade and the Ascorp Era

From early 2000 until mid-2004, Angola’s rough diamonds were bought and marketed through a single company, the Angola Selling Corporation (Ascorp). The state marketing company Sodiam owned 51 percent, and the rest belonged to two private firms, one of them partly owned by the Israeli diamond magnate Lev Leviev. The system was meant to keep rebel diamonds out of Angola’s exports; campaigners said it also pushed down the prices paid to diggers and obscured who profited. Ascorp’s contract ended in 2004, and since 2018 Angola has let producers sell most of their output outside the state channel.

Who’s who in Angolan diamonds

Body	What it is	Role in the trade
Endiama (Empresa Nacional de Diamantes de Angola)	State diamond company	Holds the exclusive diamond rights granted by the 1994 Diamond Law; partner in every mining joint venture
Sodiam (Sociedade de Comercialização de Diamantes de Angola)	Endiama’s marketing subsidiary	Buys, sells and exports rough; carries out the day-to-day Kimberley Process checks
Ascorp (Angola Selling Corporation)	Joint venture: Sodiam 51%, Welox 24.5%, TAIS 24.5%	Held the exclusive right to buy Angolan diamonds, 2000–2004

According to Partnership Africa Canada (PAC), which published annual reviews of Angola’s diamond industry in the 2000s, the 1994 law let Endiama delegate its rights only to joint ventures in which it held a majority or the largest share. Under the same law, unauthorized mining, transport or even possession of rough carried prison terms of 8 to 12 years.

Why Angola chose a single buyer

By 1999 Angola was under heavy pressure to prove that its official exports were clean. The UN panel of experts whose work is described in Angola, UNITA and the Origins of the Conflict-Diamond Problem had found internal controls so loose that UNITA stones could pass through licensed channels. PAC later concluded that dealers licensed by Endiama had been helping conflict diamonds into the official trade.

The government restructured the trade in a few steps:

1. December 15, 1999. Ascorp’s shareholders signed their shareholders’ agreement, according to the 2012 High Court judgment described below.
2. January 31, 2000. A presidential decree paved the way for Ascorp’s exclusive right to buy Angolan diamonds; the company began operating early that year.
3. February 11, 2000. Decree 7-B/00 annulled the licenses of diamond middlemen and suspended the buying contracts between Endiama and the producing joint ventures, PAC reported. A companion decree ordered every concession contract renegotiated and capped concessions at 3,000 square kilometers.
4. Early 2000. De Beers’ purchasing contract was suspended and its Angolan buying venture, CODIAM, was wound up.

PAC’s 2007 review added that the monopoly was also expected to lower the price of rough and so raise government revenue.

How the system was supposed to work

The UN Monitoring Mechanism on Angola sanctions visited twice in 2000 and described the system in its December 2000 report. A “Guichet Unico” (single window) validated the licenses of all buyers, which lasted only three months. A computerized record was being built so officials could check the origin and seller of any parcel. The official buying offices in Luanda were closed, and Ascorp was the only commercial entity allowed to bring in substantial amounts of dollars, so that illegal buyers would be short of cash. The Mechanism said Ascorp’s controls “could be considered a model” for licensing diamond buyers, and recommended that they be monitored.

Lev Leviev’s role

Leviev had been a De Beers sightholder from 1987 to 1995, according to Agence France-Presse. PAC reported that his first Angolan venture was a stake in the Catoca kimberlite mine from April 1997, when he supplied the $25 million needed to complete it. By the mid-2000s his group held 18 percent of Catoca, according to the US Geological Survey. A 2005 Gems & Gemology review by GIA’s Russell Shor said Ascorp grew out of a plan Leviev put to the government for marketing Angola’s diamonds through a single entity.

Ascorp’s ownership was set out in a June 2012 judgment of the High Court in London. Sodiam held 51 percent, Welox 24.5 percent and Trans African Investment Services (TAIS) 24.5 percent. The judge called the interests behind Welox and TAIS “less clear,” but said it was common ground that Leviev held an indirect interest in half of Welox, with the other half held ultimately by businessmen Sylvain Goldberg and Ehud Laniado. PAC’s 2004 review described Leviev as the principal buyer of Angolan diamond production at that time.

The case was brought by Arkady Gaydamak, a businessman who had been influential with the Angolan government in the 1990s and who said he had suggested tighter state control of the trade himself. He claimed that Leviev had agreed to split their Angolan interests, including the Ascorp stake, equally. Leviev denied signing the 2001 agreement on which the claim rested. Mr Justice Vos found that the agreement had been signed and was valid, but dismissed the claim because the two men had entered a binding settlement in August 2011 that released all claims between them.

Criticism, as reported

• The UN, 2002. In its October 2002 report (S/2002/1119), the Monitoring Mechanism said that after visiting buying offices it found existing controls “fall far short” of what had been envisaged. It also concluded that no large parcels of UNITA diamonds were entering the system and that buyers could account for their sources. It noted estimates in Angola that smuggling was still worth about $300 million a year.
• Prices paid to diggers. PAC’s 2004 review said Ascorp paid the lowest prices it could negotiate and required sellers to register with the authorities. With dealers outside Angola paying more, especially for larger stones, PAC said smuggling was unsurprising. It put Ascorp’s purchases of artisanally mined diamonds in 2003 at $252 million.
• Ownership. The same review described reports that the president’s daughter, Isabel dos Santos, was a hidden shareholder in TAIS as perhaps the most important transparency issue, and pointed out that TAIS’s beneficial owners could stay hidden. The 2012 judgment did not settle who stood behind TAIS.
• De Beers. Having lost its Angolan buying contracts, De Beers began international arbitration in 2001, PAC reported. In June 2005 De Beers and Endiama signed a new prospecting agreement under which a disputed $50 million loan was to be converted into investment, according to the USGS.

How the Ascorp era ended

PAC reported that Ascorp’s contract ended in July 2004 and that Sodiam would market all of Angola’s production from then on. The minister of mines presented the change as part of a drive against clandestine prospecting, in line with the Kimberley Process. That year Sodiam opened offices in Antwerp and Tel Aviv as Angola’s official export sales sites, the USGS noted.

On the ground, PAC’s 2007 review said, the monopoly was “effectively broken” in 2004 when Lazare Kaplan International opened a chain of buying houses in the interior. Legally these belonged to Sodiam, with LKI as a service provider on a four-year contract. Ascorp did not disappear: in 2007 both Sodiam/LKI and Ascorp ran central buying houses in mining towns such as Cafunfo and Saurimo.

The same review raised a structural problem. Sodiam both exported Angola’s diamonds and did the practical vetting of parcels for Kimberley Process certificates, so it was in effect certifying its own goods. PAC also noted that the International Monetary Fund had questioned the breadth of Endiama’s powers and suggested handing regulatory functions back to the Ministry of Geology and Mines.

After Ascorp: polishing, preferred buyers and the 2018 reform

• Local cutting. Angola Polishing Diamonds, the country’s first cutting factory, opened in Luanda on November 3, 2005, AFP reported. PAC gave its ownership as Sodiam 48 percent, Leviev’s LLD 47 percent and a local consortium, Projem, 5 percent.
• Growth. PAC put national production at about 5 million carats in 2002 and close to 9.5 million in 2006.
• Catoca stake sold. In May 2011 Israel’s Globes reported, citing the Russian newspaper Kommersant, that Leviev had sold his 18 percent of Catoca to China’s Sonangol International for $400 million.
• Preferred clients. For years Sodiam sold to a restricted group of buyers. In 2018 Reuters reported Catoca’s estimate that selling through Sodiam had cost it $464 million over six years, with industry sources saying the preferred buyers were often politically connected.
• The 2018 policy. Under President João Lourenço, Angola adopted a new marketing policy in July 2018, as Rapaport reported. Producers may sell up to 60 percent of their output to buyers of their choice. Rapaport later described the split as 20 percent to Sodiam, 20 percent to local manufacturers and 60 percent to the open market, with Sodiam holding tenders for stones over 10.8 carats and selling to long-term clients on one- to three-year contracts.

By 2022, Rapaport reported, De Beers had applied to explore again in northeastern Angola, and a new diamond business park was taking shape in Saurimo, near Catoca, to attract cutters and traders. How Angolan rough now moves through the trade is explained in The Diamond Pipeline.

Questions

Were Ascorp and Sodiam the same company?

No. Sodiam is the state marketing subsidiary of Endiama. Ascorp was a separate company in which Sodiam held 51 percent, with private partners holding the rest.

Did UNITA diamonds pass through Ascorp?

The UN Monitoring Mechanism found in 2002 that Angola’s buying controls fell well short of plan, but concluded that no large parcels of UNITA diamonds were entering the official system. Smuggling outside that system continued.