PwC under growing scrutiny as scandal engulfs Isabel dos Santos

Juliette Garside and Phillip Inman
Photograph: Maxim Shemetov/Reuters

PwC, the global accounting firm battling to distance itself from a financial scandal engulfing Africa’s richest woman, Isabel dos Santos, was auditing the books of Angola’s state oil company during a period that is now under criminal investigation.

Critics says PwC’s work for Sonangol, the government-owned oil group that underpins Angola’s economy, raises conflict of interest concerns because the firm appears to have been retained to check the company’s accounts while at the same time collecting fees to advise on a major restructure.

Related: Luanda Leaks: Isabel dos Santos 'named as suspect in criminal investigation'

PwC’s work took place while Dos Santos, the daughter of Angola’s former president, was chair of Sonangol. She was sacked from her role in November 2017, soon after her father retired. Sonangol’s new management subsequently terminated PwC’s audit contract, according to its annual reports.

“There is a clear conflict of interest,” said Prem Sikka, a professor at the University of Sheffield, who has advised policymakers on reforming the accountancy sector. “There should be a major investigation into this.”

It comes as it emerged Angola’s attorney general has reportedly announced that Dos Santos has been named as a formal suspect in the criminal investigation.

The complex financial schemes that helped Dos Santos amass an estimated $2.2bn (£1.7bn) fortune at the expense of the Angolan state have been revealed this week in the Luanda Leaks investigation, based on a huge cache of documents leaked from her business empire.


The Luanda Leaks project is based on a trove of 715,000 emails, charts, contracts, audits and accounts detailing the business operations of Isabel dos Santos, the daughter of the former president of Angola.

The files were initially obtained by the anti-corruption charity Platform to Protect Whistleblowers in Africa (PPLAAF), which shared them with the International Consortium of Investigative Journalists (ICIJ).

The documents, which cover a period between 1980 and 2018, have been reviewed by more than 120 journalists from 37 media outlets, including the Guardian, the BBC and the Portuguese newspaper Expresso.


The files reveal extensive use of the biggest global accounting firms by her businesses, with London-headquartered PwC emerging as one of the favoured advisers.

Angolan prosecutors allege $38m in suspect payments were authorised in November 2017 by Dos Santos, on the day she was sacked as chair of Sonangol. Dos Santos says the payments were for consultancy work provided by blue chip firms – including PwC.

A criminal inquiry into the transactions was opened by Angolan prosecutors in September last year. The businesswoman denies all wrongdoing and says she is the subject of a “politically motivated witch-hunt”.

There is no suggestion of wrongdoing by PwC. The firm declined to comment on its work for Sonangol. In an earlier statement, a spokesman said PwC was in the process of ending all engagements for Dos Santos and members of her family.

Related: Isabel dos Santos responds to Luanda Leaks investigation

Bob Moritz, the chairman of PwC since 2016, told reporters on Tuesday that from a reputational perspective, the revelations about his firm’s ties to Dos Santos were the worst thing to have happened under his leadership. Speaking on the fringes of the annual gathering of business and political leaders in the Swiss ski resort of Davos, Moritz said PwC staff could be demoted or sacked for their involvement in the affair.

The head of PwC’s tax advisory team for Angola and Portugal, Jaime Esteves, has stepped down, telling Portugal’s Observador newspaper that given the “seriousness of the Luanda Leaks’ claims”, he had decided to surrender his leadership of the team.

The Luanda Leaks reveal PwC acted for at least 20 companies owned by Dos Santos, her husband and their associates. It provided tax advice, consultancy and auditing services to entities in Malta, Luxembourg, Angola, Portugal and the Netherlands.

Among the companies audited by PwC are several named in or connected to an asset freeze imposed by Angola’s attorney general in December, on Dos Santos, her husband, an associate and their businesses. Prosecutors allege the couple drained more than $1bn from public funds through transactions with state companies including Sonangol and the national diamond exporter Sodiam.

PwC replaced another big firm as Sonangol’s auditor for the 2016 annual accounts, and was due to audit the books for 2017. During this period, PwC had also been retained by Sonangol to provide advice on a restructuring initiated by Dos Santos when she was appointed to lead the company in June 2016.

During her time at the helm, Dos Santos spent $115m on consultants. The money was paid to a Dubai consultancy run by a friend, which in turn made payments to well known firms retained to advise Sonangol. These included Boston Consulting Group, McKinsey and PwC.

After Dos Santos left Sonangol, the rival firm KMPG was hired in January 2018 to replace PwC as auditor. Sonangol’s new management said PwC’s contract had been terminated early, citing conflict of interest.

“The termination of the contract is based on the fact that the award of the contract to PwC constituted a conflict of interest, since the same company had already been contracted as a consultant for the transformation process,” the news agency Angop reported.

“Any professional services firm needs to think very hard about the reputational risk of accepting both forms of business from the same customer,” said Tom Keatinge, director of the Centre for Financial Crime and Security Studies at the Royal United Services Institute. “It is no secret that the environment in Angola is very challenging when it comes to ethical business practices.”

Moritz has made tackling corruption a priority under his leadership. He is a member of the Partnering Against Corruption Initiative, a group that bills itself as the leading business voice on anti-corruption and transparency matters. It was assembled by the World Economic Forum, which organises Davos.

Dos Santos denies her fortune is the result of nepotism or corruption, and she and her husband have rejected any allegations of wrongdoing, saying their wealth is the result of decades of hard work, and that moves to freeze their assets in Angola are part of a politically motivated “witch-hunt” by her father’s successor as president, João Lourenço.

“There is an orchestrated attack by the current government that is completely politically motivated, it’s completely unfounded,” Dos Santos told BBC News. “I can say my holdings are commercial, there are no proceeds from contracts or public contracts or money that has been deviated from other funds.”

The revelation will add fuel to demands for regulators to break up the big four audit firms, PwC, EY, KPMG and Deloitte. Critics say audits can be compromised if a firm responsible for checking the books of a business is also receiving often much larger fees for advising that business on matters such as tax schemes, cost-cutting and restructuring.

In April 2019, following a series of accounting scandals, Britain’s competition regulator proposed a shake-up. A report by the Competition and Markets Authority (CMA) stopped short of recommending the full breakup of the big four, but said their auditing arms should operate at arm’s length from tax advice and other services.

Building on similar views expressed in the Kingman review of audit regulation and the Brydon review of audit quality, the CMA said there should be rule changes to support greater competition for audit work.

But the Queen’s speech, which followed the landslide victory for Boris Johnson’s Tories in the UK general election in December, was criticised by Sir John Kingman, chair of one of the reviews, for making only a “vague reference” to his proposals for a new independent watchdog for the industry or measures to challenge the big four’s domination.

The government only made the commitment to develop proposals on company audit and corporate reporting “including a stronger regulator with all the powers necessary to reform the sector”, without agreeing to set a timetable.