Cable by Dazzlepod US Embassy Diplomatic Cables from WikiLeaks Released 251287 Cables (Sep 2, 2012)
SECRET (11322)
Reference ID 07LUANDA164 (original text)
OriginEmbassy Luanda
ReleasedAug 30, 2011 01:44
CreatedFeb 16, 2007 12:37
DE RUEHLU #0164/01 0471237
R 161237Z FEB 07
E.O. 12958: N/A 
LUANDA 00000164  001.2 OF 003 
 1. (SBU) Summary.  Angola,s new customs code took effect in 
January 2007, bringing Angolan law into line with modern 
international practices, including the Kyoto and Istanbul 
Convention norms.  Management consultant Crown Agents has 
improved daily customs operations, computerizing and 
streamlining procedures to reduce the amount of time for 
customs clearance.  Crown Agents also trains local 
authorities on cargo valuation and investigations, and the 
Customs Service has implemented higher salaries and a profit 
sharing plan to encourage employees to eschew bribes but 
fighting endemic corruption is a tough battle.  Despite 
improvements to Customs operations, importers are faced with 
slow overall clearance time for imports as both Luanda,s 
seaports and airports are overwhelmed with incoming cargo. 
In addition, Angola charges some of the highest import duties 
on goods in the world. End Summary. 
The New Customs Code 
 2. (SBU) Angola,s new customs code took effect in January 
2007, after National Assembly approval in October 2006.  The 
Angolan Customs Authority awaits the implementing regulations 
but it is not yet clear when they will be issued.  When 
implemented, the new code will be an important step toward 
modernizing customs operations in Angola and making clearance 
practices consistent with other Kyoto Convention signatories. 
 On January 24, 2007, Econoff and Commercial Specialist met 
with Andy Hunter, Consultant to Angolan Customs for Crown 
Agents, and Fecilia Senalto, a lawyer with the investigative 
office of Angolan Customs, to discuss the new regulations. 
Crown Agents is a UK-based international consultancy working 
with Angola,s Customs Service to improve its management 
systems.  Crown Agents was instrumental in amending the 
previous code, portions of which had been in force since 
 1944.  The GRA originally contracted Crown Agents in 2002 and 
its contract was renewed in 2006 for another three years. 
Crown Agents, fees are derived as a percentage of total 
customs fees collected by the GRA, thus it has a direct 
incentive in cleaning up customs irregularities and improving 
efficiency.  Angolan customs charges, at about ten percent, 
are higher than U.S. (3.7 percent) or European Union (4.2 
percent) average tariffs.  In addition to tariffs, Angola 
levies consumption taxes of ten to thirty percent on the 
value of imports.  However, an importer paying USD 30 in 
tariffs and taxes on a USD 100 item can sell it for USD 240 
in Luanda, thus allowing them to more than recoup the higher 
Meeting International Standards on Customs 
 3. (SBU) Although 85 percent of the language in the customs 
code remains unchanged, according to Hunter, the new parts 
bring Angolan Customs into line with the Kyoto and Istanbul 
conventions, as well the Southern African Development 
Community (SADC) guidelines.  (Note:  The Kyoto convention 
regularizes worldwide customs procedures so that shippers can 
predict the time required for goods to clear customs; 
automates risk management for customs services; establishes 
universal standards for better understanding by importers and 
exporters, and computerizes tracking documents to make 
extorting facilitation payments more difficult.  The Istanbul 
convention covers temporary imports of goods, such as those 
used in trade fairs.  End note.)  Angolan Customs licenses 
brokers to clear cargoes for importers.  Where the number of 
brokers was previously strictly limited, the new law allows 
as many brokers to operate as can qualify for licenses. 
Risk Management and Investigations 
 4. (SBU) Risk indicators for suspect cargoes generate notices 
reminding Customs officials to review documents and, if 
appropriate, physically inspect the shipment.  Customs also 
conducts a certain number of random documentary and physical 
 5. (SBU) The new code gives investigations a more prominent 
role, providing criminal penalties for violating the customs 
code.  The new law also gives importers the right of appeal, 
whereas under the old law, Customs sanctions could not be 
questioned.  The new law ends separate Customs courts and 
cases now must be prosecuted in the regular court system. 
However, because of the specialized nature of many Customs 
cases, judges who understand the customs code and case 
histories will try these cases, somewhat like administrative 
law judges in the United States.  For the first time, judges 
can hand down jail sentences for violations of the customs 
Streamlining Operations 
LUANDA 00000164  002.2 OF 003 
 6. (SBU) Crown Agents has focused on computerization.  As 
soon as Customs receives documents, they are keyed into the 
Customs, computer system, which permits Customs to track 
cases and gives each official the same information to work 
from.  This has also helped speed the customs process. 
Customs now can clear a shipment in three days, but 
importers, delays in assembling all required documents 
normally add 20 days to this process.  For example, a U.S. 
company was recently assessed punitive charges of over USD 
250,000 because its agent consistently delayed advising the 
US company on required documentation, resulting in long 
delays for submission. 
Hung Up On Paper 
 7. (SBU) Despite computerization, the Customs process still 
depends on a paper document, the documento unico (single 
document).  Crown Agents has also trained Angolan officials 
in risk analysis and in valuation of cargoes under the Kyoto 
Convention.  Hunter ruefully gave an example showing the 
potential downside of such training.  In Mozambique, where 
Crown Agents had authority over the Customs Service for nine 
years, it managed to stop corruption by customs officials. 
When it left, officials returned to demanding bribes, but 
demanded much more than they had previously because of their 
newly acquired expertise in cargo valuation. 
Confronting Endemic Corruption 
 8. (SBU) Crown Agents is strictly a management consultant 
located within Angolan Customs, with neither the mandate nor 
the authority to fight corruption, but Hunter believes it has 
impeded corruption by making the Customs process more 
regular.  Transferring paper records to computers protects 
against altering documents, Hunter explained.  Also, the new 
Customs regulations, when published, will reduce the power of 
individual officials to interpret the law. 
 9. (SBU) Hunter stressed that stopping the practice of 
demanding bribes requires a change in the culture of the 
workplace.  He noted that since 2003, Customs officials have 
received higher salaries than other Angolan civil servants. 
In addition, Customs has established a special fund, which is 
endowed by a small percentage of the duties, fees and fines 
charged on incoming shipments, plus a &social fee8 charged 
even on shipments otherwise exempt from charges.  The Fund 
represents a legitimate type of profit sharing scheme and its 
capital is divided among all Customs officials each year. 
The Fund also provides an incentive for Customs officials to 
increase productivity as more shipments processed results in 
a larger fund and higher per person stipend.  Hunter believes 
this incentive system is working with newer employees. 
However, he maintained that higher salaries alone do not stop 
older officials, who take bribes as a matter of course.  An 
internal audit unit investigates possible malfeasance by 
Customs officials, but authority to discipline or remove 
officials rests with a special committee and senior Angolan 
officials in Customs.  No figures are available for the 
number of Customs officials disciplined. 
 10. (SBU) Hunter shared many examples of importers, brokers 
and Customs officials trying to beat the system, ranging from 
falsified invoices to outright theft, and conveniently 
&lost8 paperwork in attempts to avoid physical inspection. 
Angolan Customs is now investigating  such cases and 
prosecuting transgressions where possible.  At least four 
customs brokers have lost their licenses as a result of 
investigations by Customs.  The investigations office 
compares values claimed against known values for the items. 
Discrepancies in data submitted can also alert Customs 
officials to take a second look at a shipment.  Hunter shared 
one incident where an importer was caught paying a bribe in 
order to avoid duty payments on his goods ) when Angolan 
Customs sat down with the importer and explained the duty 
valuation on the goods in question the importer learned he 
had paid far more with the bribe than if he had simply paid 
the duty.  But given the near institutionalized nature of 
corruption with regard to all phases of importation, it is 
likely that it will take many more cases of catching 
transgressors and explaining the actual duties before the 
importers &get8 that it is cheaper to conduct business 
according to the law. 
Improvements at Customs Dwarfed by Overall Processing Time 
--------------------------------------------- ------------- 
 11. (SBU) Improvements in Customs clearance times have not 
translated into improvements in overall processing times for 
many importers.  One non-U.S. medium-size importer says it 
LUANDA 00000164  003.2 OF 003 
gets its imports within 20 days from the time they are 
landed, but it also usually pays a bribe for faster service. 
A U.S. corporation, in contrast, reported persistent problems 
with its imports despite having done business in Angola for 
decades.  Even the Embassy,s shipments take an average of 
five weeks before they are released by the port.  In 
addition, Embassy Luanda,s GSO points to growing congestion 
at the Port of Luanda and the airport affecting total 
processing times.  Ships arriving at Luanda typically wait 
one to three weeks before docking, yet the seaport continues 
to work a 40-hour workweek.  Congestion in the container yard 
adds weeks to processing seaborne shipments.  One company 
reported a shipment which was misplaced by the airport 
warehousing authority for 14 months. 
What Does This Mean for US Business? 
 12. (SBU) Comment:  The new customs code should make Customs 
clearance in Angola more predictable.  However, it is only a 
first step.  Parts of the existing law still invite 
corruption.  While customs brokers must now compete with each 
other for business, it is still possible for officials to 
hide bribes in the broker,s bill.  High customs charges are 
a reality of doing business in Angola despite the high 
markups in Angola,s retail market.  Inefficiency in 
Angola,s ports adds to import times and the tremendous 
growth in import volume over the last two years has 
overwhelmed port facilities in Luanda.  Ending corruption and 
eliminating inefficiencies at Angola,s ports is a huge task. 
 Small steps of success are tangible in the short term but 
the complete systemic overhaul will take many years.