South Africa’s largest pharmaceutical manufacturer, Aspen Pharmacare, may have announced a relatively tepid set of annual results for the year ended 30 June 2019, but the anticipation of a reduced debt load freeing up cash flows pushed its share price up 12% the day after its results announcement.
Aenergy’s Ricardo Machado, and the shadow of the Dos Santos family
Aenergy SA, the company created by Portuguese entrepreneur Ricardo Machado, is raising eyebrows and questions, especially with regards to its dealmaking in Ghana.
On 30 July the Ghanaian government released a verbose statement with ballistic consequences.
It said it would suspend a concession agreement with Power Distribution Services (PDS) after “detection of fundamental and material breaches of PDS obligation in the provision of Payment Securities (Demand Guarantees) for the transaction which have been discovered upon further diligence.
Three years after the launch of the concession process for the public distributor Electricity Company of Ghana (ECG), the ‘PDS saga’ has made national headlines.
The closely watched tender was won in April 2018 by PDS, a consortium composed of:
- the Filipino company Meralco (30%),
- Aenergy (19%)
- various Ghanaian parties (51%).
The scandal could hit the country’s political elite, too.
Indeed, the payment guarantees equivalent to $350m presented by the consortium were forgeries, despite successfully passing the Millennium Development Authority’s audits, which represents the Ghanaian state in the process funded by US aid institution the Millennium Challenge Corporation.
The board of the Millenium Development Authority which waved through the deal includes:
- Minister of Energy John Amewu
- Minister of Finance Ken Ofori-Atta
- Minister of Trade and Industry Alan Kyerematen
- Minister of Justice and Attorney-Generale Gloria Afua Akuffo
To make matters worse, PDS, which had promised $125m in investment in the first year, had still not disbursed a cent six months after ECG operations were taken over on 1 March.
The International Financial Corporation — the World Bank’s private sector-focused body — also signed off on the deal.
A “benchmark in energy efficiency”
At the heart of this affair is Aenergy SA, created in 2012 by a 32-year-old Portuguese man, Ricardo Leitão Machado. A company with an exceptional track record that, at the end of 2018, claims more than 500 employees, about $600m in revenue, has built nearly 350 MW of installed capacity in Angola and manages more than 1,100 MW in operation, including the 750 MW Soyo plant, the largest in the country.
At an encounter in June at the Africa Energy Forum (AEF) in Lisbon before the deal broke out, the company’s “sole shareholder” had a bright smile and his talked of his determination to make Aenergy “a benchmark in energy efficiency. With undeniable charisma, the CEO, an agricultural engineer by training, explained his role within PDS to us: “Meralco doesn’t like African fights. It’s Filipino culture. Whereas this is my game[sic] … They are there to manage the network, and we know how to manage Africa. In fact we are the ones who negotiate with the locals.”
This was no doubt a valuable help for Meralco, who, under the terms of the call for tenders, had to find Ghanaian partners with a 51% share. But quite an original argument for a Portuguese man with no known history in Ghana and rudimentary English.
A coup in Ghana
The agronomist, who worked for Standard Bank of Angola in the early 2010, can be proud of his success. For such a young company, especially one specializing in production, winning shared management of a strategic distribution company like ECG – whose value is estimated at $3bn – was a coup.
- “Seeing Aenergy’s name appear in the consortium surprised me a great deal,” says Benjamin Boakye, executive director of the Africa Centre for Energy Policy (Acep), based in Accra. “First because I had never heard of them before 2018, but also because Meralco had gone through the qualification phase alone. Theoretically, after this stage, when the legality and competence of the companies and the people who own them are controlled, no foreign company could join the consortium.”
When quizzed during the AEF, many players in the sector did not hold back in the face of Mr Machado’s meteoric success. One of them summed up the general feeling: “Growth like Aenergy’s is unprecedented in the sector. We’ve never seen it before. To achieve this, tens of millions of dollars must be invested. The only plausible explanation is that Aenergy is supported by someone with a lot of money…”
Some people believe that he has links with members of the family of the former President of the Republic of Angola José Eduardo dos Santos.
The shadow of the Dos Santos family
When contacted, one of Machado’s former colleagues at Standard Bank of Angola told us that he had a “special relationship with the dos Santos family”. Another source who knew him at that time went further: “Ricardo was, at least at the time, a close friend of Hugo André Nobre Pêgo, the husband of Welwitschia José dos Santos, the former president’s second daughter. Like Ricardo Machado, Hugo Pêgo is Portuguese and an agricultural engineer.
Faced with this information, Ricardo Machado formally denied any professional connection with the dos Santos family. While he admits to knowing Hugo Pêgo, he claims to have “met him for the first time in Angola, four years after he arrived there”, only on a friendly basis and “not for business”. For him, the results obtained by his company are explained by his ability to “seek financing”, by the support, “from the beginning”, of his “partner and supplier General Electric” and by his “obsession with the satisfying [his] customers”.
Ricardo Machado also claims a price per megawatt installed well below that of the competition in Angola: “Since we entered this market, we have almost halved the price. Until five years ago, it was almost $2m per megawatt installed, while we sell it for less than $1.4m. We prefer to earn little, but over a long period of time.”
Judicial problems in Portugal
His departure for Angola in 2008 was reportedly linked to his judicial setbacks in Portugal, where he was the subject of two complaints, including one for embezzlement in the context of his duties with the Federation of Forest Producers of Portugal (Federação dos Produtores Florestais de Portugal). Before joining Standard Bank, where he was a carbon credit trader, he had participated in negotiations for Angola at several Conferences of the Parties on Climate (COP). According to him, he had even become the head of the Angolan delegation. Sources consulted during this investigation have cast doubt on this.
Today, Ricardo Machado defines Aenergy as “an African company for Africans”. According to its founder, it is supported by many financial institutions, including Standard Bank and Banco Atlántico (a subsidiary of the Spanish company Banco Sabadell). Aenergy is also a small shareholder and partner of Afreximbank. In 2019, Bureau Veritas awarded it ISO 37001 certification, an anti-corruption standard.
- An African actor in the sector who worked with him on a project told us that he did not understand the suspicions surrounding him: “For me, his career path is not abnormal. You can very well be an agronomist and succeed as he did. In Angola, in a sector where competition is still weak, if you have network, perseverance and come at the right time… Ricardo is a direct and determined person, and he has surrounded himself with very competent experts, particularly from GE”.
Ambitions in Mozambique and Cameroon
Criticism has not dimmed Machado’s ambitions. Aenergy has just opened offices in Maputo (Mozambique) and is looking at the construction of a 200MW power plant in Bekoko, Cameroon. He may be interested in the Cameroonian distributor Eneo, owned by Actis. But the PDS scandal could well have damaged his credibility in Yaoundé’s eyes.
Who is responsible for the false documents filed by the PDS consortium – including Aenergy – with the regulatory authorities for the licensing of the Electricity Company of Ghana?
Two insurance companies blame each other: Donewell Insurance of Ghana and Al Koot Insurance & Reinsurance of Qatar, which have joined forces to provide the necessary $350m guarantee.
The problem, according to Al Koot, is the employee who signed the agreement with Donewell did not have the prerogatives to sign for the company. In doing so, it blames the Ghanaian company for a lack of vigilance.
A Ghanaian delegation visited Qatar in August to shed light on the case.