BCG in Angola: An Agent, a Declination and $14.4m

On 27 August 2024, the U.S. Justice Department sent Boston Consulting Group’s lawyers a four-page letter. It said the department had decided not to prosecute the firm under the Foreign Corrupt Practices Act. It also said it had reached that conclusion “despite evidence of bribery” committed by employees or agents of the company. The conduct took place in Angola. At its centre was a person the letter never names and calls only the agent. The letter, which BCG’s chief legal officer signed on the firm’s behalf, is the main source for this account. It names no individuals, and neither does this article.

The client was the government of Angola. Its business model is oil. According to the World Bank, oil brings in about three fifths of government revenue, and more than nine in ten dollars of the country's exports. That money pays for ministries. And ministries buy advice. Two of them bought it from BCG: the Ministry of Economy, and the National Bank of Angola.

BCG's business model is simple too. It sells teams of consultants by the project. Its partners hold equity in the firm, and share in its profits. The Angola work was run from BCG's office in Lisbon, Portugal.

To win government work in Angola, the Lisbon office used an agent. Agents are common in international business. They open doors, arrange meetings, and explain local rules. But according to the Justice Department, certain BCG employees in Portugal knew this agent had close ties to Angolan government officials, and to members of the ruling political party.

The deal was a commission. BCG agreed to pay him twenty to thirty-five per cent of the value of any government contract he helped to win. It is a kind of success fee. And for a middleman close to the people who award the contracts, it is a powerful incentive. And the money did not go to him directly. It went to three different offshore companies linked to him.

From about 2011 to 2017, according to the letter, BCG paid the agent the equivalent of about $4.3 million in commissions. The department said its investigation found evidence that the agent sent part of those commissions, in Angolan currency, to government officials associated with the Ministry of Economy in connection with obtaining BCG’s contracts. That ministry awarded eleven of the twelve contracts.

That flow of money to officials is what moves the case from a commercial commission to an anti-bribery matter. The FCPA prohibits covered companies from paying foreign officials, directly or through intermediaries, to obtain or retain business. BCG was not charged, so these facts were not tested at trial; they are the facts set out in the letter that the firm signed.

According to the letter, when internal questions arose, certain employees in Portugal took steps to conceal the nature of the agent’s work. They backdated contracts and falsified the agent’s purported work product, the reports meant to show what the commissions had paid for. The documentary summarises the point simply: the paperwork was made to fit the payments. For a compliance reviewer, that is the critical detail. A file can look complete while recording a service that did not happen in the form described.

In total, the letter says, the agent helped BCG secure twelve contracts: eleven with the Ministry of Economy and one with the National Bank of Angola. They produced revenue of about $22.5 million and profit of about $14.424 million. On our arithmetic, that is about 64 cents of profit per dollar of revenue, while the agent’s $4.3 million in commissions equalled about one dollar in five of revenue.

BCG agreed to disgorge $14,424,000, the profit from the contracts as calculated by the government and agreed by the company. The letter imposes no separate fine. It also lists the absence of aggravating circumstances, including significant profit from the misconduct, among its reasons. The two observations are compatible: the profit was small relative to the whole firm, but high relative to the contracts’ revenue.

According to the Justice Department, BCG uncovered evidence of a potential FCPA violation in the form of a 2014 email and then disclosed the misconduct. The letter calls the self-disclosure “timely and voluntary”. It does not say when BCG found the email, and this article does not infer it. Not every observer was persuaded. The FCPA commentator Mike Koehler noted that the media had reported on BCG’s business dealings in Angola since at least 2020; the Luanda Leaks case in this collection covers some of that reporting. Consultancy.com.au reported that Portuguese police had searched BCG’s Lisbon office in 2023, according to earlier reports at the request of the Angolan government.

The outcome was a declination: no charges and no guilty plea. The letter lists the department’s reasons: BCG’s timely and voluntary self-disclosure; full and proactive cooperation, including information about the individuals involved; remediation, including terminating the personnel involved, requiring implicated partners in Portugal to give up their equity and withholding bonuses; compliance improvements such as screening of vendors and clients and local and global risk committees; the absence of aggravating circumstances such as involvement by executive management; and disgorgement.

BCG also said it had closed its office in Luanda. Its chief legal officer signed the letter on the firm’s behalf, accepting its terms. The letter offers no protection to any individual, and the department said it may reopen its inquiry if it learns information that changes its assessment.

BCG was not charged with any crime. In its statement of 28 August 2024, as quoted by Lusa, the firm said employees had improperly paid third parties to secure business and that it promptly self-reported the matter to the Justice Department when it found out. It pointed to its cooperation and compliance improvements, including a global network of risk and compliance staff focused on its managing directors.

The letter does not name the agent, the officials or the BCG employees, and neither does this article. In Portugal, the civic anti-corruption group Frente Cívica asked the attorney general to open a criminal investigation into BCG. The sources reviewed for this article report no charges there.