* Portugal's Expresso publishes "presidential order"
* No immediate comment from Angola's presidency, government
* Guarantee covers 70 pct of loans for 18 months, BESA says
By Andrei Khalip
LISBON, July 19 Angola's president personally
ordered that the state guarantee up to $5.7 billion in troubled
loans belonging to the Angolan unit of Portugal's financially
compromised Banco Espirito Santo, a Portuguese
newspaper said on Saturday.
BES, one of Portugal's best-known banking institutions, is
struggling to contain a crisis which erupted after an audit into
its major shareholder Espirito Santo Financial Group
revealed irregularities there, leaving a network of other
companies controlled by the Espirito Santo family under scrutiny
from investors and regulators.
The scale of those problems - and potential losses linked to
unpaid debt - is not yet clear, but the fallout has spread to
Portugal's former colony Angola where BES's 12-year Angolan unit
BESA is a major financial player with links to the ruling elite
and the dos Santos family.
On Saturday Portugal's weekly Expresso published what it
said was a copy of the "Internal Presidential Order Number 7"
signed by Jose Eduardo dos Santos on Dec. 31, 2013.
The document, whose authenticity could not be independently
verified by Reuters, instructed Angola's finance minister to
issue the guarantee for BES Angola (BESA) for up to $5.7 billion
with the aim "to protect fundamental interests for the
equilibrium of the Angolan financial system."
While BESA has already said that an Angolan state guarantee
covered $5.7 billion, or 70 percent, of its loans, the fact that
the guarantee was ordered by the president revealed his direct
involvement in the move to protect the Angolan bank.
The presidential order noted BESA had a "relevant" loan
portfolio financing Angolan companies, from small-sized to
large, which were helping to advance the government's 2013-2017
National Development Plan seeking to boost the non-oil sector of
the Angolan economy, which relies heavily on oil revenues.
Many banks in Africa's No.2 oil producer have been hit by a
surge in bad loans in recent years due to an economic slowdown.
The IMF sees Angola's real GDP growth slowing this year to 3.9
percent from 4.1 percent in 2013 and 5.2 percent in 2012.
The two-page document published by Expresso did not say how
long the Angolan sovereign guarantee for BESA would be valid.
But it said "all doubts and omissions resulting from the
interpretation and application of this document will be resolved
by the president", without elaborating further.
Angola broke its silence on the BES affair this week, when
Angolan central bank governor Jose de Lima Massano admitted to
parliament on Thursday there were problems with BESA's credit
portfolio that included bad loans. He provided no figures and
made no mention of the guarantee.
Asked about the guarantee on Saturday, Angolan presidency
spokesman Aldemiro Vaz da Conceicao, who on Friday redirected
questions to the central bank and finance minister, told Reuters
"this has nothing to do with the presidency".
But when told Expresso had published what it said was a copy
of the Angolan presidential order giving instructions for the
guarantee, he said he would double-check. He did not then
respond to follow-up emails and calls made over several hours.
Banco Nacional de Angola spokeswoman Amelia Borja Neto told
Reuters in an email on Friday that questions about the sovereign
guarantee should addressed to the "emitting entity", indicating
it was not the central bank in this case.
Bank of Portugal Governor Carlos Costa said the Angolan
guarantee helped to eliminate uncertainty around BES that holds
a 55.71 percent stake in the Angolan affiliate.
In December, Ricardo Espirito Santo Salgado, then CEO of BES
and patriarch of the Espirito Santo banking family whose
business empire is now crumbling, met the Angolan president and
Salgado has said the guarantee was agreed at that time.
Dos Santos, in power since 1979, is one of Africa's longest
serving leaders, and led his ruling MPLA party through a long
civil war that ended in 2002. The MPLA has won successive
elections but rights groups and transparency campaigners say dos
Santos' rule is personalised and autocratic and does not do
enough to share out the country's oil wealth.
(Additional reporting by Pascal Fletcher in Johannesburg;
Editing by Sophie Walker)