Judges of the top court in the capital Luanda declared the 2020 conviction of Jose Filomeno dos Santos, 46, who has been serving his sentence under house arrest, void as "unconstitutional."
The verdict breached "the principles of legality, adversarial proceedings, a fair and consistent judgment and the rights of the defence," they wrote.
The decision dated Wednesday but published Thursday, represents a major victory for the family of the late leader, which has long complained of being the target of a politically motivated campaign.
It was not immediately clear whether the young dos Santos, nicknamed "Zenu," would walk free or a new trial will be held.
Zenu was one of the first members of the former presidential family to be prosecuted as part of an anti-graft campaign led by President Joao Lourenco since he came to power in 2017.
In 2019 he was accused of trying to embezzle up to $1.5 billion (1.3 billion euros) from the oil-rich country's sovereign wealth fund, which he oversaw from 2013 to 2018.
He was then charged with stealing $500 million from the fund and transferring it to a foreign bank account.
In 2020, Zenu and three co-defendants, including the former governor of the national bank of Angola (BNA), Valter Filipe da Silva, were sentenced to between five and eight years in prison for fraud, embezzlement and influence peddling.
But the constitutional court on Thursday found that, among other issues, lower judges had not taken into proper account evidence brought by the defence, including a letter penned by the ex-president.
It also pointed to discrepancies between the charges the accused were convicted for and those they had originally been indicted on.
Anti-corruption drive
The verdict is the latest twist in the power struggle between Lourenco and dos Santos' family.
Under dos Santos's 38-year rule, Angola became one of Africa's top crude producers. But while his family reaped the benefits of the wealth, most of the country's 33 million people were left in poverty.
Handpicked by dos Santos, Lourenco swiftly turned on his predecessor, launching an anti-corruption drive targeting dos Santos's family and friends.
Once dubbed Africa's richest woman by Forbes magazine, the strongman's eldest daughter Isabel, who used to be in charge of state-run oil company Sonangol, has also faced a slew of investigations.
Dos Santos died in Spain in 2022. A month later Lourenco was re-elected for a second term in a disputed vote.
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