Controversial businessman Sandile Majali, who died four days ago, is set to be given a high-profile send off. Majali, 48, who was found dead in a Sandton hotel the morning after Christmas Day, is to be buried in Port St Johns in the Eastern Cape on January 9. His body was removed from the government mortuary in Hillbrow yesterday and handed to a private undertaker to prepare him for burial. A memorial service was scheduled to be held at the Bryanston Methodist Church, Joburg, at 3pm this afternoon.
Family insiders have revealed that, while the speakers list has yet to be finalised, those under consideration are struggle and ANC stalwart Winnie Madikizela-Mandela, the Deputy Minister of Correctional Services and former Limpopo premier Ngoako Ramatlhodi, legal eagle Dumisa Ntsebeza, SC, and the Queen of the amaMpondo. Majali was born in Port St Johns and was hugely popular in vast rural areas around the town.
It has been learnt from close relatives that Majali had a heart operation four weeks ago and that the respiratory problems thought to have led to his death were directly linked to his recuperation. Independent Newspapers has also established why Majali was staying at the Quatermain Hotel, a stone’s throw from his house, when he died. “He was estranged from his wife and was living with his girlfriend in the Morningside house,” a relative said. “His children, who live with their mother in the Eastern Cape, came to spend Christmas with their father. “Being a considerate father, he did not want the children and the girlfriend to be under the same roof, so he booked a suite at the hotel for himself and the woman. “He did this out of decency and nothing else.”
It emerged this week that Majali’s estate may be sequestrated if his creditors and business partners bring claims to recover financial losses. Johan Klopper, the managing director of Independent Corporate Recovery Advisors, which specialises in liquidation and curatorship cases, said: “If there are any legal claims regarding liquidation, then these may be claims against his estate.” Klopper was a joint trustee of the estate of slain mining magnate Brett Kebble.
At the time of his death, Majali was facing charges of fraud over the alleged hijacking of a resources company and was believed to be in financial difficulty. He had voluntarily liquidated his Imvume Resources business, which was sued by PetroSA for the recovery of R11-million that Majali diverted to the ANC before the 2004 elections instead of using it, as had been intended, to pay in advance for oil.
Majali was also involved in a court battle with the Financial Services Board over his business dealings.
Source: IoL
Showing posts with label PetroSA. Show all posts
Showing posts with label PetroSA. Show all posts
Thursday, December 30, 2010
Monday, December 27, 2010
Majali found dead in hotel: report
Controversial businessman, Sandile Majali, was found dead in his room at the Sandton Quatermain Hotel in Johannesburg on Sunday, the general manager said. “He stayed with us last night, and I can confirm that he was found passed away this morning,” general manager, Rosy Chilewitz said. Chilewitz however, could not give details of when he checked into the hotel. “I cant give you anymore details on that, all I can say is that he was with us last night, police are dealing with the rest,” she told Sapa.
Gauteng police spokesperson, Lieutenant Colonel Lungelo Dlamini, said he could not confirm that the man found dead was in fact Majali, but could confirm that a man was found dead in his room, at the hotel at 9am. “We cannot confirm the man found dead was him, as family need to identify the body...We can say that paramedics were called to the room where they pronounced him dead after he was found by his girlfriend.” Dlamini could not say whether the man had any known injuries to his body, and what seemed to be the cause of death. “An inquest into this has been opened,” he added.
Moneyweb website reported that Majali's lawyer John Ncebetsha, said the family were preparing a statement “while coming to terms with their loss”. Majali, who was said to be in financial trouble, came into the public eye following his role in the so-called Oilgate saga that saw him “donate” R11-million of PetroSA's funds to the ANC ahead of the 2004 elections.
He was arrested in October by the SAPS Commercial Crimes Unit, appeared in court on fraud charges and was released on bail - after directorship of mining company Kalahari Resources was changed from Brian Amos Mashile and his sister Daphne Mashile-Nkosi to a group of eight individuals including Majali. The two siblings had to bring an urgent interdict before the High Court in Johannesburg to get themselves reinstated as directors of the company.
Kalahari Resources owns a 40 percent stake in Kalagadi Manganese, the mining company developing an R11 billion manganese mine and sinter plant in the Northern Cape, as well as a smelter at Coega. The Industrial Development Corporation owns 10 percent of Kalagadi Manganese, while steel producer ArcelorMittal owns the remaining 50 percent stake. Majali was due to appear in the Johannesburg Specialised Commercial Crimes Court again on January 18.
His three co-accused Stephan Khoza - who was arrested with Majali -Haralambos Sferopoulous, and Elvis Bongani Ndala, recently appeared in court over their mental fitness to stand trial. Earlier this month, Kalahari Resources legal representative Heinrich Meiring, said it was found that Khoza's psychological assessment revealed that he suffered from schizophrenia and paranoid delusions amongst other mental health problems. Meiring said according to Khoza's psychiatrists, he did not have the mental capacity or ability to distinguish between right and wrong as a result of his mental illness.
Sferopoulos and Ndala were also be sent for psychological assessment and their results will be heard alongside Khoza's in the High Court in Johannesburg on January 11. They are all listed on the Internet as directors of the “South African Community Government Union” (SACGU). Its website, www.sacgu.org, carries bizarre graphs and pictures. According to the website, Khoza is the “Master” of the SACGU, Ndala the “deputy” and “doctor” Sferopoulous in charge of “economics”. An extract from website's home page says SACGU tasks include: “Overseeing the multinational people of the Republic of South Africa, united by the common fate of our land, establishing human rights and freedoms, civic peace and accord, preserving the historical established state unity, proceeding from the universally recognised state principles of equality and self-determination of peoples...”
Meanwhile, members of social networking site Twitter, late on Sunday evening expressed their views following the news of Majali's death, with new tweets at almost each minute. Some tweeted: “My gut feel is that Sandi Majali was eradicated by some powerful entities uncomfortable with what his trial might have revealed”, “More like 'who won't fall when he can't testify?' RT (at)bkonnek:
Who stands to benefit from the fall of Sandi Majali”, “What must not be confused for concern is the glib commentary on Majali death. So another person, albeit one with fraud issues, dies. Blah” and “Can't wait for a statement from Luthuli House! (at)r2kcampaign: Sandile Majali found dead -how did he die? And who benefits?”
Source: IoL
Gauteng police spokesperson, Lieutenant Colonel Lungelo Dlamini, said he could not confirm that the man found dead was in fact Majali, but could confirm that a man was found dead in his room, at the hotel at 9am. “We cannot confirm the man found dead was him, as family need to identify the body...We can say that paramedics were called to the room where they pronounced him dead after he was found by his girlfriend.” Dlamini could not say whether the man had any known injuries to his body, and what seemed to be the cause of death. “An inquest into this has been opened,” he added.
Moneyweb website reported that Majali's lawyer John Ncebetsha, said the family were preparing a statement “while coming to terms with their loss”. Majali, who was said to be in financial trouble, came into the public eye following his role in the so-called Oilgate saga that saw him “donate” R11-million of PetroSA's funds to the ANC ahead of the 2004 elections.
He was arrested in October by the SAPS Commercial Crimes Unit, appeared in court on fraud charges and was released on bail - after directorship of mining company Kalahari Resources was changed from Brian Amos Mashile and his sister Daphne Mashile-Nkosi to a group of eight individuals including Majali. The two siblings had to bring an urgent interdict before the High Court in Johannesburg to get themselves reinstated as directors of the company.
Kalahari Resources owns a 40 percent stake in Kalagadi Manganese, the mining company developing an R11 billion manganese mine and sinter plant in the Northern Cape, as well as a smelter at Coega. The Industrial Development Corporation owns 10 percent of Kalagadi Manganese, while steel producer ArcelorMittal owns the remaining 50 percent stake. Majali was due to appear in the Johannesburg Specialised Commercial Crimes Court again on January 18.
His three co-accused Stephan Khoza - who was arrested with Majali -Haralambos Sferopoulous, and Elvis Bongani Ndala, recently appeared in court over their mental fitness to stand trial. Earlier this month, Kalahari Resources legal representative Heinrich Meiring, said it was found that Khoza's psychological assessment revealed that he suffered from schizophrenia and paranoid delusions amongst other mental health problems. Meiring said according to Khoza's psychiatrists, he did not have the mental capacity or ability to distinguish between right and wrong as a result of his mental illness.
Sferopoulos and Ndala were also be sent for psychological assessment and their results will be heard alongside Khoza's in the High Court in Johannesburg on January 11. They are all listed on the Internet as directors of the “South African Community Government Union” (SACGU). Its website, www.sacgu.org, carries bizarre graphs and pictures. According to the website, Khoza is the “Master” of the SACGU, Ndala the “deputy” and “doctor” Sferopoulous in charge of “economics”. An extract from website's home page says SACGU tasks include: “Overseeing the multinational people of the Republic of South Africa, united by the common fate of our land, establishing human rights and freedoms, civic peace and accord, preserving the historical established state unity, proceeding from the universally recognised state principles of equality and self-determination of peoples...”
Meanwhile, members of social networking site Twitter, late on Sunday evening expressed their views following the news of Majali's death, with new tweets at almost each minute. Some tweeted: “My gut feel is that Sandi Majali was eradicated by some powerful entities uncomfortable with what his trial might have revealed”, “More like 'who won't fall when he can't testify?' RT (at)bkonnek:
Who stands to benefit from the fall of Sandi Majali”, “What must not be confused for concern is the glib commentary on Majali death. So another person, albeit one with fraud issues, dies. Blah” and “Can't wait for a statement from Luthuli House! (at)r2kcampaign: Sandile Majali found dead -how did he die? And who benefits?”
Source: IoL
Thursday, October 21, 2010
Sandile Majali arrested
Sandile Majali was arrested by the SAPS Commercial Crimes Unit on Thursday afternoon for alleged fraud. This followed an investigation after the directorship of mining company Kalahari Resources was changed from Brian Amos Mashile and his sister Daphne Mashile-Nkosi to a group of eight individuals including Majali, the unit said in a statement. Majali and seven others allegedly removed Kalahari Resources' directors from the Companies and Intellectual Property Registration Office (Cipro) database in August.
An urgent interdict was brought before the High Court in Johannesburg last month. The court ruled that Cipro reinstate the siblings as directors of the company. Reacting to the news of the arrest, Mashile-Nkosi told Sapa that she was relieved. “I feel exonerated and energised that the criminal justice system in my country is working - it may be slow but the wheels of justice are beginning to move ... now it's for the court to decide.”
Kalahari Resources owns a 40 percent stake in Kalagadi Manganese, the mining company developing an R11-billion manganese mine and sinter plant in the Northern Cape, as well as a smelter at Coega. The Industrial Development Corporation owns 10 percent of Kalagadi Manganese, while steel producer ArcelorMittal owns the remaining 50 percent stake. Majali came into the public eye following his role in the so-called Oilgate saga that saw him “donate” R11-million of PetroSA's funds to the ANC ahead of the 2004 elections. According to a police spokeswoman who did not wish to be named, four members of the group - including Majali - have been arrested and police were “hot on the heels” of the other four. “The arrests have been a collaboration between the police, the Hawks and a private investigator appointed by Kalahari Resources.”
The spokesperson said the four would appear in court on Friday but could not supply further details.
Source: IoL
An urgent interdict was brought before the High Court in Johannesburg last month. The court ruled that Cipro reinstate the siblings as directors of the company. Reacting to the news of the arrest, Mashile-Nkosi told Sapa that she was relieved. “I feel exonerated and energised that the criminal justice system in my country is working - it may be slow but the wheels of justice are beginning to move ... now it's for the court to decide.”
Kalahari Resources owns a 40 percent stake in Kalagadi Manganese, the mining company developing an R11-billion manganese mine and sinter plant in the Northern Cape, as well as a smelter at Coega. The Industrial Development Corporation owns 10 percent of Kalagadi Manganese, while steel producer ArcelorMittal owns the remaining 50 percent stake. Majali came into the public eye following his role in the so-called Oilgate saga that saw him “donate” R11-million of PetroSA's funds to the ANC ahead of the 2004 elections. According to a police spokeswoman who did not wish to be named, four members of the group - including Majali - have been arrested and police were “hot on the heels” of the other four. “The arrests have been a collaboration between the police, the Hawks and a private investigator appointed by Kalahari Resources.”
The spokesperson said the four would appear in court on Friday but could not supply further details.
Source: IoL
Saturday, December 12, 2009
Majali in the wars again
Beleaguered businessman Sandi Majali is desperately trying to avoid facing trial for corruption and money laundering.
The charges flow from Majali's entanglement with a web of business and political interests in KwaZulu-Natal, the machinations of which have already resulted in the launch of three criminal investigations.
Case One
This is the case involving Majali, who shot to public prominence over his role in the Oilgate saga that saw him "donate" R11-million of PetroSA money to the ANC.
Now Majali is accused of laundering bribe payments made by businessman Jabulani Mabaso to a senior KwaZulu-Natal official, Pamela Zulu, for her to secure Mabaso a huge contract to supply school stationery. In May 2005 Mabaso's company, Indiza Infrastructure Solutions, and another company won a tender from the KwaZulu-Natal education department. Zulu, then with the provincial treasury, sat on the evaluation committee that recommended Indiza. A two-year tender award was confirmed in December 2005. Over an 18-month period Indiza charged the department, where Zulu was chief financial officer, approximately R449-million. A charge sheet against Zulu and Mabaso claims invoices were inflated to the tune of R197-million.
The National Prosecuting Authority (NPA) alleges a bribe was paid by Mabaso to Zulu via a number of Majali's companies.
According to the NPA:
* On April 21 2006 Mabaso deposited R2,5-million in the trust account of Majali's attorney. About R170 000 was transferred four days later to a Honda dealership.
* On May 12 2006 a further R200 000 was deposited into Zulu's account from another Majali company, Imvume Paymaster Services.
* At about that time Majali allegedly entered into an agreement with Zulu for Imvume Paymaster Services to buy shares she supposedly held in another Majali-related company, New Era Capital. She was to receive R4-million, with an initial down payment of R200 000.
In various court papers Majali maintains this represented bona fide repayment for consulting Zulu had done on proposed New Era projects. He explains the payment from Mabaso as an investment in one of his projects and produces a letter of invitation to Mabaso dated February 20 2006 to back this up. The NPA maintains this was all a sham to disguise the bribe payments. In court papers the prosecutor alleges that the letter to Mabaso was not found during raids on Majali and Mabaso and is a fabrication. The NPA also claims that New Era Capital was dormant and had no value.
For the better part of a year Majali has fought desperately to avoid arrest, launching a slew of high court actions and petitioning both Hawks boss Anwa Dramat and then-acting National Director of Public Prosecutions Mokotedi Mpshe to throw out the case. Both declined. Last week he won a reprieve from the South Gauteng High Court. The court suspended the decision to prosecute him pending the outcome of another Majali court challenge involving the same matter. Majali launched an application to review the decision to prosecute him in the North Gauteng High Court. The outcome, expected only next year, is dependent on the court accepting Majali's argument that the Promotion of Administrative Justice Act is unconstitutional.
The Act enables judicial review of government decision-making but specifically excludes decisions to prosecute.
Mabaso and Shabalala
Majali's alliance with Mabaso and Zulu ties him into another scandal involving provincial head of treasury Sipho Shabalala and a Uruguayan businessman, Gaston Savoi, that has prompted two ongoing criminal investigations. In an affidavit provided to Majali Mabaso raises the issue of his relationship with Shabalala. Querying why his relationship with Majali is singled out for investigation, Mabaso notes: "Indiza was involved in a number of other business … transactions during April 2006 … For example, Indiza agreed to advance a loan to Blue Serenity investments in the sum of R12-million." The directors of Blue Serenity were Sipho Shabalala and his wife Beatrice. Shabalala signed the loan agreement with Mabaso and Mabaso also became a 30% shareholder in an initial joint venture.
Majali also notes that during the same tender process in which Indiza was implicated another similar contract was awarded to EduSolutions, a company that has attracted negative media scrutiny in the past. He points out that Zulu is accused of inflating one score for Indiza - awarding the company four points when the maximum possible was two - and that she made the same "error" in regard to EduSolutions without attracting a criminal investigation.
The M&G understands Zulu is a friend of Shabalala, while Mrs Zulu's ex-husband works in the office of the chief executive of African Access, EduSolutions's parent company.
Case Two
But Shabalala has not entirely escaped scrutiny; his relationship with the mysterious Gaston Savoi is under criminal investigation, though he has yet to be charged or interviewed.
The investigation relates to a R1-million donation to the ANC allegedly solicited by Shabalala from Savoi, which is suspected of being a kickback for the award of a R44-million contract by the provincial cabinet for the supply of 20 water treatment plants. Savoi's company, Intaka, supplies water purification and medical equipment, including medical gas generators and portable scanners.
He was introduced to the KwaZulu-Natal government with what appeared to have been high-level political backing. According to a leaked affidavit by the investigating officer it was then-trade and industry minister Alec Erwin who first expressed interest in Intaka's products. The affidavit says it was decided that Rafiq Bagus, a protégé of Erwin's, "would facilitate the process of contacting the relevant persons in the KZN provincial government and Trade and Investment KZN". The investigating officer alleges Shabalala was also involved in negotiations. Meanwhile, as early as April 2004, Savoi formed a company, Skyros Medical Supplies, with Shabalala's wife, Beatrice.
He was clearly covering all bases. In a separate affidavit Savoi states that he was advised that Intaka should become BEE compliant: "To this end a company, Intaka KwaZulu-Natal, was registered. As a result of disagreement between various possible shareholders and Intaka's inability to procure further substantial orders for water purification plants, this company remained dormant." Intaka KZN's initial directors included Bagus and ANC provincial secretary Sipho Gcabashe.
According to the investigating officer's affidavit, Savoi alleges that Shabalala raised the possibility of a party-political donation fairly early on. It is alleged that after the award of the tender Savoi raised the matter again. Shabalala allegedly indicated he would be sent an invoice against which he should make payment of the donation.
An invoice for R1 053 000 was received from law firm Kuboni & Shezi purporting to request payment for legal work done. Savoi paid the amount and the provincial ANC has subsequently confirmed receipt of the donation, which, it claimed, was made in "good spirits" and not linked to any tender. Shabalala has thus far, through his lawyer, declined to respond to media questions about the incident.
Case Three
Savoi was also a witness in the aborted case against former KwaZulu-Natal health minister Peggy Nkonyeni, who allegedly received a gratuity for the purchase of a mobile ultrasound scanner through Savoi's company. Charges were provisionally withdrawn against Nkonyeni and two others in August, when it is understood another key witness suffered a stress-related breakdown and was unable to testify.
Source: Mail & Guardian
The charges flow from Majali's entanglement with a web of business and political interests in KwaZulu-Natal, the machinations of which have already resulted in the launch of three criminal investigations.
Case One
This is the case involving Majali, who shot to public prominence over his role in the Oilgate saga that saw him "donate" R11-million of PetroSA money to the ANC.
Now Majali is accused of laundering bribe payments made by businessman Jabulani Mabaso to a senior KwaZulu-Natal official, Pamela Zulu, for her to secure Mabaso a huge contract to supply school stationery. In May 2005 Mabaso's company, Indiza Infrastructure Solutions, and another company won a tender from the KwaZulu-Natal education department. Zulu, then with the provincial treasury, sat on the evaluation committee that recommended Indiza. A two-year tender award was confirmed in December 2005. Over an 18-month period Indiza charged the department, where Zulu was chief financial officer, approximately R449-million. A charge sheet against Zulu and Mabaso claims invoices were inflated to the tune of R197-million.
The National Prosecuting Authority (NPA) alleges a bribe was paid by Mabaso to Zulu via a number of Majali's companies.
According to the NPA:
* On April 21 2006 Mabaso deposited R2,5-million in the trust account of Majali's attorney. About R170 000 was transferred four days later to a Honda dealership.
* On May 12 2006 a further R200 000 was deposited into Zulu's account from another Majali company, Imvume Paymaster Services.
* At about that time Majali allegedly entered into an agreement with Zulu for Imvume Paymaster Services to buy shares she supposedly held in another Majali-related company, New Era Capital. She was to receive R4-million, with an initial down payment of R200 000.
In various court papers Majali maintains this represented bona fide repayment for consulting Zulu had done on proposed New Era projects. He explains the payment from Mabaso as an investment in one of his projects and produces a letter of invitation to Mabaso dated February 20 2006 to back this up. The NPA maintains this was all a sham to disguise the bribe payments. In court papers the prosecutor alleges that the letter to Mabaso was not found during raids on Majali and Mabaso and is a fabrication. The NPA also claims that New Era Capital was dormant and had no value.
For the better part of a year Majali has fought desperately to avoid arrest, launching a slew of high court actions and petitioning both Hawks boss Anwa Dramat and then-acting National Director of Public Prosecutions Mokotedi Mpshe to throw out the case. Both declined. Last week he won a reprieve from the South Gauteng High Court. The court suspended the decision to prosecute him pending the outcome of another Majali court challenge involving the same matter. Majali launched an application to review the decision to prosecute him in the North Gauteng High Court. The outcome, expected only next year, is dependent on the court accepting Majali's argument that the Promotion of Administrative Justice Act is unconstitutional.
The Act enables judicial review of government decision-making but specifically excludes decisions to prosecute.
Mabaso and Shabalala
Majali's alliance with Mabaso and Zulu ties him into another scandal involving provincial head of treasury Sipho Shabalala and a Uruguayan businessman, Gaston Savoi, that has prompted two ongoing criminal investigations. In an affidavit provided to Majali Mabaso raises the issue of his relationship with Shabalala. Querying why his relationship with Majali is singled out for investigation, Mabaso notes: "Indiza was involved in a number of other business … transactions during April 2006 … For example, Indiza agreed to advance a loan to Blue Serenity investments in the sum of R12-million." The directors of Blue Serenity were Sipho Shabalala and his wife Beatrice. Shabalala signed the loan agreement with Mabaso and Mabaso also became a 30% shareholder in an initial joint venture.
Majali also notes that during the same tender process in which Indiza was implicated another similar contract was awarded to EduSolutions, a company that has attracted negative media scrutiny in the past. He points out that Zulu is accused of inflating one score for Indiza - awarding the company four points when the maximum possible was two - and that she made the same "error" in regard to EduSolutions without attracting a criminal investigation.
The M&G understands Zulu is a friend of Shabalala, while Mrs Zulu's ex-husband works in the office of the chief executive of African Access, EduSolutions's parent company.
Case Two
But Shabalala has not entirely escaped scrutiny; his relationship with the mysterious Gaston Savoi is under criminal investigation, though he has yet to be charged or interviewed.
The investigation relates to a R1-million donation to the ANC allegedly solicited by Shabalala from Savoi, which is suspected of being a kickback for the award of a R44-million contract by the provincial cabinet for the supply of 20 water treatment plants. Savoi's company, Intaka, supplies water purification and medical equipment, including medical gas generators and portable scanners.
He was introduced to the KwaZulu-Natal government with what appeared to have been high-level political backing. According to a leaked affidavit by the investigating officer it was then-trade and industry minister Alec Erwin who first expressed interest in Intaka's products. The affidavit says it was decided that Rafiq Bagus, a protégé of Erwin's, "would facilitate the process of contacting the relevant persons in the KZN provincial government and Trade and Investment KZN". The investigating officer alleges Shabalala was also involved in negotiations. Meanwhile, as early as April 2004, Savoi formed a company, Skyros Medical Supplies, with Shabalala's wife, Beatrice.
He was clearly covering all bases. In a separate affidavit Savoi states that he was advised that Intaka should become BEE compliant: "To this end a company, Intaka KwaZulu-Natal, was registered. As a result of disagreement between various possible shareholders and Intaka's inability to procure further substantial orders for water purification plants, this company remained dormant." Intaka KZN's initial directors included Bagus and ANC provincial secretary Sipho Gcabashe.
According to the investigating officer's affidavit, Savoi alleges that Shabalala raised the possibility of a party-political donation fairly early on. It is alleged that after the award of the tender Savoi raised the matter again. Shabalala allegedly indicated he would be sent an invoice against which he should make payment of the donation.
An invoice for R1 053 000 was received from law firm Kuboni & Shezi purporting to request payment for legal work done. Savoi paid the amount and the provincial ANC has subsequently confirmed receipt of the donation, which, it claimed, was made in "good spirits" and not linked to any tender. Shabalala has thus far, through his lawyer, declined to respond to media questions about the incident.
Case Three
Savoi was also a witness in the aborted case against former KwaZulu-Natal health minister Peggy Nkonyeni, who allegedly received a gratuity for the purchase of a mobile ultrasound scanner through Savoi's company. Charges were provisionally withdrawn against Nkonyeni and two others in August, when it is understood another key witness suffered a stress-related breakdown and was unable to testify.
Source: Mail & Guardian
Monday, August 3, 2009
Protector mulls challenge to Oilgate ruling
Public Protector Lawrence Mushwana is considering appealing against a high court judgement setting aside his 2005 report on the so-called "Oilgate" scandal, his office said on Monday.
"The Public Protector is currently considering legal advice regarding a possible appeal against the setting aside of the report by the high court and will take a decision in this regard in due course," a spokesperson for his office said in a statement.
The scandal involved the alleged irregular payment of R15-million by PetroSA to Imvume Management, which had claimed it needed bridging finance to pay oil-supply company Glencore for a shipment of oil four days from harbour. However, Imvume failed to pay Glencore, and PetroSA had to pay another R15-million directly to Glencore. Part of the first payment -- R11-million -- was allegedly used for the ANC's 2004 election campaign. In his report, Mushwana found no evidence of wrongdoing in the scandal. He determined that the ANC and Imvume were not public entities and therefore did not perform public functions and as such were not part of government.
"We look forward to a more thorough investigation of the Oilgate saga by the Public Protector, and to the prospect of genuine accountability for the abuse of public money for party political purposes uncovered by our reporting," The high court ruling said.
Source: Mail & Guardian
"The Public Protector is currently considering legal advice regarding a possible appeal against the setting aside of the report by the high court and will take a decision in this regard in due course," a spokesperson for his office said in a statement.
The scandal involved the alleged irregular payment of R15-million by PetroSA to Imvume Management, which had claimed it needed bridging finance to pay oil-supply company Glencore for a shipment of oil four days from harbour. However, Imvume failed to pay Glencore, and PetroSA had to pay another R15-million directly to Glencore. Part of the first payment -- R11-million -- was allegedly used for the ANC's 2004 election campaign. In his report, Mushwana found no evidence of wrongdoing in the scandal. He determined that the ANC and Imvume were not public entities and therefore did not perform public functions and as such were not part of government.
"We look forward to a more thorough investigation of the Oilgate saga by the Public Protector, and to the prospect of genuine accountability for the abuse of public money for party political purposes uncovered by our reporting," The high court ruling said.
Source: Mail & Guardian
Monday, July 6, 2009
Spy war at PetroSA
Papers filed in a court case shed light on a bizarre spy war at PetroSA that involved a bug sweep by the National Intelligence Agency (NIA).
At the same time, worker protests have erupted at the parastatal over the suspension of a trade union member, allegedly for leaking information to the Mail & Guardian after his emails were searched by management.
Workers allege a general witch-hunt against critics and dissenters at PetroSA. They link it to management's fears that criticism could derail a huge expansion programme planned at the parastatal.
The "spy versus spy" allegations are contained in papers filed last month in the Cape Town Labour Court by former senior PetroSA investigator Lerato Lesole, who is suing the parastatal for unfair dismissal and demanding immediate reinstatement.
Lesole was investigating PetroSA's chief executive, Sipho Mkhize, and the chief financial officer, Nkosemntu Nika, before he got the chop.
His probe was sparked by a claim by an internal whistle-blower in 2007 that Nika might be involved in fraudulent activities and that Mkhize was involved in tender irregularities relating to the desludging of PetroSA's Milnerton oil tanks.
Source: Mail & Guardian
At the same time, worker protests have erupted at the parastatal over the suspension of a trade union member, allegedly for leaking information to the Mail & Guardian after his emails were searched by management.
Workers allege a general witch-hunt against critics and dissenters at PetroSA. They link it to management's fears that criticism could derail a huge expansion programme planned at the parastatal.
The "spy versus spy" allegations are contained in papers filed last month in the Cape Town Labour Court by former senior PetroSA investigator Lerato Lesole, who is suing the parastatal for unfair dismissal and demanding immediate reinstatement.
Lesole was investigating PetroSA's chief executive, Sipho Mkhize, and the chief financial officer, Nkosemntu Nika, before he got the chop.
His probe was sparked by a claim by an internal whistle-blower in 2007 that Nika might be involved in fraudulent activities and that Mkhize was involved in tender irregularities relating to the desludging of PetroSA's Milnerton oil tanks.
Source: Mail & Guardian
Friday, March 13, 2009
The arms dealer who flies Zuma
Ivor Ichikowitz, the arms and oil broker who laid on his company jet to ferry Nelson Mandela to a Jacob Zuma election rally in Transkei, has made a career from turning political connections into profit. Last December Ichikowitz flew Zuma in the luxuriously converted Boeing 727 to Lebanon and Kazakhstan for what the Mail & Guardian understands were African National Congress (ANC) fundraising and business meetings.
Ichikowitz confirmed he provided that flight gratis, but said he went along to test recent upgrades to the jet and did not attend the meetings. At its commercial charter rate, $14 000 an hour, a return trip to Kazakhstan would have cost upwards of R5-million.
An M&G probe of Ichikowitz’s relations with the ANC and prominent Zuma backers indicates a man who has made it his business to get close to key power-brokers.
They include:
* Mathews Phosa, who shared a number of company directorships with Ichikowitz before his elevation to ANC treasurer;
* Moeletsi Mbeki, brother of the former president, who opened doors for Ichikowitz into Africa;
* Sandi Majali, former Thabo Mbeki acolyte and business frontman for the ANC and Kgalema Motlanthe in ill-fated oil trades with Saddam Hussein;
* Robert Gumede, owner of IT company GijimaAST and a prominent Zuma backer;
* Pik Botha, former National Party politician and long-time friend of the Ichikowitz family, who provided an entrée to African leaders including former Nigerian president Olusegun Obasanjo.
Ichikowitz (42) made a fortune selling surplus South African armoured vehicles into Africa and the Middle East, and seems to have manoeuvred his way into Zuma’s inner circle. He was prominent among public donors to the ANC at a Zuma fundraiser organised by Gumede in October last year, pledging R6-million.
He told the M&G the business community should "transparently and voluntarily provide both the financial and skills resources political parties need to participate in the democratic process".
He denies direct or indirect business dealings with any political party. But his best-known entanglement with ANC funding occurred via his association with Majali and his Imvume group.
Ichikowitz, who also represents controversial commodities trader Glencore, partnered Majali in his 2001 bid to supply Iraqi crude to South Africa under the controversial oil-for-food programme allowing limited trade with Saddam’s Iraq.
In 2005 the M&G revealed Majali, with official ANC backing, intended setting up an oil trading operation intended to benefit the ANC and Saddam’s Ba’ath party.
Ichikowitz was also Majali’s partner in a contract to supply PetroSA condensate for its Mossel Bay refinery. The M&G exposed how Majali diverted R11-million of state oil money to the ANC before the 2004 election, but Oilgate also strained relations between the partners as Majali's actions created a cash-flow crisis for Ichikowitz's company. Ichikowitz told the M&G he was unaware of the link between Majali's company and the ANC and is no longer in business with Majali.
Moeletsi Mbeki, a key strategist for the Congress of the People, now appears to distance himself from close association with Ichikowitz. He said they were now in only one business together, a cattle feedlot enterprise.
Company records show a number of past African joint ventures, including the agency for Mahindra vehicle sales in South Africa. Ichikowitz said they had been friends "for many years" and went into business together about six years ago. He said he had been friends with Gumede since about 1989 "and [we] worked together in our family business before he started his own businesses". "We have no active business together and remain family friends."
Phosa once served on the boards of several companies with Ichikowitz, notably Vuka Fleet Management and Vuka Municipal Services, joint ventures between Phosa’s Vuka group and TFM, the truck body manufacturer hived off from the armoured vehicle company now owned by BAE-Systems.
Ichikowitz said Phosa had been "a family friend since his return from exile in the 1990s ... I have no interest in Mathews's businesses, nor he in mine." Ichikowitz may have slipped easily from the Mbeki era into the post-Polokwane ANC, but he has also taken advantage of family political connections stretching back to apartheid.
A source close to the family said former apartheid foreign minister Pik Botha was introduced to the Ichikowitzes by the late John Pearce, then the Johannesburg council’s security head. Pearce, embedded in the apartheid security establishment, was fired in 1991 following revelations about military intelligence dirty-tricks operations.
Botha, whom Ichikowitz describes as "a long-standing friend", has been an informal adviser to Ichikowitz and was also said to have promoted Ichikowitz’s other main business: selling reconditioned surplus South African military equipment into Africa and the Middle East. Here too, Ichikowitz appears to have benefited from his ANC associations, with a defence department investigation into his trading activities suppressed before it could produce results.
Source: Mail & Guardian
Ichikowitz confirmed he provided that flight gratis, but said he went along to test recent upgrades to the jet and did not attend the meetings. At its commercial charter rate, $14 000 an hour, a return trip to Kazakhstan would have cost upwards of R5-million.
An M&G probe of Ichikowitz’s relations with the ANC and prominent Zuma backers indicates a man who has made it his business to get close to key power-brokers.
They include:
* Mathews Phosa, who shared a number of company directorships with Ichikowitz before his elevation to ANC treasurer;
* Moeletsi Mbeki, brother of the former president, who opened doors for Ichikowitz into Africa;
* Sandi Majali, former Thabo Mbeki acolyte and business frontman for the ANC and Kgalema Motlanthe in ill-fated oil trades with Saddam Hussein;
* Robert Gumede, owner of IT company GijimaAST and a prominent Zuma backer;
* Pik Botha, former National Party politician and long-time friend of the Ichikowitz family, who provided an entrée to African leaders including former Nigerian president Olusegun Obasanjo.
Ichikowitz (42) made a fortune selling surplus South African armoured vehicles into Africa and the Middle East, and seems to have manoeuvred his way into Zuma’s inner circle. He was prominent among public donors to the ANC at a Zuma fundraiser organised by Gumede in October last year, pledging R6-million.
He told the M&G the business community should "transparently and voluntarily provide both the financial and skills resources political parties need to participate in the democratic process".
He denies direct or indirect business dealings with any political party. But his best-known entanglement with ANC funding occurred via his association with Majali and his Imvume group.
Ichikowitz, who also represents controversial commodities trader Glencore, partnered Majali in his 2001 bid to supply Iraqi crude to South Africa under the controversial oil-for-food programme allowing limited trade with Saddam’s Iraq.
In 2005 the M&G revealed Majali, with official ANC backing, intended setting up an oil trading operation intended to benefit the ANC and Saddam’s Ba’ath party.
Ichikowitz was also Majali’s partner in a contract to supply PetroSA condensate for its Mossel Bay refinery. The M&G exposed how Majali diverted R11-million of state oil money to the ANC before the 2004 election, but Oilgate also strained relations between the partners as Majali's actions created a cash-flow crisis for Ichikowitz's company. Ichikowitz told the M&G he was unaware of the link between Majali's company and the ANC and is no longer in business with Majali.
Moeletsi Mbeki, a key strategist for the Congress of the People, now appears to distance himself from close association with Ichikowitz. He said they were now in only one business together, a cattle feedlot enterprise.
Company records show a number of past African joint ventures, including the agency for Mahindra vehicle sales in South Africa. Ichikowitz said they had been friends "for many years" and went into business together about six years ago. He said he had been friends with Gumede since about 1989 "and [we] worked together in our family business before he started his own businesses". "We have no active business together and remain family friends."
Phosa once served on the boards of several companies with Ichikowitz, notably Vuka Fleet Management and Vuka Municipal Services, joint ventures between Phosa’s Vuka group and TFM, the truck body manufacturer hived off from the armoured vehicle company now owned by BAE-Systems.
Ichikowitz said Phosa had been "a family friend since his return from exile in the 1990s ... I have no interest in Mathews's businesses, nor he in mine." Ichikowitz may have slipped easily from the Mbeki era into the post-Polokwane ANC, but he has also taken advantage of family political connections stretching back to apartheid.
A source close to the family said former apartheid foreign minister Pik Botha was introduced to the Ichikowitzes by the late John Pearce, then the Johannesburg council’s security head. Pearce, embedded in the apartheid security establishment, was fired in 1991 following revelations about military intelligence dirty-tricks operations.
Botha, whom Ichikowitz describes as "a long-standing friend", has been an informal adviser to Ichikowitz and was also said to have promoted Ichikowitz’s other main business: selling reconditioned surplus South African military equipment into Africa and the Middle East. Here too, Ichikowitz appears to have benefited from his ANC associations, with a defence department investigation into his trading activities suppressed before it could produce results.
Source: Mail & Guardian
Tuesday, May 3, 2005
The ANC's Oilgate
A Mail & Guardian investigation into covert party funding has revealed how R11-million of public money was diverted to African National Congress coffers ahead of the 2004 elections. In what may be the biggest political funding scandal since 1994, the M&G has established that South Africa's state oil company, PetroSA, irregularly paid R15-million to Imvume Management -- a company closely tied to the ANC -- at a time when the party was desperate for funds to fight elections. The M&G possesses bank statements and has seen other forensic evidence proving that Imvume transferred the lion's share of this to the ANC within days. PetroSA this week said it was unaware of this. The ANC denied impropriety and said it was not obliged to discuss its funders.
The scheme unfolded in two stages. First, PetroSA management bent over backwards to pay Imvume the money as an advance for the procurement of oil condensate. Then, when Imvume diverted the funds to the ANC instead of paying its own foreign suppliers, PetroSA had to cover the shortfall by paying the same amount again. A multimillion-rand hole remains in the parastatalis books. PetroSA has gone through the motions to recover the debt by suing Imvume -- but most of it remains outstanding. The effect of the entire transaction was that PetroSA, and ultimately the taxpayer, subsidised the ruling party's election campaign: a blatant abuse of public resources.
Imvume's role as an ANC "front company" first emerged in February last year when the M&G exposed its oil dealings with Saddam Hussein's Iraq. Imvume principal Sandi Majali obtained lucrative crude oil allocations from that regime when he travelled to Iraq with top ANC officials between 2000 and 2002. More recently, Imvume described its boss as ANC secretary-general Kgalema Motlanthe's "economic adviser".
But it was the diversion of the Petro-SA money four months ahead of the 2004 elections that is now lifting the lid on the funding scandal. The deal puts the spotlight on PetroSA's management, which approved the payment; Imvume boss Majali, who asked for the advance and then issued the cheques to the ANC; and Motlanthe, who was Majali's ANC patron. Imvume, now unable to pay its debts, was once the empowerment pin-up of the oil industry. The contract that caused all the trouble was awarded by PetroSA to Imvume on October 15 2002 -- the day President Thabo Mbeki publicly launched PetroSA as the national oil company.
Under the contract, Imvume -- with the backing of Swiss-based resource trader Glencore International -- was to supply PetroSA with regular cargoes of condensate, a feedstock for PetroSA's Mossel Bay gas-to-liquid fuels plant. A number of condensate cargoes were delivered to Mossel Bay during 2003. The standard contractual procedure was for PetroSA to pay Imvume the full cargo price no later than 30 days after the bill of lading date (the date the cargo was loaded for shipment to Mossel Bay). Once it received payment from PetroSA, Imvume would immediately pay it on to Glencore, which sourced the cargo on international markets. Glencore paid Imvume a commission. But in December 2003 the pattern was broken, and PetroSA has confirmed that standard procedure was departed from. The bill of lading date for that cargo was December 6 2003, meaning PetroSA's payment for the cargo -- worth $10-million (about R65-million) -- was due on January 5 2004. But Imvume's Majali asked PetroSA for an advance of R15-million (just more than $2-million of the $10-million) which was paid even before the cargo was discharged on December 22. PetroSA paid the advance into a different account to that usually used by Imvume for the contract.
Evidence in the M&G's possession confirms that Imvume Management's corporate account was credited with R15-million a day later, on December 19. And the M&G has seen forensic proof that within the next four days, Imvume's Majali issued a series of four cheques to the ANC -- for R4-million, R3-million and R2-million (twice). These cheques, totalling R11-million, were all transacted on December 23. This week Majali and Imvume did not dispute that the money was paid to the ANC, but claimed their support for the party was a "private affair".
The transfers to the ANC came four months before the elections, held on April 14 2004. A number of sources have described the party's financial straits around that time, claiming it had a bank overdraft typically running at more than R100-million. When payment for the cargo became due to Glencore on January 5, Imvume failed to pay the company the R15-million advance -- and, effectively, also withheld another R3-million from the balance owed. Glencore turned to PetroSA for what it was owed, eventually threatening in February not to offload the next cargo. PetroSA agreed to cover the shortfall of R18-million, for fear that the Mossel Bay plant would run out of feedstock, leading to greater losses. Effectively, PetroSA paid R18-million twice -- once to Imvume, and once to Imvume's supplier.
PetroSA maintains that the special circumstances of the empowerment environment largely excuse the actions of its management. It also denies that there was pressure from either the Minerals and Energy Ministry or the ANC to approve the advance to Imvume. Circumstances, however, suggest that empowerment is not a sufficient explanation and that Imvume's ANC links played a role. These links were no secret in oil trading circles. A businessman active in the sector told the M&G last year: "It was talked about when they got tenders ... that it was an ANC company ... I certainly understand that ANC fundraising has a keen interest."
The advance payment to Imvume was irregular in that it was a departure from standard procedures. PetroSA maintains procurement policy allows for advance payments, but admits it "should have checked" whether the money was going into the usual account. When the transaction with Imvume blew up in its face, PetroSA continued treating the company with kid gloves.
On February 23 last year, four days after PetroSA had been forced to settle Imvume's debt with Glencore, Majali signed an acknowledgement of debt to PetroSA, agreeing to repay the R18-million plus interest within 90 days. He also ceded his company's revenue stream as security. But Imvume paid nothing in terms of that agreement. Court records show more than a month passed after the expiry of the 90-day term before PetroSA issued a letter of demand. (See "PetroSA vs Imvume Management" download box on top right of this article for full documents).
PetroSA's choice of lawyer employed to pursue the demand raises further questions about PetroSA's seriousness of purpose. The lawyer, Leslie Mkhabela, was previously Imvume's own attorney and still has a business relationship with Majali via their common interest in Forever Resorts Aventura, the privatised state leisure company. This raises conflict-of-interest questions. Mkhabela maintained this week that this was not a problem as he had disclosed his business relationship with Majali to PetroSA. The agreement signed between Mkhize and Majali was still not enforced. Instead new terms, much more favourable to Imvume, were agreed between PetroSA chief executive Sipho Mkhize and Majali in September last year. Now PetroSA waived any claim to interest and agreed that Imvume could repay the capital amount in monthly instalments over four and a half years. But again, in February this year and after paying only R1,33-million, Imvume defaulted, court papers show.
PetroSA took off the kid gloves for a little while, filing an application for summary judgement in the Johannesburg High Court. But the matter was postponed twice, and on a third court date -- May 3 this year -- PetroSA removed the matter from the roll. PetroSA this week claimed that this was to allow Imvume to remain operational, which would give PetroSA a better chance eventually to recoup the debt. The ANC this week threatened legal action against the M&G without confirming or denying the flow of money to it. Circumstantial evidence strongly suggests the ANC knew exactly where the funding was coming from. Between 2000 and 2002, when Majali was trading in oil allocations from Saddam Hussein's Iraq, the ANC's Motlanthe repeatedly accompanied him to that country. ANC treasurer general Mendi Msimang also went along on at least one occasion. It is rumoured that the relationship between Majali and Motlanthe has cooled recently, but an Imvume brochure last year still described Majali as "economic adviser to the secretary general of the ANC". Describing the company's "winning formula", the brochure said Imvume had "access and influence on economic policy".
How they responded ...
PETROSA
The cornerstone of this deal is the policy adopted by PetroSA, which is a national initiative, black economic empowerment (BEE). PetroSA has a mandate to introduce hitherto disadvantaged South Africans into the oil and gas industry. PetroSA had a choice: to continue business as usual and exclude historically disadvantaged South Africans from the mainstream economy and prolong, if not propagate, the two-economies concept, or use our procurement muscle to bring fundamental change to the industry.
To procure a raw material referred to as condensate, the requirement was that the preferred supplier must have a South African partner who qualifies as a BEE candidate. This in effect introduced a major shift in the industry. We deliberately signed deals with the historically disadvantaged party to ensure that they were not "brought along" to the deal, but in fact they were the "principal partner" in the deal.
# On the [High Court] case PetroSA brought against Imvume PetroSA suspended the case due to the fact that if Imvume were liquidated, there would be very little proceeds flowing into PetroSA from that exercise. Imvume is much better off remaining operational for PetroSA to be able to recoup the total sum owed to PetroSA as well as interest and the legal costs.
# On Leslie Mkhabela [PetroSA's choice of lawyer to sue Imvume]
Mkhabela assured PetroSA of the following: he acted on behalf of Imvume during 2002/03. He later decided to resign from their business. While he acted for Imvume, he was invited into a consortium that submitted a bid for the Aventura Resort in exchange for his services. He retains no personal friendship with Imvume.
# On PetroSA's actions and internal inquiry
At the request of Imvume, PetroSA effected a pre-payment into an account different from the normal account. We changed the account without considering that there may be negative ramifications. PetroSA has since tightened the controls around channels of communication and instruction from vendors on payments. PetroSA in its enquiry has not found any wrongdoing by any individual or individuals within PetroSA or external to PetroSA with line of sight to PetroSA. All the procedures and processes were followed. PetroSA honoured the letter of the contract. At times we assist suppliers to better deliver to PetroSA where possible. The procurement policy at PetroSA allows for payments of this nature.
# On the double payment
Glencore held the product. Even though PetroSA did not have a contract with them, they had a ship in the harbour with our product. As we had already paid, PetroSA had to make a decision; to either pay them and deal with Imvume later -- this would cost us $2,8-million -- or refuse to pay and have our refinery cease operating for a minimum of 40 days, at the cost of $1-million daily. The PetroSA board ratified the decision.
Conclusion
It is the intention of PetroSA to recoup all the funds involved in this dispute. A liquidated Imvume would not generate the required proceeds for PetroSA. This would lead to an outright loss. PetroSA needs Imvume to pay back the money owed to PetroSA.
BARRY AARON & ASSOCIATES (lawyers for Majali and Imvume):
Our clients have requested us to record that Imvume had legitimately withheld payment in the sum of $2,8-million from Glencore against receipt of the expected commission on the profit-sharing arrangement in relation to Imvume's contract with PetroSA.
The withholding of this payment was not contested by Glencore until immediately prior to delivery of the next shipment, which it then refused to offload until such time as the shortfall (as Glencore perceived it) on the previous shipment had been paid. This resulted in PetroSA effecting payment of the shortfall and Imvume executing the acknowledgement [of debt] in favour of PetroSA.
The issue of commission from Glencore remains unresolved. Imvume expected to repay PetroSA from anticipated funds and separately resolve the issue with Glencore. Unfortunately, the anticipated funds did not materialise. Imvume has concluded arrangements with PetroSA for repayment. Imvume intends honouring its obligations to PetroSA. Our clients have no objection to fair investigative journalism and comment. [The M&G] however continues to harass our clients in an ongoing witch-hunt. [The M&G] appears to have accessed Imvume's private and confidential records, including (in particular) its banking records, constituting an invasion of our clients' rights to privacy, conduct way beyond the norms of responsible or acceptable investigative journalism. Our clients are a private businessman and a private company respectively, engaging in the legitimate pursuit of their activities. Their business activities and support for the ANC are their private affair. [The M&G] is sabotaging and subverting a legitimate black empowerment initiative.
MNMR Attorneys (for the ANC and Kgalema Motlanthe)
The short time period provided for comment demonstrates that the M&G will not give proper consideration to our clients' submissions. We wish to note that following the recent decision of the Cape high court in the Idasa matter, our clients are not obliged to discuss donations received by it from any person. Even if it were so, our clients would have no obligation and would not always have the ability or means to verify the identity of the sources of all donations made to it. We record, however, that our clients deny any insinuation that they acted in any corrupt, illegal or improper manner. Our clients will not hesitate to protect their rights should the M&G publish the defamatory material contemplated in [your] e-mail.
Source: Mail & Guardian
The scheme unfolded in two stages. First, PetroSA management bent over backwards to pay Imvume the money as an advance for the procurement of oil condensate. Then, when Imvume diverted the funds to the ANC instead of paying its own foreign suppliers, PetroSA had to cover the shortfall by paying the same amount again. A multimillion-rand hole remains in the parastatalis books. PetroSA has gone through the motions to recover the debt by suing Imvume -- but most of it remains outstanding. The effect of the entire transaction was that PetroSA, and ultimately the taxpayer, subsidised the ruling party's election campaign: a blatant abuse of public resources.
Imvume's role as an ANC "front company" first emerged in February last year when the M&G exposed its oil dealings with Saddam Hussein's Iraq. Imvume principal Sandi Majali obtained lucrative crude oil allocations from that regime when he travelled to Iraq with top ANC officials between 2000 and 2002. More recently, Imvume described its boss as ANC secretary-general Kgalema Motlanthe's "economic adviser".
But it was the diversion of the Petro-SA money four months ahead of the 2004 elections that is now lifting the lid on the funding scandal. The deal puts the spotlight on PetroSA's management, which approved the payment; Imvume boss Majali, who asked for the advance and then issued the cheques to the ANC; and Motlanthe, who was Majali's ANC patron. Imvume, now unable to pay its debts, was once the empowerment pin-up of the oil industry. The contract that caused all the trouble was awarded by PetroSA to Imvume on October 15 2002 -- the day President Thabo Mbeki publicly launched PetroSA as the national oil company.
Under the contract, Imvume -- with the backing of Swiss-based resource trader Glencore International -- was to supply PetroSA with regular cargoes of condensate, a feedstock for PetroSA's Mossel Bay gas-to-liquid fuels plant. A number of condensate cargoes were delivered to Mossel Bay during 2003. The standard contractual procedure was for PetroSA to pay Imvume the full cargo price no later than 30 days after the bill of lading date (the date the cargo was loaded for shipment to Mossel Bay). Once it received payment from PetroSA, Imvume would immediately pay it on to Glencore, which sourced the cargo on international markets. Glencore paid Imvume a commission. But in December 2003 the pattern was broken, and PetroSA has confirmed that standard procedure was departed from. The bill of lading date for that cargo was December 6 2003, meaning PetroSA's payment for the cargo -- worth $10-million (about R65-million) -- was due on January 5 2004. But Imvume's Majali asked PetroSA for an advance of R15-million (just more than $2-million of the $10-million) which was paid even before the cargo was discharged on December 22. PetroSA paid the advance into a different account to that usually used by Imvume for the contract.
Evidence in the M&G's possession confirms that Imvume Management's corporate account was credited with R15-million a day later, on December 19. And the M&G has seen forensic proof that within the next four days, Imvume's Majali issued a series of four cheques to the ANC -- for R4-million, R3-million and R2-million (twice). These cheques, totalling R11-million, were all transacted on December 23. This week Majali and Imvume did not dispute that the money was paid to the ANC, but claimed their support for the party was a "private affair".
The transfers to the ANC came four months before the elections, held on April 14 2004. A number of sources have described the party's financial straits around that time, claiming it had a bank overdraft typically running at more than R100-million. When payment for the cargo became due to Glencore on January 5, Imvume failed to pay the company the R15-million advance -- and, effectively, also withheld another R3-million from the balance owed. Glencore turned to PetroSA for what it was owed, eventually threatening in February not to offload the next cargo. PetroSA agreed to cover the shortfall of R18-million, for fear that the Mossel Bay plant would run out of feedstock, leading to greater losses. Effectively, PetroSA paid R18-million twice -- once to Imvume, and once to Imvume's supplier.
PetroSA maintains that the special circumstances of the empowerment environment largely excuse the actions of its management. It also denies that there was pressure from either the Minerals and Energy Ministry or the ANC to approve the advance to Imvume. Circumstances, however, suggest that empowerment is not a sufficient explanation and that Imvume's ANC links played a role. These links were no secret in oil trading circles. A businessman active in the sector told the M&G last year: "It was talked about when they got tenders ... that it was an ANC company ... I certainly understand that ANC fundraising has a keen interest."
The advance payment to Imvume was irregular in that it was a departure from standard procedures. PetroSA maintains procurement policy allows for advance payments, but admits it "should have checked" whether the money was going into the usual account. When the transaction with Imvume blew up in its face, PetroSA continued treating the company with kid gloves.
On February 23 last year, four days after PetroSA had been forced to settle Imvume's debt with Glencore, Majali signed an acknowledgement of debt to PetroSA, agreeing to repay the R18-million plus interest within 90 days. He also ceded his company's revenue stream as security. But Imvume paid nothing in terms of that agreement. Court records show more than a month passed after the expiry of the 90-day term before PetroSA issued a letter of demand. (See "PetroSA vs Imvume Management" download box on top right of this article for full documents).
PetroSA's choice of lawyer employed to pursue the demand raises further questions about PetroSA's seriousness of purpose. The lawyer, Leslie Mkhabela, was previously Imvume's own attorney and still has a business relationship with Majali via their common interest in Forever Resorts Aventura, the privatised state leisure company. This raises conflict-of-interest questions. Mkhabela maintained this week that this was not a problem as he had disclosed his business relationship with Majali to PetroSA. The agreement signed between Mkhize and Majali was still not enforced. Instead new terms, much more favourable to Imvume, were agreed between PetroSA chief executive Sipho Mkhize and Majali in September last year. Now PetroSA waived any claim to interest and agreed that Imvume could repay the capital amount in monthly instalments over four and a half years. But again, in February this year and after paying only R1,33-million, Imvume defaulted, court papers show.
PetroSA took off the kid gloves for a little while, filing an application for summary judgement in the Johannesburg High Court. But the matter was postponed twice, and on a third court date -- May 3 this year -- PetroSA removed the matter from the roll. PetroSA this week claimed that this was to allow Imvume to remain operational, which would give PetroSA a better chance eventually to recoup the debt. The ANC this week threatened legal action against the M&G without confirming or denying the flow of money to it. Circumstantial evidence strongly suggests the ANC knew exactly where the funding was coming from. Between 2000 and 2002, when Majali was trading in oil allocations from Saddam Hussein's Iraq, the ANC's Motlanthe repeatedly accompanied him to that country. ANC treasurer general Mendi Msimang also went along on at least one occasion. It is rumoured that the relationship between Majali and Motlanthe has cooled recently, but an Imvume brochure last year still described Majali as "economic adviser to the secretary general of the ANC". Describing the company's "winning formula", the brochure said Imvume had "access and influence on economic policy".
How they responded ...
PETROSA
The cornerstone of this deal is the policy adopted by PetroSA, which is a national initiative, black economic empowerment (BEE). PetroSA has a mandate to introduce hitherto disadvantaged South Africans into the oil and gas industry. PetroSA had a choice: to continue business as usual and exclude historically disadvantaged South Africans from the mainstream economy and prolong, if not propagate, the two-economies concept, or use our procurement muscle to bring fundamental change to the industry.
To procure a raw material referred to as condensate, the requirement was that the preferred supplier must have a South African partner who qualifies as a BEE candidate. This in effect introduced a major shift in the industry. We deliberately signed deals with the historically disadvantaged party to ensure that they were not "brought along" to the deal, but in fact they were the "principal partner" in the deal.
# On the [High Court] case PetroSA brought against Imvume PetroSA suspended the case due to the fact that if Imvume were liquidated, there would be very little proceeds flowing into PetroSA from that exercise. Imvume is much better off remaining operational for PetroSA to be able to recoup the total sum owed to PetroSA as well as interest and the legal costs.
# On Leslie Mkhabela [PetroSA's choice of lawyer to sue Imvume]
Mkhabela assured PetroSA of the following: he acted on behalf of Imvume during 2002/03. He later decided to resign from their business. While he acted for Imvume, he was invited into a consortium that submitted a bid for the Aventura Resort in exchange for his services. He retains no personal friendship with Imvume.
# On PetroSA's actions and internal inquiry
At the request of Imvume, PetroSA effected a pre-payment into an account different from the normal account. We changed the account without considering that there may be negative ramifications. PetroSA has since tightened the controls around channels of communication and instruction from vendors on payments. PetroSA in its enquiry has not found any wrongdoing by any individual or individuals within PetroSA or external to PetroSA with line of sight to PetroSA. All the procedures and processes were followed. PetroSA honoured the letter of the contract. At times we assist suppliers to better deliver to PetroSA where possible. The procurement policy at PetroSA allows for payments of this nature.
# On the double payment
Glencore held the product. Even though PetroSA did not have a contract with them, they had a ship in the harbour with our product. As we had already paid, PetroSA had to make a decision; to either pay them and deal with Imvume later -- this would cost us $2,8-million -- or refuse to pay and have our refinery cease operating for a minimum of 40 days, at the cost of $1-million daily. The PetroSA board ratified the decision.
Conclusion
It is the intention of PetroSA to recoup all the funds involved in this dispute. A liquidated Imvume would not generate the required proceeds for PetroSA. This would lead to an outright loss. PetroSA needs Imvume to pay back the money owed to PetroSA.
BARRY AARON & ASSOCIATES (lawyers for Majali and Imvume):
Our clients have requested us to record that Imvume had legitimately withheld payment in the sum of $2,8-million from Glencore against receipt of the expected commission on the profit-sharing arrangement in relation to Imvume's contract with PetroSA.
The withholding of this payment was not contested by Glencore until immediately prior to delivery of the next shipment, which it then refused to offload until such time as the shortfall (as Glencore perceived it) on the previous shipment had been paid. This resulted in PetroSA effecting payment of the shortfall and Imvume executing the acknowledgement [of debt] in favour of PetroSA.
The issue of commission from Glencore remains unresolved. Imvume expected to repay PetroSA from anticipated funds and separately resolve the issue with Glencore. Unfortunately, the anticipated funds did not materialise. Imvume has concluded arrangements with PetroSA for repayment. Imvume intends honouring its obligations to PetroSA. Our clients have no objection to fair investigative journalism and comment. [The M&G] however continues to harass our clients in an ongoing witch-hunt. [The M&G] appears to have accessed Imvume's private and confidential records, including (in particular) its banking records, constituting an invasion of our clients' rights to privacy, conduct way beyond the norms of responsible or acceptable investigative journalism. Our clients are a private businessman and a private company respectively, engaging in the legitimate pursuit of their activities. Their business activities and support for the ANC are their private affair. [The M&G] is sabotaging and subverting a legitimate black empowerment initiative.
MNMR Attorneys (for the ANC and Kgalema Motlanthe)
The short time period provided for comment demonstrates that the M&G will not give proper consideration to our clients' submissions. We wish to note that following the recent decision of the Cape high court in the Idasa matter, our clients are not obliged to discuss donations received by it from any person. Even if it were so, our clients would have no obligation and would not always have the ability or means to verify the identity of the sources of all donations made to it. We record, however, that our clients deny any insinuation that they acted in any corrupt, illegal or improper manner. Our clients will not hesitate to protect their rights should the M&G publish the defamatory material contemplated in [your] e-mail.
Source: Mail & Guardian
The ANC's Oilgate
A Mail & Guardian investigation into covert party funding has revealed how R11-million of public money was diverted to African National Congress coffers ahead of the 2004 elections. In what may be the biggest political funding scandal since 1994, the M&G has established that South Africa's state oil company, PetroSA, irregularly paid R15-million to Imvume Management -- a company closely tied to the ANC -- at a time when the party was desperate for funds to fight elections.
The M&G possesses bank statements and has seen other forensic evidence proving that Imvume transferred the lion's share of this to the ANC within days. PetroSA this week said it was unaware of this. The ANC denied impropriety and said it was not obliged to discuss its funders. The scheme unfolded in two stages. First, PetroSA management bent over backwards to pay Imvume the money as an advance for the procurement of oil condensate. Then, when Imvume diverted the funds to the ANC instead of paying its own foreign suppliers, PetroSA had to cover the shortfall by paying the same amount again.
A multimillion-rand hole remains in the parastatalis books. PetroSA has gone through the motions to recover the debt by suing Imvume -- but most of it remains outstanding. The effect of the entire transaction was that PetroSA, and ultimately the taxpayer, subsidised the ruling party's election campaign: a blatant abuse of public resources. Imvume's role as an ANC "front company" first emerged in February last year when the M&G exposed its oil dealings with Saddam Hussein's Iraq. Imvume principal Sandi Majali obtained lucrative crude oil allocations from that regime when he travelled to Iraq with top ANC officials between 2000 and 2002. More recently, Imvume described its boss as ANC secretary-general Kgalema Motlanthe's "economic adviser".
The transaction in a nutshell
But it was the diversion of the Petro-SA money four months ahead of the 2004 elections that is now lifting the lid on the funding scandal. The deal puts the spotlight on PetroSA's management, which approved the payment; Imvume boss Majali, who asked for the advance and then issued the cheques to the ANC; and Motlanthe, who was Majali's ANC patron. Imvume, now unable to pay its debts, was once the empowerment pin-up of the oil industry.
The contract that caused all the trouble was awarded by PetroSA to Imvume on October 15 2002 -- the day President Thabo Mbeki publicly launched PetroSA as the national oil company. Under the contract, Imvume -- with the backing of Swiss-based resource trader Glencore International -- was to supply PetroSA with regular cargoes of condensate, a feedstock for PetroSA's Mossel Bay gas-to-liquid fuels plant. A number of condensate cargoes were delivered to Mossel Bay during 2003. The standard contractual procedure was for PetroSA to pay Imvume the full cargo price no later than 30 days after the bill of lading date (the date the cargo was loaded for shipment to Mossel Bay).
Once it received payment from PetroSA, Imvume would immediately pay it on to Glencore, which sourced the cargo on international markets. Glencore paid Imvume a commission. But in December 2003 the pattern was broken, and PetroSA has confirmed that standard procedure was departed from. The bill of lading date for that cargo was December 6 2003, meaning PetroSA's payment for the cargo -- worth $10-million (about R65-million) -- was due on January 5 2004. But Imvume's Majali asked PetroSA for an advance of R15-million (just more than $2-million of the $10-million) which was paid even before the cargo was discharged on December 22. PetroSA paid the advance into a different account to that usually used by Imvume for the contract.
Evidence in the M&G's possession confirms that Imvume Management's corporate account was credited with R15-million a day later, on December 19. And the M&G has seen forensic proof that within the next four days, Imvume's Majali issued a series of four cheques to the ANC -- for R4-million, R3-million and R2-million (twice). These cheques, totalling R11-million, were all transacted on December 23. This week Majali and Imvume did not dispute that the money was paid to the ANC, but claimed their support for the party was a "private affair".
The transfers to the ANC came four months before the elections, held on April 14 2004. A number of sources have described the party's financial straits around that time, claiming it had a bank overdraft typically running at more than R100-million. When payment for the cargo became due to Glencore on January 5, Imvume failed to pay the company the R15-million advance -- and, effectively, also withheld another R3-million from the balance owed.
Glencore turned to PetroSA for what it was owed, eventually threatening in February not to offload the next cargo. PetroSA agreed to cover the shortfall of R18-million, for fear that the Mossel Bay plant would run out of feedstock, leading to greater losses. Effectively, PetroSA paid R18-million twice -- once to Imvume, and once to Imvume's supplier. PetroSA maintains that the special circumstances of the empowerment environment largely excuse the actions of its management. It also denies that there was pressure from either the Minerals and Energy Ministry or the ANC to approve the advance to Imvume.
Circumstances, however, suggest that empowerment is not a sufficient explanation and that Imvume's ANC links played a role. These links were no secret in oil trading circles. A businessman active in the sector told the M&G last year: "It was talked about when they got tenders ... that it was an ANC company ... I certainly understand that ANC fundraising has a keen interest."
The advance payment to Imvume was irregular in that it was a departure from standard procedures. PetroSA maintains procurement policy allows for advance payments, but admits it "should have checked" whether the money was going into the usual account. When the transaction with Imvume blew up in its face, PetroSA continued treating the company with kid gloves.
On February 23 last year, four days after PetroSA had been forced to settle Imvume's debt with Glencore, Majali signed an acknowledgement of debt to PetroSA, agreeing to repay the R18-million plus interest within 90 days. He also ceded his company's revenue stream as security. But Imvume paid nothing in terms of that agreement. Court records show more than a month passed after the expiry of the 90-day term before PetroSA issued a letter of demand. (See "PetroSA vs Imvume Management" download box on top right of this article for full documents).
PetroSA's choice of lawyer employed to pursue the demand raises further questions about PetroSA's seriousness of purpose. The lawyer, Leslie Mkhabela, was previously Imvume's own attorney and still has a business relationship with Majali via their common interest in Forever Resorts Aventura, the privatised state leisure company. This raises conflict-of-interest questions.
Mkhabela maintained this week that this was not a problem as he had disclosed his business relationship with Majali to PetroSA. The agreement signed between Mkhize and Majali was still not enforced. Instead new terms, much more favourable to Imvume, were agreed between PetroSA chief executive Sipho Mkhize and Majali in September last year.
Now PetroSA waived any claim to interest and agreed that Imvume could repay the capital amount in monthly instalments over four and a half years. But again, in February this year and after paying only R1,33-million, Imvume defaulted, court papers show.
PetroSA took off the kid gloves for a little while, filing an application for summary judgement in the Johannesburg High Court. But the matter was postponed twice, and on a third court date -- May 3 this year -- PetroSA removed the matter from the roll. PetroSA this week claimed that this was to allow Imvume to remain operational, which would give PetroSA a better chance eventually to recoup the debt.
The ANC this week threatened legal action against the M&G without confirming or denying the flow of money to it. Circumstantial evidence strongly suggests the ANC knew exactly where the funding was coming from. Between 2000 and 2002, when Majali was trading in oil allocations from Saddam Hussein's Iraq, the ANC's Motlanthe repeatedly accompanied him to that country. ANC treasurer general Mendi Msimang also went along on at least one occasion.
It is rumoured that the relationship between Majali and Motlanthe has cooled recently, but an Imvume brochure last year still described Majali as "economic adviser to the secretary general of the ANC". Describing the company's "winning formula", the brochure said Imvume had "access and influence on economic policy".
How they responded ...
PETROSA
The cornerstone of this deal is the policy adopted by PetroSA, which is a national initiative, black economic empowerment (BEE). PetroSA has a mandate to introduce hitherto disadvantaged South Africans into the oil and gas industry. PetroSA had a choice: to continue business as usual and exclude historically disadvantaged South Africans from the mainstream economy and prolong, if not propagate, the two-economies concept, or use our procurement muscle to bring fundamental change to the industry.
To procure a raw material referred to as condensate, the requirement was that the preferred supplier must have a South African partner who qualifies as a BEE candidate. This in effect introduced a major shift in the industry. We deliberately signed deals with the historically disadvantaged party to ensure that they were not "brought along" to the deal, but in fact they were the "principal partner" in the deal.
# On the [High Court] case PetroSA brought against Imvume PetroSA suspended the case due to the fact that if Imvume were liquidated, there would be very little proceeds flowing into PetroSA from that exercise. Imvume is much better off remaining operational for PetroSA to be able to recoup the total sum owed to PetroSA as well as interest and the legal costs.
# On Leslie Mkhabela [PetroSA's choice of lawyer to sue Imvume]
Mkhabela assured PetroSA of the following: he acted on behalf of Imvume during 2002/03. He later decided to resign from their business. While he acted for Imvume, he was invited into a consortium that submitted a bid for the Aventura Resort in exchange for his services. He retains no personal friendship with Imvume.
# On PetroSA's actions and internal inquiry
At the request of Imvume, PetroSA effected a pre-payment into an account different from the normal account. We changed the account without considering that there may be negative ramifications. PetroSA has since tightened the controls around channels of communication and instruction from vendors on payments. PetroSA in its enquiry has not found any wrongdoing by any individual or individuals within PetroSA or external to PetroSA with line of sight to PetroSA. All the procedures and processes were followed. PetroSA honoured the letter of the contract. At times we assist suppliers to better deliver to PetroSA where possible. The procurement policy at PetroSA allows for payments of this nature.
# On the double payment
Glencore held the product. Even though PetroSA did not have a contract with them, they had a ship in the harbour with our product. As we had already paid, PetroSA had to make a decision; to either pay them and deal with Imvume later -- this would cost us $2,8-million -- or refuse to pay and have our refinery cease operating for a minimum of 40 days, at the cost of $1-million daily. The PetroSA board ratified the decision.
# Conclusion
It is the intention of PetroSA to recoup all the funds involved in this dispute. A liquidated Imvume would not generate the required proceeds for PetroSA. This would lead to an outright loss. PetroSA needs Imvume to pay back the money owed to PetroSA.
BARRY AARON & ASSOCIATES (lawyers for Majali and Imvume):
Our clients have requested us to record that Imvume had legitimately withheld payment in the sum of $2,8-million from Glencore against receipt of the expected commission on the profit-sharing arrangement in relation to Imvume's contract with PetroSA.
The withholding of this payment was not contested by Glencore until immediately prior to delivery of the next shipment, which it then refused to offload until such time as the shortfall (as Glencore perceived it) on the previous shipment had been paid. This resulted in PetroSA effecting payment of the shortfall and Imvume executing the acknowledgement [of debt] in favour of PetroSA.
The issue of commission from Glencore remains unresolved. Imvume expected to repay PetroSA from anticipated funds and separately resolve the issue with Glencore. Unfortunately, the anticipated funds did not materialise. Imvume has concluded arrangements with PetroSA for repayment. Imvume intends honouring its obligations to PetroSA. Our clients have no objection to fair investigative journalism and comment. [The M&G] however continues to harass our clients in an ongoing witch-hunt. [The M&G] appears to have accessed Imvume's private and confidential records, including (in particular) its banking records, constituting an invasion of our clients' rights to privacy, conduct way beyond the norms of responsible or acceptable investigative journalism. Our clients are a private businessman and a private company respectively, engaging in the legitimate pursuit of their activities. Their business activities and support for the ANC are their private affair. [The M&G] is sabotaging and subverting a legitimate black empowerment initiative.
MNMR Attorneys (for the ANC and Kgalema Motlanthe)
The short time period provided for comment demonstrates that the M&G will not give proper consideration to our clients' submissions. We wish to note that following the recent decision of the Cape high court in the Idasa matter, our clients are not obliged to discuss donations received by it from any person. Even if it were so, our clients would have no obligation and would not always have the ability or means to verify the identity of the sources of all donations made to it. We record, however, that our clients deny any insinuation that they acted in any corrupt, illegal or improper manner. Our clients will not hesitate to protect their rights should the M&G publish the defamatory material contemplated in [your] e-mail.
Source: Mail & Guardian
The M&G possesses bank statements and has seen other forensic evidence proving that Imvume transferred the lion's share of this to the ANC within days. PetroSA this week said it was unaware of this. The ANC denied impropriety and said it was not obliged to discuss its funders. The scheme unfolded in two stages. First, PetroSA management bent over backwards to pay Imvume the money as an advance for the procurement of oil condensate. Then, when Imvume diverted the funds to the ANC instead of paying its own foreign suppliers, PetroSA had to cover the shortfall by paying the same amount again.
A multimillion-rand hole remains in the parastatalis books. PetroSA has gone through the motions to recover the debt by suing Imvume -- but most of it remains outstanding. The effect of the entire transaction was that PetroSA, and ultimately the taxpayer, subsidised the ruling party's election campaign: a blatant abuse of public resources. Imvume's role as an ANC "front company" first emerged in February last year when the M&G exposed its oil dealings with Saddam Hussein's Iraq. Imvume principal Sandi Majali obtained lucrative crude oil allocations from that regime when he travelled to Iraq with top ANC officials between 2000 and 2002. More recently, Imvume described its boss as ANC secretary-general Kgalema Motlanthe's "economic adviser".
The transaction in a nutshell
But it was the diversion of the Petro-SA money four months ahead of the 2004 elections that is now lifting the lid on the funding scandal. The deal puts the spotlight on PetroSA's management, which approved the payment; Imvume boss Majali, who asked for the advance and then issued the cheques to the ANC; and Motlanthe, who was Majali's ANC patron. Imvume, now unable to pay its debts, was once the empowerment pin-up of the oil industry.
The contract that caused all the trouble was awarded by PetroSA to Imvume on October 15 2002 -- the day President Thabo Mbeki publicly launched PetroSA as the national oil company. Under the contract, Imvume -- with the backing of Swiss-based resource trader Glencore International -- was to supply PetroSA with regular cargoes of condensate, a feedstock for PetroSA's Mossel Bay gas-to-liquid fuels plant. A number of condensate cargoes were delivered to Mossel Bay during 2003. The standard contractual procedure was for PetroSA to pay Imvume the full cargo price no later than 30 days after the bill of lading date (the date the cargo was loaded for shipment to Mossel Bay).
Once it received payment from PetroSA, Imvume would immediately pay it on to Glencore, which sourced the cargo on international markets. Glencore paid Imvume a commission. But in December 2003 the pattern was broken, and PetroSA has confirmed that standard procedure was departed from. The bill of lading date for that cargo was December 6 2003, meaning PetroSA's payment for the cargo -- worth $10-million (about R65-million) -- was due on January 5 2004. But Imvume's Majali asked PetroSA for an advance of R15-million (just more than $2-million of the $10-million) which was paid even before the cargo was discharged on December 22. PetroSA paid the advance into a different account to that usually used by Imvume for the contract.
Evidence in the M&G's possession confirms that Imvume Management's corporate account was credited with R15-million a day later, on December 19. And the M&G has seen forensic proof that within the next four days, Imvume's Majali issued a series of four cheques to the ANC -- for R4-million, R3-million and R2-million (twice). These cheques, totalling R11-million, were all transacted on December 23. This week Majali and Imvume did not dispute that the money was paid to the ANC, but claimed their support for the party was a "private affair".
The transfers to the ANC came four months before the elections, held on April 14 2004. A number of sources have described the party's financial straits around that time, claiming it had a bank overdraft typically running at more than R100-million. When payment for the cargo became due to Glencore on January 5, Imvume failed to pay the company the R15-million advance -- and, effectively, also withheld another R3-million from the balance owed.
Glencore turned to PetroSA for what it was owed, eventually threatening in February not to offload the next cargo. PetroSA agreed to cover the shortfall of R18-million, for fear that the Mossel Bay plant would run out of feedstock, leading to greater losses. Effectively, PetroSA paid R18-million twice -- once to Imvume, and once to Imvume's supplier. PetroSA maintains that the special circumstances of the empowerment environment largely excuse the actions of its management. It also denies that there was pressure from either the Minerals and Energy Ministry or the ANC to approve the advance to Imvume.
Circumstances, however, suggest that empowerment is not a sufficient explanation and that Imvume's ANC links played a role. These links were no secret in oil trading circles. A businessman active in the sector told the M&G last year: "It was talked about when they got tenders ... that it was an ANC company ... I certainly understand that ANC fundraising has a keen interest."
The advance payment to Imvume was irregular in that it was a departure from standard procedures. PetroSA maintains procurement policy allows for advance payments, but admits it "should have checked" whether the money was going into the usual account. When the transaction with Imvume blew up in its face, PetroSA continued treating the company with kid gloves.
On February 23 last year, four days after PetroSA had been forced to settle Imvume's debt with Glencore, Majali signed an acknowledgement of debt to PetroSA, agreeing to repay the R18-million plus interest within 90 days. He also ceded his company's revenue stream as security. But Imvume paid nothing in terms of that agreement. Court records show more than a month passed after the expiry of the 90-day term before PetroSA issued a letter of demand. (See "PetroSA vs Imvume Management" download box on top right of this article for full documents).
PetroSA's choice of lawyer employed to pursue the demand raises further questions about PetroSA's seriousness of purpose. The lawyer, Leslie Mkhabela, was previously Imvume's own attorney and still has a business relationship with Majali via their common interest in Forever Resorts Aventura, the privatised state leisure company. This raises conflict-of-interest questions.
Mkhabela maintained this week that this was not a problem as he had disclosed his business relationship with Majali to PetroSA. The agreement signed between Mkhize and Majali was still not enforced. Instead new terms, much more favourable to Imvume, were agreed between PetroSA chief executive Sipho Mkhize and Majali in September last year.
Now PetroSA waived any claim to interest and agreed that Imvume could repay the capital amount in monthly instalments over four and a half years. But again, in February this year and after paying only R1,33-million, Imvume defaulted, court papers show.
PetroSA took off the kid gloves for a little while, filing an application for summary judgement in the Johannesburg High Court. But the matter was postponed twice, and on a third court date -- May 3 this year -- PetroSA removed the matter from the roll. PetroSA this week claimed that this was to allow Imvume to remain operational, which would give PetroSA a better chance eventually to recoup the debt.
The ANC this week threatened legal action against the M&G without confirming or denying the flow of money to it. Circumstantial evidence strongly suggests the ANC knew exactly where the funding was coming from. Between 2000 and 2002, when Majali was trading in oil allocations from Saddam Hussein's Iraq, the ANC's Motlanthe repeatedly accompanied him to that country. ANC treasurer general Mendi Msimang also went along on at least one occasion.
It is rumoured that the relationship between Majali and Motlanthe has cooled recently, but an Imvume brochure last year still described Majali as "economic adviser to the secretary general of the ANC". Describing the company's "winning formula", the brochure said Imvume had "access and influence on economic policy".
How they responded ...
PETROSA
The cornerstone of this deal is the policy adopted by PetroSA, which is a national initiative, black economic empowerment (BEE). PetroSA has a mandate to introduce hitherto disadvantaged South Africans into the oil and gas industry. PetroSA had a choice: to continue business as usual and exclude historically disadvantaged South Africans from the mainstream economy and prolong, if not propagate, the two-economies concept, or use our procurement muscle to bring fundamental change to the industry.
To procure a raw material referred to as condensate, the requirement was that the preferred supplier must have a South African partner who qualifies as a BEE candidate. This in effect introduced a major shift in the industry. We deliberately signed deals with the historically disadvantaged party to ensure that they were not "brought along" to the deal, but in fact they were the "principal partner" in the deal.
# On the [High Court] case PetroSA brought against Imvume PetroSA suspended the case due to the fact that if Imvume were liquidated, there would be very little proceeds flowing into PetroSA from that exercise. Imvume is much better off remaining operational for PetroSA to be able to recoup the total sum owed to PetroSA as well as interest and the legal costs.
# On Leslie Mkhabela [PetroSA's choice of lawyer to sue Imvume]
Mkhabela assured PetroSA of the following: he acted on behalf of Imvume during 2002/03. He later decided to resign from their business. While he acted for Imvume, he was invited into a consortium that submitted a bid for the Aventura Resort in exchange for his services. He retains no personal friendship with Imvume.
# On PetroSA's actions and internal inquiry
At the request of Imvume, PetroSA effected a pre-payment into an account different from the normal account. We changed the account without considering that there may be negative ramifications. PetroSA has since tightened the controls around channels of communication and instruction from vendors on payments. PetroSA in its enquiry has not found any wrongdoing by any individual or individuals within PetroSA or external to PetroSA with line of sight to PetroSA. All the procedures and processes were followed. PetroSA honoured the letter of the contract. At times we assist suppliers to better deliver to PetroSA where possible. The procurement policy at PetroSA allows for payments of this nature.
# On the double payment
Glencore held the product. Even though PetroSA did not have a contract with them, they had a ship in the harbour with our product. As we had already paid, PetroSA had to make a decision; to either pay them and deal with Imvume later -- this would cost us $2,8-million -- or refuse to pay and have our refinery cease operating for a minimum of 40 days, at the cost of $1-million daily. The PetroSA board ratified the decision.
# Conclusion
It is the intention of PetroSA to recoup all the funds involved in this dispute. A liquidated Imvume would not generate the required proceeds for PetroSA. This would lead to an outright loss. PetroSA needs Imvume to pay back the money owed to PetroSA.
BARRY AARON & ASSOCIATES (lawyers for Majali and Imvume):
Our clients have requested us to record that Imvume had legitimately withheld payment in the sum of $2,8-million from Glencore against receipt of the expected commission on the profit-sharing arrangement in relation to Imvume's contract with PetroSA.
The withholding of this payment was not contested by Glencore until immediately prior to delivery of the next shipment, which it then refused to offload until such time as the shortfall (as Glencore perceived it) on the previous shipment had been paid. This resulted in PetroSA effecting payment of the shortfall and Imvume executing the acknowledgement [of debt] in favour of PetroSA.
The issue of commission from Glencore remains unresolved. Imvume expected to repay PetroSA from anticipated funds and separately resolve the issue with Glencore. Unfortunately, the anticipated funds did not materialise. Imvume has concluded arrangements with PetroSA for repayment. Imvume intends honouring its obligations to PetroSA. Our clients have no objection to fair investigative journalism and comment. [The M&G] however continues to harass our clients in an ongoing witch-hunt. [The M&G] appears to have accessed Imvume's private and confidential records, including (in particular) its banking records, constituting an invasion of our clients' rights to privacy, conduct way beyond the norms of responsible or acceptable investigative journalism. Our clients are a private businessman and a private company respectively, engaging in the legitimate pursuit of their activities. Their business activities and support for the ANC are their private affair. [The M&G] is sabotaging and subverting a legitimate black empowerment initiative.
MNMR Attorneys (for the ANC and Kgalema Motlanthe)
The short time period provided for comment demonstrates that the M&G will not give proper consideration to our clients' submissions. We wish to note that following the recent decision of the Cape high court in the Idasa matter, our clients are not obliged to discuss donations received by it from any person. Even if it were so, our clients would have no obligation and would not always have the ability or means to verify the identity of the sources of all donations made to it. We record, however, that our clients deny any insinuation that they acted in any corrupt, illegal or improper manner. Our clients will not hesitate to protect their rights should the M&G publish the defamatory material contemplated in [your] e-mail.
Source: Mail & Guardian
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