Media Statement from the Office of the
Public Protector of the Republic of South Africa, Adv
Mabedle Lawrence Mushwana
Pretoria
29 July 2005
(Report on the so-called Oilgate investigation)
The Office of the Public Protector (OPP) of the Republic of
South Africa Advocate Mabedle Lawrence Mushwana today issued a
report on the so-called “Oilgate” investigation.
The OPP investigated a complaint lodged by the Freedom Front
Plus on June 6 2005 in connection with an advance payment of R15
million that was made by the state-controlled petrochemical
corporation, PetroSA, to a private company, Imvume Management.
The advance payment related to a contract for the procurement
of oil condensate.
The Freedom Front Plus complained to the OPP to investigate
alleged improper conduct and maladministration by PetroSA for
making the advance payment to Imvume.
The complaint was based on an article published in the
Mail&Guardian of May 20 2005, which alleged that, amongst
others:
- A large portion of the advance payment by PetroSA was
diverted by Imvume to the African National Congress (ANC)
shortly before the April 2004 general elections, instead of
the supplier of the oil condensate, Glencore;
- Deputy President Ms Phumzile Mlambo-Ngcuka (then
Minister of Minerals and Energy) improperly influenced
PetroSA’s decision to make advance payment to Imvume;
- Imvume made payments to a company that belongs to the
brother of the Deputy President and a construction company
that was renovating the private residence of the Minister of
Social Development, Zola Skweyiya, shortly after the advance
was paid by PetroSA;
- PetroSA subsequently had to pay the supplier of the oil
condensate directly, which resulted in a further loss of R15
million;
The investigation found that the Public Protector’s mandate
is by law restricted to the investigation of matters relating to
government bodies, public entities, state affairs and dishonesty
in respect of public money.
Consequently, the allegations pertaining to the relationship
between Imvume and the ANC, payments made by Imvume to the ANC
and, private entities and the involvement of the ANC in Imvume
CEO Sandi Majali’s business negotiations with the Government of
Iraq, could not be investigated.
The investigation also found that:
- Much of what has been published by the Mail& Guardian
was factually incorrect, based on incomplete information and
documentation and comprised of unsubstantiated suggestions
and unjustified speculation;
- The approval and authorisation on December 18 2003 by
the Acting CEO of PetroSA of an advance payment of R15
million to Imvume was lawful, well-founded and properly
considered in terms of the legal and policy prescripts that
applied to PetroSA;
- The decision to approve Imvume’s request, as it was
presented to PetroSA, for an advance was not unreasonable
under the prevailing circumstances, and did not amount to
maladministration, abuse of power or the receipt of any
unlawful or improper advantage;
- Imvume’s failure to pay Glencore (the supplier) the full
amount due to it in respect of the cargo of oil condensate
concerned could not reasonably have been foreseen or
expected by PetroSA;
- PetroSA’s payment of an amount of USD2, 8 million (plus
interest) to Glencore on February 23 2004 was in the public
interest and complied with its legal obligations in terms of
the Public Finance Management Act, 1999;
- The subsequent actions taken by PetroSA to recover from
Imvume the amount paid to Glencore was taken without delay
and in compliance with its legal obligations in terms of the
Public Finance Management Act, 1999;
- The allegations and suggestions of improper influence
made against Deputy President Mlambo-Ngcuka in relation to
the advance payment were not substantiated and are without
merit;
- The allegations of improper involvement of senior
officials of the Department of Minerals and Energy and the
SFF in the advancement of business relations between Imvume
and the Iraqi Government and that a crude oil supply
contract was improperly awarded to Imvume by the SFF in
March 2002, are without merit.
The Public Protector recommended that the board of PetroSA,
in consultation with the CEO and PetroSA’s legal advisors, take
urgent steps to ensure that the outstanding amount due to
PetroSA by Imvume, is recovered without delay and in compliance
with the provisions of sections 50(1)(d) and 51(1)(b)(i) of the
Public Finance Management Act, 1999.
He further also recommended that the board of PetroSA, its
CEO and its legal advisors, should regularly report to the
Minister of Minerals and Energy on the progress made regarding
the recovery of the outstanding amount.
He added that the minister should report to the Cabinet and
to Parliament on the steps taken and the progress made to
recover the outstanding amount Imvume owes PetroSA.
Issued by Selby Bokaba, Communications and Media Liaison
Manager in the Office of the Public Protector.Tel (012) 366-
7006 or 082 496 8463
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