Leading South African businessmen allegedly arranged and received substantial kickbacks for a major state oil transaction
Mungo Soggot
Keith Kunene, the former chair of the Central Energy Fund (CEF), stands accused of accepting cash bribes in dollars worth R360 000 and was allegedly promised a further R12-million in offshore kickbacks to arrange a secret oil deal with an international trading company.
According to documents filed this week by the office of the national director of public prosecutions, the bribes were paid as part of a deal with Trafigura, a London-based oil company, and its South African empowerment partner, High Beam Trading International, a Sandton-based company registered in the Bahamas. High Beam’s head, Moses Moloele, who chairs the African Mineral and Energy Forum, is alleged to have arranged the bribes with Kunene, who split the money between himself and colleagues at the state oil company. On Thursday morning investigators attached to the investigating directorate: serious economic offences, a branch of the office of National Director of Public Prosecutions Bulelani Ngcuka, raided the homes of both Kunene and Moloele in search of incriminating evidence. They also stormed two of Kunene’s offices and the Sandton headquarters of High Beam International.
The raids follow two months of investigation by Ngcuka’s office and by Kroll Associates, the international investigating company, which was hired to probe the deal by Minister of Mineral and Energy Affairs Phumzile Mlambo-Ngcuka.
The minister suspended the board of the state oil company and called in Kroll after the deal was exposed in the Mail & Guardian in November. Before then, she had already instructed her department to conduct an investigation into the contract after receiving an anonymous tip off.
In December, Kroll’s report was referred to Ngcuka’s Scorpions investigators. At the same time, the minister also fired Kunene and the board of the Strategic Fuel Fund (SFF), the oil trading arm of the CEF, which is the holding company for the state’s energy assets. Kunene is a leading figure in the business community, occupying several important corporate positions, and last year was accorded Business Day’s Business Achievement Award
According to this week’s court papers, Kroll Associates obtained confessions from other state oil officials about the bribes, after which Ngcuka’s investigators obtained more detailed written statements about the way in which the bribes had been arranged.
These statements, from officials who came to know of or were allegedly involved in the bribes, were also filed in court this week as part of the application for the raids. The officials concerned have already received threats. Documents in the application say Kunene indicated at one stage that Trafigura had supplied the money for the bribes, and that Moloele had arranged them. An affidavit filed by advocate Andre Becker, a senior official in serious economic offences, says that after Kunene accepted $20 000 in cash for himself and two colleagues, Moloele “promised a further amount of $2-million”.
According to a statement by one state oil official, Kunene and his colleague each received, on top of the bribes, a bottle of 1940 Domaine de Penarde Armagnac from Trafigura on a visit to the company in London. The brandy was given by Trafigura’s head, Claude Dauphin. The deal with Trafigura and High Beam essentially made the companies agents of the state’s strategic oil stock. The companies were tasked with selling the 10-million barrels of oil stock stored down a disused mineshaft in Ogies, east of Johannesburg, and replacing it with a higher grade of oil.
The new oil was supposed to be stored in the state’s other storage tanks in Saldanha Bay, north of Cape Town. The transaction was to take place over a period of 15 months, during which time Trafigura/High Beam had full control over the oil and a mandate to trade on SFF’s behalf on international oil futures markets.
According to the Kroll investigation, the deal was “unduly advantageous” to Trafigura/High Beam and “potentially prejudicial to the State”. Instead of getting a return of between US15c and US80c a barrel of oil that would be the norm in such an agency contract, Trafigura/High Beam were in line to bag $3 a barrel.
The contract with Trafigura/High Beam was wrapped up without the knowledge of the minister, apparently in violation of legislation governing the state oil company and the Public Finance Management Act. Advocate Becker says in his affidavit laying the ground for the raid application that Kunene arranged for the contract to be backdated to May 1 2000, even though it was signed on May 13. Kunene and his colleagues quietly struck the deal after entering into negotiations with another international oil trading company, Masefield, to wrap up the Ogies/Saldanha Bay transaction.
Although the state oil company had been instructed to carry out the transaction, it had not been authorised to bring in a private company to help out, and was instead supposed to use the state oil operation’s in house team. The talks with Masefield, whose proposal got the thumbs-up from SFF management before it was replaced with High Beam/Trafigura, were therefore also unauthorised.
According to the investigators’ application to the Pretoria High Court, Kunene introduced Moloele to his colleagues at SFF at the time they were talking to Masefield. The state oil officials then flew to London and had dinner with senior Trafigura representatives at the Hilton Hotel in Hyde Park.
The statements from Kunene’s colleagues make it clear he was the driving force behind the contract. One statement provides considerable detail about the way in which the bribes were paid. The official who wrote the statement says he initially took $20 000 from Kunene, but subsequently gave it back and came clean to the investigators.
The statement gives an account of a meeting that took place at a private house in Kyalami shortly after the deal was struck. According to the statement, Kunene, who arranged the meeting, did not want to meet at the state oil offices in Sandton. “Kunene informed me,” the statement reads, “that after the signing of the agency agreement, SFF’s new partners had given him cash for himself, [the other official involved] and myself in the amount of $20 000 each, as an initial token of appreciation of the awarding of the contract to High Beam/Trafigura. Kunene placed a white envelope of cash on my lap. Kunene further mentioned that there was an additional R12-million to be shared between the three of us that would be deposited in a foreign bank account for us which we could access once the dust had settled.”
The writer of the statement also says that, when he questioned Kunene about the money, Kunene had reassured him, saying he had “discussed the receipt of the cash with his brothers, and they were also of the view that there could not be any problem.” The state oil official says he tried to return the money to Kunene, who urged him to keep it. On his second attempt, Kunene took the money, saying he would deposit it in case his colleague changed his mind. The statement by another of Kunene’s colleagues, which was also filed in the Pretoria High Court this week, provides a similar account of Kunene’s conduct. “During the week following the signing of the final contract, Kunene telephoned me and said he would like to meet with me. He came to my office, and I met him in the car park at my office as he was in a hurry. Kunene said that he had a gift from HBTI [High Beam/Trafigura] for me, which was $20 000, which he then handed to me in cash.
“I assumed that the money had come from Moloele, as I knew this was the only person that Kunene spoke to. I am aware that Moloele and Kunene had been friends for some time before the HBTI contract. Kunene said that HBTI thought they would not get the deal, as the SFF management favoured Masefield, and that it was through our support that HBTI got the deal, hence the gift. Kunene handed me a white envelope …” The statement says later that Kunene subsequently said HBTI would make available for himself and his two colleagues “a further two million, I cannot recall whether it was rands or dollars”.
The statement says: “Kunene at some point explained to me that this two million was for HBTI to obtain our assistance in getting a deal for HBTI in purchasing Iranian light oil for the replacement element of the contract using government connections in Iran, which would not normally be available to a private company such as HBTI.” Additional reporting by Nawaal Deane