Mungo Soggot investigates an extraordinary deal undertaken by the Central Energy Fund
A confidant of two of Africa’s most notoriously corrupt leaders has landed an extraordinary R3-million-a-year contract as an adviser to South Africa’s state-run oil company, the Central Energy Fund.
Former Liberian finance minister Emanuel Shaw II and his son, Emanuel Shaw III, pulled off the deal without going through tendering procedures and without the knowledge of the Minister of Minerals and Energy, Penuell Maduna.
Shaw got the highly influential job in July on the recommendation of the company’s chair, Don Mkhwanazi, who also introduced him to senior ANC leaders, including Deputy President Thabo Mbeki in 1992.
Shaw II served as Liberia’s finance minister under the comic-opera dictator Samuel Doe. In addition to the South African post, he was recently appointed ambassador extraordinaire by Liberia’s current President, Charles Taylor. Shaw is also economic and financial adviser to Taylor, a former warlord and fugitive from justice in the United States, where he is wanted on fraud charges. The two men were believed to be together in Taipei this week after stopping over at the Ritz Hotel in Paris.
A successful court action was brought against Shaw in Johannesburg in 1995 for the recovery of an alleged debt of R55 000. At the time of the action Shaw was involved in negotiations to mint Liberian coins in Cape Town.
Shaw’s contract gives him enormous power over the Central Energy Fund (CEF). His agreement with the company states he will steer its restructuring – and possible privatisation – and will also be advising Mkhwanazi on “all issues affecting the chair’s position”. The agreement also says Shaw’s company should “expand its advisory role to encompass the execution and implementation of the corporate strategy”.
Shaw is not new to the CEF. Two years ago he was involved in a management audit of the company’s oil-trading operations. Maduna’s predecessor, Pik Botha, and the auditor general say the audit was instigated on the advice of Mbeki. During the final stages of the audit, the deputy president’s office came to Shaw’s rescue when he was expelled from the country because of visa problems.
Shaw will share his CEF package with his son, who has also been present at the CEF’s Johannesburg’s office. The son declined to discuss their work with the Mail & Guardian this week. Shaw’s contract with CEF, signed on July 14, stipulates they be paid quarterly in advance, and they have already received their first tranche.
The chair of the CEF, Mkhwanazi, omitted to inform the parliamentary portfolio committee on minerals and energy about Shaw’s appointment this week when he briefed the committee on the state oil company’s restructuring. He said restructuring plans were at an early stage. He told the M&G after the briefing that he had not yet appointed consultants.
Mkhwanazi – who was congratulated by members of the parliamentary committee for his straight talking – admitted later in the week that Shaw had got the contract. He said Shaw had worked with him on his National Empowerment Trust, and was particularly well qualified for the job because of his prior work with the CEF.
He said he had first met Shaw when he came to South Africa in 1992 and asked to be introduced to the ANC leadership. He introduced Shaw to Mbeki, who was then head of international affairs, after checking his background.
Asked whether Shaw’s tenure under Doe was a problem, Mkhwanazi said Shaw told him he was imprisoned by Doe. The M&G could not confirm this and understands from numerous sources – who dismissed the possibility – that Shaw was a close confidant of Doe and fled the country when it became clear Doe’s days were numbered.
Mkhwanazi said Shaw’s credentials had also been confirmed when Taylor offered him Liberia’s finance ministry this year. Mkhwanazi said Shaw had showed him Taylor’s written invitation. “He is more than qualified to do what he has to do,” Mkhwanazi said, adding that Shaw had also worked in Liberia’s national petrol company. He was not aware of the details of Shaw’s contract, but believed his remuneration was in line with normal consultants’ fees.
Mkhwanazi confirmed the deputy director general of the Department of Minerals and Energy, Dr Gordon Sibiya, had written to him to express his unhappiness at the appointment. He said he had not yet discussed the matter with Maduna.
Sibiya said this week he was unhappy about the appointment as it had taken place without the approval of the board and without any open tender procedure. Sibiya, who is also a member of the CEF board, said he was not aware of Shaw’s expertise in the oil industry and did not know why he had been selected for the job.
Maduna said the CEF had not yet discussed with him the appointment of Shaw’s company, International Advisory Services, and that he had not yet seen a copy of the firm’s contract with the CEF. He said he had instructed the CEF to inform him of any appointments linked to the company’s restructuring, which is a politically sensitive matter.
The minister said he discussed some energy policy matters with Shaw shortly after he took over the portfolio last year. But he dismissed oil-industry talk that Shaw recommended Mkhwanazi’s appointment as the CEF chair.
Maduna recalled that he first became acquainted with Shaw when Shaw was carrying out the CEF audit two years ago. The minister said Shaw had been having problems with his visa – “he might even have been sent out [of the country]” – and the deputy president’s office had asked Maduna, who was then deputy minister of home affairs, to investigate as Shaw had to complete the CEF investigation. “I was called by the deputy president’s office to investigate. That is actually how I got to know him [Shaw].”
It is understood that other officials in Maduna’s ministry and department are uncomfortable about Shaw’s appointment.
The contract pays Shaw’s company a monthly retainer of R125 000 and a monthly “secondment fee” of R75 000 – as well as a $1 000 per diem fee for work done outside South Africa and R2 500 per diem for work done inside South Africa. The Shaws will also have access to an expense account which will be fed by a float of R50 000. The contract says that of the R75 000 monthly secondment fee, Shaw gets R55 000, his senior research assistant (his son) gets R15 000 and their secretary R5 000.
The contract was signed by the CEF’s acting general manager, Howard Roberts, who this week said he believed the remuneration was in line with normal consultants’ fees. He was unable to say how often Shaw and his son were at the CEF.
Shaw’s background in either the oil industry or privatisation is not clear – except for the fact that during his time in the Doe regime he presided over the neo- privatisation of the Liberian Petrol Refining Company. Local newspapers reported that the company’s core activities were taken over by a new company which was widely believed to have senior government officials as shareholders.
One of Shaw’s other notable achievements was to mastermind an arrangement between Liberia’s main iron ore mine and a company called the African Ministry Corporation (AMCL), in terms of which AMCL took over management of the mine.
AMCL was set up expressly for the deal and is run by a man called Ethelberg Cooper, who is a partner in Shaw’s International Advisory Services consultancy. AMCL took over the mine in 1989 and has yet to submit financial statements, despite receiving calls to do so by Liberia’s mines minister.
In November 1988, USAid recalled a team of 17 officials who had been loaned to Doe’s government to help counter financial impropriety by co-signing all financial transactions. Doe’s government continually found ways of avoiding the US watchdogs, so USAid decided that to continue the project would be a waste of US taxpayers’ money.
Shaw’s appointment coincides with unprecedented turmoil at the CEF, which has been wracked by the controversial suspension of its top oil trader, Kobus van Zyl. It is understood that Shaw was extremely hostile to Van Zyl.
Mkhwanazi told the parliamentary committee this week that the company had paid accountants firm Nkonki Sizwe Ntsaluba R1,2-million for its probe into the company’s accounts, which triggered a clash between Maduna and the auditor general. The board has set aside R2,5-million for the probe.