Don Mkhwanazi continues the Central Energy Fund’s tradition of non-accountability, writes Mungo Soggot
The Central Energy Fund’s handling of Emanuel Shaw II’s appointment to a lucrative state job signals disturbing levels of cronyism in this key state institution.
The chair of the fund, Don Mkhwanazi, vouched for Shaw in the Liberian politician’s application for permanent residence, his Durban law firm set up Shaw’s company, and then he gave Shaw the lucrative state post without advertising it.
Mkhwanazi has escaped unpunished, having been cleared by the state oil company’s board. The board last week ignored calls for Mkhwanazi’s head from the Chemical Workers’ Industrial Union and the deputy director general of the Department of Minerals and Energy Affairs, Gordon Sibiya. Instead, it passed the buck to the oil company’s acting general manager, Howard Roberts.
It was Roberts who signed the extraordinary contract giving Shaw and his son, Emanuel Shaw III, jobs worth at least R3-million a year. The seven-month-old board seemed uninterested in the fact that it was Mkhwanazi who nominated the unknown company named in the contract, International Advisory Services.
As Mkhwanazi is only a non-executive chair, he could not sign the contract, which is the only reason Roberts had anything to do with it. Roberts said this week that as Shaw had been appointed to the chair’s office, it was the chair’s responsibility to check all procedures were correctly followed.
“If it was my appointment, I would make sure the proper procedures are followed. But it is an appointment to the chair’s office. It is his prerogative,” Roberts said.
Mkhwanazi is, in any case, the company’s chief accounting officer, so is entirely responsible for Shaw’s appointment.
For now Roberts is in the clear. But he is presumably being lined up as a potential scapegoat if the commission of inquiry into Shaw’s appointment – set up by Minerals and Energy Minister Penuell Maduna – finds against the fund.
All the board has done is to ask Roberts to investigate whether Shaw’s other advisory job with Engen creates a conflict of interest. Maduna himself has already told SABC television that the two jobs do create such a conflict.
That much is obvious: Shaw will be advising on privatisation and Engen is a private company. Furthermore, Engen’s profits are determined by the regulated fuel price, which is of course managed by the fund.
Even if these two jobs did not pose a conflict, Shaw has shown bad faith to the fund by not alerting it to his other job at Engen when he signed up. Mkhwanazi had to be informed of Shaw’s Engen job by the press, just as Engen had to read about Shaw’s state job.
The board is clearly unperturbed by Shaw’s extraordinary past as a confidant of former Liberian dictator Samuel Doe. Nor does it seem interested in the fact that Shaw is now also performing three separate jobs for Liberia’s present leader, Charles Taylor.
Shaw’s appointment bodes badly for the fund’s ability to break from its legacy of unaccountability.
For the board’s sloppy performance and its exoneration of Mkhwanazi suggest, once again, that Central Energy Fund is an unaccountable, irresponsible state operation. The new board and its chair have, therefore, succeeded in reinforcing the fund’s reputation for unaccountability cultivated by “total onslaught” boffins during its sanctions-busting heyday.
Maduna has to take some of the blame for this. He has ignored -since October 19 – a memo from his special adviser Thulani Gcabashe, that suggested he suspend the fund’s board and rescind Shaw’s contract.
Maduna had to wait until Shaw’s extraordinary appointment was exposed in the press before ordering his acting director general to initiate an internal inquiry. The minister has also given no indication that Mkhwanazi’s job is on the line.
All of which could not have come at a less opportune time. Maduna, and more recently Mkhwanazi himself, have publicly accused the fund’s former management of spending vast sums of taxpayers’ money without proper authorisation. And they have implicitly accused the fund’s suspended general manager, Kobus van Zyl, of much worse.
Mkhwanazi’s reckless use of public money means he has committed sins similar to those for which Van Zyl was suspended.
Van Zyl was initially suspended for alleged irregularities in contracts to buy oil from Egypt, which included payments to a middleman company called Interstate, run by a prominent Egyptian, Fakhry Abdelnour. (Abdelnour showed extraordinary candour by telling the Mail & Guardian how Shaw extorted $10000 from him after promising to promote his interests to the minister.)
Maduna has publicly questioned why Van Zyl thought it necessary to pay commissions for the Egyptian oil – standard practice in the industry. Where Van Zyl may face a problem is that the payments to Abdelnour were not made in terms of a contract.
In any case, the minister’s investigators clearly did not believe the Egyptian contracts were enough to hang van Zyl, and so trawled through the rest of the fund’s books in search of more shenanigans.
Whether Van Zyl is cleared at his hearing is irrelevant as far as the fund is concerned. There is little chance he will return after his humiliating treatment. Mkhwanazi and his board are likely to escape the scandal unscathed. The fund’s problem is that unlike Van Zyl, and the other experienced staff who are now quitting, Mkhwanazi has no experience of the South African oil industry.
The taxpayer, meanwhile, is still paying Samuel Doe’s former right-hand man a massive salary to steer the fund into the 21st century.