Nawaal Deane and Mungo Soggot
The state oil company was this week preparing to block an attempt by Trafigura, the London-based oil company, to keep its controversial deal alive.
Trafigura has called for an arbitration hearing to settle the dispute that has arisen over the contract. But the government and the state oil company, both of which say the contract is invalid and irregular, want to cancel the deal and recoup $2,9-million that the state oil company has already paid out. Trafigura and High Beam, its South African empowerment joint venture, were hired last year to manage and replace South Africa’s strategic fuel stock in a deal worth about R1,5-billion.
According to papers filed in the Pretoria High Court this week, they stood to make about $3 a barrel on the 10-million barrels of South African oil they were tasked with handling considerably more than the standard fees for such contracts. In addition to a host of procedural irregularities surrounding the deal, the South African government also alleges that bribes were paid to cement the arrangement.
This week Renosi Mokate, the CEO of the Central Energy Fund, and her
attorney consulted with Sir Sidney Kentridge, QC, a South African who has become one of London’s most eminent advocates, on the arbitration application. According to the contract, disputes are supposed to be settled in London. While preparing for an application in the British courts to scotch the deal, the Strategic Fuel Fund (SFF) has also served papers on Trafigura’s South African joint venture, High Beam, in Johannesburg. The summons calls for the contract to be ditched. The summons focuses on the legality of the contract, saying it contravenes key legislation and that the officials responsible had no authority to act on behalf of the state without the minister’s authorisation.
In the summons, the SFF shrugs off the arbitration application, citing, in addition to its many procedural arguments, the “corrupt practices” that allegedly took place during the cementing of the deal. The summons contains the gist of the alleged bribes that triggered this week’s raids by National Director of Public Prosecutions Bulelani Ngcuka’s investigators.
In a statement to the Mail & Guardian, Trafigura says that the bribery claims could be part of an attempt by the South African government to cancel the contract. “We can only assume that these allegations are part of a smokescreen designed to damage our reputation in South Africa,” the company says.
Trafigura contends that the allegations are an attempt to use the media to vindicate the attempts to repudiate the contract between the SFF and HBTI [High Beam/Trafigura]. “This is supported by the fact that no charges have been made against either HBTI or Trafigura or their employees,” it says.
Trafigura says the allegations do not in any way affect their confidence that the contract between HBTI and the SFF is valid. “We are continuing to work with legal counsel to identify and resolve any problems the government may have with the contract following the December dissolution of the SFF.”
ENDS