Mungo Soggot
Trafigura, the trading company embroiled in the South African state oil kickback scandal, has had close links with Marc Rich, the alleged fraudster who broke international oil sanctions against apartheid South Africa and who has been controversially pardoned by former United States president Bill Clinton.
Trafigura’s South African joint venture, High Beam Trading International (HBTI), is at the centre of the investigation by the Office of the National
Director of Public Prosecutions into the payment of $60000 in cash bribes to board members of the Strategic Fuel Fund (SFF). The bribes were allegedly paid as part of a multi- million-dollar oil trading contract.
High Beam’s chief, Moses Moloele, was raided last week, with Keith Kunene, the former chair of the Central Energy Fund, who this week resigned all his corporate and public positions.
Trafigura’s chief executive, Claude Dauphin, and the other founding directors of Trafigura all formerly worked for Rich. They left in 1993 to form Trafigura, which was in merger talks last year with Marc Rich & Co, a trading company revived by Rich in 1997.
Rich’s recent pardon by Clinton has led to criminal and congressional investigations, not least because Rich’s ex-wife, pop songwriter Denise, has been a key contributor to Democratic Party coffers. Rich and his former partner, Pincus Green, fled the US in 1983 before being indicted on charges of tax evasion, racketeering and trading with Iran. Rich then based himself in Switzerland. He was the biggest supplier of oil to apartheid South Africa.
Press reports at the time of the merger talks between Marc Rich & Co and Trafigura say the deal fell through because Rich was demanding too much, but there have also been suggestions that the move was opposed by Trafigura employees. Trafigura’s public relations firm in London this week said of the talks with Rich: “The name [of Rich] and the association with the name was a major consideration in the discussions.”
Trafigura has denied that either it or High Beam paid bribes to secure the SFF deal and has defended Moloele from the allegations against him. Trafigura itself has not been directly implicated, although one confession from a state oil official involved in the bribes says he was under the impression that Trafigura had supplied the money to Moloele. One of the statements that forms part of the Scorpions’ case also quotes an official involved saying Kunene had told him “Trafigura have people who can help us open foreign bank accounts”.
According to one affidavit in the Scorpions’ application, Kunene, two of his colleagues from the SFF and Moloele met at Dauphin’s home in London last March, a month before the deal was wrapped up.
According to the court documents filed for last week’s raids, Moloele also allegedly promised Kunene and his colleagues a further $2-million offshore.
The SFF’s contract with High Beam/Trafigura involved replacing and transferring oil in the SFF’s storage tanks, and gave Trafigura the right to trade on oil markets on the SFF’s behalf. While the hedging strategies proposed by Trafigura are considered to have been highly effective and professional, the South African government argues that the remuneration sought by the company is far out of line with industry norms.
According to Kroll Associates, an international investigative company that conducted the initial probe into the deal, Trafigura’s contract provided the company with a gain of about $3 a barrel, compared with the average agency fee of between 15 and 80 US cents a barrel.
According to the court papers, Trafigura and High Beam came on the scene while the SFF was in talks with another company, Masefield, to handle the SFF’s transaction.
One of the statements by an SFF official involved in the bribes says: “Kunene said 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 investigation is still continuing, with a parallel civil case taking place in London, where the SFF is seeking to cancel the contract and reclaim $2,9-million that has already been paid to Trafigura.
Trafigura, meanwhile, wants to go to arbitration over the dispute.
Back in Johannesburg SFF has issued summons against High Beam Trading International and Trafigura to scrap the contract and reclaim the money already paid out.
In the summons, the SFF says the contract is void not only because of procedural irregularities but also because of “corrupt practices”. It says the defendants, High Beam Trading International and Trafigura, “caused … bribe[s] to be paid … to influence the concluding of the agreement”.
Trafigura is a leading international commodity trader. It operates in 30 countries, many in Africa. Its headquarters are in Lucerne, Switzerland, while its parent company, Trafigura Beheer BV, is domiciled in the Netherlands. In Africa it has a joint venture operation in Nigeria, where it secured deals with the regime of General Sani Abacha, and has also worked in Sudan and the Congo. Apart from oil, Trafigura trades natural gas, metals, minerals, electricity and other commodities. Last year it bought Burmah’s Australian wholesale marketing business, which is now called Trafigura Fuels Australia.
High Beam Trading International, registered in the Bahamas, was set up in the last quarter of 1999, as a joint venture between High Beam Investment and Trafigura in London. Its deal with the SFF was its first venture.