NAWAAL DEANE, Johannesburg | Friday
THE state-owned Strategic Fuel Fund (SFF) is again under the spotlight for its controversial R1-billion Iraqi oil deal with a dubious firm investigated by the United Nations and previously owned by dodgy oil dealer Marc Rich.
This week Dr Renosi Mokate, chief executive of the SFF, denied allegations that Swiss-based trading company Glencore International – new name for Marc Rich & Co – had been investigated for allegedly violating the UN oil-for-food programme for Iraq. Rich was also linked to Trafigura, the trading company embroiled in the state oil kickback last year and was the alleged fraudster who broke sanctions by supplying oil to apartheid South Africa.
The Mail & Guardian reported last week that the contract to black empowerment company Imvume, in partnership with Glencore, is steeped in controversy due to Imvume’s lack of expertise in the oil industry and the specific call of the tender for Iraqi “Basrah Light” crude oil.
Reports at the time say that in February last year the United Nations asked the Swiss authorities to investigate Glencore International for allegedly profiting illegally from the UN oil-for-food programme.
Glencore bought crude oil contracted to be sent to the United States but diverted it to Croatia, with the justification that it was awaiting a tanker to take it to the US.
Glencore stood to make $3-million profit by buying US-bound crude at a lower price then selling it in Europe. After numerous discussions the company agreed to pay the profits into UN accounts. Reports say Glencore was also put under special surveillance with any future dealings in the oil-for-food programme having to be approved by the full sanctions committee.
In a radio interview Mokate was asked to respond to allegations that Glencore was investigated for allegedly violating the UN regulations.
She said: “We have actually enquired from Glencore whether that is the case [but] there is no indication that is the case. They are not aware of these investigations. We have seen some of it in the newspapers but in enquiring from the company they’ve indicated to us that they have not been investigated by the UN.”
But Ian Davidson, Democratic Alliance representative, says the export control and sanctions section of the Swiss Economic Ministry confirmed that they were asked by the UN to probe Glencore.
He says that such information must have come to the notice of the management of Imvume and of the SFF.
“Mokate’s comment reveals that due diligence was not carried out in full.” Davidson says if South Africa is to avoid the type of controversy of the High Beam Trafigura Deal then corporate governance requires total disclosure.
Davidson questions why the SFF did not source its oil requirements directly from the Iraqi oil company. “The obvious question has to be why the use of all the middlemen and what is the margin each middleman takes?” he asks.
Davidson also raises the rumour that Sandi Mogali, director of Imvume, was recently involved in Montega Trading, a South African company owned by Glencore and investigated for profiting illegally from Iraqi oil sales.
“The DA believes that the minister [Mineral and Energy Affairs, Phumzile Mlambo-Ngcuka] needs to investigate, as a matter of urgency, this oil deal, which is becoming increasingly unsavoury,” says Davidson.
Another hiccup this week occurred when Iraqi President Saddam Hussein put a ban on all Iraqi fuel exports, forcing the SFF to reconsider logistics to get the two tanker loads of oil to South Africa. Mokate was unavailable for comment.