South Africans have cause for the gravest possible misgivings about the labyrinthine oil deal exposed in this edition of the Mail & Guardian.
The deal, clinched in late 1999, has every appearance of an official transaction between our government and Nigeria’s state oil company. The allocation was solicited by President Thabo Mbeki using Minister of Trade and Industry Alec Erwin as an emissary, and, once awarded to the official-sounding South African Oil Company, was trumpeted by Minister of Minerals and Energy Phumzile Mlambo-Ngcuka in Parliament as a coup for South Africa.
An official of Mlambo-Ngcuka’s department travelled to Nigeria a year later to help renegotiate it. It is clear from correspondence in the M&G’s possession that the Nigerians saw it as a government-to-government transaction.
If it had panned out as projected, the deal would have held major benefits for South Africa. To supply 55 000 barrels a day in the first year, the contract has since provided for the daily sale of 120 000 barrels — all at a wholesale price. But the reality is that not one drop of the cheap oil has reached our shores.
It turns out that the contract signatory, the South African Oil Company, is registered in the Cayman Islands — a notorious tax haven and provider of corporate anonymity — under the majority ownership of United States-based Nigerian mogul Kase Lawal. This entity has sold the oil on, making an estimated profit of between R15-million and R30-million a year.
Lawal is also a large shareholder in a South African-registered company of the same name, whose other shareholders include or were intended to include the brother-in-law of Eastern Cape Premier Makhenkesi Stofile, Hintsa Siwisa; the wife of Minister of Provincial and Local Government Sydney Mufamadi, Nomusa; the Women’s Development Bank, chaired by President Mbeki’s wife, Zanele; and Miles Nzama, a fundraiser for the African National Congress. While South Africa gained nothing from the deal, some of these shareholders are known to have benefited.
The questions and suspicions surrounding the deal are legion. Why did the South African government lend its authority to a contract which is of no benefit to South Africa, and whose primary beneficiary appears to have been a Nigerian plutocrat? Why was it touted by our government as a coup for the country? If the deal was hijacked by Lawal, why did South African government officials lobby for its renewal? Are the Nigerian authorities aware of the true nature of the deal?
The creation of two identically named companies, one registered here and one in the Caymans, raises further questions. What was the purpose of this device? Was the South African company originally intended to be the beneficiary of the contract, and later sidelined? Or is the South African entity merely camouflage, designed to put possible inquisitors off the scent? Apart from Lawal, who are the other shareholders of the mystery 25% share of the Caymans company? Which of the
South African shareholders have benefited, and to what extent?
Perhaps the major source of concern is the involvement of “Mr 15%”, Miles Nzama, who first came to the M&G’s attention in connection with the controversial Skotaville contract with Transnet. Nzama’s role in this imbroglio appears to have been to ensure an ANC cut in a black empowerment transaction backed by Minister of Public Enterprises and senior ANC leader Jeff Radebe. What does Nzama’s presence in the oil deal betoken?
Even by the standards of the legendarily oily dealings of the fuels industry, this saga stinks to high heaven. The circumstances demand the appointment of an independent commission of inquiry.