Oil slick tars bigwigs

Sharp new questions over conflicts of interest have emerged about the controversial private company that secured a “government-to-government” deal to buy Nigerian crude oil.

Two weeks ago the Mail & Guardian reported that “South African Oil Company” (SAOC), a private company registered in the offshore tax-haven Cayman Islands, was still benefiting from a Nigerian state oil contract allocated in 1999 to “the Republic of South Africa” — though neither oil nor income flowed to this country.

Now it emerges that the man behind SAOC, Nigerian-American Kase Lawal, also planned to set up an oil refinery in East London with the assistance of senior South African politicians, whose relations stood to benefit from the project.

In September 2001 — over the weekend of the funeral of African National Congress stalwart Govan Mbeki — a high-level meeting took place in a boardroom at the city’s harbour. There Lawal sold the idea of the refinery to leaders in local, provincial and national government.

The plan was to relocate a decommissioned United States oil refinery, the Blue Island plant, and use it to refine Lawal’s Nigerian crude.

What might have made things easier for Lawal was that while two of the officials at the table represented their government portfolios, their wives and relatives had interests in a locally registered, duplicate SAOC. The company was part-owned by Lawal’s Camac Group. According to an earlier Camac press release, this local company would have been the vehicle for the refinery project.

The meeting in the harbour boardroom was attended by Minister of Provincial and Local Government Sydney Mufamadi, whose wife was a director of and 5% shareholder in SAOC (South Africa), according to the company’s official share register.

Premier of the Eastern Cape Makhenkesi Stofile, who had a slew of relations linked to SAOC, also attended the meeting. Stofile’s brother-in-law, Hintsa Siwisa, was chairman of the local SAOC and held an 11% stake. Stofile’s wife, Nambita, headed the Eastern Cape Anti-Poverty Foundation, a charity that held 2% of SAOC. And Stofile’s sister-in-law, Nosipho Damasane, became a director of Tor Trading, which, at least on paper, held 3% of SAOC.

Damasane, who made a presentation to the meeting in her capacity as acting head of the East London port, maintains she was unaware of this shareholding until alerted by the M&G and denies a personal conflict of interest.

Insiders say Lawal’s presentation was well received, with local, provincial and national support forthcoming. Council land was identified and a provincial team was set up to deal with Lawal. At least two subsequent meetings were held, attended by representatives from different national and provincial government departments, parastatals, banks and consulting firms.

Mufamadi this week expressed anger at being drawn into the controversy over the fact of his wife’s involvement.

Confirming her interest in SAOC, Mufamadi said that he had declared this in the confidential section of the parliamentary register of members’ interests. But he declined to make the declarations public, though his spokesperson had earlier indicated he would not object.

Mufamadi also declined to respond to specific questions from the M&G about his conflict of interest, saying he was aggrieved at the negative inferences drawn by the newspaper.

“I know in which circumstances conflicts arise … I represent the state and the state has a role in the economy in South Africa … I know when to keep these two things [State interests and personal interests] apart.”

Stofile was more candid: “Our government gave full support to the [refinery] project. This is what we do to all potential investments. Of course we assess the viability, impact etc; hence the briefing sessions.

“My wife is a director since 1997 of the NGO called the Anti-Poverty Foundation. Hintsa Siwisa is my brother-in-law. Nosipho Damasane is my sister-in-law. I am not aware of the shares these people hold in SAOC. Frankly, Hintsa and Nosipho are adults who run their lives and their careers. This has nothing to do with me.

“Did I fail to declare my interest? No. My interest was clearly declared in these meetings. It was and still is to facilitate infrastructure investment that will create jobs and economic growth in this province.”

Stofile said that late last year or early this year Lawal had reported that the refinery was not going to be located in the Eastern Cape and that he was considering other options, such as Mossel Bay.

This appears to be in line with the recommendations of consultants, who favoured locating the plant near an existing refinery such as Mossgas, where it could piggy-back on existing infrastructure.

Nevertheless, it is understood that Lawal was not able to get banks and other funding institutions, such as the Industrial Development Corporation, to buy into the project.

This was mainly due to a failure to secure long-term agreements for domestic and foreign buyers for the refined products.

The Blue Island refinery equipment, for which Lawal paid $5-million, has still not been removed from its US site.

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