Outgoing minister of minerals and energy Phumzile Mlambo-Ngcuka ascends to the second most powerful position in the country with questions on the Oilgate saga still unresolved — and new evidence has emerged that throws doubt on her claim that she adopted a strictly hands-off approach to PetroSA, the parastatal at the centre of the controversy.
When the Mail & Guardian first asked Mlambo-Ngcuka what she knew of the R15-million advance payment by PetroSA in December 2003 to ANC-linked company Imvume Management — of which R11-million was swiftly forwarded to the party account — she stated that she had no knowledge of Imvume’s ANC connections and stressed repeatedly that she did not interfere in operational matters affecting PetroSA.
Mlambo-Ngcuka said, through her spokesperson, that she was merely briefed by PetroSA acting chief executive Sipho Mkhize when Imvume’s international partner, Glencore, threatened to withhold supplies to PetroSA if the state company did not make up the cash shortfall siphoned off by Imvume.
She left the decision about what to do in the hands of the board, she noted. PetroSA ended up making a double payment of some R18-million, most of which the company is still trying to recover from Imvume.
At the time of the Oilgate payments Mkhize, who had been brought in by Mlambo-Ngcuka as chairperson of the PetroSA board, was acting as chief executive following the unexpected departure of Mpumelelo Tshume.
Now evidence has emerged that, in the wake of the double payment debacle, Mlambo-Ngcuka intervened decisively to secure Mkhize’s permanent appointment as chief executive, overruling the PetroSA board in the process.
In the first official response by Mlambo-Ngcuka’s ministry to questions from the M&G about Oilgate, her spokesperson took the unusual step of addressing the appointment of Mkhize — something the newspaper had raised in passing but not included in formal written questions.
Her spokesperson, Kanyo Gqulu, citing corporate governance principles that emphasise board independence, said: “The appointment of the executives at PetroSA, including the CEO, is a matter that PetroSA’s board deals with.”
The statement said: “The Board deliberated on the matter and could not come to a decision, hence other members of the Board decided to write a minority report to cover their concerns. In an effort to deal with the controversy, the Board took a decision to commence afresh the appointment of the CEO, so as to ensure that the best candidate wins.”
Gqulu said that while the minister may have attended some board meetings, this was merely to be briefed: “At these meetings, the minister never gets involved in operational matters such as appointment of executives, awarding of tenders, et cetera.”
Yet, investigations by the M&G and further detailed questions to Mlambo-Ngcuka reveal a different story.
During 2004 a subcommittee of the PetroSA board, led by human resources director Tami Bonga, was mandated to come up with a short-list of candidates for the post of CEO for submission to the minister.
PetroSA appointed well-known empowerment recruitment agency Leadership Unlimited to manage the process. The selection panel consisted of Bonga, board chairperson Judy Dlamini, board member Mlungisi Kwini and ministry secondees to the board Rod Crompton and Ayanda Nkuhlu.
Interviews were conducted, including with Mkhize, and the subcommittee produced a shortlist that did not include the acting chief executive but did include Almorie Maule, the former boss of Engen, chief executive of Energy Africa Rhidwaan Gasant, and a top manager at the Johannesburg Metro.
According to the information available to the M&G, this shortlist was endorsed by the full board of PetroSA and no minority report was presented to that board. This has not been denied by either PetroSA or the ministry.
When this scenario was put to the minister, her explanation changed from that first tendered. The ministry told the M&G that the minister was briefed by the PetroSA board about the selection process: “She was also informed that Mr Sipho Mkhize, who was acting CEO, was not on the final shortlist … The miniÂster was also briefed that some members of the subcommittee of the PetroSA board responsible for selecting and recommending the CEO candidate had prepared a minority report that cast aspersions on the process followed by the subcommittee of the board in doing its work.
“Based on the fact that there was this minority report and the fact that it seemed strange that Mr Mkhize, who was acting as the CEO (he has an engineering background, refinery experience and financial background), and had helped stabilise a company, could not make it onto the final shortlist. After due consideration of all these matters, the minister asked the Central Energy Fund [CEF] board, which is a holding company for PetroSA, to take over the process, including explore re-interviewing all the shortlisted candidates, convene the interviewing panel and make recommendations to her.”
The meeting at which this decision was taken appears not to have been a formal interaction with the board at all, but a crisis meeting with the minister held at Johannesburg International airport.
According to the ministry, this meeting was attended “by those PetroSA members who were involved in the selection process” as well as the director general of minerals and energy and the chairperson of the CEF.
Both the ministry and PetroSA have refused to answer further questions about what “aspersions” were cast on the original selection process or release the so-called minority report. No complaint was ever made to Leaders Unlimited and the company was paid in full for its services.
Questions remain about what process was finally followed to appoint Mkhize.
Those members of the board who resisted Mkhize’s appointment have since departed. Crompton and Nkuhlu remain.