Oilgate: Anatomy of a whitewash

Before Public Protector Lawrence Mushwana released his Oilgate findings at a press conference last Friday, selected journalists received a three-hour briefing. The Mail & Guardian was not invited.

The M&G’s allegations about a party funding scandal had to be vanquished by spin.

It could have been different. The protector could have appreciated the M&G exposing grave allegations, even if after a serious investigation he did not concur.

Instead he disregarded the most important issues, cleared government and its functionaries of remaining allegations on the flimsiest of grounds, while defaming the M&G.

Mushwana’s report (pdf)

July 29 2005: Public protector’s report

Most journalists did not fall for the spin.
The reason? The report is a whitewash. Here are key features:

  • The M&G described how Imvume Management had asked for a ­

    R15-million advance on a condensate supply contract it had with PetroSA, the state oil company. Imvume paid R11-million of that to the African National Congress. As a result it could not pay its supplier. PetroSA stepped in to pay the default amount again.

The protector disregarded the onward payment to the ANC, saying that it fell in the private domain and he was mandated by the Public Protector Act to investigate public matters only. With that, he excised any possibility of the abuse of power. With the ruling party out of the equation, he could hardly have come to a finding that pressure from it, or its presence behind Imvume, had caused ­PetroSA to make payments prejudicial to the public.

But the law is the law and Mushwana maintains he had no option but to respect its limitations on his mandate. In fact, he interpreted his mandate so narrowly as to make the Act meaningless.

The Public Protector Act contains a number of empowering clauses, including that he or she can investigate “any alleged improper or unlawful enrichment, or receipt of any improper advantage … by a person [read ANC] as a result of an act or omission … in connection with the affairs of government … or of a person performing a public function … or entity [read PetroSA] … in which the state is the majority or controlling shareholder”.

This clause seemed tailor-made for the central allegation. It should have empowered the protector to investigate the ANC’s receipt of allegedly improper advantage, since it related to the affairs of a public entity, ­PetroSA. But the protector decided that as the ANC was not a public body, he could not.

Similar arguments were used to take the spotlight off Imvume, which the M&G had revealed as “effectively a front” for the ANC; off Uluntu Investments, the company belonging to the brother of the then minister, ­Phumzile Mlambo-Ngcuka; and off Social Development Minister Zola Skweyiya. Uluntu had received R50 000 from Imvume immediately after the advance payment, and Imvume gave or loaned R65 000 for renovations at Skweyiya’s private residence.

The extent of the avoidance is thrown into stark relief by the protector’s refusal to investigate Skweyiya. The minister was responsible for fundamentally redesigning policy on how social grants were paid. An Imvume sister company partnered the pre-eminent contractor distributing grants, Aplitec.

The protector declared that the money Imvume paid for the minister’s benefit was private, not public money. “The suggestion of corruption therefore … falls outside of the jurisdiction of the Public Protector to investigate.”

With a stroke of the keyboard, the protector has set precedent that he can investigate corruption allegations only where the alleged bribe has been paid from public money — usually not the case in bribery allegations.

What the protector disregarded was that the counter-performance sought by Imvume may have related to state contracts — that is, public money.

He similarly disregarded the alternative enabling clause — “improper advantage … in connection with the affairs of government”, which does not qualify whether the “advantage” must be from private or public sources.

The question should have been whether Imvume had wanted to buy Skweyiya’s government influence, or whether it was (as Schabir Shaik argued in his case) merely a matter of friendship. But before even investigating, the protector discounted the possibility of a “connection with the affairs of government”.

Finally, and without explanation, the protector’s report did not even consider whether Skweyiya had declared a benefit, or whether he had wittingly involved himself in a conflict of ­interest.

  • Even in the areas he considered to fall within his mandate, the protector did no investigation in the true sense of the word. While he acknowledged the M&G as the source of the allegations, he did not contact us, nor does it appear from his report that he used the documentary evidence on our website.

    The investigation process, as detailed in the report itself, shows that key witnesses were not questioned despite the protector’s power to subpoena. Simphiwe Mehlomakulu, the PetroSA official who signed the advance, was not questioned.

    Instead, explanations were sought from the relevant political and administrative heads— Mlambo-Ngcuka, the chief executives of PetroSA and its holding company, the Central Energy Fund, and the director general of the Department of Minerals and Energy.

    Their assurances were accepted without criticism, so much so that the protector gave PetroSA a clean bill of health when even PetroSA’s own internal investigation had questioned inadequate control.

  • The protector did not deal with key allegations that could have been hard to explain away. He did not look at a conflict of interest of Riaz Jawoodeen, who played a key role adjudicating a R1-billion Strategic Fuel Fund tender that went to Imvume in 2002. He concluded that the tender was regularly awarded.

    Similarly, he found that PetroSA had taken legal action to recover the debt “without delay” — without explaining the time lapses and other problems — such as a glaring conflict of interest of the lawyer used by PetroSA — raised by the M&G.

  • The report contains serious inaccuracies, some of them material. In clearing the SFF of irregularly awarding the tender in 2002 to Imvume, it said that Imvume was third on the shortlist, implying that it was not specially favoured. In fact the company first on the shortlist would have been disqualified anyway, and Imvume was second on an alternative shortlist. There is no indication that the protector studied records of the SFF evaluation process.

  • The protector trashed the M&G, saying: “Much of what has been published by the Mail & Guardian was factually incorrect, based on incomplete information and documentation and comprised unsubstantiated suggestions and unjustified speculation.” But he failed to point out a single inaccuracy in the M&G reports.

    Where he directly confronted the “impression created by” the M&G that some of the events were secret, he said that documents and official versions were openly available — such as a document on a 2001 trip to Iraq which the M&G had obtained though a request under the Promotion of Access to Information Act. In fact, the M&G got only a fraction of what it had applied for, with the rest of the documentation having been “lost”.

    By not seeing the wood for the trees — and by not looking at the mountains beyond — the protector has failed the public.

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