Oilgate’s Sandi Majali used the names of both President Thabo Mbeki and African National Congress secretary general Kgalema Motlanthe when he sought crude oil from Saddam Hussein’s Iraq, according to a United Nations probe.
Majali bought millions of barrels of oil from Iraq under the UN Oil-for-Food Programme (OFF).
Supporting documents
Document one: The document (original in Arabic and a translated version) where Sandi Majali’s first oil allocation is approved by Iraq. Majali is described as “advisor to the President of South Africa”.
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Document two: Majali gives a handwritten undertaking, on Imvume letterhead, that he will pay “return money” ‒ a kickback ‒ on oil allocated to Imvume by Iraq.
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Document three: Majali writes to the Iraqi oil minister. He asks for the payment of the $646 000 kickback he owes Iraq on an earlier cargo of crude oil to be rescheduled. He refers to a meeting in Baghdad which included ANC Secretary General Kgalema Motlanthe.
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The Independent Inquiry Committee, appointed by UN Secretary-General Kofi Annan last year, detailed in its final report on Thursday how the Iraqi regime had abused OFF — it sought to buy diplomatic support by awarding lucrative oil contracts to politicians and others it perceived as influential, and it illegally raised about $1,8-billion in kickbacks from more than 2Â 000 of the companies that traded under OFF.
This contravened the letter and the spirit of the UN resolutions governing OFF. Iraq was under comprehensive UN sanctions and could sell crude oil only to pay for humanitarian imports.
In a section devoted to Majali and two of his companies, Montega Trading and Imvume Management, the report finds they “profited from Iraq’s efforts to deliver business opportunities to South Africa in return for political support”. This is consistent with earlier Mail & Guardian articles saying the ANC, through Majali, had succumbed to Hussein’s “crude Âdiplomacy”.
The inquiry committee also shows that Majali had promised the regime a $464Â 000 kickback, euphemistically termed a “surcharge”. An amount of $60Â 000 was subsequently paid on behalf of Imvume, but the committee could not establish by whom.
Majali and Imvume are best known for their role in the Oilgate scandal. The M&G has detailed the very close relationship between Imvume and the ANC and revealed how Imvume diverted R11-million of state oil money to the party before last year’s election.
One surprise in the report is that Majali used Mbeki’s name when he solicited oil from Iraq. Another is that there is evidence, including a letter from Majali, placing Motlanthe near the kickback negotiations with the ÂIraqis.
Majali, using Montega Trading, first sought oil allocations from Iraq in 2000. One of his partners in Montega was Iraqi-American Shakir al-Khafaji, who had access to Hussein’s influential deputy prime minister, Tariq Aziz. The report says Aziz “specifically asked Mr Al-Khafaji to help strengthen the ties between Iraq and South Africa”.
Majali and Al-Khafaji travelled to Baghdad in December that year. “During their meetings in Iraq, Mr Majali described himself as an adviser to both the ANC and President Mbeki. After several days of meetings, Mr Majali was allocated two million barrels of oil.”
The report reproduces the official Iraqi document approving the allocation. The document describes Majali as “adviser to the President of South Africa”.
The Iraqis may have had good reason to believe that Majali was an adviser to Mbeki — the M&G revealed earlier that Motlanthe and ANC treasurer Mendi Msimang accompanied him to Baghdad that December. Smuts Ngonyama, the ANC national spokesperson and head of Mbeki’s office in the ANC, on Thursday confirmed that he too had been on the trip. He denied Majali had used Mbeki’s name.
Murphy Morobe, the head of communications in the Presidency, declined comment pending the formal release of the report later on Thursday.
Montega traded its two million barrels in early 2001, but failed to pay the $464Â 632 kickback the regime levied. It appears the kickback was not paid because of a dispute between Montega and its trading partner, Glencore International, when the cargo was diverted to an unapproved destination.
The report deals at some length with a subsequent visit by Majali to Baghdad. On this visit, in September 2001, Majali was accompanied by a delegation of senior South African state oil officials. The report states: “The delegation was involved in discussions on strengthening ties between the ANC and the … [then ruling] Arab Ba’ath Socialist Party, as well as building better oil trade relationships between the two countries.”
The report records that Motlanthe had written to Iraq in anticipation of Majali’s visit, saying Majali had the ANC’s “full approval and blessing”. This letter was revealed by the M&G earlier this year.
During the visit, the regime was asked for oil allocations to replenish South Africa’s strategic oil stocks through Majali and his then new company, Imvume.
In December that year the Strategic Fuel Fund Association (SFF), the state body that maintains South Africa’s strategic stocks, issued a tender for the Âsupply of Iraqi crude. Imvume won the tender in early 2002 — after what the M&G earlier revealed to have been a process riddled with Âirregularities.
When Majali needed the Iraqis to keep their end of the bargain so he could supply the SFF, Iraq’s State Oil Marketing Organisation balked because the $464 000 kickback demanded a year earlier remained unpaid.
Majali met Iraqi officials in Baghdad on March 6 2002, the same day that Imvume concluded its contract with the SFF to supply the latter with an initial two million barrels. At this meeting, it appears from a letter Majali sent that June to the Iraqi oil minister, he sought an allocation of two million barrels and promised to pay the outstanding kickback in two tranches.
The report records that a day after Majali’s plea and undertaking in Baghdad, a sealed letter from Motlanthe was forwarded to Aziz, the Iraqi deputy prime minister, by the Iraqi ambassador in South Africa.
The committee was unable to find a copy of Motlanthe’s letter, but says that confirmation that both Aziz and the Iraqi vice-president approved Majali’s request for two million barrels was annotated by hand on the ambassador’s letter that had covered Motlanthe’s sealed letter.
When there were further delays, Majali met on May 10 in Baghdad with Aziz personally to discuss the contract. According to the same letter that Majali sent in June to the oil minister, Motlanthe was also present.
Was the kickback discussed at the meeting, and was Motlanthe present? Majali’s June letter to the oil minister is a request to reschedule the kickback repayments, and in that context “refers” to the meeting it says included Motlanthe. There is no further description of what transpired at the meeting and Majali, although confirming to the committee’s investigators that Motlanthe was in Baghdad at the time, denied the ANC secretary general was present.
According to the report, Iraqi Oil Ministry records show that on May 20 — 10 days after the Baghdad meeting — an “advance” kickback payment of $60Â 000 was deposited at the Central Bank of Iraq. The payment was deposited on behalf of Imvume but the committee was unable to establish by whom and it found no further payments.
Motlanthe did not respond to inquiries before the M&G went to press.
Ngonyama said the ANC would have to take legal advice before responding.
Judicial authorities in France, the United States and elsewhere have initiated investigations or prosecutions against companies and individuals who among other things had paid kickbacks under OFF. Whether South African authorities will take similar action remains to be seen.
Imvume responds
At the time of the allocation to Montega, Sandi Majali was entirely unaware of the requirement regarding the payment of surcharges. After the Montega cargo was lifted SOMO [the Iraqi oil parastatal] raised the issue of the outstanding surcharge which it seems the other Montega partners may have agreed to pay.
In the course of the discussions and negotiations on behalf of Imvume, Majali tactically undertook to SOMO to attempt to resolve the Montega surcharge issue as there would otherwise have been no prospect whatsoever of Imvume receiving any allocation. Majali was by this time aware that the payment of surcharges was contrary to the United Nations sanctions arrangements and, in fact, had no intention at all of paying any surcharges, whether in respect of the Montega account or otherwise. The Montega surcharge was, to the best of Majali’s knowledge, never paid.
Although Imvume received its first allocation of two-million barrels, Majali had made it clear that no surcharge would be paid and a surcharge was never part of the arrangements in respect of this allocation. SOMO may well have “levied” a surcharge (of which Majali was unaware) but this was never part of the contractual arrangements. Imvume and Majali deny having paid any amount in respect of any surcharge on this (or any other) allocation and deny that they made any advance payment of $60 000 or at all. It is also inconceivable that anybody else paid this amount on behalf of Imvume.
The investigators who met Majali on June 30 2005 never raised the issue of this alleged payment. At the interview Majali denied generally that he had ever paid any surcharges. The investigators never contested this. No evidence of this alleged payment has ever been produced. The issue was only raised in mid-October 2005 by the investigating committee for the first time.
Majali and Imvume have demanded that the committee produce proof of such payment, which has not been forthcoming.
Imvume and Majali deny that any evidence of such a payment can exist as no such payment was made by them.
Majali has a long standing, close relationship with and is a member of the ANC. Both Majali and the ANC have openly admitted that the ANC promoted the business activities of Imvume with the former Iraqi government in the course of legitimate, above-board political support and the promotion of Imvume as an emerging black economic empowerment company.
It is ordinary, standard, everyday, commercial international business practice for companies to receive political support and be promoted, at a political level, in international trading activities.
This is the manner whereby Majali “used his close ties” with the ANC in pursuing business opportunities for Imvume in Iraq.
Majali at all stages complied with the requirements and regulations of the UN in respect of the Iraqi sanctions and in accordance with the Oil for Food Programme. He is unaware of the political or other considerations applied in allocating oil cargoes. All Majali did was pursue genuine business.
Majali certainly did not pay any surcharges or other irregular payments to the Iraqi authorities. If necessary, Majali and Imvume will take legal action against the IIC for making such unfounded, malicious and damaging allegations regarding the alleged payment in contravention of the UN regulations.