Namibia to investigate Sasol role
Sasol and its joint venture partners in Namibia are finally starting to break their silence over a R4-billion oil contract as questions of impropriety mount around the questionable black economic empowerment (BEE) deal.
The change follows an announcement this month by the Namibian Anti-Corruption Commission (ACC) that it was investigating complaints of irregularities in the awarding of the state tender.
In October 2004, Sasol formed a joint venture called Namibia Liquid Fuel (NLF) Ltd with Philco Twenty, a Namibian company whose shareholders are top government officials from the state presidentâ€™s office, the Ministry of Justice and individuals closely linked to the ruling party, Swapo.
NLF was formed specifically to land an R800-million-a-year state contract to import half of Namibiaâ€™s fuel needs for five years. It was formed a few months after Sasol had signed a “memorandum of understanding” with another BEE firm, Namibia Energy Corporation (Namenco), which had hoped to specialise in the shipment of the fuel from South Africa to Namibia in an agreement with Sasol. Namenco representative Lucius Murorwa claims Sasol dumped the firm for the Swapo-linked partners after Namenco had introduced the deal to former Namibian president Sam Nujoma in the middle of 2004.
The NLF and Philco shareholders are Dr Ndeutala Angola, the Permanent Secretary in the Office of the President; Sacky Shanghala, adviser to the minister of justice; Ranga Haikali, a trade-unionist-turned-businessperson with close ties to Swapo; James Hatuikulipi, who was recently appointed managing director of Investec Namibia; and Luke Mabaso, a South African who was, until February, listed as a manager at metal roof producer Safintra.
NLF has refused to explain why Mabaso is described as a “Namibian” BEE partner or how he became involved in the deal, as it seems that Mabaso has not lived in Namibia.
Namenco unsuccessfully tried to sue Sasol for breach of contract and has since accused the South African company and its Namibian business partners of committing irregularities in the procurement of the tender. Sasol has denied doing anything wrong, while, until recently, the Namibian shareholders of NLF ignored several media requests for comment.
ACC director Paulus Noa said the ACC would conduct a “preliminary investigation” into whether correct procedure was followed in securing the tender, if other parties could have secured the tender, and if there was political influence involved in the process. The corruption investigation is expected to look into NLFâ€™s claim as a broad-based BEE company, while shareholding indicates that the engineers of the deal included names of charitably organisations without their knowledge and that most of the initial supposed shareholders had simply been used to prop up the companyâ€™s credentials to win the tender from the state-owned National Petroleum Corporation of Namibia.
While Noa indicated that the probe will focus mainly on NLF and not Sasol, the South African firm is bound to come under scrutiny as to how it got involved with people with close ties to politicians and whether any kickbacks exchanged hands.
Insight Namibia, a monthly current affairs magazine, reported in March that Sasol, which holds 49% shares in NLF, provided the Namibian BEE partners with access to R150-million in the form of a loan guarantee. The loan was provided by Bank Windhoek (a former member of the then Volkskas Bank) with further backing from Absa.
Insight Namibia has also learnt that Sasol paid out half-yearly dividends of more than R3-million to the individual shareholders at a time when the Namibians were yet to raise capital. Another payment that may come under scrutiny is the $19 per metric tonne that NLF paid back to Namcor, the state-owned company that gave Sasol and its partners the deal to import 500 000 metric tonnes of “white product” requirements every year. The R800-million contract was initially awarded for three years, but has since been extended to five years, to total R4-billion. It is arguably Namibiaâ€™s biggest black empowerment deal.
Sasol has so far declined to provide details about the financial deal to which it has helped its BEE partners gain access. The company stated that for the 2005 financial year it “effectively controlled this entity [NLF] and was entitled to 90% of the income from this business.
“NLF has accordingly been consolidated as a subsidiary for the 2005 financial year.” Sasol is yet to explain why the shareholding has remained 51% in favour of the BEE partners, who have no office, employees or technical role in the importation of the fuel into Namibia, except for drawing dividends and having access to the R150-million loan that is fully guaranteed by Sasol.
According to the shareholdersâ€™ agreement, if the BEE partners failed to repay the loan, Sasol would annex a corresponding portion of the shareholding, up to 90%. The agreement also states that “Sasol shall carry all the risks associated with such importation [of fuel]”. This is contrary to the BEE pitch that helped NLF win the government tender — that it intended to “cultivate Namibian know-how, skills and other resources” — ahead of other competitors such as BP, Caltex and Energy.
NLF chairperson Ranga Haikali announced last week that it will appoint a CEO to be based in Namibia and issue a press statement responding to questions raised by the media about the deal with Sasol.
Tangeni Amupadhi is the editor of Insight Namibia