When will the public get its Oilgate money back? Almost two years after Imvume diverted R18-million from a state oil contract — the bulk of it to the ANC — about R12-million remains outstanding.
After a history of broken promises and stop-start repayments, oil parastatal PetroSA has instructed attorneys to take action against Imvume. PetroSA’s past legal threats have been as indulgent as Imvume’s attitude has been recalcitrant. It remains to be seen whether this time will be different.
Imvume’s debt to PetroSA arose from events that took place in December 2003.
Imvume had asked PetroSA for a R15-million advance on a R65-million payment due to it under a contract to supply the parastatal with oil condensate. The money was not Imvume’s to keep; the entire amount was due to Imvume’s foreign supplier, Glencore.
But instead of paying Glencore, Imvume transferred R11-million to the ANC, which was cash-starved with only months to go before the 2004 general election.
Imvume also paid R50Â 000 to a brother of Phumzile Mlambo-Ngcuka, then minister of minerals and energy, and R65Â 000 towards renovations at the home of Social Development Minister Zola Skweyiya.
That January, Imvume helped itself to another R3-million from the balance of PetroSA’s payment. In February Glencore refused to offload the next shipment of condensate unless PetroSA paid it the total amount Imvume had diverted. PetroSA complied immediately, paying the same R18-million twice.
Imvume was close to the ANC. Its boss, Sandi Majali, was described in company literature as “economic advisor” to the party’s secretary general, Kgalema Motlanthe.
Between 2000 and 2002 senior ANC officials, including Motlanthe, treasurer general Mendi Msimang and presidency head Smuts Ngonyama, accompanied Majali on trips to Saddam Hussein’s Iraq. When PetroSA doubled up the R18-million, it got a written acknowledgement of debt from Majali, who promised that Imvume would repay the entire amount in three months.
In July 2004 — with the entire amount still outstanding more than two months after Imvume’s deadline had passed — PetroSA instituted action in the Johannesburg High Court. PetroSA’s choice of lawyer was surprising: It used Leslie Mkhabela, a business partner of Majali.
In the condensate contract documentation between PetroSA and Imvume Mkhabela was indicated as Imvume’s legal adviser.
Instead of pursuing the legal course, PetroSA and Imvume entered into settlement negotiations. In August 2004 Imvume made what PetroSA has called a “good intent” payment of R1-million.
According to court papers subsequently filed by Majali, PetroSA CEO Sipho Mkhize agreed in September 2004 that Imvume could repay at a rate of R333Â 333 a month — interest free. PetroSA has disputed that interest was waived.
Imvume made one such payment, in November 2004, and then stopped paying again. PetroSA, still using Mkhabela as its lawyer, set the matter down for a High Court hearing in April last year. For reasons that are not clear, PetroSA did not persist with the court action.
The Mail & Guardian exposed the scandal in May last year. By then Imvume had still only paid the R1,333-million, well short even of the interest that had accrued by then. After a public outcry Imvume made two payments of R1,666-million and R3-million that June, bringing the total paid to R6-million.
But as suddenly as the payments had resumed, they stopped again — until September 2005, after Imvume and PetroSA reached a settlement in terms of which Imvume would repay R500Â 000 a month, plus interest.
The agreement was made an order of court, meaning that should Imvume fail to comply, PetroSA could move against it for the entire outstanding amount.
Imvume complied until May this year, by which time the total amount paid had reached R10,5-million. The original debt, interest included, has reportedly grown to about R22,5-million, meaning Imvume still owes about R12-million.
Has PetroSA been any more serious this time around about enforcing its rights? Imvume’s latest non-compliance came to light only last week, when PetroSA’s annual report was tabled in Parliament. This was four months after Imvume
went into default.
The annual report said nothing about legal action, only that management was “investigating the alternatives to enable the successful recovery of the outstanding debt” and that it was “confident”.
Mkhize said on Thursday that his information was that Mkhabela — still acting for the parastatal in the matter— had handed an order to attach Imvume assets to the deputy sheriff on October 2. The order had not yet been executed and a decision would have to be made whether to speed up the process.
Whether PetroSA’s kid-glove approach to Imvume is now over, remains to be seen.
Imvume attorney Barry Aaron this week confirmed that the company had stopped paying after May. He claimed that this was because a provincial government was in default to a company in the Imvume group.
The Imvume company, Aaron said, had four subcontracts on a relatively new contract with the province. He declined to name the provincial government or the nature of the contract.
Aaron said the provincial government’s default, which ran into millions of rands, was “serious” for the Imvume group. He said Imvume was preparing to ask the High Court for a declaratory order that would have the effect of temporarily excusing its default to PetroSA, based on the failure of the provincial government to comply with its obligations.