Majali: It was a cover-up

The Mail & Guardian was right: Oilgate, says the man at the centre of it, was a premeditated scheme to channel public funds to the ruling party.

Sandi Majali’s confession that he conspired with the bosses of state oil company PetroSA to divert R11-million to the ANC — in his version, PetroSA masterminded it — leaves two years of official cover-up in tatters.

Majali’s breaking of ranks, first hinted at in litigation with Petro-SA, could not have come lightly as it exposes participants, himself included, to the charge that they defrauded the state through a sham transaction.

Majali’s lawyer was quoted at the weekend as saying on his behalf that the initiative had come from PetroSA, which had asked Majali to make available the bank account of his company Imvume Management.

If this version stands, it also confirms that the public and Parliament have been lied to.

At the root of Oilgate is PetroSA’s payment in December 2003 of a R15-million ‘advance” to Imvume in respect of Imvume’s supply of oil condensate to PetroSA.

Majali ‘donated” R11-million of this to the ANC and made other payments, leaving a hole that had grown to more than R18-million by the time Imvume had to pay its foreign supplier, Glencore. When Glencore balked, PetroSA plugged the R18-million hole.

The M&G broke the scandal in May 2005, saying that PetroSA management had ‘bent over backwards” to make the ‘irregular” payment to Imvume, and that although Petro-SA had gone through the motions of attempting to recover the debt from Imvume, it had treated Imvume with ‘kid gloves”. By that time only R1,33-million had been repaid.

The official version, maintained over the past two years, was that Majali had asked for the advance; that it was properly paid; and that any onward payment to the ANC was Majali’s own decision — leaving Imvume accountable to PetroSA for the R18-million it reimbursed Glencore.

In July 2005, then minerals and energy minister Phumzile Mlambo-Ngcuka said in answer to parliamentary questions: ‘PetroSA did not know if or who benefited from Imvume.”

That same month PetroSA CEO Sipho Mkhize told Public Protector Lawrence Mushwana that Majali had requested the advance. ‘Mr Majali did explain that Imvume had temporal [sic] cash flow problems and wanted to pay their monthly payment commitments.” Mushwana absolved PetroSA of all blame.

In August PetroSA chair Popo Molefe told a joint meeting of Parliament’s public accounts and minerals and energy committees that Imvume had requested the advance as it was experiencing cash flow problems that month. Majali’s new version undermines all of that.

Unfolding events in PetroSA’s stop-start attempts to recover the debt from Imvume appear to be behind Majali’s change of heart. After the M&G exposé two years ago, Imvume ramped up payments to a total of R10-million. But a year ago Imvume stopped paying altogether, with R8-million in capital and well over R5-million in interest outstanding.

PetroSA, under the glare of the media, the auditor general and Parliament, launched action against Imvume Resources (Imvume’s sister company, which had stood surety) late last year. This March the Johannesburg High Court granted PetroSA a debt judgement of R7,5-million — still, PetroSA had mysteriously claimed R500 000 short on the capital and forgot altogether about the millions in interest.

The debt judgement was given by default, which happens when the defendant does not oppose. In correspondence, PetroSA’s lawyer then threatened to liquidate Imvume.

Last month Imvume went back to court, claiming that its notice of intention to oppose had been ignored and that the debt judgment was obtained by stealth. The judgement was rescinded after PetroSA, in turn, failed to oppose Imvume’s application.

In a hint of the bombshell about to be dropped, Imvume’s lawyer, Barry Aaron, said, in an affidavit for the application to rescind, that the debt was ‘in fact nonexistent” and was based on a ‘version created by” PetroSA.

His affidavit stated that Imvume intended to demand back even the R10-million it had already paid. ‘The nature of that ‘advance’ and the underlying issues on that payment is the essence of the defence and will be the grounds on which the counter-claim will be based.”

Last weekend the Sunday Times quoted Aaron as saying on Majali’s behalf that PetroSA had masterminded the scheme to pass money to the ANC and that Majali had agreed to assist.

When approached this week, Aaron initially confirmed aspects of the Sunday Times article, while strongly denying he had said Imvume had played along because of loyalty to the ANC.

Later, while promising to make a full disclosure at a later stage, all he was prepared to say was: ‘My client always intended going through with the repayment as had been arranged — albeit that he had no underlying obligation on it.

‘However, when PetroSA changed the basic understanding whereby a soft approach to the collection would have been pursued, and instead forced through an illegitimate judgement and then giving its indication to proceed with the winding up of Imvume Resources, Majali felt compelled to bring out the involvement of all the role players, which he did on a preliminary basis in the court case to set aside the judgement, and which he intends to pursue.”

PetroSA CEO Mkhize had not responded to messages at the time of going to press.