Three strikes against Oilgate man

For Sandi Majali it doesn’t rain but it pours — not money this time, but trouble with the law, regulators and leaked findings about his oil dealings in Iraq.

Majali, first exposed by the Mail & Guardian for his questionable oil deals in Iraq and funnelling of state oil money to the ANC, faces imminent arrest over his role in a new scandal: bribes allegedly paid for a R450-million KwaZulu-Natal education department contract.

Majali has denied complicity.

Majali also has potential criminal exposure on a second front — relating to the affairs of New Era Life, put under provisional curatorship by the Financial Services Board (FSB) last month.

Majali is fighting to hold on to New Era, most of which is owned by his Imvume Resources, reportedly claiming that the FSB’s actions amount to a racist conspiracy.

In addition, leaked findings of the politically buried Donen Commission were published by the Sunday Times last weekend, restating allegations that Majali had promised to pay oil-trade kickbacks to Saddam Hussein’s Iraq in breach of United Nations sanctions.

The payment of similar kickbacks has been prosecuted in several countries, but an apparent loophole in South African law means Majali and others implicated locally will escape prosecution.

Strike 1: KZN contract
Majali’s alleged laundering of bribes three years ago to Pamela Zulu, then a senior KwaZulu-Natal official, has moved back to the top of his worry list.

Majali narrowly avoided arrest on July 1 when his lawyers convinced the National Prosecuting Authority at the Randburg Magistrate’s Court not to charge him, pending an opportunity to answer questions about his alleged role.

Both Zulu and Jabulani Mabaso, the Durban businessman who allegedly paid the bribes via Majali, appeared in Pietermaritzburg Magistrate’s Court on the same day. The matter was transferred for trial in the High Court in November.

Although a Majali associate this week said Majali was still making ‘high-level” representations to avoid being an accused, a justice department source told the M&G the decision had been taken.

The Star reported on Thursday that the NPA told Majali’s lawyers last week that a warrant for his arrest has been ‘reactivated”. The NPA declined to answer the M&G‘s questions.

The details of the charges Majali may face appear in the draft charge sheet already prepared against Zulu, Mabaso and Mabaso’s company Indiza Infrastructure ­Solutions.

Indiza and another company won a tender from the KwaZulu-Natal education department in 2005 to supply schools with stationery. The charge sheet states that Indiza invoiced the department for R479-million over 18 months, less R30-million in discounts. Zulu was the department’s chief financial officer at the time.

A raft of fraud-related counts allege that Mabaso over-invoiced the department by R197-million.

A set of corruption and money-laundering counts implicates Majali as well.

In April 2006 Mabaso deposited R2,5-million in the trust account of Majali’s attorney. About R170 000 was transferred four days later to a Honda dealership to buy a car for Zulu’s adoptive mother.

Transfers were also made from the trust account to Impilo Food Distributors, a Majali company, which transferred R400 000 to another Majali company, Imvume Paymaster Services, which it, in turn, deposited R200 000 into Zulu’s account.

At about that time Majali allegedly entered into an agreement with Zulu for Imvume Paymaster Services to buy shares she supposedly held in another Majali-related company. She was to receive R4-million with an initial down payment of R200 000.

This, the charge sheet claims, was a sham to cover the bribe payment.

A source close to Majali this week said his defence was that Zulu had consulted for the Imvume group of companies on an Eastern Cape school-feeding project and a food parcel project.

‘There were outstanding amounts due to her in respect of pre-existing invoices and the payments made to her were to honour those obligations. The payments made to her had nothing to do with Mabaso or the education department tenders.”

Strike 2: New era
In July this year the FSB appointed curators to seize control of Majali’s key operating company, New Era Life, whose main business is selling funeral insurance policies.

In November 2008 concerns about New Era’s corporate governance prompted a full-scale probe of New Era’s affairs by the FSB, especially of Majali’s role.

The findings, delivered at the end of June, were devastating and prompted the FSB to approach the North Gauteng High Court on an ex parte basis to grant an order for curators to take over the running of New Era.

Majali, backed by his legal terrier, Barry Aaron, is fighting back. He applied to have the FSB
ruling overturned — followed by a media campaign accusing the FSB of ­racism and conspiring with insurance giant Sanlam to squeeze him out of business.

Majali’s objection to the FSB’s action is largely based on the claim that New Era has rectified most of the financial problems that emerged during inspection.

But the FSB report contains allegations of lying, fraud and theft by Majali that are much tougher to shrug off.

The most serious transgression relates to the ceding of about R43-million in New Era assets to serve as security for a ballooning Absa bank overdraft facility for Majali’s investment vehicle, Imvume Resources.

It is an offence to encumber the assets of an insurer in this way.

In their report, the FSB inspectors state: ‘During our interview with Majali, he stated that he was not aware of the nature of the documents he was signing when he signed all the cession agreements.”

The FSB says Majali admitted that purported minutes of company meetings authorising the cession were prepared by Absa and that he had signed them — though no meetings were held on the relevant dates.

The FSB clearly doubted Majali’s version that he had simply made a ‘stupid mistake”.

The report notes: ‘We submit that we cannot fathom how Majali could have made this mistake in light of the following: Majali has a bachelor’s degree in economics … the cession agreements and accompanying documents are simple and straightforward documents … the signing of the cession agreements was not a once-off event.

Majali signed six cession agreements over a period of approximately 10 months”.

Aaron told the M&G that allegations of criminal conduct were ‘completely unfounded”, so much so that they were ‘not even mentioned” in the FSB’s susbequent application for curatorship.

Strike 3: Iraq oil
The M&G was first to reveal, in 2004, how Majali travelled repeatedly to Iraq between 2000 and 2002 accompanied by ANC heavyweights Kgalema Motlanthe, then secretary general, and Mendi Msimang, then treasurer general, to negotiate oil contracts to benefit the ANC.

The contracts were under the UN oil-for-food programme, allowing Iraq to receive proceeds for humanitarian purposes only. Many traders broke sanctions by paying ‘surcharges” — kickbacks — which the regime used as it pleased.

A UN inquiry claimed $60 000 was paid in kickbacks that the Iraqis demanded from Majali, although it failed to establish who made the payment. The M&G has reported that the payment was made 10 days after Majali and Motlanthe visited Baghdad.

Last weekend the Sunday Times published leaked findings of the Donen Commission, South Africa’s attempt, led by advocate Michael Donen, to get to grips with the oil-for-food scandal.

Mbeki and his successors have failed to release Donen’s reports, dating from 2006.

Donen, the Sunday Times reported, repeated allegations about Majali having ‘promised” to pay the kickbacks. He also found that South African law did not cover the breach of UN sanctions, meaning Majali and others implicated could not be tried locally.

Aaron said on behalf of Majali this week that Majali had offered his full cooperation to the Donen Commission, but that Donen had not heard Majali in full. ‘Imvume denies willingly or knowingly paying surcharges.”