Donen Report: ANC bosses are not off the hook

With one voice the headlines on Thursday proclaimed that the Donen Commission had “cleared” Deputy President Kgalema Motlanthe and Human Settlements Minister Tokyo Sexwale.

It did nothing of the kind—but that is the power of spin and the inability of hacks to digest 250-odd pages of detailed evidence in short order before deadline.

The spinmeister was presidential spokesperson Mac Maharaj, whose statement accompanying Wednesday’s long-awaited release of the commission’s 2006 report raised the art of obfuscation to new levels.

Curiously, he was assisted by advocate Michael Donen himself, who had laid the groundwork in a 2009 letter to the presidency reinterpreting his work three years earlier in the most legalistic way.

The view that Donen has “cleared” Motlanthe and Sexwale suffers from two fatal defects.

First, his commission’s terms of reference made both men “witnesses” rather than “suspects” and did not include examining the political allegation, highlighted by the Mail & Guardian and others, that Saddam Hussein’s Iraq gave cheap oil allocations to ANC-connected middlemen to buy diplomatic favour from South Africa.

Second, as the commission vocally complained, Motlanthe did not answer at all and Sexwale did not answer satisfactorily the serious possible inferences that could be drawn about them.

Because the commission’s power to subpoena had been challenged in court—and then-president Thabo Mbeki failed to oppose the court challenge, amend the commission’s powers or extend its term—the allegations against both men could not be tested.

Donen, in short, could neither damn nor exculpate. The allegations against Motlanthe and Sexwale were not fully investigated and remained unresolved.

However, new information presented in the commission’s report extends the known evidence against both men. This bolsters the impression that they must answer a case of having associated themselves with kickback payments to Iraq in breach of United Nations sanctions.
 
Motlanthe’s letters
Motlanthe, then the ANC’s secretary general, is known to have accompanied connected oil trader Sandi Majali to Iraq at least three times between 2000 and 2002, helping him to create the impression that he was doing business on the ANC’s behalf.

The M&G has published correspondence, including a letter Motlanthe addressed to the Iraqis, saying Majali had the ANC’s “full approval and blessing”, as well as proposals from Majali’s company, Imvume, indicating that the ANC would benefit if he received further oil allocations. The Donen Commission did not probe these matters.

However, a second Motlanthe letter was germane to Donen’s terms of reference, which centred on whether South African individuals or entities doing business in terms of the Iraq oil-for-food programme paid the regime kickbacks in breach of UN sanctions.

The oil-for-food programme was a limited exception to comprehensive sanctions, permitting the exchange of humanitarian supplies for the proceeds of approved oil sales. No cash was supposed to reach Iraq, but the regime soon started demanding “surcharges” and other kickbacks from oil buyers and “food sellers” alike.

Majali, whose death last December in a Sandton hotel room remains a mystery, first obtained an oil allocation from Iraq in 2000 using a company called Montega Trading.

The Iraqis levied a surcharge of $464 632, but Montega failed to pay it, all but disqualifying Majali from further allocations, although he kept trying to get them.

On March 6 2002 Majali returned to Baghdad after Imvume had controversially won a tender to supply Iraqi crude worth R1-billion to South Africa’s state-owned Strategic Fuel Fund.

Promised payback
There, according to a letter Majali subsequently sent to the Iraqi oil minister, he promised to pay the outstanding kickback in two tranches. A day later, on March 7, a sealed letter from Motlanthe arrived in Baghdad, under cover of a letter from Iraq’s ambassador to South Africa, for Iraq’s then-deputy prime minister, Tariq Aziz.

Donen, like the UN’s Independent Inquiry Committee before him, could not find a copy of Motlanthe’s letter, but his report lifts the veil a little.

On the ambassador’s covering letter, the director of the Iraqi State Oil Marketing Organisation wrote that the country’s vice-president had approved the request for two million barrels of oil, whereas another note made it clear that it was Majali’s request that was under consideration.

And separate records of the organisation, according to Donen, also refer to Majali’s two million barrel application by recording “an instruction referring to [a] letter from Kgalema Motlanthe”.

It is clear that Motlanthe’s missing letter weighed in on Majali’s behalf when the latter was desperate for more oil but hampered by his kickback “debt”.

Evidence of this is Majali’s later missive to the Iraqi oil minister in which he confirmed his March 6 agreement to pay the debt in two tranches.

He also referred to a May 10 meeting with Aziz and Motlanthe, in which he appeared to implicate the latter in follow-up discussions about the kickback.

Present or absent?
Majali later denied to the UN that Motlanthe was present at the meeting, but confirmed that he had been in Baghdad.

Ten days after the meeting, on May 20, $60 000 was deposited at the Central Bank of Iraq as an “advance” kickback on the two million barrels Majali had obtained with Motlanthe’s help.

Did Motlanthe know of, and perhaps even acquiesce in, Majali’s payment of a kickback?

The Donen report highlights an “inference” that can be drawn from the available documentation: that Motlanthe ‘probably knew of the conspiracy [to pay kickbacks] — and might have become associated in it in some manner”.

However, the report also presents counter-evidence, which it says might mean Motlanthe’s missing letter is “exculpatory”. How? When Rodney Hemphill, Majali’s former partner in Montega Trading, gave a confidential deposition to United States prosecutors in 2005, he “revealed that he had helped Motlanthe settle a letter — [in which] Motlanthe had requested the Iraqi authorities not to impose oil surcharges”.

Indignation
“The apparent response of Motlanthe, on first being informed of the surcharge levy, was one of indignation. The suggestion is that the South African political delegation, of which Motlanthe was a member, had visited Iraq in order to assist it in removing oppressive sanctions. Therefore Motlanthe believed they should not have been compromised by an illicit levy.”

Donen believes that this letter, which Hemphill helped Motlanthe draft, is the same as the missing letter. He seems to be wrong.

A group that included Hemphill, Majali, Motlanthe, then-ANC treasurer Mendi Msimang and then-ANC presidency head Smuts Ngonyama visited Baghdad in December 2000, when Majali got his first allocation through Montega.

By May 2001—10 months before Motlanthe’s missing letter—Hemphill and Majali had fallen out and Majali had registered Imvume without Hemphill, who is unlikely to have helped Motlanthe draft a letter designed to help Majali and Imvume.

If anything, Hemphill’s testimony implicates Motlanthe in already being aware of the kickback levies from late 2000. Despite this, he remained involved in Majali’s dealings well into 2002.

For Donen, the unresolved questions about Motlanthe meant that he was a “material witness”. However, by the time the commission ceased to exist, Motlanthe had not responded to requests for “a copy of the aforementioned letter or to disclose its content”.

A request to the foreign affairs department to help source the letter from the Iraqi embassy went unanswered. Motlanthe has offered no explanation publicly.
 
Sexwale’s story
Sexwale has never disputed that he traded in Iraqi oil under the oil-for-food programme. When the scandal first broke he proclaimed his innocence, but when the Donen Commission was established he was circumspect—and clearly failed to convince Donen.

On Sexwale’s answers, Donen’s report notes: “His response was neither made under oath nor signed by him.”

Because of the challenge to Donen’s powers, Sexwale was never questioned under oath, as the advocate had wanted.

The commission’s principal target was Sexwale’s United Kingdom-based business partner Michael Hacking, with whom he formed a company, Mocoh Services South Africa. Sexwale informed the commission: “All barrels allocated to me were lifted by MSSA (Mocoh) and Hacking and his company — would have attended to that detail.”

The UN’s investigation found that on at least two occasions Hacking paid illegal kickbacks levied by the Iraqis, of $94 000 and $480 000.

Failure to assist
Donen records: “Sexwale has failed to assist the commission to establish the veracity of the allegations ...”

According to the report, Sexwale told Donen that, between June 2000 and July 2001, he had learned from Hacking that the Iraqis were demanding kickbacks.

Sexwale was told Mocoh would also have to cough up unless he could persuade Iraq to forego the surcharges. Sexwale said he made inquiries.

Donen notes: “Sexwale is silent as to when and to whom he made these requests. Sexwale’s response is also silent as to whether or not he received a response, let alone a positive response.

“Clearly his requests fell on deaf ears. Mocoh is alleged — to have paid surcharges in relation to contracts — concluded [between June 2000 and July 2001].

“A further and better explanation from Sexwale is necessary: that is explaining how he proceeded to negotiate more oil contracts after Mocoh had already incurred an obligation to pay surcharges.”

Sexwale claimed that some time before July 2001 the directors expressly agreed that no surcharges would be paid.

However, Donen points out that by that time a surcharge had already been paid.

“One would have expected Sexwale to inform the commission of what was discussed in relation to Iraq’s demands, and whether or not the participants in the — meeting showed any concern for the fact that they were acting too late to prevent the payment of the [first] surcharge,” Donen notes. 

* Got a tip-off for us about this story? Email amabhungane@mg.co.za

The M&G Centre for Investigative Journalism, a non-profit initiative to develop investigative journalism in the public interest, produced this story. All views are ours. See www.amabhungane.co.za for all our stories, activities and sources of funding.

For more news on the Oilgate saga view our special report

Stefaans Brümmer

Stefaans Brümmer

Stefaans is an old hand at investigations. A politics and journalism graduate, he cut his reporting teeth at the Cape Argus in the tumultuous early 1990s; then joined the Mail & Guardian as democracy dawned in April 1994. For the next 16 years (a late-1990s diversion into television and freelancing apart), the M&G was his journalistic home and launch pad for award-winning investigations focusing on the nexus between politics and money. Stefaans has co-authored exposés including Oilgate, the Selebi affair, Chancellor House and significant breaks in the arms deal scandal. Stefaans and Sam Sole co-founded amaBhungane in 2010. He divides his time between the demands of media bureaucracy (which he detests), coaching members of the amaBhungane team, and his first love, digging for dung.
  • Read more from Stefaans Brümmer
  • Client Media Releases