PetroSA has suspended a top executive implicated in the R1-billion scandal that is rocking the parastatal.
While its chairperson, Benny Mokaba, resigned on the back of the exposé – he was apparently told to leave – it has emerged that the parastatal also cut ties with consulting fund manager Harith a fortnight ago, shortly after being approached by the M&G for comment.
Harith, in turn, fired implicated lawyer George Sabelo on the strength of evidence revealed by the M&G last week that he had received millions that might not be due to him while consulting for both PetroSA and Harith on the same deal.
Harith said it knew nothing of Sabelo's controversial dual role in the deal.
The allegations of impropriety rocking the state oil company relate to decisions made mainly during the tenure of former acting chief executive Yekani Tenza. These allegedly resulted in the company overpaying or needlessly risking about R1-billion.
The police's directorate for priority crime investigation, or the Hawks, has confirmed that it is investigating PetroSA.
Success fee
The main allegations relate to two PetroSA deals: its 2012 acquisition of a company holding oil acreage off the coast of Ghana and its ongoing attempt to buy out oil company Engen in South Africa.
Sabelo is central to both.
On the Ghana acquisition, Tenza appointed Sabelo, outside of PetroSA's procurement rules, as the company's legal adviser. While Tenza has been accused of proceeding to negotiate the deal "in reverse" – upwards, rather than downwards – Sabelo was paid an unusually high R11.4-million "success fee".
It has been claimed that he had a large portion of this paid onwards to unknown "corporate consultants", raising concerns about possible corruption.
PetroSA and Tenza have defended the extra $20-million (R162-million then) he agreed to pay for the Ghana acquisition, saying it still represented value for money. And Tenza maintained Sabelo's appointment was justified by confidentiality and urgency.
The oil company has admitted to "some deviations from our normal procurement processes".
The scandal over PetroSA's efforts to buy Engen relates to its firing of global investment bank HSBC as transaction adviser, after which Tenza appointed Harith, without a tender process, for the same job in November 2011.
Initiating negotiations
HSBC had completed substantial groundwork, identifying Engen as a target and initiating negotiations. Had the deal closed at R14-billion, the bank would have been paid a R35-million contingency.
Harith was to be paid more than 10 times that, R371-million, plus a monthly retainer of R1.3-million. PetroSA later reduced this to R187-million, as board members felt it was "exorbitant".
Internal documents suggest PetroSA first used Sabelo's services in relation to the firing of HSBC and hiring of Harith. Last month, Tenza confirmed that Sabelo had provided legal services in the matter.
Then, in January 2012, the newly appointed Harith contracted Sabelo's new company, Nkosi Sabelo Inc, to advise it on the self-same Engen deal, the M&G revealed last week.
Five months later, Sabelo's clashing roles were further entrenched when he invoiced PetroSA for R3-million, on an Nkosi Sabelo Inc letterhead, again for consulting work on the Engen deal.
Tenza approved the invoice on his second-last day as acting chief executive, but PetroSA did not pay it, following staff queries.
PetroSA has not answered specific requests for details of Sabelo's claimed "mandate", as reflected on the Nkosi Sabelo Inc invoice.
It said Harith's appointment was part of investigations by its board and holding company, the Central Energy Fund, adding: "As soon as the due process of the investigation is completed all appropriate corrective action will be taken and an announcement made."
Reviewing options
Conflicting and unexplained payments to Sabelo, and the unpaid invoice, raise the possibility of a sham to channel funds to or through him.
In a statement on its website, Harith said that two days after the M&G's first exposé last month it received notification from PetroSA – curiously predating the M&G article – that its contract would be terminated.
Harith said: "We requested reasons for the termination of our services, in a letter dated April 29 2013 and have to date not received a written response from PetroSA."
In response to questions, PetroSA said the firing of Harith was "one of the corrective actions taken by the PetroSA board following the findings and recommendations of the board-ordered audit review".
Harith said: "[The company] is reviewing its options."
In the same statement, issued the day the M&G revealed Sabelo's conflicting roles, Harith said it "considered it prudent" to end its relationship with Nkosi Sabelo.
"We have taken the decision to terminate our contract with Nkosi Sabelo following the revelations that [it] was allegedly double invoicing. It is our understanding that Nkosi Sabelo was contracted only to Harith and not to PetroSA at the time of the contract."
Sabelo has not responded to questions since the M&G first contacted him two weeks ago.
His partner in Nkosi Sabelo, Hugh Nkosi, is employed full time as a lawyer in the department of public works, the department has confirmed. It is not clear whether he has declared his private practice.
Like Sabelo, he has not responded to queries.
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