/ 22 September 2017

PetroSA former board members lose bid for reinstatement

Insolvent: PetroSA is among the state energy assets being moved to the minerals department.
Insolvent: PetroSA is among the state energy assets being moved to the minerals department.

The Western Cape High Court has dismissed the former PetroSA board members’ application to be reinstated.

In July, William Steenkamp and Owen Tobias approached the court on an urgent basis stating that they had been unlawfully removed as directors.

Steenkamp and Tobias argued that one of the reasons why they were dismissed from their position was because the Central Energy Fund planned to sell a 70% interest in the rights to certain PetroSA off-shore oilfield holdings to a state-owned Russian company.

“They alleged that it was because of their resistance to this proposed plan and for reasons of political intrigue that the CEF board turned against them and ultimately terminated their relationship,” reads the judgment.

Judge Lee Bozalek said that the allegations were strongly denied by CEF in its answering affidavit.

“Disturbing as these allegations are, CEF’s denials are not so far-fetched or lacking in detail that they can be dismissed out of hand on these papers. It is not possible for this court to make any findings based on this aspect of the case,” said Bozalek.

But the accusations recently caused a stir when ANC treasurer general Dr Zweli Mkhize called on CEF officials to respond as to why he was dragged into allegations that he wanted a Nigerian company to get the exploration deal instead of the state-owned Russian company.

Steenkamp had in his affidavit claimed that CEF chairperson, Luvo Makasi and his adviser Anda Bici had confronted him outside a meeting last year and asked him why he had turned the PetroSA board against the Russians on the deal and instead opt for a Nigerian company linked to the Mkhize.

Mkhize, Makasi and Bici all denied the allegations.

Bici said he felt vindicated by the judgment.

“Now that the matter has been resolved by the high court, our focus is on the task at hand which is to break new ground at CEF,” he said.

Steenkamp and Tobias could both not be reached for comment.

Steenkamp’s son said his father was in a meeting.

The judgment also highlights that CEF’s main reason for the removal of the directors was due to the R14.5-billion impairment by PetroSA of which R11.7-billion related to the Project Ikhwezi, which was meant to find new gas deposits off the coast of Mossel Bay to feed PetroSA’s gas-to-liquids refinery.

The project was an abject failure and no one the board was held to account.

CEF also argued that the board members were not reliable to implement a successful turnaround strategy for PetroSA and to improve the state of its financial and corporate governance.

“I consider that the applicants have failed to establish that the impugned decision is one which a reasonable decision-maker could have reached, particularly in the light of the very substantial financial difficulties in which PetroSA found itself and what was, at best, the strained relationship between PetroSA board and the CEF board,” reads the judgement.