/ 15 March 2019

Hawks investigate crude oil bribes

Slick: Sibusiso Gamede is facing legal action after a forensic report found he received payments into his legal practice’s trust account from oil traders and his wife’s company
Slick: Sibusiso Gamede is facing legal action after a forensic report found he received payments into his legal practice’s trust account from oil traders and his wife’s company

Millions of rands in unexplained payments have been found in the bank account of the Strategic Fuel Fund’s (SFF’s) former acting chief executive officer, Sibusiso Gamede.

Forensic investigators and Gamede’s former bosses at the Central Energy Fund (CEF) allege he is responsible for the sale of the country’s 10.3-million barrels of crude oil reserves, between December 2015 and March 2016.

The SFF is a subsidiary of the CEF that manages the country’s crude oil reserves.

The deposits into Gamede’s account were made when he was negotiating and concluding the sale of the crude oil, which brought $280-million (equivalent to just more than R4-billion today) into the fiscus.

Critics of the sale said the transaction, which took place when the oil price was at the bottom of its cycle, exposed the SFF to huge risk because it would have to pay more to replenish stocks.

In addition, the transactions did not follow proper procurement processes and were not approved by the ministers of energy and finance, the investigation found.

Investigators have now revealed that a little more than R20-million was deposited — through 305 transactions — into the trust account of Gamede’s law firm between January 2015 and April 2016, a period that broadly covers the dates of the sale of the oil.

Close to R3-million of the payments could be directly linked to two companies that put in bids to procure the oil from the fund, according to a report by investigators from Gobodo Forensic and Investigative Accounting.

The report forms part of evidence in a criminal complaint related to the sale laid with the Hawks by the CEF’s chairperson, Luvo Makasi.

In a 102-page statement submitted to the Hawks last month, Makasi said Gamede’s actions prejudiced the state financially and could have a “significant impact” on its security and independence.

“By selling off the crude oil, he also sold off the strategic stock required for the security of the state. The prejudice that could be suffered by the state is that the security of supply could not be realised and the security of the state is at risk and this could have a significant impact on the economy and independence of the republic,” said Makasi.

“It has also come to our attention that Gamede … may have derived a personal financial benefit from the transaction that was concluded, and thereby aiding in the procuring of the contract using his position of authority to unduly enrich himself. I have reason to suspect that Gamede may have expedited the contract to achieve an unjustifiable result.”

CEF board member Neville Mompati told Parliament’s portfolio committee on energy this week the Gobodo report was complete but had been referred back by the board so that three people central to it could be interviewed.

The matter is also the subject of a civil case before the Western Cape high court, in which the CEF wants the entire deal declared unlawful and reversed.

The payments — 305 transactions ranging from cash deposits at ATMs in Durban, Cape Town and Johannesburg to EFTs — were made into a trust account belonging to Gamede’s law firm, Gamede Attorneys, and included:

  • R2.6-million linked to Taleveras, which bought some of the oil, and Lengard Projects. Taleveras and Lengard are owned by Nigerian oil billionaire Igho Salomi;
  • R300 000 from Skydeck, a company that submitted a bid for the crude oil; and
  • R6.3-million that emanated from Olica-score, a company owned by Gamede’s wife.

The R2.6-million comprises R707 000 and R601 000 paid by Godfrey Mulaudzi, a director of Taleveras, in November 2015 and January 2016 respectively, and another R684 645 on November 24 2015. The previous day Gamede Attorneys had invoiced Lengard Projects’ general manager Eva Tolentino for $50 000.

In the end, Taleveras bought four million barrels at $112-million, and a joint venture between Venus Rays and Glencore bought three million barrels for about $90-million. European oil giant Vitol was sold 300 000 barrels of crude oil for about $78-million.

On November 10 2015 Gamede received an email from Sanomi discussing details of the proposed sale in which he attached a letter signed by Tolentino, who also operated from a Taleveras email address.

Investigators found that Gamede had asked the Law Society, between August 2015 and March 2016, to excuse him from submitting audited financials because his practice was dormant. The Gobodo report said Gamede had financial problems and struggled to keep up with payments to Hilton College and on his bond between late 2014 and early 2015.

It is understood that he was interviewed by investigators but cut the interview short just after he was asked about the payments.

This week Gamede said he could only respond on Friday after the M&G’s print deadline. His response will be published online.

Gamede’s wife, Patricia Gamede, said the R6.3-million she paid into her husband’s account was a retainer for legal advice when she ventured into the oil industry. “I had a client in Nigeria that paid me a retainer to pursue opportunities for them in the oil industry here,” she said.

The CEF and Energy Minister Jeff Radebe’s office said they could not comment because of ongoing litigation in the matter.

Among the irregularities found by the report is that Gamede communicated with some of the bidders prior to the department issuing a request for proposal (RFP). He also did not get approvals from the SFF board, its shareholder the CEF, and government through the department of energy and the treasury.

Gamede was found to have deviated from normal processes by approaching and negotiating with 10 companies through a closed RFP.

Although agreements were reached in December 2015, the SFF issued invoices for payment for the oil in February and March 2016 and, after numerous amendments to the sales and purchase agreements, prices were eventually agreed at January 2016 levels of $26 and $27 a barrel plus a $3 premium.

Investigators found that Gamede was in contact with representatives of the companies to discuss aspects of the deal after the RFP was issued and before the transactions were concluded.

In an affidavit before the court in the civil case, Makasi alleges that Gamede entered into the agreements without the knowledge and consent of the SFF executive and board, the CEF and the treasury. He said Gamede may also have misled former energy minister Tina Joemat-Pettersson into believing she was signing off a rotation when it was in fact a sale. (A rotation is the sale of ageing crude oil to replenish the reserves with fresh oil.)

To make matters worse, it now appears that 1.3-million barrels of the crude oil that, along with the money, remains with the SFF, have deteriorated to the point that it is unpumpable.

Should the CEF lose its bid to retain the oil, it would have to pay the traders R1.3‑billion to replace the unusable oil and another R9.8‑billion at today’s oil prices to replace the country’s oil reserves. Should the CEF win it would still be looking at shelling out the R1.3‑billion to replace the deteriorated stock.

“Either way the state is fucked on this,” said a CEF insider. “If we pay the money back with interest and keep our stock we will be sitting with stock that has lost R1.3-billion in value in today’s terms. Similarly, should the traders win, they will take the oil and we will have to pay them R1.3‑billion back from the R4-billion they paid us.”

Hawks spokesperson Lloyd Ramovha confirmed a case had been opened. “We are, however, not at liberty to divulge persons that are subject of our investigations. The investigation is progressing and it is one of our priority matters, though we may not be able to give a time- frame as to when is going to be finalised.”

On Thursday Mulaudzi said the information was “untrue”. “Taleveras has never instructed me to make any illegitimate payment to any public official in South Africa or anywhere else,” he said, adding that the allegations appear to be aimed at causing reputational damage.

He also said Taleveras had not seen any forensic report. “As you know, the matter has been ongoing for over three years and has been before the high court, thus limiting Taleveras comments pending the outcomes of the court process.”