Controversial oil reserves sale ‘corrupt’ and ‘dishonest’ court hears

The sale of South Africa’s crude oil reserves is now facing a criminal investigation by the Hawks.

Details of the probe are contained in legal papers from the Central Energy Fund (CEF) in support of its bid to overturn the sale of 10-million barrels of the country’s strategic oil reserves. In 2015 the Strategic Fuel Fund (SFF), which reports to the CEF, sold 10.3-million barrels of the country’s oil reserves for less than the going market rate. 

By law, the SFF must hold sufficient oil reserves to last the country up to 21 days, which is an equivalent amount to what was sold.

The deal has been under scrutiny since it was brought to light in 2016. At the time, then energy minister Tina Joemat-Pettersson told Parliament that it was not a sale, but “a rotation”.

The court papers reveal more details as to how SFF’s former acting chief executive, Sibusiso Gamede, received mysterious payments into his personal accounts for facilitating the sale. 

Court papers detail how Gamede orchestrated the sale of the oil reserves only three months after he started his job at the SFF. The sales were made in three transactions to:

  •  African business conglomerate Taleveras, (three million barrels);
  • European oil giant Vitol and its local empowerment partner, Vesquin (two million barrels); and
  • Venus Rays Trade (three million barrels).

The CEF contends that the sale was unlawful, and should be overturned because there was no open tender process, there was no due diligence conducted, and Gamede “personally selected particular entities” to take part in the process.

“There were no objective criteria for evaluating the proposals that were received; Gamede simply selected three entities of his choice,” court papers read.

The CEF’s lawyers said there was independent expert evidence to demonstrate the sale of the oil reserves “made no sense”. And there was little to no evidence to support the defence that strategic oil stock needed to be rotated.

Questions have also been raised about how Gamede concluded the sale when global crude oil prices were at “rock-bottom prices”. The former executive did the opposite of what is known as the “contango-carry” strategy of buying low and selling high. This meant that when South Africa eventually needed to replenish sold-off stocks, it would almost certainly have had to pay a higher price. 

To make matters worse, the CEF said, Gamede sought permission from Joemat-Pettersson to undertake the sale based on “dishonest claims”. 

The CEF also raises the issue with how Gamede allegedly personally benefited from the sale. The fund said that, during the sale, Gamede concluded a “consultancy agreement” with Taleveras Oil SA, which received the bulk of the oil contracts. Taleveras directors claim this was “for unrelated legal research”.

The CEF’s lawyers described these claims as “far-fetched”, saying they “should be rejected by the courts.”

It is alleged Gamede received payments of up to R20-million through his lawyer’s trust account and his personal account. 

“The bulk of this money was received in cash instalments of R20 000 that were physically loaded into ATMs around the country. No discernible references for the payments were used,” says the CEF.

These transactions have prompted the Hawks to open an investigation to analyse the flow of these funds. 

“The Hawks are currently investigating the impugned transactions as well as the flow of funds into Gamede’s bank accounts. It is difficult to think of stronger prima facie evidence of corruption.”

In asking the Western Cape high court to remedy the situation, the CEF is seeking the reversal of the administrative action of the sale, not only because of Gamede’s alleged wrongdoing, but also contending that “Venus and Taleveras are not innocent tenderers”. 

The CEF said the companies involved in the transactions should not be awarded compensation, claiming they were party to Gamede’s alleged wrongdoing, and that, as experienced business people, they were not “babes in the woods”, but had experience and knowledge of public procurement processes. 

“Any additional losses that traders wish to claim can be handled in trial proceedings if the traders launch the necessary claims — where evidence can be subjected to cross-examination. Expert evidence can be properly interrogated, and experts can be cross-examined. The fiscus should not be made to bear the losses that were brought about by dishonesty, collusion and a variety of improper conduct,” the entity said.

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Lester Kiewit
Lester Kiewit
Lester Kiewit is a Reporter, Journalist, and Broadcaster.

Related stories


Subscribers only

Covid-overflow hospital in ruins as SIU investigates

A high-level probe has begun into hundreds of millions of rand spent by the Gauteng health department to refurbish a hospital that is now seven months behind schedule – and lying empty

Q&A Sessions: ‘I should have fought harder for SA vaccine’...

Professor Salim Abdool Karim talks to Nicolene de Wee about his responsibility as head of the ministerial advisory committee tasked with guiding the government’s response to the Covid-19 pandemic.

More top stories

‘No one took us seriously’: Black cops warned about racist...

Allegations of racism against the Capitol Police are nothing new: Over 250 Black cops have sued the department since 2001. Some of those former officers now say it’s no surprise white nationalists were able to storm the building

Pay-TV inquiry probes the Multichoice monopoly

Africa’s largest subscription television operator says it is under threat amid the emerging popularity of global platforms like Netflix and Amazon Prime

​No apology or comfort as another Marikana mother dies without...

Nomawethu Ma’Bhengu Sompeta, whose funeral will be held this weekend, was unequivocal in calling out the government for its response to the Marikana massacre

Children may benefit when parents share their digital gaming...

Digital games can provide forums for diverse groups of people to come together, which is especially important while our physical activities are restricted

press releases

Loading latest Press Releases…