Oil-for-food probe names government heavyweights
- Commission’s report ‘lacked credibility’, says energy department boss
- How Saddam was paid for oil
Deputy President Kgalema Motlanthe has been named by a government-appointed commission as being “privy to material information” relating to controversial businessman Sandile Majali’s shady oil deals with the former Iraqi regime.
Majali — a well-known ANC funder who was also at the centre of the Oilgate scandal in 2004 — carried out deals with Iraq in a manner that contravened United Nations-imposed sanctions against Saddam Hussein’s regime.
In all, Saddam’s regime scored about 1.8-billion from surcharges and kickbacks under the UN’ s oil-for-food programme.
Motlanthe is named in a report compiled by the Donen Commission, which was set up by former president Thabo Mbeki. It was asked to probe the involvement of South African companies and individuals in the violation of the UN sanctions on Iraq.
Despite promising to make the commission’s report public, Mbeki kept it under wraps after it was handed to him in late 2006.
He said the government would “take the appropriate decisions in due course” and, if anyone had broken the law, this would be “taken up by South Africa’s law enforcement agencies”.
Motlanthe also resisted calls to release the report during his six-month stint as president. President Jacob Zuma has ignored similar requests.
The Sunday Times can today reveal that — besides Motlanthe — the report also names minister of human settlements Tokyo Sexwale, whose role in the scandal was scrutinised by the commission.
At issue are the so-called “surcharges” paid to Iraq for its oil.
All revenue from Iraqi oil sales was supposed to go into a special UN-supervised account to be used only for humanitarian purposes.
But the Iraqi government levied surcharges of about 10% on all sales and demanded that these should be paid into Iraqi government accounts, in defiance of the UN.
Sexwale told the commission that he did not know that Mocoh — a foreign entity in which he was co-director — had “incurred obligations to pay surcharges” while it negotiated oil contracts in Iraq .
Mocoh and Imvume apparently paid “surcharges” for oil allocations to the State Oil Marketing Organisation of Iraq.
But the commission, headed by advocate Michael Donen SC, expressed doubts about Sexwale’s written submission to it.
Both Motlanthe and Sexwale were named by the commission in their then respective capacities as ANC secretary-general and businessman.
Also named in the report is Department of Minerals and Energy director-general Sandile Nogxina who, in 2001, led a departmental delegation to Iraq.
The report slams him “for failing to act with an overriding appreciation that state departments were bound by international law to prevent the payment of surcharges by South African companies”.
The violation of the UN sanctions against Iraq first surfaced when it emerged that the UN’s oil-for-food programme was abused by international companies .
An investigation by the UN’s independent inquiry committee in 2005 found that because Iraqi officials were allowed to choose oil customers, they levied the “surcharges” on companies who applied for allocations.
These companies included Montega Trading, on whose behalf Majali’s Imvume allegedly offered to pay surcharges, and Mocoh, in which Sexwale was a co-director.
Donen found that Motlanthe might have been privy to information on how Majali and his company, Imvume, allegedly offered to pay surcharges from the proceeds of two Imvume contracts that were concluded.
Motlanthe and Majali travelled together to Iraq in May 2002 and attended a meeting with Iraq’s Deputy Prime Minister Tariq Aziz where, it is alleged, surcharges were discussed.
The report claims that, on an unspecified date, Majali promised to pay 464000 from the proceeds of the resale of the 1.8 million barrels of oil he had bought on behalf of Montega Trading. The oil was to be supplied to South Africa’s state-owned Strategic Fuel Fund.
In its report, dated September 30 2006, the Donen Commission said it needed more time to subpoena information from Majali and Motlanthe.
The report said that, without the summons, the commission could not establish with “evidential certainty” whether Majali paid or offered to pay surcharges.
Mbeki appears to have ignored the request for more time.
The UN report had earlier said documents from the Jordan National Bank showed that Mocoh paid surcharges totaling 574699 in two separate transactions in 2001.
Sexwale told the commission in a statement that although he had been made aware by his co-directors in Mocoh that the Iraqis demanded surcharges, he had made it clear that he was not at any stage prepared to sanction the payment of surcharges.
He relied instead on his ability to lobby senior Iraqi officials to waive such demands.
But, said the commission, “Sexwale is silent as to when and to whom he made the requests”.
“Sexwale’s response is also silent as to whether or not he received a response to his requests let alone a positive response.”
The commission said it needed further information from Sexwale in terms of how Mocoh negotiated more oil contracts while it incurred obligations to pay surcharges.
In his affidavit to the commission, Nogxina said that he had visited Iraq to address concerns that black economic empowerment companies were being asked to pay surcharges.
The commission, however, said Nogxina’s visit to Iraq did not prevent South African-linked companies from offering or paying surcharges.
While the Sunday Times received no response from either Motlanthe or Sexwale this week, Nogxina attacked the commission, saying he had been acting in the interests of South African companies and had not gone to Iraq to represent the interests of the UN .
“We went to explain to the Iraqis that BEE companies were being asked surcharges.
“And we wanted to say that in our policy BEE companies were assisted to thrive and we wanted Iraq not to levy surcharges,” he said.
He said this was after he had been approached by Majali and Montega Trading with the complaint about surcharge requests from the Iraqis.
Nogxina said the commission had not subpoenaed him to testify on his submission, nor given him and his department a draft report.
“This and the fact that the report was not published meant that it lacked credibility,” he said.
The commission report claimed that “the records of the Department of Minerals and Energy, as well as the affidavit of Advocate Nogxina, are characterised by a singular lack of clear reference to the legal issue created for South Africa by the imposition of oil surcharges on its nationals, or to how this problem was being addressed by (the department) .”
But, although Mbeki had asked the commission to report on what steps to take on any wrongdoing it found, the commission concluded that the matter of alleged surcharge payments could not be tried in a South African court.
It recommended, among other things, that the Corruption Act be amended to make it possible to try South Africans involved in the payment of irregular payments to regimes under the UN sanctions.
In June, DA parliamentary leader Athol Trollip asked Zuma whether he would release the report.
Zuma has yet to respond.