Central Energy Fund's former CEO's role in sale of SA's oil reserves questioned

  • Terry Motau raised evidence that up to R1.3 million was paid in bribes to Gamede to facilitate the sale. 
  • Advocate Simi Pillay (SC) said the oil traders and SFF management were making a desperate attempt to provide an artificial explanation for improper and corrupt conduct. 
  • Representing Contango Trading Advocate Gilbert Marcus (SC) said Contango suffered prejudicial financial losses from the transaction.

The role of former Strategic Fuel Fund CEO Sibusiso Gamede in the sale of 10 million barrels of strategic oil reserves came under the spotlight at the Western Cape High Court in Cape Town on Tuesday morning.

Representing the Strategic Fuel Fund in court on Monday, Advocate Terry Motau raised evidence. He referred to a forensic report from last year also states that up to R1.3 million was paid in bribes to Gamede to facilitate the sale, which took place under then-minister of energy Tina Joemat-Pettersson's watch.

The CEF is approaching the court to have the sale of the reserves to stock to various companies, in contravention with the Public Finance Management Act and below market value, declared invalid.

The companies involved include Taleveras Oil, Venus Rays and Vitol Energy.

Representing the Organisation Undoing Tax Abuse in the Western Cape High Court, Advocate Simi Pillay (SC) said the oil traders and former SFF management were making a desperate attempt to provide an artificial explanation for improper and corrupt conduct on the part of the traders in the sale. Outa intervened in the matter as a friend of the court.

The applicants argue that Taleveras Oil was a central beneficiary to the sale of R5 billion worth of strategic oil reserves in December 2015. Gamede is accused of colluding with traders to facilitate the sale at the expense of the SFF. 

"Mr Gamede is responsible while acting as CEO of the SFF, so for him to serve as legal advisor to the Taleveras arrangement raises questions. Once the impugned contracts are set aside, the appropriate relief should be relevant to the tender made by the applicants. This includes the repayment of storage fees, the return of the oil," Pillay said.

High Court Judge Owen Rogers said it was noteworthy that the value of the oil sold in the transaction is estimated to be as much as $348 million but government was pursuing significantly less.

"Taleveras bought oil from SFF for $112 million but can on-sell it for $180 million in the same day and still leaves $20 million in the pocket of Taleveras after payments. It is quite odd," said Judge Rogers.

Representing Taleveras Oil, Advocate Leon Kuschke (SC) denied an assertion by Outa that Taleveras sought to justify the contract, saying that Taleveras merely sought to explain their role and communicate that they accepted part of the contracts that constituted an invalidity. Kuschke said there was no evidence of payment to Mr Gamede's trust account being a direct bribe.

Representing Contango Trading, Advocate Gilbert Marcus (SC) said Contango suffered prejudicial financial losses from the transactions related to the oil sales, but that Contango was not involved in any collusion.

"There is no evidence like the evidence levelled against Telaveras being levelled against Contango. Traders except for Contango colluded with Mr Gamede to ensure the transaction went through," said Marcus.

* This article has been corrected to reflect that Sibusiso Gamede was not CEF CEO but SFF CEO. The edits also reflect that his surname is not Gumede but Gamede. The error is regretted.

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