- The Strategic Fuel Fund has agreed to discuss an out-of-court settlement with Glencore over their sale of strategic oil reserves.
- Other companies responding to the CEF's application asked the Western Cape High Court to provide clarity on who get the awards, including the oil and storage fees.
- Some companies involved in the case suffered losses due to failure on the part of SFF to provide the oil paid for.
While the Strategic Fuel Fund has agreed to discuss a settlement with Glencore over their sale of strategic oil reserves, other companies responding to the application for the sale to be declared illegal also asked the Western Cape High Court to provide clarity on who gets awarded with the oil, the compensation paid for it and the storage fees.
As the case into the sale of strategic oil reserves by the Strategic Fuel Fund entered its third day, respondents told the Western Cape High Court that while they would not venture to dispute the transaction’s illegality, which the CEF asserts, they have thoughts on how the court should award remedies.
On Wednesday the court heard from Vitol Energy, Telaveras Oil and the CEF in a virtual hearing which started on Monday. At issue is a decision made under Tina Joemat-Pettersson's watch, during her time as energy minister, under the administration of former president Jacob Zuma.
The court also heard extensive arguments of how Joemat-Pettersson's conduct as minister was reckless and that former SFF CEO Sibusiso Gumede oversaw a transaction riddled in corruption and bribes. Companies purchasing the oil maintained that they entered the transaction in good faith.
The SFF sold ten million barrels of strategic oil reserves to nine oil traders for less than R5 billion, considered well below the market value that they were worth, as the stock is estimated to cost R7 billion to replace.
CEF said the court was best placed to determine the remedy for the losses suffered by the companies that purchased the oil. The court also heard that the SFF agreed to with Glencore in the matter to settle the matter out of court.
Representing Vitol Energy and Vesquin Trading Advocate Wim Trengove (SC) sought to argue the law on the sale of state assets was not determined by procurement as the applicants would like to contend.
"The culprit is the SFF and not a bad apple within the SFF. The whole institution from the minister to the board, CEO, executives were infested with fraud, corruption and recklessness.
"The culprit is the institution and not an individual in it. Vitol negotiated in good faith and wants to be compensated for the cost paid, storage costs and cost of ownership, which the SFF was relieved of for four and a half years," said Trengove.
Some companies involved in the case suffered losses due to failure on the part of SFF to provide the oil paid for. Trengove said failure to render assets that are the subject of a transaction agreement alone does not make the transaction invalid.
"The sale was unlawful for many reasons and we accept that. But did the traders know that they were unlawful, and should they have known that they were unlawful? The legal rules that govern the disposal of state assets are not the same of procurement laws for state entities," Trengove said.
Representing the SFF, Advocate Terry Motau said while the illegality of the transaction was not being disputed by the fund, the companies that sought to benefit from the transaction could not plead innocence or ignorance in how the deal transpired and Gamede's role.
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.
Western Cape High Court Judge Owen Rogers reserved judgement.