JUDITH FEBRUARY: We can’t let the Joemat-Pettersson fuel reserves issue slide
Public Protector, Busisiwe Mkhwebane, in a closing report on allegations of maladministration and improper conduct by former Energy Minister, Tina Joemat-Pettersson, has singled out only former CEO, Sibusiso Gamede, for possible sanction.
Mkhwebane, not known for her consistency or application of the law, is also continuing her single-minded pursuit of Public Enterprises Minister, Pravin Gordhan, without showing similar responsiveness in investigating the Vrede dairy matter which implicates ANC secretary-general, Ace Magashule. Separately, the less said about Magashule’s recent kite-flying exercise regarding a possible warrant for his arrest, the better.
Given the relentless South African news cycle and the constant stream of news about corruption, some important issues are either forgotten or simply don’t demand as much of our attention. The 2016 sale of strategic fuel reserves is one such issue. It’s worth reminding ourselves what happened then.
In May 2016, there were revelations that Joemat-Pettersson had sold off Strategic Fuel Fund (SFF) reserves in 2015 without the go-ahead of then Finance Minister Gordhan.
In 2017 then newly-appointed Minister of Energy, Mmamoloko Kubayi, directly contradicted the statement that Joemat-Pettersson made to Parliament regarding the sale of South Africa’s strategic oil stocks. Joemat-Pettersson said it was not a ‘sale’ but a ‘rotation’.
There were key questions to which there were no answers. Why did the sale of crude oil stocks (10-million barrels) at $29 a barrel in December 2015 take place at a time when the market was in “contango” – that is, when the current price of a commodity, such as oil, is lower than prices for delivery in the future? In other words, it was no time to sell.
By the time the controversy hit, oil had reached $50 a barrel. So, whoever bought this oil locked in some pretty decent profits.
Joemat-Pettersson denied that there was a sale, telling Parliament that it was simply a strategic rotation of unsuitable oil stock. Kubayi, in 2017, confirmed that this was not the case and oil reserves were sold off. Kubayi also confirmed to Parliament that the sale was made without the approval of the Central Energy Fund (CEF) board. She then asked that action be taken against those who approved the sale, though some of them were no longer at the CEF by that time.
The revelations are shocking not only because there was no sign-off from the Finance Minister or the CEF board, but also – especially – because the former minister specifically told Parliament that no sale had taken place.
How could she not have known about the sale, given that she said at the time that nothing like this would happen without her knowledge?
Answers are still needed four years later. Who benefitted from this action and why was Gordhan side-lined and the Public Finance Management Act (PFMA) breached? At best this seems like an act of gross incompetence; at worst, it smells like corruption – not unlike the arms deal perhaps?
The PFMA stipulates that before a public entity concludes the “acquisition or disposal of a significant asset”, the accounting authority for the public entity must “promptly and in writing inform the relevant treasury of the transaction”. That did not happen and has left South Africa vulnerable.
And so, who will be held to account and how? Joemat-Pettersson is now chair of the parliamentary portfolio committee on police. The ANC enjoys irony.
A breach of the PFMA, of course, attracts criminal sanction. The Prevention of Corrupt Activities Act 12 of 2004 creates the offence of corruption and attempts to prevent the illicit acquisition of wealth. Should it be found that the former minister or anyone else may have been involved in an act of corruption, it would attract a criminal sanction.
All we know is that the sale of oil reserves took place without the Treasury’s approval and that some individuals benefited handsomely.
The Hawks are now investigating the matter, given that the CEF is involved in a court battle to overturn the 2015 sale of the 10.3 million barrels of oil reserves. It is crucial that we get to the bottom of all allegations which still remain unanswered.
Judith February is a lawyer, governance specialist and Visiting Fellow at the Wits School of Governance. She is the author of 'Turning and turning: exploring the complexities of South Africa’s democracy'. Follow her on Twitter: @judith_february