Wednesday, 21 July 2010

Trafigura: South Africa and Jamaica

I mentioned last Thursday that today I would publish an old but interesting Trafigura story.  At the same time I invited Trafigura to comment but they have chosen not to do so.

I assume this means that they are happy for me to publish and comment upon the particular article which I publish in its entirety but which can be read online here.

The first story – South Africa - I hadn’t heard before.  Despite the story being almost 10 years old I believe it is important.  For many of us our first contact with Trafigura was over the Probo Koala incident and so stories before and after 2006 fill in major gaps in our knowledge of Trafigura.

The second story I’ve been very aware of but I haven’t to date become involved.  Perhaps this will change now!

JAMAICA: Trafigura figures in South Africa bribery scandal

by Olivia Campbell, The Jamaica Observer
October 18th, 2006

Trafigura president Claude Dauphin, who in August paid a visit to Prime Minister Portia Simpson Miller at Jamaica House before his company controversially transferred over $31 million to the People's National Party, is a man steeped in the art of expensive gift giving.

For their 'assistance' in delivering to a Trafigura joint venture company a 1.5 billion rand oil trading contract in 1999, for example, Dauphin handed a couple of bottles of 1940 Domaine de Penarde Armagnac brandy to two South African government officials on a visit to Trafigura in London, the South African Mail and Guardian newspaper reported in 2001. Officials in South Africa also testified to receiving envelopes filled with cash and promises of foreign bank accounts from the oil traders.

Those are just some details in a bribery scandal that rocked South Africa at the beginning of the decade, when it was discovered that Trafigura and its local joint venture partner, an African empowerment company called High Beam Investments, illegally paid out thousands of US dollars and promised millions more to government officials.

The bribes were paid to ensure that High Beam Trading International, as the joint venture was called, received a secretive no-bid contract from the South African state oil trading company, The Strategic Fuel Fund Association (SFF).  The contract would give full control of South Africa's strategic oil reserves to High Beam, who would be responsible for selling a 10-million barrel stock of crude, and to restock the reserves with a higher-grade crude.

High Beam, it was discovered later, stood to make inordinately high profits from the 15-month deal, details of which were kept away from the South African Ministry of Mining and Energy.

The secret deal was brought to light in 2000, and in response, then minister of mining and energy, Phumzile Mlambo-Ngcuka, immediately cancelled the contract and fired the entire board of the SFF.

Later, Trafigura/High Beam challenged the contract's cancellation in court, but, according to the Mail and Guardian, in late 2002 "backed down. (sic) because of convincing evidence of the illicit payments". In an out-of-court settlement, the joint venture was ordered to repay all money earned under the contract, as well as to pay the government's legal fees, another South African newspaper, the Sunday Times reported in 2003.

Trafigura's connection to Jamaica dates back to 2000, when the company won a bid and was contracted by the Jamaican state oil company, the Petroleum Corporation of Jamaica, to lift, market and trade the 30,000 barrels per day of Nigerian crude allocated to the country under a 1978 oil facility.

Since 2001, the company has lifted oil in Jamaica's name, and initially paid Jamaica a flat fee of US7.5 cents per barrel. The annually renewable contract was last signed for the 2005-2006 year, and provided for Jamaica to receive US12.5 cents per barrel.

Two weeks ago, Opposition Leader Bruce Golding brought the Trafigura dealings to public attention when he presented leaked returned cheques and a bank statement that showed over $31 million transferred from Trafigura to an account at FirstCaribbean Bank held by one CCOC Association. The PNP hastily denied that the money was illegally gained, and insisted that it was an above-board donation. Trafigura later denied that, saying that the money was part of a commercial transaction with CCOC.

Colin Campbell, the government minister at the centre of the controversy, resigned his posts as information and development minister and as PNP general-secretary, saying that he had acted independently in his dealings with Trafigura.

Prime Minister Portia Simpson Miller has subsequently ordered that the money, some of which was believed to be used by the party to put on its massive 68th annual conference in September, be returned to Trafigura.

It is unclear whether Dauphin, who is currently detained in the Ivory Coast as the government there investigates Trafigura's role in the dumping of thousands of tonnes of chemical toxic waste around Abidjan, the capital, brought gifts for the government officials he met with on his trip to Jamaica in September.

I must point out that Trafigura have NOT been found guilty of bribery in South Africa.  The contract was cancelled, Trafigura and High Beam challenged the cancellation but settled out-of-court, repaid all monies earned from the contract and paid the legal fees of their opponents in court.

If, at any time, Trafigura makes any comments about this post I will give them the prominence they deserve.

If there are any errors in the cited article please let me know and I will correct them immediately.

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