46 DIRTY DIESEL – How Swiss Traders Flood Africa with Toxic Fuels | Chapter 5
General of the Swiss Trading and Shipping Association (STSA).52 But we are not convinced by this statement. The examples of Angola and Sierra Leone show Mr Graber’s claim to be misleading at best. And even when such tenders do exist, there is no guarantee of their integrity. Allegations of irregularities in the procurement tenders have surfaced, for example, in Zambia, where Puma and Oryx operate a network of petrol stations. In June 2012, members of the opposition party, the Movement for Multi-party Democracy (MMD), wrote an open letter to “the donor community of the Republic of Zambia” in which they highlighted situations where the mismanagement of public funds could have occurred. Among the questions they raised were: “In the recent oil procurement contract awarded to Trafigura (…), why were the more competitively priced bids overlooked? Who acted as agent for these suppliers, and does this person have a relationship to any political figures?”53 A non-oil producing country, Zambia imports its oil, some of which it refines itself at its ageing refinery, Indeni. However, with a maximum output of 24,000 barrels per day and usually operating at 50 percent of that capacity, this refinery does not meet all of Zambian demand. So the government also uses international tenders, awarding two-year contracts for the supply of diesel and gasoline. Glencore won the bid for 2010–2012, then Trafigura secured the deal in August 2012. Under the terms of this deal, Trafigura would deliver 216 million litres of diesel and 21 million litres of gasoline, worth US$500 million, until 2014.54 5.4.1 – HOT TIMES FOR WYNTER
Allegations of corruption in the Trafigura contract emerged quickly. As if power was synonymous with money, Zambia’s then Justice Minister, Wynter Kabimba, set up Midland Energy, of which he was a board member and shareholder, in January 2012, just four months after the head of his party, Michael Sata, was elected president of Zambia, The Guardian reported. Then, in December 2012, media reported that Zambia’s Anti-Corruption Commission had called Kabimba “to respond to allegations that Trafigura paid his company, Midland Energy Zambia,” in order to win the tender.55 At the time, Wynter Kabimba also served as Chairman of the Commission of Inquiry of the Energy Regulation Board (ERB) and as Secretary-General of the Patriotic Front, the governing party. Wynter Kabimba was cleared of the charges in 2013 after a preliminary investigation, while still heading the ruling party. But President Michael Sata dismissed him nevertheless in August 2014.56 This case echoes Jamaica in 2006 when Trafigura was accused of funding the People’s National Party (PNP) in order to win contracts for the supply of crude oil through the PNP’s Secretary-General and national Information Minister, Colin Campbell.57 Campbell admitted the accusations and was forced to resign. In both the Zambian and Jamaican cases, however, Trafigura denied all wrong-doing. Zambian press reports allege that Trafigura’s “agent” in the country was businessman Rajan Mahtani, a close friend of Wynter Kabimba and known funder of the Patriotic Front (PF).58
He was also Chairman of Finance Bank until his arrest in June 2015 for forgery and the illegal acquisition of a cement company’s shares. By then, he had already been implicated in a separate case related to PF funds.59 A spokesperson for Trafigura said Rajan Mahtani is “neither an agent nor an employee or a consultant” of the company, but would not say – despite being asked specifically – whether that had also been the case at the time of the deal.60 The spokesperson did say, however, that Trafigura “welcomed the investigation by Zambia’s Anti-Corruption Commission (ACC) in 2012 where they found no evidence of corruption”. 5.4.2 – ANOTHER QUESTIONABLE CONTRACT IN ZAMBIA
In November 2014, Trafigura won another controversial US$28 million contract to supply petroleum products into Zambia.61 It attracted suspicion, because it was “hastily executed (…) on 12th November 2014, apparently “at a very high price” before the normal consultative procedures had been completed.” President Michael Sata had previously rejected the contract before he passed away.62 National media claimed the price was high because, although oil prices had crashed in the second half of 2014, Tra figura requested and “apparently obtained” a price based on more favourable months.63 According to the same report, the Anti-Corruption Commission is investigating the deal and the police have questioned a South-African based employee of Trafigura. Responding through its local law firm, Trafigura confirmed the contract and said that it had been approved by the relevant authorities. It failed to mention the pricing issue.64 The contract had indeed been approved by the relevant authorities. But how? Two senior government officials of the Ministry of Mines, Energy and Water development are due in court for having “illegally awarded” the contract to Trafigura.65 A company spokesperson said he could not “comment on legal proceedings to which Trafigura is not a party”.66
5.5 – ZIMBABWE: TRADERS ADAPT TO THE LOCAL CONTENT LAWS In Zimbabwe, the fuel industry is dominated by three players, Sakunda Holdings,67 Redan Petroleum and Zuva Petroleum. Local content laws require petroleum companies to be at least 50 percent owned by nationals. But Swiss trading companies Glencore and Trafigura partly own all three, thanks to loans they granted to local purchasers of retail networks. Glencore, for example, is using “fronts” to conceal its interests in the distribution sector, a 2013 report by the National Indigenisation and Economic Empowerment Board (NIEEB) concluded. The report said that Glencore used a company called Alveir Management, which it owned 100 percent and registered in the British Virgin Islands, to provide a US$22.2 million loan to Woble Investments Ltd, a local company which bought Zuva Petroleum. Zuva, in turn, claims to be the country’s “biggest oil company” after acquiring BP and Shell assets in 2010.68