About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: North Gauteng High Court, Pretoria
SAFLII
>>
Databases
>>
South Africa: North Gauteng High Court, Pretoria
>>
2009
>>
[2009] ZAGPPHC 98
|
|
M & G Media Limited and Others v Public Protector (2263/06) [2009] ZAGPPHC 98; 2009 (12) BCLR 1221 (GNP) ; [2010] 1 All SA 32 (GNP) (30 July 2009)
IN
THE HIGH COURT OF SOUTH AFRICA
/ES
(
NORTH GAUTENG HIGH COURT, PRETORIA
)
CASE
NO: 2263/06
DATE:
30/7/2009
REPORTABLE
IN
THE MATTER BETWEEN
M &
G MEDIA LIMITED 1
ST
APPLICANT
FERIAL
HAFFAJEE 2
ND
APPLICANT
STEFAANS
BRUMMER 3
RD
APPLICANT
SAM
SOLE 4
TH
APPLICANT
AND
THE
PUBLIC PROTECTOR RESPONDENT
JUDGMENT
POSWA,
J
Parties
[1] The first applicant is a company that publishes the
Mail &
Guardian
newspaper and the
Mail &
Guardian
0nline
. It will, from time to time, be referred to also as
the
Mail &
Guardian
. The second applicant is an
adult female who was, at all relevant times, employed as the editor
of the
Mail & Guardian
at all relevant times. The third
and fourth applicants were, at all relevant times, journalists
employed by the
Mail &
Guardian
. The deponent to
the founding affidavit states that he and the fourth applicant "
were
primarily responsible for researching and writing the articles that
[as will later appear in this judgment] were published
in the
Mail
& Guardian
and which led to the respondent's
investigation and the report [which will later be referred to in the
judgment] that forms the
subject-matter of this application.
"
The respondent is a Public Protector appointed in terms of s.1(a) of
the Public Protector Act 23 of 1994 ("the
Public Protector
Act"
;), read with s.181 and 193 of the Constitution of the
Republic of South Africa, 1996 ("the Constitution").
Background to and History of the Application
[2] It is, in my view, essential for a proper understanding of this
application that a brief background and history of events preceding
it be stated.
The United Nations Security Council's concerns about and reaction
to Iraq's invasion of Kuwait in August 1990
[3] Information on which the background and history of this
application (with regard to this subheading) is based is in annexures
"
SB12
" to "
SB21
", referred to in
paragraphs 47 to 58 of the applicants' founding affidavit. The
respondent, in paragraph 42.1 of his answering
affidavit [
p745
],
states, with regard to these paragraphs:
"
I do not have personal knowledge of the averments made in
these paragraphs. For the purpose of the presentation
I do
not dispute them
.
" (Emphasis added.)
The following is a list of what emerges from these annexures ("SB12"
to "SB21"):
1. 0n 2 August 1990, 6 August 1990 and 9 August 1990,
respectively, the Security Council passed resolutions with regard to
the situation between Iraq and Kuwait. In Resolution 60 (1990), of 2
August 1990, the Security Council commented as follows: "
Alarmed
by the invasion of Kuwait on 2 August 1990 by the military
forces of Iraq …
" It then sets out what the
Security Council had resolved. In Resolution 661 (1990), of
6 August 1990, the
Security Council reaffirms Resolution 660
(1990) and further resolves in respects set out therein. It makes
various decisions,
the net effect whereof to restrict relations
between UN member-states and the government of Iraq to affairs that
were "
exclusively for strictly medical or humanitarian
purposes and, in humanitarian instances, foodstuffs
". Even
non-member states were, in paragraph 5 of Resolution 661 (1990),
called upon to join UN member-states and "
to act strictly in
accordance with the provisions of the present resolution
notwithstanding any contract entered into or licence
granted before
the date of the present resolution
".
The Security Council then-
"
6. Decide[d] to establish, in accordance with rule 28 of the
provisional rules of procedure, a Committee of the Security Council
consisting of all the members of the Council, to undertake the
following tasks and to report on its work to the Council with its
observations and recommendations:
(a) To examine the reports on the progress of the implementation
of the present resolution which will be submitted by the
Secretary-General;
(b) To seek from all States further information regarding the
action taken by them concerning the effective implementation of the
provisions laid down in the present resolution;
"
The Resolution went on to set out further decisions designed for
ensuring strict compliance with the embargo on Iraq.
2. After almost six years, on 14 April 1995, the Security
Council relaxed its embargo on Iraq previously imposed by Resolution
661 (1990). The relevant portion of Resolution 986 (1995), of
14 April 1995, reads:
"
The Security Council
,
…
1.
Authorises
States, notwithstanding the
provisions of paragraphs 3(a), 3(b) and 4 of resolution 661 (1990)
and subsequent relevant resolutions,
to permit the import
of petroleum and petroleum products originating in Iraq, including
financial and other essential transactions
directly relating thereto
,
sufficient to produce a sum not exceeding a total of one billion
United States dollars every 90 days for the purposes set out
in this
resolution and subject to the following conditions: …
"
(Emphasis added.)
It is not necessary to repeat those conditions for purposes of this
background.
3. A United Nations program to implement the provisions of Resolution
986 (1995) was named the 0il-for-Food Program ("OFF"),
effective from 1996. According to the OFF, Iraq was permitted to
sell crude oil, to cater for the humanitarian needs of the people
of
Iraq.
4. The Security Council and the Government of Iraq signed a
Memorandum of Understanding, on 20 May 1996, "
on the
implementation of Security Council resolution 986 (1995) of 14 April
1995
" ("
SB40
").
According to the
OFF program, Iraq was entitled to select companies and/or persons to
whom it would make allocations of crude
oil, subject to UN oversight.
The Memorandum of Understanding set out the terms and conditions
under which the Iraqi State
0il Marketing 0rganisation ("SOMO")
would contract with such companies or individuals, having sought UN
approval in accordance
with rules set out in the Memorandum of
Understanding. [
Paras 48 and 49, FA, p20.
]
5. It is the UN's view that, because the OFF program was not destined
to benefit the Iraqi regime, the government of Iraq found
ways of
benefiting itself out of the OFF program. It used a system of
clawbacks, kickbacks and retroactive pricing. The
latter system is
described in detail at pp12-14 of "
SB15
"
[pp240 269(e)], which is titled "SOURCES OF REVENUE FOR
SADDAM & SONS". As stated in earlier reports,
even large
western governments were involved in this practice of undermining the
OFF program. In that regard, I quote the following
under a heading
titled "
Clawbacks, kickbacks and retroactive pricing
":
"
A kickback is the payment of a minor portion,
usually five to ten percent, of the price of a good by one party in a
transaction
with another. It is
a form of bribery
or extortion that is tolerated by the party making the kickback so as
to clinch a deal. The recipient is usually a government
official in
position to either block or facilitate the transaction.
Kickbacks
have been a hallmark of trade with the regime of Saddam Hussein since
its grasp of power in the late 1970s.
While the practice
has usually been associated with weapons procurement, it was also a
regular feature of the Reagan administration's
agricultural support
program to Iraq, as administered by the US Department of
Agriculture's Commodity Credit Corporation (CCC).
"
6. "SB15" lists a number of instances where the Iraqi
government is said to have made attempts to obtain the UN approval
of
various sales of Iraqi oil at "
prices below the market
trade
", which attempts were always turned down by the UN.
There is reference to, for instance, an arrangement between the Iraqi
and Syrian governments, in terms whereof:
"
the Iraq-Syrian pipeline had begun carrying Iraqi oil for
the first time in nearly 20 years, meaning that Iraq had another
potentially
lucrative market for its production. Because the
Syria-bound oil was and is sold outside of the 0il-for-Food program,
the proceeds
from these sanctions-busting sales bypass the UN's BNP
bank account and go straight into Iraqi coffers.
"
7. A major occurrence in this regard, which is aptly summarised in
paragraph 52 of the founding affidavit, took place at the beginning
of January 2004:
"
52. An Iraqi newspaper, Al Mada, published a report on
25 January 2004 to the effect that the former Iraqi regime had
bestowed lucrative crude oil allocations under the OFF on certain
parties in exchange for support for the regime. Copies of the
relevant pages of Al Mada are attached as '
SB16
'.
They are written in Arabic but a copy of a translation by the Global
Policy Forum is attached as '
SB17
'. Annexure
SB13
alleges that the OFF was corrupt. [I could
not find this allegation in
SB13
.] Al Mada
published a list of allocation recipients under the OFF. This list
included Imvume (called 'Infiom Management/Sandy
Majali') and Montega
Trading (Pty) Ltd ('Montega'), another company associated with Majali
(referred to as 'Montica').
"
8. The allegations or assertions by
Al Mada
(in "
SB17
")
sparked an international outcry and aroused the UN's vigilance and
circumspection about the alleged abuse of the OFF program
by the
Iraqi Government, in conjunction with other countries or individuals
from other countries. The Independent Inquiry Committee
("the
IIC"), which was formed to inquire into the performance of the
United Nations 0il-for-Food program, was, in April
2004, "
charged
by the Secretary-General and the Security Council with the task of
thoroughly reviewing the management of the United Nations
0il-for-Food Programme
". That report is titled "
The
Management of the United Nations 0il-for-Food Programme
".
0n 27 0ctober 2005 the IIC produced another report on
"
Manipulation of the 0il-for-Food Programme by the Iraqi
regime
" [pp327 355(d) of the papers]
9. In a chapter headed "
Summary of Report
", the
following is stated (at page 1 of the 0ctober, 2005 IIC Report),
[p334 of the papers]:
"
Today, the Independent Inquiry Committee ('the Committee')
issues its fifth and final substantive report concerning the United
Nations
0il-for-Food Programme ('the Programme'). This Report
illustrates the manner in which Iraq manipulated the Programme to
dispense
contracts on the basis of political preference and to derive
illicit payments from companies that obtained oil and humanitarian
goods contracts. Today's Report complements the Committee's recent
report addressing the adequacy of the Programme's management
by the
United Nations.
Under the Programme, the Government of Iraq sold $64.2 billion of
oil to 248 companies. In turn, 3,614 companies sold $34.5 billion
of
humanitarian goods to Iraq. Beyond the narrative set forth in this
volume, the Committee releases today a set of eight comprehensive
tables identifying contractors under the Programme and other actors
of significance to Programme transactions (such as non-contractual
beneficiaries of Iraqi oil allocations and parties that financed oil
transactions). These tables can be accessed at the Committee's
website: …
Several of the tables identify specific illicit payments made in
connection with oil and humanitarian contracts under the Programme.
0il surcharges were paid in connection with the contracts of 139
companies, and humanitarian kickbacks were paid in connection
with
the contracts of 2,253 companies. The tables identify whether and,
if known, how much was paid to the Government of Iraq
with respect to
particular Programme contracts. The principal basis for this
illicit
payment data
is information received from various
ministries of the Government of Iraq, as well as data retrieved from
numerous banking institutions
and, in some cases, from the company
contractors themselves.
A preface to the tables explains the basis for the Committee's
calculations.
The Committee emphasises that the
identification of a particular company's contract as having been the
subject of an illicit payment
does not necessarily mean that such
company – as opposed to an agent or secondary purchaser with an
interest in the transaction
– made, authorised or knew about an
illicit payment.
" (Emphasis added.)
10. In this 27 0ctober 2005 Report, the IIC recaptures the
situation with regard to the Program as follows:
"
Following six years of international economic sanctions,
Iraq resumed its export of crude oil in December 1996 under the
0il-for-Food
Programme.
Under the rules of the Programme,
Iraq was free to sell its oil so long as it was sold at what the
United Nations decided was a
fair market price and the proceeds of
each sale were deposited to a UN-controlled escrow account to be used
only for humanitarian
and other purposes allowed by the Security
Council.
It was a basic assumption of the Programme that Iraq – not
the United Nations – would choose its oil buyers. Yet the
decision to allow Iraq to choose its buyers empowered Iraq with
economic and political leverage to advance its broader
interest
in overturning the sanctions regime. Iraq selected oil recipients in
order to influence foreign policy and international
public opinion in
its favor.
Several years into the Programme, Iraq
realised that it could generate illicit income outside of the United
Nations' oversight
by requiring its oil buyers to pay
'surcharges'
of generally between ten to thirty cents per
barrel of oil.
…
During the two years that the illicit surcharge scheme persisted,
Iraq's State 0il Marketing 0rganisation ('SOMO') assessed surcharges
of between ten and thirty cent per barrel. Every contracting
customer, if not each beneficiary, was advised of the requirement.
Surcharges were levied on each barrel lifted, that is, loaded by a
tanker at the port.
Iraq's attempt to impose a fifty-cent surcharge rate at the end of
2000 sparked a crisis in the market for Iraqi crude oil as the
United
Nations oil overseers warned traders and companies that such payments
were illegal. After many of Iraq's regular customers
balked at
buying Iraqi oil, a group of four oil traders took a much greater
role in the market during Phase IX of the Programme
from
December 2000 to July 2001. These four companies were Bayoil Supply
& Trading Limited ('Bayoil'), the Taurus Group ('Taurus'),
Glencore International AG ('Glencore')
, and the
Vitol Group ('Vitol').
All four had had limited access to direct contracts under the
Programme, and had used intermediaries to maintain their access to
Iraqi crude. In Phase IX, these companies purchased crude oil
through intermediary entities: …
Glencore through
its own Swiss-based company,
…
" (Emphasis
added.)
(I have omitted the remaining details with regard to the other
three companies because, as will later appear in the judgment,
it is
only Glencore that is of relevance to this application.)
Specific Reference to South Africa
11. The IIC devoted ten pages of its 27 0ctober 2005 report, on
Programme Manipulation, to Mr Sandi Majali, Montega Trading
(Pty) Ltd ("Montega") and Imvume Management (Pty) Ltd
("Imvume") of South Africa. In the very first paragraph
of
the report in this regard, the following adverse statement is made:
"
0ne example in the Programme of exploitation of the
symbiotic relationship between a country's closely aligned political
and business
figures and the Government of Iraq, is that of Montega
Trading (Pty) Ltd ('Montega Trading') and Imvume Management (Pty) Ltd
('Imvume').
As described below,
the principals of these
two companies used their relationships with South African political
leaders to obtain oil allocations under
the Programme
.
Throughout the Programme, South Africa and Iraq were actively
developing business and political ties. In late November 1999, South
Africa's Deputy Foreign Minister Aziz Pahad led a delegation of 30
South African companies with interests in oil, electricity,
and other
sectors to Iraq. 0ne purpose of the visit was 'to expose South
African businesses with already established interests
in the
so-called "oil-for-food" programme with Iraq to the
processes involved in winning such UN-approved contracts.'
Deputy Prime Minister [of Iraq] Tariq Aziz and other Iraqi
officials were also interested in gaining the political support of
South
Africa and its leaders. At the time, South Africa chaired
several influential political alliances. South African President
Thabo
Mbeki was Chair of the Non-Aligned Movement ('NAM') and had
been the President of South Africa's ruling party, the African
National
Congress ('ANC'), sine 1997. He was also Chairman of the
African Union. Within weeks after Mr Pahad returned from his
trip,
Iraq established its Embassy in Pretoria, and, by 2001, Iraq
had accredited a full Ambassador to South Africa using Iraqi funds
that had been frozen until then.
South African officials also pushed to improve trade relations.
In 0ctober 2002, the South African Department of Foreign Affairs
('DFA') sent a delegation of senior officials to Iraq. Both sides
reportedly expressed satisfaction with the state of relations
between
their respective countries, which had been boosted by Mr Aziz's
then recent visit to South Africa. Later that month,
the DFA issued
a statement that Mr Pahad would visit Iraq to represent South
Africa at the annual Baghdad International Trade
Fair in November.
During his visit, Mr Pahad reportedly met with Saddam Hussein
and conveyed a message to him from President
Mbeki. He also met with
Mr Ramadan and Mr Aziz, and the Foreign Minister, the
Minister of Trade, and the Minister of
Electricity. According to the
public statement of Mr Pahad, Saddam Hussein told South African
officials that he would instruct
his ministers to 'observe special
care' with respect to economic, technical, and scientific relations
with South Africa.
Mr Aziz perceived that South Africa could be supportive of Iraq.
During his July 2002 official visit of Mr Aziz to South Africa,
Mr Aziz attended
a farewell dinner hosted by the ANC
with members of South Africa-Iraq Friendship Association ('SAIFA')
and the business community at the Cabanga Conference Center,
which
was funded by Imvume
, which – as described below –
had been purchasing oil from Iraq under the Programme
.
"
(Emphasis added.)
12. There is no doubt that the effect of the contents of the section
dealing with South Africa is to depict South Africa –
acting
through the Department of Foreign Affairs and the influential
position occupied by its erstwhile President, Mr Mbeki
- through
also Montega and Imvume, as represented by Mr Sandi Majali and
the ANC, through some of its senior officials, such
as its erstwhile
Secretary-General, Mr Kalema Motlanthe, as corrupt country, with
a corrupt President, a corrupt Department,
corrupt Cabinet, Ministers
and Senior Government officials and a corrupt ANC, the organisation
to which the bulk of the members
of Parliament and the Cabinet –
including the President – belong.
13. Mr Majali is depicted, right through this Report, as having held
very high and influential positions in the country. Apart
from his
position in Imvume, he was the chairperson of SAIFA and a
newly-formed South African Business Council for Economic
Transformation
("SABCETT"). Initially, Mr Majali
received oil allocations from Iraqi through Montega Trading. 0f
Montega Trading
the following is stated in the Report:
"
An Iraqi-American, Shakir Al-Khafaji, helped facilitate the
granting of oil allocations to Sandi Majali, a self-proclaimed
advisor to the ANC and President Mbeki
, through
his joint venture with Mr Majali and Rodney Hemphill, a South
African businessman, called Montega Trading Limited.
Mr Al-Khafaji
had access to Mr Aziz; indeed, Mr Aziz specifically asked
Mr Al-Khafaji
to help strengthen the ties between Iraq
and South Africa
. In December 2000, Mr Al-Khafaji
travelled to Baghdad with Mr Majali and Mr Hemphill to meet
with Iraqi officials.
During their meetings in Iraq,
Mr Majali
described himself as an
adviser to both the ANC
and President Mbeki
. After several days of meetings,
Mr Majali was allocated two million barrels of oil. The SOMO
[Iraq's state oil marketing organisation
] contract of approval
explicitly referenced 'Sandi Majali –
Advisor to the
President of South Africa
.'
…
Mr Majali used Montega Trading as the contracting company to
purchase the oil. Montega Trading arranged to sell the oil through
Sopak SA ('Sopak'), a wholly-owned subsidiary of Glencore. Glencore
financed the contract with a $46,585,093 letter of credit
through
BNP, and it arranged for lifting and selling the oil. Although
Glencore was backing Montega Trading's SOMO contract,
the
company insisted that its name be concealed from disclosure to any
third parties
."
[p106 of the IIC Report, p347(d) of
the papers]
(Emphasis added.)
14. Without going into further details, it is alleged that an
incident occurred between Montega and Glencore, in which Glencore
did
not deliver oil that was to have been shipped to the United States,
on behalf of Montega, but, instead, shipped it to Singapore.
That
resulted in excessive costs being incurred by Montega for that
delivery.
[p107 of the IIC Report, p347(e) of the papers]
The Report proceeds further thus, in this regard:
"
After the shipping incident, Mr Majali continued to receive
oil allocations
through a new company, Imvume
.
Because Montega Trading had failed to pay the outstanding surcharges,
SOMO refused to sell oil to Mr Majali in Phase X.
When
Mr Majali complained to Iraq officials, SOMO was ordered to
allocate oil to Mr Majali in Phase XI. Imvume managed
to obtain
two Iraqi oil contracts in Phases XI and XII.
"
I pause to mention that the parties do not give a history of the
relationship between Montega, Imvume and Mr Majali. The only
account
in this regard is that given above, from the Report.
"
Prior to the renewal of his oil allocations, Mr Majali
had
been very involved in strengthening ties between South Africa and
Iraq
. In September 2001, as Chairperson of both the SAIFA
and the South African Business Council for Economic Transformation
('SABCETT'),
Mr Majali led a South African delegation to
Baghdad, which included officials from the South African Strategic
Fuel Fund Association
and South African Department of Minerals and
Energy. The delegation was involved in discussions on strengthening
ties between
the ANC and the Iraq Friendship Association and Arab
Ba'ath Socialist Party ('Ba'ath Party'), as well as building better
oil trade
relationships between the two countries. Mr Majali
undertook the trip as a
recognised representative of the
ANC
. In a letter to the Iraq Friendship Association,
Mr Motlanthe stated that Mr Majali's position as
Chairperson of SAIFA
had the ANC's 'full approval and blessing'. He
also confirmed the ANC's approval of Mr Majali 'as a designated
person to
lead the implementation process arising out of our economic
development programmes.'
"
[p108 of the IIC Report,
p347(f) of the papers]
15. After the meeting in Baghdad, Mr Majali is said to have
written two letters, on 20 September 2001, the one being
to the
President of the Iraqi Friendship Association – Mr Majali
writing in his capacity as "Chairman" of
SABCETT –
and the other, on the Imvume letterhead, to Mr Saddam Z Hassan.
In both letters, he was requesting
an allocation of 12 million
barrels of oil. According to the Report, at p109, p347(g) of the
papers, "
These increased allocations do not appear to have
been granted.
" In the second letter:
"
Mr Majali requested allocations of 12 million barrels to be
lifted in December 2001 and February 2002, noting that the order for
oil 'is required by the South African government for its strategic
reserves and …
it will be undertaken by Imvume on
behalf of the South African Department of Minerals and Energy
.'
Mr Majali also expressed an interest in attending the conference in
Baghdad in support of lifting the Iraq sanctions held in
November
2001 and that the '
ANC will be sending a high level
delegation
.'
" (Emphasis added.)
16. From the next excerpt, it appears that Imvume had some
difficulties with regard to due diligence during the bidding process.
The Report goes as follows:
"
A couple of months later, Imvume obtained a contract to
supply two million barrels of oil to the South African Strategic Fuel
Fund
Association. This association is responsible for the
procurement and management of the strategic crude oil and petroleum
products
of South Africa. Because of
concerns raised
during the comprehensive due diligence of Imvume in the bidding
process
, Glencore sent a letter to the South African
Strategic Fuel Fund Association ('SFF') representing that it backed
Imvume 'as its
strategic partner'. As part of the contract
conditions, Glencore was liable for performance of the contract, and
Imvume needed
approval to lift oil from SOMO by March 2002.
"
17. The Report proceeds to discuss, in detail, Mr Majali's and
Imvume's difficulties in obtaining further oil from Baghdad, in
view
of the debt owing to Montega, an amount of $464,000. According to
the Report –
"
Mr Majali promised to settle this debt in two installments
with the proceeds from the sale of the crude oil that he hoped to get
from Iraq. In early March 2002, SOMO confirmed that Imvume had been
allocated two million barrels of oil.
"
18. Although Mr Majali is reported to have explicitly represented, in
a letter, "
that he would 'undertake to perform [his]
obligation accordingly [sic] to SOMO's requirements regarding the
return money …
for the quantity of 2.0 million barrels,'
"
he is reported to have denied, during an interview with a
representative of IIC on 30 June 2005, "
paying
surcharges on any oil contracts during the Programme
". The
Report continues as follows:
"
He stated that he made his refusal to pay surcharges clear
to Mr Aziz. Mr Majali, however, has admitted that he told
Mr Aziz that he was unable to pay surcharges
unless he
was allocated additional oil at a sufficiently discounted price
.
"
[Emphasis added.]
The implication, as I understand it, is that Mr Majali was not
averse, in principle, to paying the surcharges, on his own
version,
except that he wanted them to be on the basis of an allocation of
additional oil at a discounted price. That, of course,
does not
place him outside the alleged Programme Manipulation that the Report
is dealing with which includes South African Cabinet
Ministers,
senior Government officials and the ANC.
Facts
[4] In paragraph 43 of the founding affidavit, the applicants refer
to nine articles that were published in the
Mail & Guardian
,
by the "applicants" on various dates. They are
respectively entitled as follows:
- "
South African-Iraq oil deal shrouded in controversy
"
5-11 April 2002 ("
SB3
");
- "
How the ANC fell for Saddam's crude diplomacy
"
6-12 February 2004 ("
SB4
");
- "
The ANC's 0ilgate; 'How they responded'
" 20-26
May 2005 ("
SB5
");
- "
Majali: Adviser to the ANC
" 3-9 June 2005
("
SB6
");
- "
The scandal spreads
" 10-16 June 2005 ("
SB7
");
- "
Free to print, and more hard questions
" 10-16
June 2005 ("
SB8
");
- "
Mlambo-Ngcuka 'interfered' at PetroSA
"; "
Deputy
President's brother: Explanation still on thin ice
" 24-30
June 2005 ("
SB9
");
- "
An ANC front
", "
What the players have to
say
"; "
Trading principle for profit
" 15-21
July 2005 ("
SB10
");
- "
0ilgate: How R1bn tender was 'fixed'
" 22-28 July
2005 ("
SB11
").
From the articles, it would seem that the
Mail & Guardian
was dealing with the issues raised by the IIC in the reports. There
is, however, no reference in any of these annexures to the
IIC
reports, an indication that the applicants were, perhaps, not aware
thereof at the time of the writing of the reports –
perhaps
relying on other sources. The interim report of 3 February 2005
came long after "
SB3
" and "
SB4
"
were published, so also the remaining two reports, ie the "Management
of the 0il-for-Food Programme" of 7 September
2005 and the
"Manipulation of the 0il-for-Food Programme by the Iraqi Regime"
of 27 0ctober 2005. There is no doubt,
however, that the
Mail
& Guardian
had access to the same sources or similar sources
of information to which the IIC had access. For purposes of the
background that
I have already outlined in this judgment, I prefer to
rely more on the IIC report because it is, firstly, more objective
than the
Mail & Guardian
may be perceived to be and,
secondly, the applicants did not challenge the correctness of its
contents.
[5] A lot of what is alleged in the
Mail & Guardian
's
articles is contained in the IIC reports. For purposes of this
judgment, neither the contents of the IIC reports nor those of
the
Mail & Guardian
articles are regarded as being true. By
virtue of the nature of his occupation or job, I would expect that
the contents of the
IIC reports and those of "
SB3
"
to "
SB10
" – which date between 5 April 2002
and 21 July 2005 – were read by the respondent before he
received complaints,
which I shall allude to shortly, with regard to
the so-called "0ilgate". The applicants, referring to the
respondent's
Report, to which I shall later make reference, say the
following of "0ilgate":
"
12. The Report arose from a number of articles published in
the Mail & Guardian relating to what has become known as
'0ilgate'.
Broadly speaking, these articles raised allegations
regarding the dealings between a private company, Imvume Management
(Pty)
Ltd ('
Imvume
') and high-ranking officials
within the African National Congress ('
the ANC
'),
the Department of Minerals and Energy ('
DME
'),
the Strategic Fuel Fund Association ('
the SFF
')
and the Petroleum, 0il and Gas Corporation of South Africa
('
PetroSA
'). Both the SFF and PetroSA are
state-owned corporations. The allegations are essentially that (a)
Imvume and its chief executive
officer, Sandi Majali ('
Majali
'),
obtained lucrative contracts for Iraqi oil with the support of
high-ranking ANC and government officials, (b) on the understanding
that the proceeds would benefit the ANC, and (c) that the ANC would
use its position as the ruling party in Government to oppose
sanctions against Iraq on the international plane. (d) In the course
of this, the SFF irregularly awarded a contract to Imvume
for the
supply of Iraqi oil.
[letters (a) to (d) added]
13. PetroSA irregularly advanced R15-million to Imvume. Rather
than using the money for its intended purpose, which was to pay a
supplier for a cargo of oil condensate destined for PetroSA, Imvume
channeled the bulk of this to the ANC (which received R11 million
and others. When Imvume was unable as a result to pay the supplier
of the oil condensate, PetroSA paid the same amount (and more)
again.
The effect was that PetroSA was R18 million out of pocket and
that public money had been transferred to, amongst others,
the ANC.
"
That, in essence, is what the applicants mean when they refer to the
"0ilgate".
Complaints Addressed to the Respondent
[6] In paragraph 20 of its answering affidavit, the respondent,
responding to the allegation by the applicants, in paragraph 12
of
their founding affidavit, that his Report arose from a number of
articles published in the
Mail & Guardian
, disputes that
allegation. He states:
"
20.1 …
The report arose from the written
complaints lodged with the respondent by two members of parliament,
Mr W Spies and Mr T Leon.
Copies of the complaints
are annexed hereto and marked 'AA5' and 'AA6'.
20.2 Those who lodged statutory complaints referred to some of
the allegations in the articles published by the first applicant.
"
Mr Spies's Complaint
[7] 0n 6 June 2005, Mr Willie Spies, MP for the Freedom Front
Plus ("FFP"), wrote a letter of complaint addressed
to the
"0ffice of the Public Protector". The letter reads as
follows:
"
COMPLAINT AGAINST PETROSA AND TWO CABINET MINISTERS
With reference to the above, we hereby give notice of-
1. our formal complaint against the state-controlled petrochemical
corporation, PetroSA, for improper conduct and maladministration,
in
that it used the company Imvume Investments as a conduit to transfer
public money to the ANC, as well as
2. a request for an investigation into the exact nature of certain
business relationships between close relatives of the Minister
of
Minerals and Energy and the Minister of Social Development and the
company known as Imvume Investments.
Background to the complaint
We request you to investigate whether the alleged unindebted and
unsecured payment of R15 million made by PetroSA to Imvume
Investments
on 18 December 2003, constituted improper conduct
and maladministration by the management of PetroSA.
In particular, given the fact that a further R15 million had to be
paid by PetroSA to Glencore International (a Swiss-based resource
trader) on 19 February 2004, as a result of Imvume Investments'
non-performance in terms of its obligations towards Glencore
International, we submit that
prima facie
,
Imvume Investments was merely used by PetroSA as a conduit to
transfer public money to the ANC during December 2003.
Kindly also investigate the exact nature of the following alleged
payments by Imvume Investments or its CEO, Mr Sandi Majali to the
persons and/or entities referred to below:
•
R50 000 paid to the company Uluntu Investments of Mr Bonga
Mlambo on 19 December 2003;
•
R65 000 paid with regard to improvements by the
construction company Hartkon to the private residence of the Minister
of Social
Development on 19 December 2003; and
•
R11 million paid to the ANC in tranches of R2 million
(twice), R3 million and R4 million respectively, on 23 December
2003.
It is our respectful submission that, if found to be true and
causally related, one or more of the transactions set out above, not
only constitute an improper prejudice caused to the fiscus, but also
amounts to dishonesty and/or improper dealings with respect
to public
money.
The Public Protector's authority to Investigate the matter
We respectfully submit that the office of the public protector is
the appropriate forum to take this matter further, since the
complaints
relate to the actions of a state-controlled corporation
(PetroSA) and two public officials (the two cabinet members) and
involves
public money.
We thank you for considering the matter.
Yours faithfully
WILLIE SPIES, MP
"
0n 28 July 2005, Mr Spies wrote a follow-up letter to the respondent,
mentioning that there had been no response to the letter
of 6 June
2005 and furnishing his fax number. He added that he would like the
enquiry to be broadened, so as to include issues
raised in the
Mail
& Guardian
of 15 July and 22 July 2005. It seems
to me that he was referring to the
Mail & Guardian
of 15
to 21 July 2005, as those are the dates for "
SB10
".
Mr Leon's Complaint
[8] Before there was a response to Mr Spies's complaint,
Mr A J Leon, then MP for the Democratic Alliance
("DA") party, wrote a complaint addressed to the
respondent, which reads as follows:
"
Request for broadening of investigation into '0ilgate' to
include the state's involvement with Imvume
I am approaching your office with the specific request that, as
constitutionally mandated to
investigate matters and to protect the public against matters such
as maladministration in connection with the affairs of government,
improper conduct by a person performing a public function, improper
acts with respect to public money, improper or unlawful enrichment
of
a person performing a public function and an act or omission by a
person performing a public function resulting in improper
prejudice
to another person (
110-114 of the Constitution of the
Republic of South Africa, 1993 {Act No 200 of 1993}),
your office broadens its existing inquiry into the so-called
'0ilgate affair' (where public funds are alleged to have been
deliberately
channelled to the ruling party through a BEE company,
Imvume) by determining the extent to which the state was involved in
funding
and supporting Imvume's Iraqi oil ventures and travel related
thereto.
1. Background
1.1 Newspaper reports suggest that Kgalema Motlanthe travelled in
September 2001 to Iraq with a delegation that included Imvume CEO
Sandi Majali, who concluded a deal with former Iraqi dictator Saddam
Hussein to supply millions of barrels of oil to the South
African
market in violation of the United Nations 0il-For-Food Programme.
1.2 The allegation made in these reports is that the ANC had set
up Imvume as a front company to raise money for the party. The
ANC
allegedly hoped to gain billions of rands through oil deals with
Saddam Hussein.
1.3 In return, it offered him the assurances of the South African
government to oppose sanctions and other international actions
against the Iraqi regime – and the government, indeed, duly did
so.
2. Justification
2.1 …
2.2 Imvume is a company headed by Sandi Majali who was described
by the then Minister of Minerals and Energy, Phumzile Mlambo-Ngcuka,
as the 'Head of Implementation of ANC Economic Transformation
programmes' in her letter introducing a South African delegation
which visited Iraq in 2001.
2.3 Public entities are charged with the duty to ensure that there
is an 'appropriate procurement and provisioning system which is
fair,
equitable, transparent, competitive and cost-effective' and further
that 'irregular expenditure' and 'losses resulting from
criminal
conduct' must be prevented. (Public Finance Management Act, No 1 of
1999).
2.4 It is clear that the principles set out in the Public Finance
Management Act are jeopardised by the abuse of BEE by companies
like
Imvume.
In light of the above, the extent of the state's involvement in
funding and assisting Imvume's oil ventures in Iraq are relevant
to a
full exploration of the 0ilgate affair.
Your swift action in the investigation of these affairs, and your
reversion to me at your earliest convenience, is greatly appreciated.
Yours sincerely
A J LEON MP
Leader of the 0fficial 0pposition
"
The Respondent's Report on the Complaints
[9] As has already been indicated in this judgment, the respondent
investigated the complaints by Messrs Spies and Leon and, thereafter,
produced his Report, annexure "
SB1
", dated 25 July,
2005.
In making his findings on the complaints, the respondent gave what,
in my view, is a correct statement of the legislative framework
in
respect whereof the Public Protector performs his duties.
Consequently, I shall quote verbatim and extensively what is stated
in paragraph 5.1 of the Report:
"
5.1 The legislative framework
5.1.1
The provisions of Chapter 9 of the Constitution,
1996
5.1.1.1 The Public Protector is one of a cluster of constitutional
institutions established by Chapter 9 of the Constitution, 1996,
to
strengthen the constitutional democracy of the Republic of South
Africa.
5.1.1.2 These institutions are independent,
subject only
to the Constitution and the law
and must be impartial and
exercise their powers and perform their functions without fear,
favour or prejudice.
[s.181(2)]
5.1.1.3 In terms of section 182(1) of the Constitution, 1996, the
Public Protector has the power to investigate
any
conduct
in state affairs
or in
the public administration
in any sphere of government
that is alleged or suspected
to be improper or to result in any impropriety or prejudice.
5.1.1.4 0n conclusion of an investigation, the Public Protector
has to report on the conduct investigated and take the appropriate
remedial action.
[s.182(1)(b) and (c)]
5.1.1.5 The additional powers and functions of the Public
Protector are regulated by national legislation, including the
Public
Protector Act, 1994
.
[s.182(2)]
5.1.2
The
Public Protector Act, 1994
5.1.2.1 Section 6(4)(a) of the Act provides that the Public
Protector is competent to investigate any alleged maladministration
in connection with the
affairs of government
at
any level and any alleged abuse of power or other improper conduct by
a person performing a public function;
5.1.2.2 The Public Protector is also competent to investigate any
alleged improper or dishonest act or omission or offences referred
to
in Part 1 to 4 or section[s] 17, 20 or 21 (in so far as it relates to
the said offences) of Chapter 2 of the
Prevention and Combating of
Corrupt Activities Act, 2004
,
with respect to public money
;
[s.6(4)(a)(iii)]
and
5.1.2.3 Any alleged improper or unlawful enrichment or receipt of
any advantage or promise of such enrichment or advantage by a person
as a result of an act or omission in the public
administration or in connection with the affairs of government at any
level or of
a person performing a public function
.
[s.6(4)(a)(iv)]
5.1.2.4 In terms of
section 6(5)
, the Public Protector also has
the power to investigate maladministration, unlawful enrichment or
the receipt of an improper advantage
and other improper conduct
relating to the affairs of any institution in which the State is the
majority or controlling shareholder
or of any public entity as
defined in
section 1
of the
Public Finance Management Act, 1999
.
5.1.2.5
Section 6(9)
provides that:
'Except where the Public Protector in special circumstances,
within his or her discretion, so permits, a complaint or matter
referred
to the Public Protector shall
not be entertained
unless it is reported to the Public Protector within two years from
the occurrence of the incident or matter concerned.' (Emphasis
added)
5.1.2.6 The format and procedure to be followed in conducting any
investigation is determined by the Public Protector with due regard
to the circumstances of each case.
[s.7(1)(b)(i)]
5.1.2.7 In terms of
section 7(1)(a)
the Public Protector has the
power:
'on his or her own initiative
or on receipt of a
complaint or an allegation or on the ground of information that has
come to his or her knowledge and which points
to conduct such as
referred to in
section 6(4)
or (5) of this Act, to conduct a
preliminary investigation for the purpose
of determining
the merits of the complaint, allegation or information and the manner
in which the matter concerned should be dealt
with
.'
(Emphasis added)
5.1.2.8 Section 8(2)(b) provides that:
'The Public Protector shall, at any time, submit a report to the
National Assembly on the findings of a particular investigation
if-
(i) he or she deems it necessary;
(ii) he or she deems it in the public interest.'
"
(All emphasis, except "
on his or her own initiative
"
under para 5.1.2.7, added by the respondent.)
After his correct statement of the legislative framework from which
his powers and obligations flow, the respondent concluded as
follows,
regarding his interpretation of the effect of relevant enactments:
"
5.1.3.2 The Public Protector (as an institution) does not
have inherent jurisdiction in respect of the performance of its
powers
and functions and can only investigate and consider the
conduct of government institutions and public entities that fall
within
the ambit of its jurisdiction, as provided by its empowering
legislation;
5.1.3.3 The affairs of private individuals and entities fall
outside of the Public Protector's jurisdiction, except if the conduct
complained of or under suspicion relate[s] to:
(a) state affairs;
(b) improper or unlawful enrichment or the receipt of promise of
any improper advantage by a person as a result of an act or omission
in the public administration or in connection with the affairs of
government at any level or that of a public entity; or
(c) an improper or dishonest act or omission or corruption, in
respect of public money;
5.1.3.3 A preliminary investigation into any matter that came to
the attention of the Public Protector and that falls within his/her
jurisdiction can be conducted to determine the merits of the
complaint and whether or not it should be investigated further;
5.1.3.4 0nly in special circumstances can the Public Protector
investigate a complaint that is reported more than 2 years after the
incident complained of occurred; and
5.1.3.5 It is in the public interest that a special report of the
investigation of this matter be submitted to Parliament.
"
[10] After restating or summarising the two complaints, the
respondent made his findings and stated the following:
"
The Public Protector found that:
•
[a] The mandate of the Public Protector is by law restricted
to the investigation of matters relating to government bodies, public
entities, state affairs and dishonesty in respect of public money.
Consequently, the allegations pertaining to the relationship
between
Imvume and the ANC, payments made by Imvume to the ANC and private
entities and the involvement of the ANC in Mr Majali's
business
negotiations with the Government of Iraq,
could not be
investigated
;
•
[b] Much of what has been published by the
Mail
and Guardian
was factually incorrect, based on incomplete
information and documentation and comprised unsubstantiated
suggestions and unjustified
speculation;
•
[c] The approval and authorisation on 18 December 2003 by
the Acting CEO of PetroSA of an advance payment of R15 million to
Imvume
was lawful, well-founded and properly considered in terms of
the legal and policy prescripts that applied to PetroSA;
•
[d] The decision to approve Imvume's request, as it was
presented to PetroSA, for an advance was not unreasonable under the
prevailing
circumstances and did not amount to maladministration,
abuse of power or the receipt of any unlawful or improper advantage;
•
[e] Imvume's failure to pay Glencore (the supplier) the full
amount due to it in respect of the cargo of oil condensate concerned
could not reasonably have been foreseen or expected by PetroSA;
•
[f] PetroSA's payment of an amount of USD2,8 million (plus
interest) to Glencore on 23 February 2004 was in the public interest
and complied with its legal obligations in terms of the
Public
Finance Management Act, 1999
;
•
[g] The subsequent action taken by PetroSA to recover from
Imvume the amount paid to Glencore was taken without delay and in
compliance
with its legal obligations in terms of the
Public Finance
Management Act, 1999
;
•
[h] The allegations and suggestions of improper influence
made against Deputy President Mlambo-Ngcuka in relation to the
advance
payment were not substantiated and are without merit;
•
[i] The allegations of improper involvement of senior
officials of the Department of Minerals and Energy and the SFF in the
advancement
of business relations between Imvume and the Iraqi
Government and that a crude oil supply contract was improperly
awarded to Imvume
by the SFF in March 2002, are without merit.
(
Numbering, [a] to [i], is added
.)
It was recommended that:
*[a] The Board of PetroSA:
in consultation with the CEO and PetroSA's legal advisors, take
urgent steps to ensure that the outstanding amount due to PetroSA
by
Imvume, referred to in this report, is recovered without delay and in
compliance with the provisions of
sections 50(1)(d)
and
51
(1)(b)(i)
of the
Public Finance Management Act, 1999
; and
Regularly report to the Minister of Minerals and Energy on the
progress made in regard to the recovery of the outstanding amount;
and
*[b] The Minister of Minerals and Energy report to the Cabinet and
to Parliament on the steps taken and the progress made to recover
the
outstanding amount due by Imvume.
" (Emphasis and numbering
[a] and [b] are added.)
The Applicants' Challenge of the Report
[11] The applicants challenged the respondent's Report. Paragraph 1,
including subparagraphs 1.1 to1.4, of the notice of motion,
reads
thus:
"
1. The applicants intend to apply to this Court for an order
in the following terms:
1.1 The respondent's report titled '
Report on an
Investigation into an Allegation of Misappropriation of Public Funds
by the Petroleum 0il and Gas Corporation of South
Africa, trading as
PetroSA, and matters allegedly related thereto
' dated 29
July 2005 (the Report) is reviewed and set aside.
1.2 The respondent is ordered
to redo his investigation
of and report on the matters that gave rise to the Report
.
1.3 The respondent is ordered to pay the applicants' costs.
1.4 The applicants are afforded further and/or alternative
relief.
" (Emphasis in subparagraph 1.2 added.)
It should be mentioned that, in paragraph 38 of its replying
affidavit (at pp958-959 of the papers) the applicants now pray that
"
the matter should not be referred back to the Public
Protector for re determination
". Yet, in paragraph
281.4 of their Heads of Argument, the applicants seem to be still
contemplating referral of the matter
to the Public Protector, the
respondent, for re investigation. Referring to the question of
the respondent's failure to investigate
some of the complaints,
Mr Maleka, making submissions on the respondent's behalf in
paragraph 111 (pp59 60) of the respondent's
Heads of Argument,
makes the following submission:
"
111. We emphasise, in this regard, that the setting aside of
the respondent's decision not to investigate the ANC payment and
similar
complaints, would be academic, in the light of the order
sought by the applicants. They have made it clear that they do not
seek
any consequential order, arising from an order reviewing and
setting the respondent's decision. An order which merely reviews and
set [
sic
] aside the respondent's decision not to
investigate these complaints would not only be academic, but would
also not be just and
equitable.
"
It would appear that this submission on the respondent's behalf is
based on the averment in paragraph 38 of the applicants' replying
affidavit, already referred to herein. I shall return to this aspect
in due course.
[12] In their founding affidavit, the applicants consider the
respondent's task as having entailed –
"
14. … an investigation into these allegations, which
involve [a] claims of abuse of power, [b] conflicts of interest, [c]
improper financial management, [d] inappropriate political influence
and [e] even corruption within the DME, the SFF, PetroSA and
the ANC.
[f] The respondent produced the Report following a perfunctory
and wholly inadequate investigation, undertaken in
a surprisingly
short period of time.
"
[p8] [The numbering [a] to [f] is
added.]
In paragraphs 14 to 17, the applicants criticise the respondent's
report as follows:
"
14. … The respondent produced the Report following a
perfunctory and wholly inadequate investigation, undertaken in a
surprisingly
short period of time.
15. The investigation was completed, and the Report compiled,
without either consulting with the applicants or giving them an
opportunity
to make representations, notwithstanding the fact that
the articles published by the applicants were the source of the
allegations
that formed the subject of the investigation and Report.
16. In the Report, the respondent adopted the position that he is
not entitled to investigate many of the transactions that form
the
basis of the 0ilgate scandal, as these payments were not out of
'
public funds
' and were made between '
private entities
'.
The respondent also found that he was not entitled to investigate
the relationship between the ANC and Imvume. According to
the
respondent, these issues fell outside his investigative powers. I am
advised and accordingly submit that
this finding of the
respondent constitutes a misdirection as to his powers
.
17. In respect of those aspects of 0ilgate which the respondent
considered to fall within the scope of his investigative powers,
the
Report broadly speaking found that there was no substance in any
allegations of impropriety.
" (Emphasis added.)
[13] In paragraph 19 of their founding affidavit, the applicants give
the basis for their challenge of the respondent's report
as follows:
"
19. The applicants challenge the Report in terms of the
Constitution, the Promotion of Administrative Justice Act, 2000
('
PAJA
') and the
Public Protector Act. The
Report must be set aside for the following reasons:
19.1 The respondent misconstrued the nature of his powers under
the
Public Protector Act read
with the Constitution. This amounts to
a material error of law under PAJA and
breaches the
constitutional principle of legality
.
(Emphasis
added.)
19.2 [a] The respondent failed to comply with the requirements of
procedural fairness in terms of
section 9(7)(a)
of the
Public
Protector Act, the
Constitution and PAJA. [b] The respondent made
serious findings against the
Mail & Guardian
(and, by implication, all the applicants) without giving them an
opportunity to make representations on those findings or on the
subject of the investigation.
[The numbering [a] and [b] is
added.]
19.3 The respondent failed to undertake a proper investigation, as
required by section 181(2) of the Constitution read with the
Public
Protector Act. Instead
, he conducted a superficial and inadequate
investigation.
19.4 The Report is vitiated by bias and partiality on the part of
the respondent. This renders the Report in breach of the
respondent's
duty to perform his functions without '
fear,
favour or prejudice
' as contemplated in section 181(2) of
the Constitution and makes the Report reviewable under PAJA. It also
amounts to the exercise
of a public power in bad faith.
"
[14] The applicants discussed each of the aspects raised in
paragraphs 14 to 19.4 of their founding affidavit in detail in
subsequent
paragraphs of that affidavit, ie from paragraph 20 to
paragraph 304.5, pp10 107.
Applicants' Grounds on which the Report Must be Set Aside
[15] From the outset, it is evident that the applicants challenge the
respondent's Report, on the basis of PAJA, the Constitution
(in
particular
the principle of legality
) and the
Public Protector
Act (paras
260-263 of the founding affidavit). The applicants'
submissions in this regard have, in my view, to be considered
together with
their submissions under the heading "
The
respondent's misdirection regarding his own powers
"
discussed in paragraphs 264-266.1.3 of the founding affidavit. It
is, therefore, instructive to understand what the applicants
submit
in the latter paragraphs, which read:
"264.
Part 3
of this affidavit deals in great detail with the
manner in which the respondent
failed to exercise his
powers of investigation
over a substantial number of the
allegations made in terms of the complaints brought before him.
265. I will not repeat the applicants' contentions why the
allegations in fact fall within the jurisdiction of the respondent.
These are dealt with in paragraphs 147 to 179 above.
266. The respondent misdirected himself
in limiting his
own powers of investigation
in this manner. This
misdirection renders the Report liable to be set aside on the
following grounds:
266.1.1 The report was materially influenced by an error of law
within the meaning of
section 6(2)(d)
of PAJA.
266.1.2 The respondent took into account irrelevant considerations
and failed to take into account relevant considerations in
formulating
the Report within the meaning of
section 6(2)(e)(iii)
of
PAJA;
266.1.3 The misdirection
contravenes the principle of
legality
embodied in the rule of law in section 1(c) of
the Constitution, read with section 182 of the Constitution and the
Public Protector Act.
" (Emphasis
added.)
[16] Earlier in the founding affidavit, dealing with the respondent's
failure to investigate many of the allegations, the applicants
submit
the following regarding the respondent's approach:
"147. The approach followed by the respondent in his Report
was
to interpret his own mandate narrowly
so as
to exclude most of the subject matter of the complaints before him
from his own jurisdiction.
148. The respondent held that he was
not empowered to
investigate
the following allegations:
-[1] the ANC Payment Complaint (paragraph 5.5.2 of the Report);
-[2] the Uluntu Complaint (paragraph 5.5.3);
- the Hartkon Complaint (paragraph 5.5.4)
-[3] the Skweyiya complaint (paragraph 5.5.7)
-[4] the relationship between Imvume and the ANC (paragraph
11.1.1.1; and
-[5] the involvement of the ANC in Majali's business negotiations
with the Government of Iraq (paragraph 11.1.1.4).
[The
numbering of the above items from [1] to [5] and emphasis are added.]
149. I am advised that
the respondent erred in adopting
this approach
. The respondent is empowered to investigate
each of these complaints. His misdirection is unduly limiting his
own powers of investigation
and oversight vitiated the Report. If
the applicants are right that he ought not to have limited his
jurisdiction over the allegations,
then the entire process in terms
of which the report was investigated and written would be set aside.
"
The applicants' list of allegations which the respondent himself was
not empowered to investigate, as set out in para 148 above,
is
correct.
0ther subheadings in terms whereof criticism of or attack on the
Report is made are:
- "
The failure to comply with the principle of procedural
fairness
" (paragraphs 267-270.2, pp93-94);
- "
No proper investigation was done
"
(paragraphs 271-287.6, pp94-101);
- "
The respondent's bias and lack of impartiality
"
(paragraphs 288-304.5, pp101-103).
Voluminous papers
[17] The papers in this application are excessively voluminous. The
applicants attached 77 annexures to its founding affidavit.
After
being furnished with detailed information that they had sought from
the respondent, as part of their notice of application,
the
applicants filed a supplementary affidavit of 37 pages (pp661-698)
with 7 further annexures.
[18] The respondent filed a 74-page affidavit, with 13 annexures. He
then filed a further answering affidavit, covering 78 pages
(pp795-873). He, after receiving the applicants' supplementary
affidavit, filed an answering affidavit thereto, totalling 67 pages
(pp874-941). The applicants filed a 62 page replying affidavit with
a further 7 annexures, covering 42 pages (pp1008-1050). I
have
deliberately omitted reference to confirmatory affidavits, which were
quite short.
[19] The applicants' heads of argument are 116 pages, whilst the
respondent's are 80 pages. The parties then addressed the Court
at
the hearing of the application over three days. The transcript of
submissions by both counsel covered five volumes, over 444
pages.
The papers, inclusive of pleadings and annexures, total 1056 pages.
In making this judgment, I have had regard to every
page of the
papers, every page of the parties' heads of argument and every page
of the transcript of the submissions made on behalf
of the parties
during argument.
The Respondent's Defence
[20] The applicants made issue of the fact that the deponent to the
respondent's answering affidavit, Mr Christoffel Hendrik
Fourie,
"Head of Special Investigations in the 0ffice of the Public
Protector of the Republic of South Africa", states
that he
"
investigated the complaints referred to in the Report, which
is annexure '
SB1
' of the founding affidavit
".
In that very subparagraph, the deponent states that he did what he
did in the investigation "
under the direction control of the
respondent
". He further states, in paragraph 1.4, that-
"
Elsewhere in this affidavit [he makes] submissions on
matters of law. [He does] so on the advice of the respondent's legal
representatives,
which [he accepts] and [believes] to be correct.
"
Furthermore, it is common cause between the parties that the
respondent is entitled, in terms of the provisions of
the
Public Protector Act
("PPA"), to delegate someone, such as
the deponent, to do investigation on his behalf. I find that
the attack of
the Report on this basis is without substance.
[21] In paragraphs 2 to 4 of the answering affidavit, the respondent
sets out the basis on which he opposes the application. He
states:
"
2. The respondent has resolved to oppose the relief sought
in the notice of motion, on the grounds set out more fully below.
Before
I respond to the averments in the founding affidavit, I draw
attention to the following aspects of the application.
3. The office of the Public Protector was established on 1 0ctober
1995, pursuant to the provisions of
sections 181(1)(a)
and
182
of the
Constitution of the Republic of South Africa Act, 108 of 1996, as
amended ('
the Constitution
'), and the
Public
Protector Act, 23 of 1994
, as amended ('
the PP Act
').
The office of the Public Protector is one of the state institutions
that are established and required to strengthen constitutional
democracy in the Republic of South Africa ('
the Republic
').
4. The constitutional responsibility of the respondent is to
investigate conduct in the affairs of the state or public
administration
which is alleged or suspected to be improper or to
bring about impropriety or prejudice, to report on that conduct, and
where necessary
to take remedial action. The powers of the
respondent to conduct investigations and report on his findings are
set out in the
PP Act
. As a statutory
functionary, the respondent can lawfully and properly exercise only
those powers conferred, and discharge only
those functions and duties
imposed, upon him in terms of
the PP Act
, and
the Constitution
.
"
It is on the basis of his approach, as outlined above, that the
respondent investigated some of the complaints placed before him
and
not others. In paragraph 60 of the respondent's heads of argument it
is stated thus:
"
The parties differ sharply on the jurisdiction of the
respondent, in respect of some of the complaints that were submitted
to the
respondent.
"
[22] As I have already stated, the applicants are of the view that
the respondent narrowly interpreted his mandate, which interpretation
resulted in his incorrectly excluding the investigation of the four
aspects I have mentioned. The applicants further submit that,
if and
when the respondent investigates the outstanding four complaints, it
is well possible, in fact likely, that he will find
a relationship
between these aspects and the others in respect whereof he has
already made findings adverse to the applicants.
The applicants
further submit that, although the respondent purports to have made a
finding with regard to the complaint involving
Dr Skweyiya, he
did not, in fact, on a proper construction of what happened, conduct
an investigation in that regard.
[23] This specific complaint is one lodged by Mr Spies, wherein he
sought an investigation into the circumstances which led to
Imvume
paying R65 000,00 with regard to improvements by Hartkon to the
private residence of the Minister of Social Development,
Dr Skweyiya,
on 19 December 2003, a day after Imvume had received payment of
R15 million from PetroSA, a state-controlled
company. Due to
the manner in which the respondent gave his Report with regard to
latter complaint, the applicants are of the
view that he did not, in
fact – either himself or through Mr Fourie –
investigate the complaint. It should be
recalled that he says the
following in his report:
"
There is no substantive allegation or indication that the
Minister performed any official action or omission that could have
favoured
Imvume in any way. The suggested corrupt intent clearly
speculates in respect of
future events that might or might
not occur, which obviously cannot be investigated
.
"
(Emphasis added.)
[p145]
The respondent then concluded this aspect as follows:
"
The information at the disposal of the 0ffice of the Public
Protector and
that could be considered and verified
in terms of its jurisdiction does not disclose the commission of any
offence, but merely comprise [
sic
] suspicions
and speculations that have not been substantiated. No substantive
reason could therefore be found to refer this matter
to the National
Prosecuting Authority at the time of the investigation referred to in
this report.
" (Emphasis added.)
[24] It could, indeed, understandably be argued that the underlined
words in the first quotation connote that the respondent found
no
basis for an investigation. Similarly, the underlined words in the
second quotation could be interpreted to mean that the "
information
at the disposal of the office of the Public Protector
" was
not considered and verified because it "
does not disclose the
commission of any offence
". If the wording had been "
that
was considered and verified
" that would clearly indicate
that the information was so considered and verified. In my view,
however, there is no basis
for gainsaying the respondent's averments,
under oath, that the complaint involving Dr Skweyiya was
investigated, simply on
account of a speculative inference based on
the wording in the report. Consequently, I approach this matter on
the basis that
this is one of the items investigated by the Public
Prosecutor, the respondent. It only remains to determine whether it,
like
the others that were investigated,
was properly investigated
as averred by the respondent.
The Respondent's Arrangement and Compartmentalisation of matters
before him for Investigation
[25] I have found the respondent's arrangement of his Report somewhat
difficult to understand in some respects. He decided to
deal with
the matters before him on the basis of four particles, viz,
1. "
5.2
The jurisdiction of the Public Protector in
respect of the conduct
and affairs of PetroSA
" [5.2 – 5.2.5,
pp134-135];
"
5.3
The jurisdiction of the Public Protector in
respect of the conduct
and affairs of Imvume Management
" [5.3 - 5.3.4,
pp135-136];
"
5.4
The jurisdiction of the Public Protector in
respect of the conduct
and affairs of the ANC
" [5.4 - 5.4.5,
pp136-137];
"
5.5.
The jurisdiction of the Public Protector in
regard to the conduct
complained of by the Freedom Front Plus and the Democratic
Alliance and alleged and reported on by the
Mail and
Guardian
" [5.5 – 5.5.7.8, pp137-146].
[26] His conclusion, in paragraph 5.6, after discussing these four
categories of complaints before him, is set out as follows:
"
5.6.1 For the reasons advanced above,
[1]
the Public Protector has jurisdiction to investigate
[a]
the alleged improper conduct by PetroSA and
[b]
the alleged improper involvement of Deputy President Mlambo-Ngcuka in
the advance payment that was made to Imvume.
5.6.2
[2]
The alleged involvement of senior
officials of the Department of Minerals and Energy in the advancement
of business relations between
Imvume and the Iraqi Government and the
alleged improprieties relating to the awarding in March 2002 by the
SFF of a crude oil
supply contract to Imvume,
fall within
the jurisdiction of the Public Protector
. These events
occurred more than 2 years ago
and the
allegations were published when the investigation of the complaint
referred to in paragraph 3 above, was already at an
advance[d] stage.
It was however,
regarded in the public interest to make
enquiries into these allegations
to determine the merits
thereof and whether or not it warranted further consideration and
investigation.
"
[the numbering under 5.6.1 and 5.6.2 is
not original but added]
[27] I have already mentioned that I find the respondent's structural
approach, in dealing with the complaints, difficult to follow.
It
would seem, however, that the respondent considers the first three
categories as flowing from the fourth category, viz
the complaints
by Mr Spies of the Freedom Front Plus and Mr Leon of the
Democratic Alliance
. I say so because, as already pointed
out, the respondent's answering affidavit clearly states that the
application flows
exclusively from the complaints by Mr Spies
and Mr Leon, respectively. Under the fourth category, "
5.5
the jurisdiction of the Public Protector in regard to the conduct
complained of by the Freedom Front Plus and the Democratic
Alliance
",
the respondent has further sub-categories viz:
(a) "
5.5.1 The advance payment made by PetroSA to Imvume
Management
and its subsequent payment to Glencore International
"
[
paragraphs 5.5.1 – 5.5.1.4, pp137–138];
(b) "
5.5.2 The payment by Imvume of R11 million to the ANC
"
[paragraphs 5.5.2 – 5.5.2.4, pp138-141];
(c) "
5.5.3 The payment by Imvume of R50 000 to Uluntu
Investments
"
[only paragraph 5.5.3, p142];
(d) "
5.5.4 The payment by Imvume of R65 000 to Hartkon
Construction
"
[only paragraph 5.5.4, p142];
(e) "
5.5.5 The improper involvement of Deputy President
Mlambo-Ngcuka in
PetroSA's advance payment to Imvume
"
[only paragraph 5.5.5, p142].
Reasons for Finding that the Conduct and Affairs of Imvume
Management do not Fall Within the Respondent's Jurisdiction
[28] The respondent states that Imvume is a private company, that the
state does not own the majority or controlling shares in
it and that
it is not listed as a public entity in terms of the
Public Finance
Management Act, 1999
. As such, Imvume "
does not perform a
public function
" [para 5.3.3, p136].
Reasons for the Conduct and Affairs of the ANC not Falling Within
the Respondent's Jurisdiction
[29] In paragraph 5.4.1 the respondent states the following:
"
5.4.1 The distinction between the ruling political party (as
an entity) and government (as a body) is a fundamental principle of
constitutional law and democracy. Governments at the different
levels in South Africa do not only consist of members of the ANC.
The fact that the ANC holds the majority of the seats in these
governments does not change the position.
"
The respondent then continues as follows, in subparagraphs 5.4.2 to
5.4.4:
"
5.4.2 The question as to whether or not a political party
should be regarded as a public or private body was recently raised in
the Cape of Good Hope Provincial Division of the High Court in the
case of
Institute for Democracy in Southern Africa v
African National Congress and 0thers
[cited by the
respondent, in footnote 11, as 'case no 9828/03', otherwise reported
under 2005(5) SA 39 (C) and referred to as such
by Mr Maleka and
Mr Budlender in their respective addresses to the Court.] The
Court had to decide,
inter alia
, whether
political parties could be regarded as public or private bodies for
the purposes of the
Promotion of Access to Information Act, 2000
.
5.4.3 Section 1 of the Act defines a public body as:
'(a) any department of state or administration in the national or
provincial sphere of government or any municipality in the local
sphere of government or;
(b) any other functionary or institution when-
[no sub-para (i) in the Report];
(ii) exercising a power or performing a duty in terms of the
Constitution or a provincial constitution; or
(iii) exercising a public power or performing a public function in
terms of any legislation.'
5.4.4 The Court found that a political party could not be regarded
as a public body as it does not conform to the said definition
and
that
political parties are not obliged by law to disclose
the records of donations made to them
.
5.4.5 The meaning ascribed to 'a person performing a public
function' in the context of the
Public Protector Act, 1994
is clearly
similar to the definition of a public body in
section 1
of the
Promotion of Access to Information Act, 2000
. Consequently, the said
judgment confirmed that
the Public Protector does not have
jurisdiction in respect of the conduct and affairs of political
parties as they are regarded
as private entities
.
"
(Emphasis added.)
I shall return to this aspect later in the judgment.
Reasons for the Respondent not Having Jurisdiction to Investigate
the alleged Payment of R11 million by Imvume to the ANC
[30] In subparagraph 5.5.2.2 [pp138-139] the respondent says the
following:
"
5.5.2.2 As indicated above, the Public Protector does not
have jurisdiction in respect of the affairs and conduct of the ANC
and
Imvume, except if the conduct complained of:
(a) relates to 'state affairs'; or
(b) constitutes improper or unlawful enrichment of the receipt or
promise of any improper advantage by a person as a result of an
act
or omission in the public administration or in connection with the
affairs of government at any level or that of a public entity;
or
(c) could be regarded as an alleged improper or dishonest act or
omission with respect to public money;
[reference is to
s.
6(4)(a)(iii)
of the PPA]
; or
(d) could be regarded as an alleged offence referred to in
Part 1
to
4
or section[s] 17, 20 or 21 of Chapter 2 of the
Prevention and
Combating of Corrupt Activities Act, with
respect to public money.
"
Consequently, having come to the conclusion that neither the ANC nor
Imvume is a public entity, the respondent made the following
conclusion in paragraph 5.5.2.3:
"
5.5.2.3 … The alleged payment was clearly made by one
private entity to another and could therefore not have had any
bearing
on 'state affairs'. It also had no relation to an act or
omission in the public administration or in respect of a public
entity.
"
He went further to submit, in paragraph 5.5.2.4 that:
"
5.5.2.4 … it firstly needs to be established whether
the alleged payment was made with 'public money'. When does public
money lose its character and become 'private money'?
"
The respondent then places reliance on the case of
South
African Association of Personal Injury Lawyers v Heath and 0thers
,
[2001(1) SA 883 (CC)]. He then purports to be quoting from p908
(at paragraph 53) "
of the judgment of the former Chief
Justice CHASKALSON
". He proceeds to quote from the judgment
without listing the paragraphs from which he quotes, which are [56],
[57] and [59].
I pause here to comment that the Public
Protector, being an advocate of the High Court of South Africa and
occupying a senior
position provided by the Constitution, should
ensure that he refers appropriately to authorities, just as a judge
or magistrate
would do. In continuing with the quotation from the
Report, therefore, in paragraphs 5.5.2.5, I insert the relevant
paragraphs
from the judgment:
"
[56] The respondents rely on the definition of 'public
money' in the Act (the
Special Investigating Units and Special
Tribunals Act, 1996
), which reads:
'(A)ny money withdrawn from the National Revenue Fund or a
Provincial Revenue Fund, as contemplated in the Constitution, and any
money acquired, controlled or paid out, by a State Institution.'
They contend that money paid by the RAF to an attorney in
settlement of a client's claim is money 'paid out' by a State
institution,
and that it remains public money in the hands of the
attorney. If that attorney fails to account properly to the client
for the
money received on the client's behalf, that, so it is
contended, constitutes an 'unlawful appropriation' of 'public money'
within
the meaning of s 2(2)(c).
[57] I am prepared to accept for the purposes of this judgment
that s 2(2)(c) may linguistically be capable of such an
interpretation.
In my view, however, the section should not be
given such a wide meaning.
[58] …
[59] When the RAF pays compensation to an attorney as agent for
the claimant, the RAF's obligations to the claimant are thereby fully
discharged. In the hands of the attorney it is money lawfully paid
and received in which the State institution no longer has a
legal
interest and which the attorney is then obliged to pay to the client
in accordance with the contract between them. If the
attorney
unlawfully appropriates that money, it would be an unlawful
appropriation of the client's money and not an unlawful appropriation
of money of a State institution
."
[31] Comparing the situation in the
South African Association
of Personal Injury Lawyers
case and the payment of
R11 million by Imvume to the ANC, after the former had received
R15 million from PetroSA, the
respondent concluded as follows in
paragraphs 5.5.2.7 to 5.5.2.9:
"
5.5.2.7 In the matter under consideration, the advance in
question was paid to Imvume
on the basis of its agreement
with PetroSA
.
Imvume was not acting as an agent
for PetroSA
, but had a separate supply contract with
Glencore.
0nce Imvume received the payment from PetroSA,
it owned the money
. Whether the payment due to Glencore
was to be made from this money or other funds of the company is
immaterial. Unlawful appropriation
of the payment made by Imvume
could only have affected Glencore and not PetroSA, who (
sic
)
then only had an interest in the delivery of the oil condensate that
it had paid for.
5.5.2.8 The payment Imvume allegedly made to the ANC therefore
did
not involve public money
. …
5.5.2.9 The Public Protector therefore
does not have
jurisdiction to investigate the alleged payment by Imvume made to the
ANC
.
" (Emphasis added.)
I shall return to this aspect later in the judgment.
The Respondent's Reasons for Finding that he had no Jurisdiction
to Investigate the Imvume Payment of R50 000,00 to Uluntu
Investments [par 5.5.3, p142] and R65 000,00 to Hartcon
Construction [par 5.5.4, p142]
[32] For the same reasons that he came to the conclusion that he had
no jurisdiction to investigate the alleged payment by Imvume
to the
ANC, the respondent was of the view that he was not entitled to
investigate these two payments.
[33] The applicants challenge the respondent's decision that he had
no jurisdiction to investigate the conduct and the affairs
of the
Imvume Management, the conduct and the affairs of the ANC and the
payments made by Imvume to the ANC, Uluntu Investments
and Hartcon
Construction, respectively. Before I deal with the applicants'
submissions in this regard, however, it is necessary
to first discuss
the respondent's objection to the applicants' standing in this
matter.
Standing
[34] In his heads of argument, the respondent submits [in paragraph
28, p16], correctly, in my view, that the applicants bring
their
review in their own interests as well as in the public interest,
relying on the applicants' averments in paragraph 35 of
their
founding affidavit. In a detailed but well-argued submission by
Mr Maleka on the respondent's behalf and on the question
of the
applicants' entitlement to bring the application in their own
interests, he submits that they have no special entitlement
to do so.
He base his submission on the fact that the applicants base their
interests mainly on the fact that the respondent criticised
the
articles they wrote in the
Mail & Guardian
and did so
without affording them opportunity to respond to his views in that
regard. The applicants, in fact, allege in the founding
affidavit
that the respondent's remarks are highly damaging and defamatory of
and concerning them. During argument, Mr Budlender
submitted
that the applicants would no longer rely on defamation as a basis for
their bringing the application. He did not, however,
abandon the
applicants' submission that they were entitled to a hearing by the
respondent before he published remarks that were
critical of their
complaints. The respondent points out in,
inter alia
,
paragraph 32 of his heads of argument that:
"
32. The applicants do not claim at all that the critical
remarks they complain about violate or infringe their rights to
freedom
of expression, including the freedom of the press. Despite
the critical remarks, the applicants have been able to exercise their
freedom of expression, and have been able to do so vigorously. For
instance, the applicants have published articles, subsequent
to
the
Report
, in which they expressed critical views about the
respondent, without being constrained, in pursuit of their right to
freedom of
expression, and the freedom of the media, and to freely
publish those views. [The heads of argument, footnote 31, refers to
annexures
'AA7', 'AA8' and 'AA9',
all of which were written
after the Report and in which the applicants vehemently criticise the
Report.]
This is not a case of persons who are unable to
exercise their fundamental right or pursue their chosen career,
because of the
contents of
the Report
.
"
[35] I find the respondent's submissions compelling in this regard.
I, however, am of the view that the applicants are entitled,
as
persons who were entitled to and did lay complaints about matters
dealt with by the respondent and which formed the basis of
his
Report, to complain when they are of the view that their complaints
were either not investigated or not appropriately investigated.
The
respondent does not contend – neither could he contend, in my
view – that the applicants were not entitled, in
law, to
complain as they did to him. Why then would they not be entitled to
bring an application if they were unhappy with his
conduct?
I, therefore, find that the applicants are perfectly entitled to
bring this application on that basis alone.
[36] In passing, I wish to comment about the manner in which the
applicants criticised the Report (annexure "AA2" pp796-804
– which is inexplicably duplicated by the respondent on
pp837-842) abusive of and insulting to the 0ffice of the Public
Protector and the respondent, personally. I refer to headlines such
as "
Anatomy of a whitewash
", "
Dismal.
Depressing. Disingenuous
.", "
The Public what
?".
0n p799, under the title "
Eina!
", the
following appears:
"
… it is now common cause that Mushwana
dodged
his responsibilities and sought to protect power rather than the
public
. The 73-page report is littered with the term, '…
the Public Protector cannot investigate this allegation'.
That is how Mushwana has explained how he investigated a payment
from PetroSA that ended up in the ANC's coffers and hardly considered
the dangers inherent in crony capitalism and tender shenanigans with
which this 0ilgate story so brims.
"
By isolating the phrase "
the Public Protector cannot
investigate this allegation
" from the reasoning that
precedes it, the writer does the respondent an immense injustice on a
sensitive issue. In my view,
the 0ffice of the Public Protector,
being a direct creation of the Constitution, and the holder thereof,
are entitled to more respect
than was shown by the applicants in
their criticism of the respondent's Report. Just as a magistrate or
a judge can make a mistake
in his or her judgment, so can a Public
Protector make a mistake in the exercise of a discretion with which
he is bestowed by the
Constitution and the
Public Protector Act. The
question as to whether or not the Public Protector has erred in his
or her discretion cannot be determined otherwise than by a
Court of
law. Institutions such as these must, in my view, be implicitly
respected, regardless of who the incumbents thereof are.
That does
not, however, amount to saying that there should not be appropriate
criticism of such institutions.
[37] I am in agreement with the respondent's conclusion, based on the
authority of
Institute for Democracy in Southern Africa v
African National Congress & 0thers
, that the conduct and
affairs of the ANC, a political party, are outside the scope of his
jurisdiction. I do not, however, regard
the applicants' approach to
the respondent as having been for him to investigate merely "the
conduct and affairs" of
the ANC. I understand that the
applicants raised the conduct and affairs of the ANC in relation to
its perceived relationship
with Imvume and Mr Majali, which two
were also perceived to be having an improper relationship with
PetroSA and the Government
of the Republic of South Africa, in the
context of what was subsequently referred to by the
Mail &
Guardian
as the "0ilgate". That, in my view,
distinguishes the facts of the present case from those in the
Institute for Democracy in Southern Africa v African National
Congress & 0thers
.
[38] In his argument, Mr Budlender disagreed, correctly so in my
view, with the respondent's submission that, on the basis
of
South
African Association of Personal Injury Lawyers
the
R11 million paid by PetroSA to Imvume was no longer state funds.
[39] Regarding the respondent declaring
the affairs and conduct of
Imvume
as being outside his jurisdiction, I am similarly of the
view that he misconstrued the manner in which he was approached to
investigate
those affairs. Although it is not disputed that Imvume
is a private company, the applicants aver that it was being used by
PetroSA
as a front for the ANC. In other words, according to them,
it was being used to siphon public funds to the ANC, in an endeavour
to fund the latter. It is further alleged by the applicants that
Mr Majali, through Imvume, was involved in efforts to bring
relief to the Iraqi Government from the international isolation that
it was going through after its attack on Kuwait. As I have
already
stated, there is no indication in the papers that the 0ffice of the
Public Protector was aware, as at the time of its receiving
the
complaints from Messrs Spies and Leon, of the existence of the IIC
reports, regarding the alleged improper involvement of,
inter
alia
, Mr Majali and Imvume, in attempts to improperly assist
the Iraqi Government avoid the negative consequences arising from
deliberate sanctions, against it, by the UN. Inconceivable as that
may seem, I approach this case on the assumption that the 0ffice
of
the Public Protector was completely oblivious of what was happening
internationally in that regard.
[40] There was, in my view, sufficient information in the articles
that were in the
Mail & Guardian
and which, on the
respondent's own version in the papers, the respondent read. I quote
from one of those, "
SB10
" (at p211), the following:
"
The African National Congress has misled the nation on the
0ilgate scandal.
Documents in the possession of the
Mail & Guardian
make it clear that Imvume Management – the company that
channelled R11-million in state oil money to the ANC before the 2004
election – was effectively a front for the ruling party.
The relationship between the ANC and Imvume is central to
0ilgate
.
When the
M&G
broke the 0ilgate story two
months ago, ANC spokesperson Smuts Ngonyama claimed Imvume was an
independent firm from which the ANC
was perfectly entitled
to
accept donations
. 'We do not ask donors where their money
comes from,' he said. The point was echoed by ANC secretary general
Kgalema Motlanthe,
who said: 'A distinction should be made between
the ANC and private companies.'
Both officials suggested the transaction was an arm's-length
donation from an ordinary private concern – which meant the ANC
could not have known that the R11-million
came from the
parastatal PetroSA
, which had prepaid Imvume for part of a
supply contract.
But the documents, some marked 'Top Secret' and which the
M&G
gathered over three years, make a mockery of that defence. Instead,
they show how close the ANC and Imvume really were.
They show that as early as 2001 Motlanthe and, to an extent, party
treasurer Mendi Msimang, were intimately entangled with Imvume
boss
Sandi Majali.
The evidence suggests that together they hatched an ambitious
project to raise millions of rands for the ANC by obtaining lucrative
oil allocations from Saddam Hussein's regime under the United Nations
0il for Food (OFF) programme.
OFF was an exception to UN sanctions [which] allowed Iraq to
export oil to pay for humanitarian needs.
In turn Motlanthe and Majali, on behalf of the ANC, would extend
political solidarity to the Iraqi dictator and
campaign for
the lifting of sanctions
.
The documents include a letter from Motlanthe to the Iraqis,
confirming Majali as the ANC's designated representative for this
project.
…
The information obtained by the
M&G
carries implications for the government as well
.
It shows that
senior representatives from the Ministry and
the Department of Minerals and Energy, as well as the state-owned
Strategic Fuel Fund
(SFF), participated in this project – to an
extent that suggests their boss, former minister Phumzile
Mlambo-Ngcuka, must
have been aware of the plan
.
Mlambo-Ngcuka and her officials have denied any such collusion,
but have declined to comment on the allegation that Majali was
effectively
an agent for the ANC.
…
When Majali travelled to Iraq for talks with Hussein's
government in 2001, he was accompanied by a top-level delegation,
including
the Director General of Minerals and Energy, Sandile
Nogxina, and Mlambo-Ngcuka's chief of staff, Ayanda Nkuhlu. The
minister
personally authorised their trip
.
Also with them was Riaz Jawoodeen
, a director of the
SFF, the state body responsible for maintaining South Africa's
strategic fuel stocks.
The SFF was also answerable to
Mlambo-Ngcuka
.
The deal proposed to the Iraqis was startling in its simplicity.
The ANC – and,
by implication, its officials in
government
– would support Hussein's beleaguered
regime in exchange for the allocation of oil. The oil trade between
Iraq
and the South African authorities
would be
handled by Majali, who was introduced as the ANC's agent. Some of
Majali's profits would go to an ANC funding front,
controlled by
him.
" (Emphasis added.)
[41] It will be observed that the contents of "
SB10
",
as quoted herein, remarkably resemble the contents of the IIC reports
that are contained in the background and history of
this application.
Even if, therefore, the respondent had not been aware of the IIC
reports, he, in my view, had adequate damning
information before him
when considering the complaints by Messrs Spies and Leon. Without
suggesting that the allegations, either
as contained in the IIC or,
for instance, "
SB10
", are correct, they are, in my
view, sufficiently damning to the Government of the country, the
ministers and senior officials
mentioned therein and to the ANC to
merit serious attention. Although the ANC is not, itself, part of
the Government, the respondent
must have been aware that the then
cabinet ministers implicated by the
Mail & Guardian
articles were members of the ANC. The respondent, therefore, owed it
to all these interested groups to investigate complaints
that cast
them in very poor light, ie if the respondent had legal authority to
investigate the complaints. This raises the question
as to whether
the respondent correctly interpreted the parameters of his authority,
based on the Constitution and the PPA. That,
in turn, raises the
principle of legality, to which I shall refer later in the judgment.
I am in agreement with Mr Budlender
in his submission that the
respondent's reliance on the decision in the
South African
Association of Personal Injury Lawyers v Heath
2000(10)
BCLR 1131 (T), with regard to the funds that were used by Imvume to
make payment to the ANC (R11 million), Uluntu
Investments
(R50 000,00) and Hartcon Construction (R65 000,00)
involving public money, is misplaced. The propriety of
the
transaction between the RAF and the attorneys concerned, in
South
African Association of Personal Injury Lawyers
was not
disputed. That is evident from the following passage in the judgment
by CHASKALSON, P at para [55]:
"
[55]
…
There is no
suggestion that payments made by the RAF to attorneys, on behalf of
their clients, were in any way improper or unlawful,
or that the
investigation can possibly give rise to the recovery of any money on
behalf of the State
. 0n the face of it,
the
investigation is not concerned with the appropriation or expenditure
of public money
.
"
(908A D)
[Emphasis added.]
In the current matter the very basis on which PetroSA made payment to
Imvume was challenged by the applicants, contending that
it was an
improper siphoning of State funds from PetroSA to the ANC, via
Imvume. Seeing that these are State funds the respondent
was obliged
to investigate that complaint.
[42] Seeing that the respondent's decision that
payments made to
Uluntu Investments and Hartcon Construction
, respectively, were
similarly out of his jurisdiction for the reasons given in respect of
the payment by Imvume to the ANC, it
follows that that decision is
similarly affected by the distinction made between the present matter
and that in
South African Association of Personal Injury
Lawyers
. It should be borne in mind that, with regard to
each of these two complaints (Uluntu Investments and Hartcon
Construction), the
respondent said:
"
The alleged payment did not relate to State affairs or
public money
."
[43] From the aforegoing, it follows that I am of the view that the
respondent's decision that the investigation in respect of
the
conduct and affairs of Imvume Management and of the ANC is beyond his
powers and his finding that the payment by Imvume of
R11 million
to the ANC, R50 000,00 to Uluntu Investments and R65 000,00
to Hartcon Construction, (shortly after
receiving an advanced payment
of R15 million from PetroSA), were appropriate, are incorrect.
What the PetroSA payment Entails
[44] In view of the importance of this aspect of the case, it is
necessary to give a brief summary of what it entailed. In 0ctober
2002, PetroSA entered into a documented contract with Imvume, a BEE
company, for the supply of oil condensate required for PetroSA's
operation. Imvume had a "
back-to-back agreement
"
with a condensate supplier, Glencore International AG ("Glencore")
in terms whereof Glencore would source the condensate
on Imvume's
behalf, for the latter to supply PetroSA. PetroSA duly purchased
314,598,06 barrels of condensate which was to be
delivered to Mossel
Bay under a bill of lading dated 06 December 2003, on an agreed
contract price of USD10 215 942,80.
0n 18 December
2003, Imvume requested an advance payment of R15 million from
PetroSA. According to Mr S Majali,
the executive chairman
of Imvume, the reason for the request was cash flow problems
relating to Imvume's monthly commitments.
The CEO of Imvume, Mr Sipho Mkhize, was, by virtue of the
provisions of
s.56
of the
Public Finance Management Act, 1999
,
granted delegated authority to approve advances in respect of
budgeted projects (contracts) up to an amount of R50 million,
without informing the Companies Board. Before the CEO went on leave,
from 15 December 2003 to 28 December 2003, Mr S Mehlomakulu
was delegated written authority, as acting CEO, on 12 December
2003. It was during the absence of the CEO, Mr Mkhize,
that the
acting CEO, Mr Mehlomakulu, authorised the advance payment to
Imvume, on 18 December 2003. The above information
was obtained
during the respondent's investigation. During such investigation,
the respondent was given the following explanation
with regard to the
considerations that led to the granting of the request, as stated in
para 7.8.2, p154, of the Report:
"
7.8.2 'It was in PetroSA's interest to assist our BEE
supplier, Imvume, so that it can continue to supply condensate to
PetroSA.
When PetroSA awarded the contract for the supply of
condensate to Imvume it was making a conscious contribution to the
advancement
of BEE in South Africa
.
'
"
0ther considerations given are:
1. the authorisation of an advance payment was within the delegated
authority of the CEO;
2. PetroSA's Procurement Policy provided for financial assistance to
BEE suppliers;
3. the amount requested was only 28% of the full invoice amount of
the cargo concerned;
4. the advance related to cargo that was due on 22 December 2003, a
matter of four days from 18 December 2003;
5. Imvume had an excellent track record of performance in its
delivery of products to PetroSA, having already successfully
delivered
certain of the nine contracted cargos.
The respondent's Default in Payment
[45] 0n 28 January 2004, Glencore informed PetroSA that it had not
been paid in full for the cargo delivered on 22 December 2003,
Imvume
being in arrears in the total amount of USD 2.8 million.
PetroSA confirmed that with Imvume. Glencore subsequently
threatened
to put a financial hold on the next cargo of condensate already in
transit to Mossel Bay, unless the outstanding amount
was paid. That
meant that PetroSA would not be in a position to fulfil its own
obligations if Imvume would be unable to supply
it with condensate.
As I understand the position, the contract that was being breached
was between Glencore and Imvume, there
being no contract between
Glencore and PetroSA. Consequently I have difficulty with the
following passage, in para 7.10.2 of the
Report:
"
Glencore's threat to put a hold on the discharging of the
cargo in transit put PetroSA in a predicament. It had to decide
either
to stand its ground against Glencore and take legal
action
or to pay the outstanding amount and take legal
action against Imvume.
" (Emphasis added.)
It is not clear to me on what basis PetroSA could have taken legal
action against Glencore, when Imvume was responsible for Glencore
threatening to stop the supply of condensate to Imvume and not
PetroSA. What is understandable to me is what follows in para 7.10.3
of the Report, viz, that delay in the delivery of condensate would
have resulted in a disruption of production at PetroSA's Mossel
Bay
refinery, at a cost of USD 1 million per day. In the event
of a shut-down, there would be start-up costs.
[46] Having had the Board's approval, PetroSA decided to pay Imvume's
outstanding debt to Glencore, an amount of USD 2,8 million
plus interest thereon of USD 40 000 on 23 February 2004.
PetroSA would claim the entire amount from Imvume.
Legal Action by PetroSA against Imvume
[47] Although PetroSA's legal department was instructed to recover
from Imvume the money paid to Glencore, it transpired, from
an
analysis of Imvume's financial position, that the company had no
significant assets to attach and that its cash and revenue
streams
available would be insufficient to cover a once-off payment of the
debt. Moreover, Imvume stated that it would soon be
awarded a
contract from which it would be in a position to pay the debt. Quite
clearly, PetroSA was not keen to sue for Imvume's
liquidation. 0n
19 February 2004, a written agreement of acknowledgement of debt
and cession was entered into between PetroSA
and Imvume, in terms
whereof,
inter alia
:
1. Imvume acknowledged that it was lawfully indebted to PetroSA in an
amount of USD 2.8 million, plus interest;
2. Imvume irrevocably and unconditionally undertook to pay the debt
within ninety days from the date of the agreement;
3. as security for the payment of the debt, Imvume ceded its right
and title in and to all its book debts and revenue contracts,
both
present and future, which would endure until the debt was fully paid.
Imvume defaulted on the agreement of acknowledgement of debt,
resulting in PetroSA writing a letter of demand, followed by issue
of
summons in the Johannesburg High Court in July 2004. Imvume had the
temerity to file a notice of intention to defend the action.
That
notwithstanding, the respondent records that "
a further
settlement agreement was proposed [no indication whom by] in terms of
which Imvume would pay its debt in monthly or quarterly
instalments
.
Imvume delayed the finalisation of the details of the settlement
agreement and PetroSA insisted on immediate payment
." [para
7.11.6 of the Report, p157]
[48] From what appears in para 7.11.7 to 7.11.9 of the Report, it is
quite evident that Imvume was in dire financial straits:
"
7.11.7 Imvume paid an amount of R1 million in August 2004
and R333 333 in November 2004. Further payments of R1,666 665
and R3 million was [
sic
] made on 13 June
2005 and 30 June 2005, respectively.
7.11.8 It is expected that the total outstanding debt would be
paid by January 2008, if the settlement proposal put forward by
Imvume
is approved by the Board of PetroSA.
7.11.9 The total outstanding amount on 12 July 2005 was
R16 796 964,54.
"
[49] The explanation given as to why PetroSA was reluctant to file
for Imvume's sequestration is that it is, in principle, opposed
to
having BEE companies sequestrated. Whilst this may well be a true
explanation for that omission, it seems to me that the respondent
was
called upon to do more, by way of investigation, to determine whether
or not the reason might not be that Imvume was, indeed,
formed in
order to be used as a conduit of funds from PetroSA to ANC. I agree
with Mr Budlender that a number of persons
who could have been
approached and questioned about the entire episode were not
questioned by the respondent. They might, if
so questioned, have
confirmed the explanation given. 0n the other hand, they might not
have done so. A further question
that arises, in my mind, is
how Imvume could, in the very difficult financial circumstances that
it was obviously in, have afforded
to pay R11 million, as a
donation, to the ANC, R50 000,00 to Uluntu Investments and
R65 000,00 to Hartcon Construction.
In the context of the
allegations made by the applicants, with regard to what they thought
was the reason for such payments, I
am of the view that the
respondent did not investigate this aspect sufficiently. The
respondent confined himself to Mr Mkhize's
letter, in response
to his queries. In para 233 of the applicants' heads of argument,
the following is submitted:
"
233. Fourie
[the deponent to the respondent's answering
affidavit, who was delegated by the respondent to do the actual
investigation]
did not even attempt [to] test the correctness of
the Mkhize's responses by seeking to obtain information from anyone
else such
as PetroSA (such as Mehlomakulu, who with others signed the
PetroSA invoice), Majali or others from Imvume, the Auditor-General
who had already investigated the advance payment, any persons from
the leadership of the ANC who may have had knowledge of the
advance
payment, or any of the applicants.
"
In my view that submission has merit. So, indeed, does the
submission in paragraph 234 of the same heads of argument which
reads:
"
234. Fourie made no effort at all to investigate whether
representatives of PetroSA were aware that the advance payment would
in
part be paid to the ANC, or whether improper pressure was brought
to bear on PetroSA to make the payment for that reason.
"
[50] In para 36 of the applicants' founding affidavit (at pp15-16),
the following submissions are made in this regard:
"
36. The Public Protector's investigation and the Report
dealt with matters of overwhelming public interest. The respondent
is an
important institution that is mandated to support
constitutional democracy. Its investigations can be far-reaching and
its reports
carry significant weight. Its reports are not simply the
views of an expert, but are those of a body with great institutional
credibility. They are often relied upon by both the public and
public officials as being determinative of issues that it
investigates.
"
I pause to state that it is common cause that the Report was accepted
by the Parliamentary Portfolio Committee on Minerals and
Energy and
the National Assembly and was endorsed by the Government.
The following appears in the statement of the Cabinet at a meeting on
3 August 2005:
"
Cabinet noted and accepted the Report of the Public
Protector on the matter pertaining to PetroSA and its contractual
relations
with Imvume. While Government had always understood that
the allegations of improper conduct on the part of state officials
were
unfounded, we do appreciate that this matter, as it relates to
Government, has been laid to rest. Cabinet respects the authority
and integrity of the constitutional bodies set up to protect our
democracy, and we hope that the same principles will be observed
by
other institutions in our society.
"
[51] I find the response to this averment, as stated in para 27 of
the respondent's answering affidavit, a bit strange. It reads:
"
27.
Ad paragraph 36
The averments in this paragraph are admitted. It is not clear why
the deponent apparently holds the view that this information,
which
was submitted to the respondent by the President and Chief Executive
of PetroSA should have been regarded with suspicion.
The applicants
also do not appear to have evidence that contradicts the information
provided by Mr Mkhize.
"
The respondent is of the view that he needed to regard the response
by Mr Mkhize "
with suspicion
" in order for him to
verify its correctness. For the respondent to expect the very
applicants who request him to investigate
the correctness or
otherwise of their impression to be the ones to produce evidence to
contradict Mr Mkhize's response is,
to say the least, odd.
Unlike a judicial officer, the Public Protector, as an investigator,
is expected to do more than merely
to weigh what is placed before him
and make a decision in favour of the party that produces more
evidence. By virtue of his
powers, he is, in my view, expected
and is under a duty to actually look for evidence either way. Where,
therefore, the party
complaining does not have sufficient
information, it is incumbent upon the Public Protector, in my view,
to actually search for
it if the circumstances warrant that. I am of
the view that the circumstances warranted more investigation of the
PetroSA payment
to Imvume and the latter's payment to ANC than the
respondent did.
The Alleged Involvement of the erstwhile Deputy President
Mlambo-Ngcuka
[52] The erstwhile Deputy President, Ms Mlambo-Ngcuka, is accused of
improper involvement in a number of instances. They concern
the
advanced payment made by PetroSA to Imvume, payment made by Imvume to
Uluntu Investments, in which her brother had a major
financial
interest and the appointment of Mr Mkhize, formerly an acting
CEO, as CEO for PetroSA. The respondent wrote her
a letter to
respond to allegations or accusations made against her in respect of
these matters. The approach to her was on the
basis that, being the
then Minister of Minerals and Energy, under whose ministry PetroSA
fell, she might have been aware of these
developments.
[53] With reference to her brother's matter, she wrote, in response,
that she had made enquiries and had established that the reason
for
the payment to Uluntu, by Imvume, was that her brother and Mr Majali,
of Imvume, "
were at some stage involved in a tourism related
business which tried to bid for a hotel in St Lucia,
KwaZulu Natal.
It is in this context, I have been informed,
that a sum of R50 000,00 was paid by Imvume towards the
defrayment of costs incurred
in the bidding process
." The
suggestion, of course, was that Imvume paid it because it was part of
that project. The respondent accepted that explanation
without much
ado – certainly without interviewing anybody else who might
have given information in that regard, whether in
confirmation or
contradiction of the Deputy President's explanation. She is
exonerated by the respondent in the Report. The applicants
list, in
paras 53.1 to 53.6, a number of persons who could have been
interviewed by the respondent in this regard. They are:
- her own brother Mr Bonga Mlambo,
- Mr Joseph Amindazeh, the head of the office that prepared the
St Lucia tourism development bid for the Uluntu Consortium,
who
is mentioned in annexure "
SB9
" to the founding
affidavit,
- the Greater St Lucia Wetlands Park Authority, which adjudicated on
the bids and whose relevance I shall later mention,
- Mr Majali or any other representative of Imvume who might have been
aware of the payment to Uluntu.
[54] As it turned out, both Mr Joseph Amindazeh and the Greater
St Lucia Wetlands Park Authority stated that the only shareholders
involved in the bid were 0ld Mutual Properties and Uluntu, with
neither Mr Majali nor Imvume being also involved. That then
raises the question as why Imvume would make a payment to Uluntu
Investments, which involved only the Deputy President's brother
and
not Imvume. Admittedly, the Deputy President might not have been
aware of this inaccuracy when she gave the response. Had
the
respondent investigated in the manner suggested, such information
would have been given to him and he would have been in the
position
to bounce it back on the Deputy President for her further response.
Further developments in that process might have revealed
more than
was before the respondent and he might not have exonerated the Deputy
President. 0n the other hand, further information
might have
confirmed her reply. Such information might even have provided an
explanation as to why the documents did not reveal
Mr Majali's or
Imvume's involvement in the bid at St Lucia and that they were,
indeed, involved.
[55] Concerning the
advance payment made by PetroSA to Imvume
,
the Deputy President responded that she was informed of the crisis
only at a stage when Glencore threatened to stop the flow of
oil,
resulting in serious risk of the Mossel Bay refinery being shut down.
It then became a strategic issue. She was being briefed
by
management of PetroSA on how they proposed to solve the problem. She
supported the suggested way i.e. that PetroSA would pay
to Glencore
and that it would later sue Imvume for the amount so paid. None of
the other persons involved or with knowledge was
interviewed by the
respondent in this regard. Consequently, the Deputy President was,
once more, exonerated in circumstances where
there was, in my view,
inadequate information.
[56] In saying that there was inadequate information, I am not
unmindful of the following submission by the respondent. In para
11.4.4 of his answering affidavit, the respondent points out that the
CEO, Mr Mkhize, did not personally approve Imvume's request
for an
advance payment, being, at the time, away on leave. The implication
is obviously that, if Mr Mkhize was important
in ensuring that
PetroSA transmitted funds to Imvume – with the ultimate end
thereof being the ANC – the then acting
CEO, Mr Mehlomakulu,
was free to decline the request, there being no pressure from
Mr Mkhize. That explanation is, in
my view, too speculative.
If Mr Mkhize was, indeed, specifically chosen to come and facilitate
the flow of funds from PetroSA
to ANC, nothing could have prevented
him being hands on, even when away on leave, in matters that entailed
assistance to Imvume.
0nly a more detailed investigation than was
done could, in my view, have enabled the respondent to comfortably
come to the conclusion
which he reached regarding Mr Mkhize's
appointment as CEO.
[57] Concerning the appointment of Mr Mkhize as a CEO, very detailed
and damaging information was contained in "
SB9
". It
is evident from the papers, especially the respondent's answering
affidavit, that he read "
SB9
". For purposes of this
judgment it is not necessary for me to go into all the detail
contained in that newspaper article
from the
Mail & Guardian
,
dated 24 to 30 June, 2005. In summary it contained the following:
1. After the unexpected departure of the then Chief Executive 0fficer
of PetroSA, Mr Mpumelelo Tshume, the Deputy President,
then
Minister of Minerals & Energy, intervened decisively to secure
Mr Mkhize's permanent appointment as Chief Executive
0fficer.
Mr Mkhize had been acting CEO after the departure of the CEO,
Mr Tshume.
2. A recruitment agency, Leadership Unlimited, was assigned the task
of interviewing candidates for appointment as CEO.
3. Mr Mkhize was also interviewed, he was not short-listed, much to
the Deputy President's chagrin. Notwithstanding the fact that
the
Board of PetroSA had finalised the short-listing, the Minister
intervened and caused the Central Energy Fund ("CEF")
Board, which is a holding company for PetroSA, to take over the
short-listing process and explore the possibility of re interviewing
all the short-listed candidates. There was talk that she had cast
aspersion on the process followed by the sub committee
of the
Board in doing its work.
4. There never was a complaint to Leadership Unlimited concerning the
process.
5. In a manner not explained, Mr Mkhize was appointed CEO.
According to "
SB9
", "
Questions remain about
what processes was finally followed to appoint Mkhize
".
6. Those members of the Board who resisted Mr Mkhize's
appointment have since departed.
[58] In the Report, the following,
inter alia
, is given as the
Deputy President's explanation with regard to the appointment of
Mr Mkhize:
"
8.2.3.2
…
(c) The 3 candidates that made the final short-list that was
submitted to the Board did not include Mr Mkhize;
(d) When the Board considered the final short-list, they were made
aware of a minority report of some members of the said sub-committee,
casting aspersions on the process to arrive at the final short-list;
and
(e) The Board accepted the recommendations from the majority of
the sub-committee.
8.2.3.3 The fact that the acting CEO (Mr Mkhize) had the required
qualifications and experience and had performed excellently as
CEO as
well as the said doubts cast in respect of the propriety of the
selection process that excluded him from the final short-list,
made
her feel uncomfortable to make a recommendation to the Cabinet.
8.2.3.4 She decided to request the Central Energy Fund (of which
PetroSA is a subsidiary) to take over the process of selecting a
CEO,
to re interview the 5 candidates on the initial shortlist and to
make a recommendation to her;
8.2.3.5 The Central Energy Fund recommended Mr Mkhize and his
selection was endorsed by the Cabinet. PetroSA's Board concurred and
he was appointed; and
8.2.3.6 There was nothing untoward in her decision to question the
process and to involve the Central Energy Fund, as the only
shareholder
of PetroSA, on behalf of the Government.
"
The last paragraph is evidently the respondent's finding.
[59] The Minister's response, as reported by the respondent above,
seems to tally with the contents of "
SB9
". The only
difference is that the presentation in "
SB9
" is in a
negative form whilst the Minister's response is in a manner that
explains how she acted in the manner alleged.
[60] In para 12.5 of his Report, dealing with "KEY FINDINGS",
the respondent concludes that the payment by PetroSA to
Glencore, of
the amount of USD 2.8 million (plus interest), on 23
February 2004
, "was
in the public interest
and complied with its
legal obligations
in terms
of the
Public Finance Management Act, 1999
;" Although
"
public interest
", once Imvume had failed to pay
Glencore's money and Glencore was threatening to stop the supply of
oil to PetroSA, is understandable,
the circumstances concerning the
manner in which Imvume was seemingly handled with soft gloves, at a
stage when it was simply not
complying with any of its obligations –
even to the extent of opposing PetroSA's legal action to recover the
funds –
needed to be investigated and explained. The reason
for that conduct might not simply be that which was stated, viz,
PetroSA's
reluctance to have BEE companies sequestrated. In view
of Dr Mokate's deviant conduct, attitude and qualification
concerning
Imvume's disqualification for the tender she is one person
who, in my view, certainly should have been interviewed about
Imvume's
relationship with PetroSA.
[61] In paras 102-104 of the founding affidavit, the applicants make
some telling averments in respect of Dr Mokate. Before
going
further on this aspect, I feel I should make a comment that applies
to this and other aspects of the case. It is conceivable
that a lot
of the information contained in the applicants' founding affidavit
and its annexures, in the applicants' supplementary
affidavit and
annexures and in the applicants' replying affidavit and its annexures
was unknown to the respondent at the time of
his investigating and
subsequently making his Report. The point, however, is that he
would, in my view, have come across quite
a substantial portion of
that information if he had made further investigations. The more
disturbing point, in my view, is the
fact that, even after he had
obtained the information from the documents I have mentioned, he
continued to oppose the application,
rather than to offer to
re investigate the complaints or some of them. The information
in paras 102-104 of the founding affidavit
is one such piece of
evidence that, in my view, called for a re assessment by the
respondent. It reads:
"
102 During the course of subsequent contract negotiations
between the SFF and Imvume, Mokate informed Imvume that it was
disqualified
for failing to submit the required performance bond.
This was set out in Mokate's letters to Imvume of 25, 28 and 29
January 2002,
copies of which are respectively attached as 'SB44',
'SB45' and 'SB46'. As appears from these letters, Mokate also had a
number
of other objections to Imvume's negotiating positions.
103. However, Mokate backed down on Imvume's disqualification
after she came under pressure to do so. The applicants were told by
sources, with whom we had agreements of confidentiality, that the
pressure was from, among others, Mputhumi Damane ('Damane') who,
at
that time, was chairperson of the SFF.
104. After Renosi Mokate ('Mokate') was suspended on 29 August
2002 (on unrelated charges) from her then position as chief executive
of the SFF, confidential sources told us that the action against her
was at least partly motivated by the fact that she had opposed
the
award of the aforementioned SFF contract to Imvume. Mokate also
repeated these allegations in an article in
Business Day
of 30
0ctober 2002. A copy of her article is attached as 'SB47'. Mokate,
now a Deputy Governor of the Reserve Bank, was later
dismissed from
her position after a disciplinary inquiry.
"
[62] I now proceed to quote, in full, the respondent's response to
paras 102-104 of the founding affidavit. It reads as follows:
[pp754-755]
"
62.
Ad paragraph 102
I admit that the letters which appear as annexures 'SB44' to
'SB46' were exchanged between SFF and Imvume.
63.
Ad paragraph 103
The averments in this paragraph constitute
inadmissible
evidence
. I request that they be struck out on the
grounds set out in the respondent's
application to strike
out
.
64.
Ad paragraph 104
64.1 I admit that Ms Mokate was suspended. 0n the applicants'
version the suspension and subsequent dismissal of Ms Mokate was
(
sic
) unrelated to the tender awarded to Imvume.
The dismissal resulted from an inquiry which investigated charges
brought against
Ms Mokate.
64.2 The sinister conclusion sought to be drawn by the applicants,
relying on
undisclosed sources
, that the actions
taken against Ms Mokate were connected to her objection to the award
of the contract to Imvume, is unfounded.
64.3 The respondent requests that the allegations made in this
paragraph to support that conclusion
be struck out
,
in terms of his application to strike out.
64.4 It is also curious that the applicants make the allegations
in this paragraph without following their approach to describe the
allegations they rely on according to 'chronological episodes'.
"
(Underlining by the respondent.)
[63] I pause to mention that the respondent did, indeed, make an
application to strike out certain portions of the applicants'
founding affidavit, including the portions mentioned in para 63 of
the answering affidavit. That application was not, however,
pursued
during the hearing of the main application. In opposing the
application, the applicants had submitted,
inter alia
, that
the information sought to be struck out was subsequently confirmed in
documents contained in the
Rule 53
record. A striking example of
such confirmation is found in an undated document bearing the name of
M B Damane, CEO:
CEF (which name and title are handwritten)
on pp79 80 of the
Rule 53
record. I read it in its entirety:
"
REBUTTAL OF MAIL & GUARDIAN
…
Imvume was not SFF's first choice as it came out third in the
bidding process. But the first two parties failed on fulfilling
preconditions
of the tender process, namely to provide SFF with $1
million performance bond and satisfactorily complete a due diligence.
The sub-committee of the Board chosen to oversee the repurchase of
the crude oil was selected because of the lack of capacity by
Dr Mokate and her management role was always peripheral at best
in the whole repurchase strategy.
She is correct to say that she was severely rebuked by the
Chairman Mr Mputumi Damane. She had no role in the whole
strategy
but countermanded a decision of the board by unilaterally
disqualifying Imvume after it had been awarded the tender. Imvume
had,
in fact, unbeknown to her, fulfilled the last remaining
condition – supply (
sic
) a performance bond of
$1 million. Dr Mokate was on a learning curve and she
accepted that she had been in error and
the process was always above
board. The attached statements by her at the time indicate firmly
that (
sic
).
That she is now singing another tune is obviously due to the fact
that she was later dismissed as CEO for incompetence after she
caused
oil trading losses of R70 million.
"
[64] It is evident that the extract from the
Rule 53
record
corroborates the applicants' averments in para 52. I find it odd
that the respondent prepared an application to strike
out,
inter
alia
, the aspect I have just referred to, when he had in his
possession the document from which I have just quoted, which confirms
the
information obtained from the "
confidential sources
".
I also find it interesting that Dr Mokate found employment as a
Deputy Governor General of the Reserve Bank after being
"
dismissed
as CEO for incompetence after she caused oil trading losses of
R70 million
". In my view, Dr Mokate should have been
interviewed by the respondent with regard to the SFF bid.
[65] With the wide powers at his disposal, it is strange that the
respondent did not consider asking the applicants to disclose
their
"
confidential sources
". Had they refused, after
being so asked, the respondent would have had the option of either
taking action to compel disclosure
or refusing to proceed with
investigation where such non disclosure was hampering his
efforts. I am unable to find that the
respondent was aware of the
decision in
Munusamy v Hefer NO & 0thers (Freedom of
Expression Institute and 0thers as
amici curiae
)
2004 5 SA
112
(OPD), the judgment of MALHERBE, JP and LOMBARD, J. In that
judgment MALHERBE, JP said the following at 120D:
"
I do not find a clear statement in these judgments that a
journalist
qua
journalist has the right to be called as a
witness only as a last resort.
"
[66] Whilst I do not intend adding my voice as to whether or not
there is such
'a clear statement
', the possibility exists
that the respondent did not think that it would be worth pursuing
information held confidentially by the
applicants, in their capacity
as journalists. That notwithstanding, I am of the view that the
respondent was wrong in not following
up the pressure allegedly
brought to bear upon Dr Mokate. In passing, I should point out
that the
Munusamy
case was relied on by Mr Maleka, the
respondent's counsel, in his submission to the effect that the
applicants should not
have sought to rely on confidential sources and
that they ought to have endeavoured to have affidavits from the
confidential sources.
[67] With regard to "
THE ALLEGED IMPROPRIETIES RELATING TO
A CONTRACT AWARDED TO IMVUME BY THE SFF IN MARCH 2002,
"
the respondent, in spite of pertinently starting with reference
to the "
22 July edition [of] the
Mail and Guardian
"
(which is "
SB11
"), has made no attempt to deal with
the issues raised in that newspaper. Apart from stating what has
already been said, in
this judgment, about Dr Mokate, he quoted
a lengthy explanation by the Chief Executive of the CEF (Pty) Ltd of
which the SFF
is a subsidiary.
[68] To appreciate the extent to which the respondent did not deal
with the issues in question I quote extensively from "
SB11
".
The relevant portion reads thus:
"
Last week the
M&G
revealed that
Imvume was effectively an ANC front. The party promoted the company,
as an oil purchaser, to the Iraqis in return
for diplomatic support,
and senior government officials travelled to Iraq with Imvume boss
Sandi Majali in September 2001 to ask
for oil. It appears that
Majali was promised large oil allocations.
Three months later the SFF issued a tender to buy Iraqi crude.
Evidence, including extensive documentation collected by the
M&G
,
shows that the tender process
was riddled with
irregularities
– all of which favoured Imvume.
The only party-pooper was Renosi Mokate, the then SFF chief
executive.
She came under intense pressure after she
disqualified Imvume for what she said was its failure to meet tender
requirements
. Her decision was abruptly reversed.
Among the irregularities were:
•
Imvume initially quoted the highest in terms of the
stipulated price measure, but bidders were allowed to change their
bids twice,
in violation of tender rules;
•
A key figure on the SFF adjudication panel, Riaz
Jawoodeen, had a prior, undisclosed association with Imvume
;
•
Iraqi Basrah Light was specified in the tender documents,
though it was known Saddam Hussein was demanding the payment of
'surcharges'
– illegal kickbacks – for oil;
•
Factors that led to the disqualification of
another empowerment bidder
– including a negative
due diligence report –
appear to have been overlooked
in Imvume's case
.
The Jawoodeen factor
Central to the affair is former SFF board member Jawoodeen, who
last year branded as 'a lie'
M&G
suggestions
that the tender was tainted.
Jawoodeen was part of the top-level government delegation that
travelled with Majali to Iraq on September 11 2001 to ask for oil
.
Accounts, including from a former SFF director, suggest that
Jawoodeen knew
the ANC, or an ANC trust, the Stalwarts
Research Trust, had been secretly intended to benefit from the oil
allocations through Imvume
. Three months later, when
Imvume emerged as a bidder in the tender to supply Iraq oil,
Jawoodeen
– far from recusing himself –
played a leading role on the tender evaluation panel
.
A well-placed SFF source charged that while Jawoodeen was open about
his own part in the mission to Iraq,
he never disclosed
Majali's presence on that crucial trip
.
Indeed, it was Jawoodeen who set the tender process in motion
the day after he returned from Iraq on September 18
.
SFF correspondence shows that on September 19 Jawoodeen briefed
the SFF trading committee on the need to go out on tender for the
Iraqi purchase –
and that he helped draw up the
tender specifications
, including that it be Iraqi Basra
Light oil.
Jawoodeen also knew that the Iraqis were
demanding
'surcharges'
– in fact kickbacks, which
were
illegal under the United Nations 0il for Food programme for Iraq
– when it sold oil. He allegedly cited this as the
reason
a government-to-government deal was not an option and the
oil had to be bought through a private company
.
Said one SFF source: 'He said the Iraqis would need "favours"
from the South African government in return [for an oil allocation]
and therefore it could not work.'
"
It is not clear what is meant in the last quoted paragraph. It seems
to suggest that it would be embarrassing for a government
to openly
flout UN resolutions on the 0il for Food Programme for Iraq.
[69] Much more appears in "
SB11
". However, the
portion I have cited is adequate for purposes of demonstrating the
point I am making with regard to the respondent's
failure to deal
with most of the issues raised in "
SB11
", as
reflected in the quotation. To do justice to the respondent in that
regard, it is imperative that I quote verbatim most
of what he says
in his response. In paras 10.1-10.1.8 he says the following:
"
10.1
The allegations
In its 22 July edition, the
Mail and Guardian
,
in the main, alleged that:
10.1.1 The SFF issued a tender for the supply of 4 million barrels
of Iraqi Basrah Light crude oil on 5 December 2001;
10.1.2 Conditions of the tender included that offers could not be
changed and that a US$ 1 million performance bond had to be submitted
within 10 days of acceptance of the tender.
10.1.3 Imvume was amongst the tenderers. Its offer was the most
expensive;
10.1.4 The Evaluation Committee requested further quotes from the
bidders after the closing date for the submission of tenders;
10.1.5 Imvume was placed third in terms of its quote and the
tender was awarded to Leokoane 0il Industries on 4 January 2002,
subject
to a positive due diligence report and the submission of a
$1 million performance bond;
10.1.6 Leokoane failed to comply with the said conditions and was
disqualified;
10.1.7 The tender was subsequently jointly awarded to World Wide
Africa and Imvume, but World Wide withdrew;
10.1.8 0n 23 January 2002, Imvume's attorneys furnished the SFF
with a letter from a bank in London which undertook to issue the
required performance bond;
"
[pp169-170]
[70] In paras 10.1.9 and 10.1.10 he deals with Dr Mokate's alleged
disruptive role as already mentioned herein. He then proceeds
from
10.1.11 as follows:
"
10.1.11 It appears from 'a partial draft' of a due diligence
report that Imvume had certain shortcomings;
10.1.12 The contract between Imvume and the SFF was signed on
6 March 2003; and
10.1.13 Dr Mokate was later dismissed on charges of dereliction of
duty and financial management involving a loss to the State of
R70 million. (These charges did not relate to the matters
discussed in this report.)
"
In 10.2, the respondent has his "
response by the Central
Energy Fund
". He states that the Chief Executive 0fficer of
CEF responded to his request and quotes from that response. The CEO
states
that CEF is "
a statutory company established to
acquire, exploit, generate, manufacture, market and distribute any
energy form and conduct research
relating to the energy sector. The
SFF's specific mandate is to procure and store crude oil as well as
manage the strategic crude
oil stocks for South Africa.
" -
the SFF being a subsidiary of CEF. He points out that, in 1999, the
South African Government took a strategic decision
to relocate its
strategic stocks from 0gies to Saldanha and gives the reasoning
behind that. Ultimately, it was to "
ensure that the country
had in storage crude oil stocks that are appropriate to its needs and
are of known quality
".
[71] Having decided to sell and having sold the oil stocks from
0gies, it became necessary for the Government to replace such oil
at
Saldanha. A sub-committee was established for that purpose and its
tasks included deciding on the best method of purchasing
strategic
stock where identified, open tender being one of such methods. Part
of the tasks of such committee was to "
undertake an analysis
of what the appropriate crude oil types to keep as strategic stocks
are
". The sub committee "
concluded and
recommended to the Board that the Nigerian Bonny Light and the Iraqi
Basrah Light were the two suitable types based
on two considerations
"
which are mentioned in the Report. The sub-committee was also to
"
design a comprehensive and fair tender process, including
the appropriate process
".
[72] Having invited companies with an interest in supplying crude oil
to submit their profiles for inclusion in its database of
suppliers,
SFF issued a tender, on 5 December 2001, calling for proposals
for the supply of Iraqi Basrah Light crude oil "
chosen for
its quality and price
". With the anticipated delivery date
being in January of February 2002, the closing date for tenders was
14 December
2001, a period which, as the applicants point out,
was remarkably but I suppose unavoidably short. A special
sub committee
which had been mandated to evaluate and rate the
tender proposals on predetermined criteria - which included the
price, BEE composition
and capacity to deliver the service
effectively - produced a short list of bidders, Imvume coming
out as only the third, as
has previously been mentioned. As the
respondent puts it, "
However, the other two parties failed to
comply with the conditions of the tender and it was ultimately
awarded to Imvume
". The applicants are highly suspicious of
the two companies especially the Worldwide Africa Investment Holdings
("WAIH"),
which had jointly been awarded the tender with
Imvume. In para 101 of their founding affidavit, p39, the applicants
said the following
in that regard:
"
101
.
For reasons unknown, but apparently after an
interaction with Jawoodeen, WAIH withdrew its bid and Imvume, in the
end, supplied
all four million barrels of Basrah Light to the SFF.
"
[73] The respondent, correctly in my view, points out that the
applicants' averment or allegation in this regard is not based on
facts. In other words, the applicants have not produced any evidence
on the basis whereof the Court can infer that Mr Jawoodeen
interacted in the manner suggested. That did not, however, in my
view, exonerate the respondent from conducting a full investigation,
which took into account,
inter alia,
the allegations contained
in "
SB11
". Mr Jawoodeen's position in SFF is
common cause. That he went to Iraq in the company of, amongst
others, Mr Majali,
is also not in dispute. In the context of
such serious allegations about the purpose for which Imvume, of which
Mr Majali
was in charge, was founded, viz to siphon funds from
PetroSA to the ANC, it was imperative that Mr Jawoodeen be
interviewed
by the respondent. For that matter, all others mentioned
in the IIC reports and the
Mail & Guardian
annexures to
the applicants' affidavits, should similarly have been interviewed.
That includes those who allegedly went to Iraq
with Mr Majali,
those who attended meetings with him in South Africa and those who
were allegedly present at any of the places
mentioned in the
annexures when he either declared himself a representative of both
the ANC and the Government or simply of the
ANC.
[74] It will be remembered that, according to the IIC Report on
Programme Manipulation:
"
In September 2001, as Chairperson of both the SAIFA [the
South African-Iraq Friendship Association] and the South African
Business
Council for Economic Transformation ('SABCETT'), Mr Majali
led a South African delegation to Baghdad
, which
included officials from the South African Strategic Fuel Fund
Association and South African Department of Minerals and Energy.
The delegation was involved in discussions on strengthening ties
between the ANC and the Iraq Friendship Association and Arab Ba'ath
Socialist Party … as well as building better oil trade
relationships
between the two countries
.
Mr Majali undertook the trip
as a recognised
representative of the ANC
. In a letter to Iraq Friendship
Association, Mr Motlanthe stated that Mr Majali's position as
Chairperson of SAIFA had the
ANC's 'full approval and blessing'. He
also confirmed the ANC's approval of Mr Majali 'as a designated
person to lead the
implementation processes arising out of our
economic development programmes.'
"
[p347(f)]
Mr Aziz Pahad, the then Deputy Foreign Minister, who, according to
the IIC Report, "
led a delegation of 30 South African
companies with interests in oil, electricity, and other sectors to
Iraq
", should also have been interviewed. From the South
African Government Information, "
The 0fficial Visit To South
Africa By The Deputy Prime Minister 0f Iraq
", cited in
footnote 199 of the ICC Report at p347(a), one purpose of the visit
was "
to expose South African businesses with already
established interests in the so-called 'oil-for-food' programme with
Iraq to the
processes involved in winning such UN-approved
contracts
".
[75] Against this, it will be recalled that it is alleged, in the
Report on Programme Manipulation, that:
"
During [Mr Aziz, the Iraqi Prime Minister's] July 2002
official visit … to South Africa, Mr Aziz attended a farewell
dinner
hosted by the ANC
with members of South
Africa-Iraq Friendship Association … and the business
community at the Cabanga Conference Center,
which was
funded by
Imvume
, which …
had been purchasing oil from Iraq under the Programme.
"
[76] In the respondent's answering affidavit, dealing with "
THE
ALLEGED IMPROPER INVOLVEMENT OF SENIOR OFFICIALS OF THE DEPARTMENT OF
MINERALS AND ENERGY IN THE ADVANCEMENT OF BUSINESS RELATIONS
BETWEEN
IMVUME AND THE IRAQI GOVERNMENT
", he writes, in para
9.3, as though the only information he has by way of response was
that which he obtained after the Director
General of the Department
of Minerals and Energy, Adv S Nogxina, was interviewed.
The paragraph reads as follows:
"
9.3 The response by the Director General of Minerals
and Energy.
During the investigation, the Director General of the Department
of Minerals and Energy, Adv S Nogxina, was provided with an
opportunity
to respond to the allegations referred to in this
paragraph. From his reply it appeared that …
"
and then he proceeds to state his summary of what he understands from
the investigation. There is no suggestion there that he
or his
representative spoke to any other person concerning this complaint.
[77] According to Mr Nogxina, this was a perfectly normal official
visit by the Minister of Minerals and Energy (subsequently to
become
the Deputy President) to Iraq, from 7 to 10 April 2001. He
writes thus in that regard:
"
During the bilateral discussions with senior Government
officials emphasis was placed on the need to enhance the economic
relations
between South Africa and Iraq. In this context detailed
deliberations were held between representatives of Eskom and the Iraq
Electricity Commission on the basis of the Minute of Understanding
concluded in September 2000 in Pretoria. Discussions were also
held
on ways and means to improve the cooperation between South Africa and
Iraq in the oil industry.
There was agreement that our private sectors and parastatals are
not exploiting the tremendous potential that exists to develop our
bilateral economic relations.
The two sides welcomed the intended
humanitarian flight
from South Africa to Iraq to deliver
humanitarian
assistance
arranged by the civil society organiser under
the umbrella of the Iraq Action Committee. It was agreed that the
humanitarian flight
to Iraq would take place in the middle of May
2001.
The other important issue discussed by the two sides was the
question of the suffering and damage to Iraq caused by international
sanctions against Iraq. They deplored the deepening humanitarian
crises resulting from these sanctions. Both sides agreed on the
imperative of lifting of the sanctions to halt further destruction of
the fabric of Iraq society. They called for the normalisation
of the
Middle East region and the resolution of all the problems associated
with the Middle East.
"
In para 9.3.2 the following is stated by the respondent:
"
9.3.2 The 'humanitarian flight' referred to in the said
media statement included a number of BEE companies that were approved
by
the United Nations (UN) in terms of its 'Iraq 0il for Food
Programme';
"
[78] There is reference, in paras 9.3.3 and 9.3.4 to the former
Minister of Public Enterprises, Mr J Radebe, leading
a –
"
follow-up humanitarian flight to Iraq, accompanied by the
Deputy Minister of Foreign Affairs, government officials and a
business
delegation. The purpose of this visit was to provide
assistance to the people of Iraq in the light of the catastrophic
humanitarian
situation that prevailed as a result of the imposition
of sanctions and to explore trade relations under the UN Iraq 0il for
Food
Programme;
"
[79] I find the contents of para 9.3.4 of the Report somewhat
confusing. The paragraph reads:
"
9.3.4 It was against the background as set out above that he
[Mr J Radebe] approached the Minister of Minerals and
Energy
to approve a visit to Iraq by himself, Mr A Nkuhlu
(Director: Ministerial Services), and Mr T Mafoko (of the
International Liaison section) for the period 10 to 14 September
2001. A copy of the memorandum submitted to the Minister
[presumably of Minerals and Energy] on 7 September 2001 was
provided with the Director General's
response to the said
allegations
.
" (Emphasis added.)
[80] It is not clear what "
allegations
" would have
been in existence on 7 September 2001. The following sentence
of that paragraph reads: "
From this document it appears that
the request for the approval of the visit to Iraq was motivated as
follows:
" What follows in the quotation from the "
document
"
is a picture of a normal and innocent relationship between two
countries. Included therein is reference to Eskom being involved
in
negotiations with the Iraq Electricity Commission "
over the
rehabilitation and construction of a power station to the tune of
US$ 500 million over two years
". Then the
following is stated:
"
There is room for expansion for more trade by South Africa
under the '0il for Food (UN) programme
...
It
is recommended that the right political atmosphere between Iraq and
South Africa be created in order to win more business.
"
[81] In 9.3.5 to 9.3.10 the following is stated:
"
9.3.5 0ne of the aims of the visit to Iraq was to explore
the possibility of a government-to-government oil supply deal for
South
Africa's strategic oil stocks;
9.3.6 The delegation included a representative of the SFF, the
state institution charged with managing strategic oil stocks on
behalf
of the South African Government;
9.3.7 Shortly before their departure, Mr Majali contacted his
[presumably the Director-General's] office and indicated that he had
learned from the Iraqi Embassy of the intended visit. Mr Majali
explained that he represented a BEE and requested to join
the
delegation as he held the view that it would be helpful if the
delegation could explain the South African Government's BEE
policy to
the Iraqi Government. He also indicated that he has had previous
dealings with the Iraqi's.
9.3.8 As a result of the tense situation immediately following the
11 September 2001 terrorist attack in the United States of
America, the South African delegation found it difficult to meet with
Iraqi officials. However, Mr Majali managed to secure
a meeting
for the delegation with the Deputy Minister for 0il through the
so-called South African Friendship Association;
9.3.9 The intended meetings with the Electricity Commission to
pursue the negotiations initiated by Eskom did not take place due
to
the aftermath of the events of 11 September 2001; and
9.3.10 It is normal practice for government officials undertaking
official visits abroad to be accompanied by a business delegation
to
assist in the facilitation of trade negotiations.
"
[82] It appears that the respondent accepts all the explanations
given, as quoted above. 0f course, if that explanation is
correct, it depicts an innocent visit by Mr Majali to Iraq in
the company of the departmental officials. That view, however,
stands in stark contrast to the negative image of South Africa, with
regard to its relationship with Iraq in the light of the 0il-for-Food
Programme, as contained in the IIC reports and the article by the
Al Mada ("
SB17
")
.
I have already
stated that there is no indication that the respondent was aware of
the IIC reports at the time of his investigation.
He similarly may
not have been aware of the Al Mada article. He was,
however, aware of all this information as at the
time of his filing
his opposing papers in the application. As already mentioned in
this judgment, it is strange that, in
spite of such knowledge, he
continued to oppose the application. The respondent need not have
disbelieved Mr Nogxina's account
for him to seek more
information from other sources, in the light of the IIC reports and
the Al Mada article.
[83] Apart from the information contained in the IIC reports and the
"
SB17
", information in the respondent's possession,
from the list of articles written by the applicants, as at the time
of his investigations,
was, in my view, enough to have caused him to
make more investigations and not to simply accept innocent
explanations such as that
I have just referred to, concerning
the "
alleged improper involvement of senior officials of
the Department of Minerals and Energy in the advancement of business
relations
between Imvume and the Iraqi Government
". He
had read, or should have read,
inter alia
, the following:
1. In "
SB5
", of 20-26 May 2005 the following is
stated:
"
Mail & Guardian
investigation into covert
party funding has revealed how R11 million of public money was
diverted to African National Congress
coffers ahead of the 2004
elections.
"
2. Reporting on the payment of R11 million by PetroSA to Imvume,
in "
SB6
", dated 3-9 June 2005 the following is
stated:
(a) "
… the African National Congress has maintained
that R11 million it received before last year's elections was an
ordinary
donation from a private company. But Imvume Management was
no ordinary private company, judging by its chief executive's CV.
Documentation produced by another Imvume group company describes
its boss, Sandi Majali, not only as the ANC secretary-general's
'economic advisor', but also places him close to party committees
involved in fundraising and economic policymaking.
"
(b) It is stated that Mr Majali's lawyer said the following
about him:
"
As a party member and from time to time … he has
provided advice to various structures within the ANC, including to
the secretary
general.
"
(c) "
In one of the ANC's first responses, the party's
national spokesperson, Smuts Ngonyama, was quoted in the
Cape
Times
as saying: 'It really has very little to do with the
ANC because it's a business transaction between a company and PetroSA
–
that's all …
'The ANC only features in that a donation was given to the ANC –
it's an issue that we believe is a pure business transaction.'
"
He is reported to have gone on to say the following, in the
Business
Day
:
"'
We do not ask donors where their money comes from …
The business relationship between Imvume and PetroSA and other
parties
is their business, not ours.'
"
If Mr Ngonyama said that, indeed, it would be a strange statement,
bearing in mind that the ANC was the governing party. It could
not
be indifferent as to where its funds emanate from. He may, of
course, have been inaccurately quoted or, if correctly quoted,
had
been expressing a personal view. The respondent could not, on his
part, been that indifferent and ought to have questioned
even
Mr Ngonyama himself about the PetroSA payment, in my view.
3. In "
SB7
" of 10-16 June 2005, the following is
said of payments in relation to the Deputy President's brother and
Dr Zola Skweyiya's
wife's residence:
"
The [two] ministers – Phumzile Mlambo-Ngcuka of
Minerals and Energy and Zola Skweyiya of Social Development –
regulate
fields in which Majali's companies operated.
…
Mlambo-Nguka's ministry is responsible for PetroSA, which awarded
Imvume the condensate contract in 0ctober 2002 and made the
controversial
advance payment on that contract in December 2003.
"
It is common cause and it also emerges, though somewhat inelegantly,
from "
SB7
", that Dr Zola Skweyiya's Social
Development Department is involved with,
inter alia
, pension
grants, nationally. According to "
SB7
", Mr Majali's
business(es) was/were a significant beneficiary/beneficiaries from
social grants. From the long excerpt
that follows, there are
suggestions of improper relationship between Dr Zola Skweyiya
and Majali. The following appears in
"
SB7
" in that
regard:
"
Skweyiya this week contacted the
M&G
from France to answer questions about Imvume's R65 000 payment
towards renovating his Waterkloof Ridge home.
He denied knowing of the payment and referred the
M&G
to his wife, Mazibuko-Skweyiya.
Mazibuko-Skweyiya confirmed the payment by Majali, but said the
money was a loan that was repaid last year. She said she and her
husband had taken out a R800 000 bond to pay for the
renovations. Majali had been in France at the time and had offered
to help after overhearing her say she had problems paying the
builder.
Skweyiya said he was aware that Majali 'was trying to recruit my
wife' to work for Imvume once her ambassadorial term ended. But
he
denied that his wife's employment by Imvume would have constituted a
knowing conflict of interest, as he was unaware at the
time that
Majalie's companies were involved in social grants distribution.
Mazibuko-Skweyiya confirmed that Majali offered her a job, but
said: 'When I told Zola, he said you can't work with Sandi. That's
why I turned it down.'
She was unclear why her husband disapproved of her working with
Majali. Asked whether it was because Skweyiya knew Majali was active
in the field he regulated, she said she could not remember, or had
not asked her husband for a reason.
Skweyiya also argued that there was no conflict of interest
because social grants distribution was a provincial competency at the
time, and contracts were not issued by his national department.
Skweyiya said it would be 'unfair reasoning' to suggest that
Majali was trying to buy influence 'for the future'.
Serge Belamant, the chief executive of NetI UEPS Technologies, the
holding company of Cash Paymaster Services (CPS), confirmed this
week
that Majali's companies, principally the Permit group, had partnered
his firm.
CPS is the country's premier grants distribution group, with
contracts from five provincial governments.
Belamant said that in several provinces, Majali's companies were
contracted to 'distribute our message on the ground' to stakeholders
from pensioners' committees to church groups and local politicians.
That contract, worth up to R700 000 a month, was terminated
last
year.
The
M&G
has seen documentary evidence
that in late 2003 Majali was not only an agent for CPS, but was
working on grandiose plans to build
a financial services group under
the Permit banner. Imvume, NetI UEPS and government bodies would
have been among the stakeholders.
0ne of Permit's main functions
would have been grants distribution.
Even though grants distribution was a provincial function, Majali
would still have had much to gain from securing influence with
Skweyiya as national minister. At the time, Skweyiya was drawing up
policies that led to the creation of the Social Security Agency,
which is taking over the function from the provinces.
Belamant remarked: 'We don't get a R1,7-billion contract without
being pretty close to the minister nationally as well as to the
[provincial ministers].'
"
4. "
SB9
", dated 24-30 June 2005 says "
Mlambo-Ngcuka
'interfered' at PetroSA
.
" I have already
referred to it extensively earlier in the judgment.
5. I have similarly quoted from "
SB10
".
6. "
SB11
", dated 22-28 July 2005, was, in all
likelihood not seen by the respondent at the time of his
investigations. Judging from
the extent to which he has made no
reference to the annexures that he acknowledges having seen and,
quite obviously, read, there
is no reason to believe that he would
have reacted differently from the contents of "
SB11
".
[84] The significance of these "
SB
" annexures is the
fact that the allegations contained therein tally remarkably with the
allegations contained in the IIC reports
and the Al Mada
article. I have repeatedly referred to the respondent's failure to
interview people mentioned in these articles.
By way of example,
I consider the contents of "
SB7
", which I find
particularly damaging to Dr Zola Skweyiya's reputation and
dignity, to have called for an interview with
him. Quite apart from
the damage that the allegations do to the country and its government,
Dr Skweyiya, I would imagine,
would be happy to have his name
properly cleared, by allowing him to repeat these statements, even
under oath if need be, before
the respondent. I would think
that Ms Skweyiya would equally well-come an interview, to enable
her to state her version
in her own words.
[85] In my view, regardless of the truth or otherwise of the
contents of the IIC reports and the Al Mada article, the
contents of the "
SB
" articles lend credence to the
negative version of the country and its government as allegedly held
by the UN, concerning
the alleged manipulation of the 0il-for-Food
Programme by various countries, including South Africa. The fact
that the respondent's
Report was endorsed by the legislature, in the
manner already described, does not, in my view, really remove the
suspicion and
stigma attached to South Africa. I have no
knowledge of the circumstances under which the approval came about
and the extent
to which those concerned were aware of the details as
set out in this judgment, most of which were before the respondent at
the
time of his investigation.
Complaints with regard to Dr Skweyiya concerning alleged improper
relationship between him and Imvume
[86] I have already stated, in this judgment, that I am of the view
that, regardless of the adequacy or otherwise of his investigation,
the Public Protector did investigate this complaint. The only
question remaining, therefore, is whether or not the investigation
was adequate. From what I have said, with reference to the contents
of, in particular, "
SB7
", it is clear that I am of
the view that the investigation in this regard was inadequate.
I need to point out that,
in para 5.5.7.2 of his Report, the
respondent says the following:
"
5.5.7.2 The said suspicions cast in regard to Dr Skweyiya
appear to suggest that Imvume paid an amount of R65 000 to the
construction
company renovating his house in order to ensure that the
Minister would in future use his influence to secure business for
Imvume,
or one of its sister companies, from the Department of Social
Welfare or the Social Security Agency.
It therefore
clearly points to a corrupt act as contemplated by the provisions of
the Corruption Act, 1992 or the
Prevention and Combating of Corrupt
Activities Act, 2004
.
"
[87] Relying on the judgment already referred to, in
South
African Association of Personal Injury Lawyers v Heath and 0thers
,
the respondent repeated that the money used by Imvume for payment to
Hartcon Construction was not "
public money
".
Consequently, he concluded that "
The suggestion of corruption
therefore also falls outside of the jurisdiction of the Public
Protector to investigate
." [para 5.5.7.5, p145].
[88] In the light of,
inter alia
, the damning evidence I have
alluded to in "
SB7
", I find it difficult to
understand why the respondent says the following, in para 5.5.7.6:
"
5.5.7.6 There is no
substantive
allegation or indication that the Minister performed any
official
action
or omission that could have favoured Imvume in any
way. The suggested corrupt intent is clearly speculates in respect
of
future events that might or might not occur
,
which obviously cannot be investigated.
" (Emphasis –
except underlining by the respondent - is added.)
It is not clear to me why in spite of the serious allegations
contained in,
inter alia
, "
SB7
", the Minister
had to be performing an "
official action or omission
"
before the respondent could investigate the matter much more than he
did. How could he arrive at the conclusion that the
"
suggested
corrupt intent
" is clearly speculative without deeper
investigation?
[89] I agree with the submissions made on the applicants' behalf
that the only way in which the respondent could be certain
as to
whether or not the allegations made, in this respect and in other
respects, were valid was for him to investigate much more
deeply than
he did. After all, the Public Protector has power, in terms of
s.7(1)(a)
of the PPA, "
on his or her own initiative …
to conduct a criminal investigation
", in terms of s.(4)(a)
of the PPA, of,
inter alia
, "
any alleged abuse of
power or other improper conduct by a person performing a public
function
". 0nce there were allegations of the nature made
against Dr Skweyiya, it was incumbent, upon the respondent, in
terms
of the provisions of the PPA, to, on his own initiative,
conduct an investigation in respect of the allegations, even if the
"
suggested corrupt intent purely speculate(d) in respect of
future events that might or might not occur"
, the respondent
was, in my view, obliged to investigate now that the matter was
before him.
The Law
[90] Although I have arrived at the conclusion that the respondent
ought to have investigated the complaints that he did not investigate
and to have investigated more fully the ones he did investigate, that
does not automatically render his Report liable to be set
aside. The
Court may not set aside the respondent's decisions simply because it
thinks they ought to have been otherwise. It
can do so only if it,
in law, has the power to do so. Both counsel addressed the Court
comprehensively and ably on a number of
applicable legal principles
relevant in a matter of this nature. In the nature and the obvious
length of this judgment, I cannot
do more justice to counsel than to
ensure them that I thoroughly considered their respective
submissions. These are on matters
such as the question whether or
not the respondent's conduct is an administrative action, the
question of the applicability or
otherwise of the provisions of PAJA,
the question as to whether the respondent was under an obligation to
treat the applicants
fairly, the question of reasonableness when an
official such as the respondent conducts an investigation and the
role played by
the principle of legality in such matters. For
reasons that will be apparent later, I do not propose discussing all
this aspects,
I shall deal, primarily, with the principle of legality
and, incidentally, reasonableness.
Principle of legality
[91] In para 19.1 of their founding affidavit the applicants make the
following allegation:
"
19.1 The respondent
misconstrued the nature of his
powers
under the
Public Protector Act read
with the
Constitution. This amounts to a material error of law under PAJA and
breaches the constitutional principle of legality.
"
[p10]
Quite clearly the applicants, in that paragraph, linked the principle
of legality to PAJA. Although, in para 214 of the founding
affidavit, the applicants, discussing the respondent's attack on the
applicants' credibility, do not in so many words refer to
the
principle of legality, they allege that the respondent is "
endowed
… with wide powers to statutorily compel the disclosure of
information
". In the applicants' heads of argument,
Mr Budlender, directly or indirectly, repeatedly refers to the
principle
of legality. Referring to the respondent's conclusion that
the money paid by Imvume to the ANC, out of the R15 million
received
from PetroSA, were no longer public money at the time of
such payment by Imvume, the applicants submit, in para 107 of the
founding
affidavit, that "
the respondent erred in this
regard, and that he was in fact empowered to investigate the ANC
Payment Complaint.
" The question is then raised as to
whether, if it is assumed that the Imvume was, in fact, an ANC front
company, the Public
Protector would not have had jurisdiction to
enquire into the matter, which question is answered on the basis that
"
it will be indisputable
" that he would have such
jurisdiction in terms of s.6(4)(a)(iv) and s.6(5)(a) and (c) of the
PPA (paras 109 110, pp41-42).
Then, in para 111, the following
is stated:
"
111. 0f course, the question is whether those were the
facts. The only way to determine that is to enquire into them.
However,
the Public Protector disabled himself from exercising his
functions, by refusing to investigate the matter. His very
starting-point
– that this was not 'public money' – was a
conclusion he could only have reached after investigating the facts.
"
[92] The respondent's submissions with regard to the principle of
legality, as contained in his first answering affidavit, is somewhat
contradictory in my view. In para 8 (p721-722) the respondent states
the following in this regard:
"
8. I have been advised that although the respondent
exercises public power which is subject to control by this Court, the
findings,
conclusions and points of view described in the report
may
only be reviewed
if it is shown that they constitute
'
administrative action
' which materially and
adversely affect the rights and legitimate expectations of the
applicants,
and do so
in a manner
which is not procedurally fair
.
" (Emphasis
added.)
This submission seems to be repeated in paras 112-113 of the
respondent's heads of argument (pp60-61), which read:
"
We do not accept that the applicants are entitled to rely on
the principle of legality, in support of the other ground of review,
pleaded by them, with reference to the principle of legality. We
draw attention, in this regard, to the following passages of
the
judgment of Moseneke DCJ, in the
Masethla judgment
[
Billy Lesedi Masethla v President of the Republic of South
Africa & Another
not yet reported case CCT 01/07 of
3 0ctober 2007 (CC), since reported under 2008(1) SA 566 (CC)] –
'It is clear that the Constitution and the legislative scheme give
the President a special power to appoint and that it will be only
reviewable on narrow grounds and constitutes executive action and not
administrative action … It would not [be] appropriate
to
constrain the executive power to requirement of procedural fairness,
which is a cardinal feature in reviewing administrative
action.
These powers to appoint and to dismiss are conferred especially upon
the President for the effective business of government,
and in this
particular case, for the effective pursuit of national security. In
Premier, Mpumalanga
, this Court had occasion to
express itself on whether to impose a requirement of procedural
fairness, in the following terms-
"In determining what constitutes procedural fairness in a
given case, a Court should be slow to impose obligations upon
government
which will inhibit its ability to make and implement
policy effectively (a principle well recognised in our common law and
that
of other countries). As a young democracy facing immense
challenges of transformation, we cannot deny the importance of the
need
to ensure the ability of the Executive to act efficiently and
promptly."'
113. Whilst it is so that the Constitutional Court, in the
Masethla case
, was concerned with the exercise
of
executive power
, which did not constitute
administrative action, we submit that the principles captured in the
above quoted passage applies, with
equal force, to the exercise of
other constitutional power which does not constitute executive power.
That principle will apply
therefore to the exercise of the powers
vested upon the respondent, in terms of section 182 of the
Constitution.
"
[93] What the respondent submits in paras 112 and 113 is not clear to
me. Section 182 of the Constitution is the enabling section
from
which the Public Protector draws his/her powers of investigation and
receives duties in that regard. In subsection (2), the
Constitution
provides that the Public Protector "
has the additional powers
and functions prescribed by national legislation,
" in this
case the PPA that was subsequently enacted. Nothing in s.182 of the
Constitution has a bearing on the
dictum
by MOSENEKE, DCJ
in
Masethla
, in my view.
[94] In para 20.1 of his answering affidavit, the respondent's
understanding of what he was required to investigate is clearly
set
out. He responds, in that paragraph, to the applicants' allegations
in para 12. In that paragraph the applicants state:
"
12. The Report arose from a number of articles published in
the
Mail & Guardian
relating to what has
become known as '0ilgate'. Broadly speaking, these articles raised
allegations regarding
"
to a number of issues outlined in the remaining portion of the
section. Those were the matters that were supposed to be
investigated
and reported on by the respondent. The respondent makes
it clear that he did not consider himself obliged or even entitled to
investigate the issues raised in the
Mail & Guardian
articles. As already stated, earlier in this judgment, the
respondent made it clear, in paras 20.1 to 20.4, that he confined his
investigation to what is contained in the complaints by Messrs Spies
and Leon, annexures "AA5" and "AA6",
respectively. He says, in 20.3 and 20.4:
20.3 … The report resulted from the investigation into
complaints referred to in annexures 'AA5' and 'AA6'.
20.4
The respondent was not required
and did
not therefore investigate the widespread allegations of impropriety
contained in the articles published by the first applicant,
in [
sic
]
which they attribute to functionaries of a foreign state, and private
commercial entities and persons.
" (Emphasis added.)
[95] Evidently, the respondent regarded himself as being required to
merely react to that which is pertinently raised by the applicants
in
annexures "AA5" and "AA6", the complaints by
Messrs Spies and Leon, respectively. However, those complaints
were
said to be based on articles written in the
Mail & Guardian
which, as I have already stated earlier in the judgment, the
respondent did read. It seems, however, that the respondent
did
not consider it his business to investigate issues arising from these
annexures – including, for instance, the damaging
contents of
"
SB7
" – as long as they did not appear to him
to be pertinently part of annexures "AA5" and "AA6".
That
is notwithstanding the respondent's acknowledgement of the fact
that he is entitled, in law, to initiate investigations. In this
regard, it should be borne in mind that s.182(1)(a) authorises the
Public Protector "
(a) to investigate any conduct in the state
affairs, or in the public administration in any sphere of government
that is alleged
or suspected
to be improper or
to result in any impropriety or prejudice
" (emphasis added).
The significance of the word "
suspected
" lies, in
my view, in the fact that the Public Protector does not have to rely
on actual facts proven and that he may make
an investigation based on
mere suspicion, whether his own or that of another. The articles
that were before him – certainly
before he filed his
answering affidavit(s) - contained, in my view, enough to have caused
him to be at least suspicious that there
was conduct of a nature that
called for investigation, where he had conducted none or much deeper
investigation, where he did conduct
an investigation. After all, the
PPA empowered him to institute an investigation out of his own
initiative. As I have already
stated the Public Protector is not
expected to confine himself to the proverbial four letters of the
complaint or complaints placed
before him or her.
[96] The respondent evidently changed his stance in paras 107-109 of
his heads of argument. Before reading those, however, I should
allude to what precedes them. In para 287 of their founding
affidavit, the applicants state the basis on which the Report may
be
set aside. In subparas 2.7.1 – 2.7.4 the grounds are related
to PAJA. Subpara 287.5 reads:
"
the Report contravenes section 182(1)(a) [of the
Constitution], which requires a proper investigation by the
respondent;
"
Subpara 287.6 reads:
"
287.6 it contravenes the constitutional principle of
legality embodied in the rule of law in section 1(c) of the
Constitution in
that it is irrational.
"
The respondent clearly adopts the view that the first five grounds,
in subparas 287.1 287.5, are different from the ground
in
subpara 287.6. He is not sure whether the latter is part of the
first five or an alternative ground thereto.
[97] In paras 107-109 (pp58-59), the following is stated:
"
107. Whatever the precise status of the allegation made in
paragraph 287.6 of the founding affidavit may be, it is clear that it
constitutes a conclusion made in support of a specific ground of
review, pleaded by the respondent, namely that
there was no
proper investigation done by the respondent
.
108. In the first answering affidavit, the respondent accepts that
the exercise of public power by him is subject to control by this
Court,
even if it did not constitute an administrative
action
. [From what has already been stated earlier,, it
is evident that the respondent is making a mistake by relying on para
8 of his
answering affidavit as supporting this submission.] We
submit that
the principle of legality
is one of
the means by which this Court will be entitled to exercise control on
the exercise of public power by the respondent.
This is the scheme
of control by Courts on the exercise of public power,
which
does not amount to administrative action
. [Reliance for
this submission is on
President of the Republic of South
Africa & 0thers v South African Rugby Football Union & 0thers
2000 1 SA 1
(C).
]
109. The judgments of the Constitutional Court have now
established that public powers conferred upon public functionaries
must
be exercised lawfully, rationally and in a manner consistent
with the Constitution. [Reference is to the
Masethla
judgment, para [78].]
We accept, in these proceedings,
that the principle of legality will apply to the question whether the
respondent properly construed
the powers vested upon him when he
decided not to investigate aspects of the complaints that were
submitted to him
. In other words,
if he was
mistaken in the construction of his statutory mandate, by excluding
from investigation
, aspects of the complaints submitted to
him,
that in itself would be sufficient to justify the
setting aside of his decision
not to investigate the
aspects of the complaints concerned, based on the principle of
legality.
" (Emphasis added.)
[98] That change of stance by the respondent was confirmed during
submissions by Mr Maleka. 0n p323 (vol 4) the following
submission was made by Mr Maleka:
"
MR MALEKA
: Now the point we are making on
page 34 up to 48 is quite a simple point and that is (1) the public
protector measured
his own understanding of his powers
and then (2) concluded that he did not have jurisdiction to
investigate 3 complaints. He may be wrong or right.
If he
is wrong
all that it means is that
his decision
ought to be reviewed and it must be set aside
on the basis
that
he misunderstood the nature of the mandate vested upon
him
. We agree with our learned friends that for you to
set aside that decisions [
sic
]
does
not depend upon whether the public protector carried out an
administrative action
on their [
sic
]
part. You have the power to set aside even if his decision does not
constitute power simply because [on] the principle of legality
which
we all agree,
that will be the basis upon which you set
aside the decision
.
So we accept that if the respondent misconstrued the nature of
his power(s) you have every right to set aside his decision
.
"
[99] My decision not to discuss the question of the application of
PAJA and all that go with it, in this judgment, is based, primarily,
on the concession made by and on behalf of the respondent, in the
manner demonstrated, with regard to the principle of legality
–
a concern well made, in my view. Both parties rely on
Masethla
with Mr Maleka, probably before he applied his mind to the need
to concede, submitting that it is not authority in support
of the
principle of legality on the facts of this case. Although he did not
say so in so many words, it is evident that Mr Maleka
now
concedes that
Masethla
supports the applicants' submission
with regard to the principle of legality. As the respondent himself
has conceded, all that
the applicants require this Court to do is to
find that the respondent misconstrued his powers and duties and that,
consequently,
he constrained himself unduly and did not investigate
where he should have done so or under investigated what he did
investigate.
[100] Since INNES, ACJ's decision in
Shidiack v Union
Government (Minister of the Interior)
1912 AD 642
, at 651 it had
been accepted law that:
"
where a matter is left to the discretion or the
determination of a public officer, and where his discretion has been
bona fide
exercised or his judgment
bona
fide
expressed, the Court will not interfere with the
result
.
Not being a judicial functionary no appeal or review
in the ordinary sense would lie; and if he has duly and honestly
applied
himself to the question which has been left to his
discretion, it is impossible for a Court of Law either to make him
change his
mind or to substitute its conclusion for his own.
"
In
Pharmaceutical Manufacturers Association of SA & Another:
In re: Ex parte President of the Republic of South Africa and 0thers
2000(2) SA 674 (CC)
at paras [83] to [86], CHASKALSON, P, as he
then was, dealt at length with this topic as follows:
"
[83] To the extent that
Shidiack
requires public officials to exercise their powers in good faith and
in accordance with the other requirements mentioned by Innes
ACJ, it
is consistent with the foundational principle of the rule of law
enshrined in our Constitution. The Constitution, however,
requires
more; it places further significant constraints upon the exercise of
public power through the Bill of Rights and the founding
principle
enshrining the rule of law.
[84] In
S v Makwanyane
[1995] ZACC 3
;
[1995 (3) SA 391
(CC)]
Ackermann J characterised the new constitutional order in the
following terms:
'We have moved from a past characterised by much which was
arbitrary and unequal in the operation of the law to a present and a
future in a constitutional State where State action must be such that
it is capable of being analysed and justified rationally.
The idea
of the constitutional State presupposes a system whose operation can
be rationally tested against or in terms of the
law. Arbitrariness,
by its very nature, is dissonant with these core concepts of our new
constitutional order.
'
Similarly, in
Prinsloo v Van der Linde and Another
[1997(3) SA 1012 (CC)]
this Court held that when
Parliament enacts legislation that differentiates between groups or
individuals it is required to act
in a rational manner:
'In regard to mere differentiation the constitutional State is
expected to act in a rational manner. It should not regulate in
an
arbitrary manner or manifest "naked preferences"
that
serve no legitimate governmental purpose
, for that would
be inconsistent with the rule of law and the fundamental premises of
the constitutional State.'
[85] It is a requirement of the rule of law that
the
exercise of public power
by the Executive
and
other functionaries
should not be arbitrary. Decisions
must
be rationally related to the purpose for which the
power was given
, otherwise they are in effect arbitrary
and inconsistent with this requirement. It follows that in order to
pass constitutional
scrutiny the exercise of public power by the
executive and
other functionaries
must, at
least, comply with this requirement. If it does not, if falls short
of the standards demanded by our Constitution for
such action.
[86] The question whether a decision is
rationally
related to the purpose for which the power was given
calls
for an objective enquiry. 0therwise a decision that, viewed
objectively, is in fact irrational, might pass muster simply
because
the person who took
it mistakenly and in good faith
believed it to be rational. Such a conclusion would place form above
substance and undermine an important constitutional principle.
"
(Emphasis added.)
Both counsel before me cited
Pharmaceutical Manufacturers
as
authority for the principle of legality and agreed on its
interpretation as outlined above.
[101] All this does not mean that the principle of judicial deference
is abandoned. In other words, Courts may not usurp
the function
of the legislature or the executive. In
Minister of Environmental
Affairs and Tourism and 0thers v Phambili Fisheries (Pty) Ltd 2003(6)
SA 407 (SCA)
the following is stated [at 409J-410A]:
"
Judicial deference was particularly appropriate where the
subject-matter of an administrative action was very technical or of a
kind in which a Court had no particular proficiency.
"
In my view, those remarks should apply also in a case where one is
not dealing with administrative action but simply the exercise
of a
power by a public functionary such as the respondent in the present
case. A combination of the principle of legality and
judicial
deference ensures that a Court can, without usurping the powers or
functions of a public official, determine whether or
not the conduct
of such public official is rational in accordance with the powers and
duties conferred upon him or her by statute.
Bearing these two
principles in mind – the principle of legality and judicial
deference – I have come to the conclusion
that the respondent
acted irrationally in respect of (a) complaints that he did not
investigate because he considered them to be
beyond his jurisdiction
and (b) complaints which he investigated with the aid of inadequate
evidence, i.e., without obtaining further
relevant evidence in the
respects I have discussed in this judgment.
[102] In summary, on the question of the respondent's omissions, I
refer to the applicants' list of such omissions, which reads
thus:
"
The respondent:
210.1 did not direct any person to submit an affidavit or affirmed
declaration,
210.2 did not summon any person to produce documents;
210.3 did not summon any person to give evidence;
210.4 did not seize any documents;
210.5
did not make any enquiry of the
Mail &
Guardian
, which had published the reports which gave rise
to the complaints
;
210.6 did not make any enquiry of Imvume;
210.7 did not make any enquiry of [Mr] Majali;
210.8 did not make any enquiry of any representative of the ANC;
210.9 did not make any enquiry of [Dr] Mokate, the former CEO of
the SFF, who had refused to award the tender to Imvume;
210.10 did not make any enquiry of any staff of the CEF, including
those identified in the documents as having had a role in the
matter;
210.11 did not make any enquiry of any staff of the DME, including
those identified in the documents as having had a role in the
matter;
210.12 did not make any enquiry of any staff of PetroSA, including
those identified in the documents as having had a role in the
matter;
210.13 did not make any enquiry of [Dr] Skweyiya;
210.14 did not make any enquiry of Hartkon;
210.15 did not make any enquiry of Uluntu;
210.16 did not make any enquiry of [Deputy President] Mlambo;
210.17 did not make any enquiry of the persons who were publicly
reported as stating that Imvume was not a joint venture partner
of
Uluntu in the St Lucia project;
210.18
did not investigate PetroSA's use of [Mr]
Mkhabela, who represented Imvume at the time of the advance, to
pursue the recovery of
the advance from Imvume
;
"
(Emphasis added.)
[103] Whilst I agree with the applicants' list of the respondent's
omissions, I should point out that, in respect of item 210.5,
the
applicants are bitterly aggrieved by what they consider to be
"
defamatory and highly damaging [criticism and] findings
against the
Mail & Guardian
newspaper, and
by necessary implication, its publisher (the first applicant), its
editor (the second applicant), and the two journalists
who were in
the main responsible for the reporting on the 0ilgate saga (the third
and fourth applicants)
". [Para 72 of the applicants' heads
of argument, read with paras 201-206 of their founding affidavit.]
In para 205 of the
founding affidavit, the applicants state the
following:
"
205.
The damning nub of the respondent's findings
in relation to the
Mail & Guardian
were
reiterated and emphasised in the media statement of the respondent on
the release of the Report (annexure '
SB60
'), …
"
(Emphasis added.)
[104] As pointed out, earlier in the judgment, the applicants have
since abandoned the alleged defamatory aspect of the criticism,
correctly so in my view. Consequently, I do not share the view
expressed by the applicants in item 210.5 above. I also do not
think
that it would have been appropriate for the respondent to investigate
the item in 210.18. It seems to me a matter more appropriately
left
to the Law Society of South Africa, as it relates more to the conduct
of an attorney than that of the respondent. Ideally,
it would have
been better if the respondent had used the services of another firm
of attorneys rather than one already used by
Imvume. The applicants'
submissions in paras 208 to 210 of their founding affidavit are,
however, correct, in my view. They read:
"
208. It is inconceivable that the respondent was able to
make findings relating to the veracity of the factual allegations
contained
in the articles, given the fact that the respondent did not
investigate the payments made by Imvume to the ANC, Uluntu and
Hartkon
and that he did not investigate the relationship between
Imvume and the ANC as well as the involvement of the ANC in Majali's
business
negotiations with the Government of Iraq …
209. Without investigating these aspects, it is impossible to
assess the veracity of the central allegations made in the articles.
…
210. Furthermore, the respondent was not justified in finding that
much of what was stated in the Articles was factually incorrect
in
circumstances in which the Report does not identify a single instance
of a factual error in the Articles.
"
[105] In agreeing with the applicants' criticism of the Report, I
need to emphasise that I make no finding as to the correctness
of the
articles as well as the contents of the UN's IIC's reports and the
Al Mada article. I have no basis for making
such a finding
neither have I been asked to do so. It is conceivable that the
interventions by Cabinet Ministers and others were
genuine innocent
interventions by the SA President, Government Departments and
Cabinet Ministers involved with Iraq. They
could yet be part of the
alleged manipulation of the OFF for reasons other than an honest
endeavour to assist Iraqi citizens who
were unintended victims of the
international sanctions, whatever justification there was for the
sanctions. Al Mada, the
Security Council and the applicants are
of the view that these were mischievous interventions. Clearly the
respondent could have
helped unravel this situation and rescue
Mr Mbeki, the Cabinet Ministers involved and, therefore, the
country, if their involvement
was innocent. The ANC would certainly
benefit as the ruling party, if the trips concerned were innocent.
Similarly, the respondent
had no basis, in my view, for making
credibility findings in respect of the contents of the articles.
[106] Whilst on this aspect, I should mention that I find it odd that
the respondent, when dealing with "
THE ALLEGED IMPROPER
INVOLVEMENT OF SENIOR OFFICIALS OF THE DEPARTMENT OF MINERALS AND
ENERGY IN THE ADVANCEMENT OF BUSINESS RELATIONS
BETWEEN IMVUME AND
THE IRAQI GOVERNMENT
", chose to rely on the "
South
Africa Yearbook
" and "
Harmony and Discord in South
African Foreign Policy
", by Tim Hughes,
et al
,
instead of obtaining evidence from relevant individuals,
including officials of the Department. The allegation that South
Africa
is part of a group of dishonourable countries that are
involved in the manipulation of the 0il-for-Food Programme, with the
use
of improper stratagems, is damning to the otherwise high esteem
with which South Africa is generally known to be held in the world.
The respondent, as the Public Protector, is duty-bound to protect the
country's image, including its Government, Cabinet Ministers
and
senior officials of the various departments implicated. To the
extent that the ANC is a party from which almost all the Cabinet
Ministers originated, including the then Minister of Minerals &
Energy (Mrs Mlambo-Ngcuka) and the Minister of Social
Development (Dr Skweyiya), makes it essential, in my view, in
the public interest, for the respondent to clear its name, if
it is
improperly accused of underhand practices. I would be most
surprised if the ANC thought otherwise in this regard.
[107] The respondent's omissions notwithstanding, I am unable to make
a finding, as is contended by the applicants, that the respondent's
inadequacy of investigation is due to the fact that he deliberately
wanted to shield the ANC. In the absence of direct evidence
to that
effect, I am constrained to approach the respondent's conduct when
dealing with the complaints on the basis of the integrity
that he and
his office possess, in the manner I have already alluded to. In any
event, it is not necessary for the Court to determine
that aspect in
order for it to determine whether or not the respondent's findings
and conclusions, as set out in his Report, should
be set aside. It
should always be borne in mind that the Report was prepared by
Mr Fourie, the deponent to the respondent's
affidavits, as
lawfully instructed by the respondent to conduct the investigation on
behalf of the 0ffice of the Public Protector.
A finding that
the respondent is a crony of the ANC would, in my view, entail a
necessary finding that Mr Fourie is
also a crony of the ANC or
the respondent's puppet. Neither the applicants nor Mr Budlender
submitted that Mr Fourie
is a crony of the ANC or the
respondent's puppet. In saying that the investigation was conducted
by Mr Fourie, I am not unmindful
of the fact that, according to
him as deponent, the respondent was constantly in touch with him
during the course of the investigation
and that he read the Report
and endorsed its accuracy.
[108] I must emphasise that, to arrive at my decision, I
considered the applicants' reliance on the constitutional principle
of legality. In other words, I have not determined the question
whether or not the applicants are entitled to bring the application
on the basis of the provisions of the
Promotion of Administrative
Justice Act
("PAJA"). I have not decided the question
whether or not the respondent's conduct, in investigating the
complaints
and making his Report, amounts to an administrative action
as defined in PAJA. I have reached the decision on the basis
that
the respondent's conduct does not pass the test of the
constitutional principle of legality. (
New National Party of
South Africa v Government of the Republic of South Africa
[1999] ZACC 5
;
1999 3
SA 191
(CC), at para [106].) I have also taken into account the
following
dictum
by CHASKALSON, P (as he then was) in
Ferreira
v Levin NO & 0thers
1996 1 SA 984
(CC)
at para [165], which
reads:
"…
I can see no good reason for adopting a narrow
approach to the issue of standing in constitutional cases. 0n the
contrary, it is
my view that we should rather
adopt a broad
approach to standing
. This would be consistent with the
mandate given to this Court to uphold the Constitution and would
serve to ensure that constitutional
rights enjoy the full measure of
the protection to which they are entitled.
"
[108(a)] In doing so, however, I am conscious that such "broad
approach" cannot and
does not, in my view, amount to a
carte blanche
approach to
the question of standing in which a party need not give a basis for
bringing an application, i.e., establish its standing.
As I
have stated, I considered the fact that the applicants were unhappy
with the manner in which the respondent dealt with
their complaints,
which, it is common cause, they were entitled to place before the
respondent.
[108(b)] Having arrived at the conclusion that the applicants have
standing to bring this
application in their own interest, I found it unnecessary to
determine whether or not they also have standing to bring it in
public
interest, although I am inclined to think that they were
entitled to bring the application on that basis as well. What is
important, however, in my view, is that, once the applicants are
entitled to bring this application in their own interest, as I
have
found, the Court is entitled and duty-bound to consider the public
interest when dealing with the facts of the case, as I
have done when
I pointed out the various public groups that have an interest in a
proper investigation of the complaints.
[109] As already pointed out earlier in the judgment, the
respondent's appreciation of "
the
ambit of the
statutory complaints
" was that "
he was not required
to investigate widespread allegations of impropriety that were
contained in all of the articles published by
the first applicant, on
the so-called 0ilgate scandal
" (para 20 of the respondent's
heads of argument, read with paras 20.4-20.5 of his answering
affidavit.) That, in my view,
has to be the basis on which his
conduct during the investigation should be understood, even in
instances where his attitude borders,
in my view, on naivety. He
also believed that those aspects that he regarded as being "
beyond
his competence [ought to] be investigated by the commission of
enquiry appointed by the president
" (the Donen Commission),
whose "
terms of reference
" are contained in annexure
"AA7".
The Donen Commission
[110] It is quite evident that the then President of the Republic of
South Africa, Mr Mbeki, was disturbed by the allegations
that
the Republic of South Africa was involved in the manipulation of the
0il-for-Food Programme, in the manner alleged in,
inter alia
,
the IIC reports, which, it must safely be assumed, he was aware of.
It is for that reason, in my view, that he appointed the
Donen
Commission.
[110(a)] The Donen Commission was established on 17 February 2006,
almost seven
months after the respondent had finalised and published his Report.
That may be an indication that President Mbeki was not at
ease to
rely on the respondent's Report in defence of his and the country's
image. I found both counsel's knowledge of the
background for
the creation of that Commission and what its real role was
inadequate. Its terms of reference read as follows:
"
The President has, in terms of section 84(2)(f) of the
Constitution of the Republic of South Africa of 1996, appointed a
Commission
of Inquiry to conduct an investigation into the alleged
illicit activities of certain South African companies or individuals
relating
to the United Nations 0il-For- Food Programme in Iraq, with
the terms of reference set out in the Schedule, and appoint Adv
Michael
Donen, S.C., as Chairperson, and Adv Khehla Chauke (of the
Specialised Commercial Crime Unit of the National Prosecuting
Authority)
and Senior Superintendent Lucy Moleko (of the Serious
Economic Crime Unit of the Commercial Crime Unit of the South African
Police
Services) as additional members of the said Commission.
"
[110(b)] If, as I find must be assumed, the President was aware of
the adverse allegations
against the country, in the manner I have described in the background
to this judgment – an assumption that is borne out
by the terms
of reference, to "
the United Nations 0il-For-Food Programme
in Iraq
" – then the President must have realised that
the respondent's Report did not cast any light on the alleged
manipulation
of the Programme.
[111] I raised the question with both counsel, during argument, as to
whether the findings of the Donen Commission were not relevant
to
some of the aspects that I am required to make findings on in this
matter. I also asked that I be informed as to, precisely,
what
transpired with regard to that Commission. Mr Budlender
addressed me (as set out in detail on pp415-421 of the transcript
of
the proceedings during argument), with regard to "
the Donen
Commission which engaged your lordship yesterday afternoon for some
time
" (p415),
inter alia
, as follows:
"
So M'Lord at paragraph 24 [of the applicants' heads of
argument], we make the submission that it, therefore, follows that,
in fact,
there is no overlap at all between the activities of the
Public Protector and the Donen Commission and that the Donen
Commission
is another red herring [which] [j]ust occupied your
lordship's time unnecessarily.
"
[112] I do not know why Mr Budlender referred to "
another red
herring
" in this context, bearing in mind that the issue was
raised by the Court. Whatever he had in mind, this was not a red
herring.
From page 823 to page 827 of the papers, being part of the
mandate to the Donen Commission, in para 1 of the mandate, and
pp828 829
of the papers, (which contain pp25 and 26 of the
annexure attached to the terms of reference, headed "
OIL
TRANSACTIONS: South African companies and individuals identified by
the IIC as having participated in illicit activities relating
to oil
transactions
"), it is quite evident that Montega and
Imvume, both of which are associated with Mr Majali, who is
mentioned in respect
of each of them specifically under the
subheading '
Non-contractual beneficiaries (individuals)
",
as "
Mr Sandi Majali
", were part of what the
Commission was required to investigate. The mandate reads as
follows, in para 1 (pp825-827):
"
NOW THEREFORE,
in order to advise the
Government of South Africa, on the appropriate action or steps to be
taken relating to the alleged involvement
of any South African
company or individual in such alleged illicit activities and the
adoption of any preventative measures to
avoid any such future
illicit activities:
1. The Commission of Inquiry (hereinafter referred to as the
Commission) shall conduct an investigation under the following terms
of reference:
(i) Having regard to the Constitution of the Republic of South
Africa, other relevant legislation, International Law, South Africa's
international law obligations deriving from UN Resolutions, the
Commission shall investigate, report on and make recommendations
regarding the following matters:
(a) Whether the alleged surcharges on oil sales or illicit
payments in regard to purchases of humanitarian goods or any other
illicit
payments in respect of the Programme, or the offer to make
such payments, referred to in the Report of the IIC and as identified
and set out in the attached Annexure, were in fact paid or offered to
be paid, by such identified South African companies or individuals;
(b) If so, whether any such conduct, as outlined in the Annexure,
of any such South African company or person, falls within the
jurisdiction of a South African court of law; and
(c) If so, whether any conduct, as outlined in the Annexure, of
such company or person, amounts to the commission of-
(aa) any offence, which offence may be tried by a South African
court of law and whether there is sufficient and admissible evidence
to provide a reasonable prospect of a successful prosecution; or
(bb) any other illegal, illicit or irregular activity, which
activity does not necessarily constitute an offence, but contravenes
or violates any other South African law.
(d) In the case of the commission of any offence or illegal,
illicit or irregular activity contemplated in paragraph 1(i)(c)(aa)
or (bb) above, any proposed action or steps to be taken in respect of
such offence, contravention or violation.
(e) Any further proposed actions or steps to be taken to prevent
companies or persons falling under South African jurisdiction, from
getting involved in future illegal, illicit or irregular
international activities, for example, sanction-busting in respect of
internationally imposed sanctions, including the enactment of
legislative measures or the establishment of systems and mechanisms,
to ensure that such companies and persons do not, in future,
contravene binding UN Resolutions.
(ii) As a first step in the investigation, all evidence and
information obtained and assessed by the IIC, which relate to South
African companies or individuals and which may assist in this
investigation, must be accessed and analysed.
"
[113] The assumption earlier made in this judgment, that the
President must have been aware of the allegations contained in the
IIC reports, is, by now, confirmed as a fact. Montega and Imvume, as
well as Mr Majali, are mentioned in both the IIC reports
and the
Al Mada article, as well as in the articles by the
Mail &
Guardian
.
[114] I do not appreciate how counsel concurred that what the Donen
Commission was supposed to investigate is different from that
which
the respondent had earlier been requested to investigate. As I have
stated, I am of the view that the President, notwithstanding
the
endorsement of the Report in Parliament, came to the conclusion that
it did not assist in clearing the poor light in which
South Africa
was viewed internationally, with regard to the alleged manipulation
of the 0il-for-Food Programme. Notwithstanding
what the respondent
says in para 25.1 of his answering affidavit, the Donen Commission
was not in existence at the time of his
investigation and production
of the Report. The allegation in para 25.1 of the respondent's
answering affidavit, which states
that the aspects which "
were
beyond [the respondent's] competence
" would be investigated
by the Donen Commission is made in an affidavit commissioned on
25 April 2006 and filed on the
same date, more than two months
after the appointment of the Commission, long after the respondent's
investigation had been completed
and his Report had been published.
The respondent could, therefore, not have known, at the time of his
dealing with the complaints,
that some of the aspects in question
would be dealt with by the Donen Commission.
[115] Be that as it may, the fact of the matter is that there is no
indication as to what eventually happened to the Donen Commission.
I
must accept both counsel's report to me, after having made enquiries
overnight at the Court's instance, as to the fate of the
Donen
Commission, that such information was not readily available, unless,
of course, they both approached the inquiry on the basis
that it was
a red herring. Even if the Donen Commission had performed its task
in terms of the mandate it got from the terms of
reference, that
still would not prevent the Court from making its finding as to
whether or not the respondent's Report should be
set aside. I have
come to the conclusion that it should be set aside.
[116] The next question is with regard to the appropriate order to
make. I am aware that there is authority to the effect that
a Court
may, in appropriate circumstances, not refer a matter back to the
person or institution or body which had made the order
which has been
set aside, where the Court is of the view that the individual or body
in question is unlikely to change his/her
or its mind. I am of
the view that there is no evidence, direct or indirect, to suggest
that the respondent or his successor-in-office
will not do a proper
investigation if the matter is remitted to his office for an
appropriate investigation, taking into account
the aspects mentioned
in this judgment. I have considered the question as to whether
Mr Mushwana would still be in office
when this matter is
returned to him. I do not, however, think that it makes a
difference who the Public Protector is that
reconsiders the
complaints.
[117] In the circumstances I make the following order:
(1) The respondent's Report titled "
Report on an
Investigation into an Allegation of Misappropriation of Public Funds
by the Petroleum 0il and Gas Corporation of South
Africa, trading as
PetroSA, and matters allegedly related thereto
", dated 29
July 2005 ("the Report") is set aside;
(2) The respondent or his successor in title is ordered to
investigate complaints that were not investigated, re investigate
all complaints that were investigated and write a report on the
outcome of his/her investigation;
(3) The respondent or his successor must, when doing such
investigation, take into account the findings of the Donen
Commission,
if any findings have been made by such Commission, and,
to the extent that such findings are consistent with his or her own
findings,
incorporate them into his or her own findings.
(4) The respondent is ordered to pay the applicants' costs.
J N M POSWA
JUDGE
OF THE NORTH GAUTENG HIGH COURT
2263-2006
HEARD ON: 14 NOVEMBER 2007
FOR THE APPLICANTS: GEOFF BUDLENDER SC
INSTRUCTED BY: WEBBER WENTZEL BOWENS, JHB - c/o FRIEDMAN
HART ING, PTA
FOR THE RESPONDENT: VINCENT MALEKA SC
INSTRUCTED BY: MAHLANGU NKOMO RATSHIMBILANI, JHB
c/o LEDWABA MAZWAI INC, PTA