report on programme manipulation - Independent Inquiry Committee

INDEPENDENT INQUIRY COMMITTEE INTO THE UNITED NATIONS OIL-FOR-FOOD PROGRAMME
REPORT ON PROGRAMME MANIPULATION
CHAPTER TWO
OIL TRANSACTIONS AND ILLICIT PAYMENTS
After these meetings, Mr. Majali wrote two letters to the Iraqi authorities in which he referred to a
request for oil allocations that had been made to support South Africa’s political activities in
connection with Iraq. In a letter to the President of the Iraqi Friendship Association, dated
September 20, 2001, in his capacity as “Chairman” of SABCETT, Mr. Majali expressed the view
that a “joint effort between the ANC and the Arab Ba’ath Party will add a lot of value towards
achieving the common political objectives” and “will result in an effective strategy geared
towards campaigning for the lifting of sanctions.” He went on to advise the President that, as had
been discussed in their meeting in Baghdad, a letter had been sent to SOMO requesting an
allocation of 12 million barrels of oil and requested that the transaction be facilitated:
with particular attention to the competitive advantage pricing of this transaction
for the benefit of both parties in order to build financial resources to support
political programmes. I am convinced that you do appreciate that such financial
resources are crucial for the long term sustainability of the political programmes
that [the ANC and Ba’ath] parties will be implementing and to run seminars,
workshops in order to develop effective political development strategies. 208
A second letter dated September 20, 2001, with Imvume letterhead, was sent to Saddam Z.
Hassan, thanking Iraq’s newly appointed Deputy Minister of Oil for his hospitality towards the
South African delegation. In the 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.” These increased
allocations do not appear to have been granted. 209
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. 210
208 Sandi Majali letter to Khalid Tabra (Sept. 20, 2001) (writing on behalf of SABCETT).
209 Sandi Majali letter to Saddam Z. Hassan (Sept. 20, 2001) (writing on behalf of Imvume); Committee oil
beneficiary table, contract no. M/11/72.
210 R. Mokate letter to M. Mandela (Jan. 18, 2002); ANZ letter to SFF (Jan. 25, 2002) (attaching draft
performance bond); Dr. Mokate letter to Imvume (Jan. 28, 2001); ANZ Bank Performance Bond, no.
GTEE 02/05 (Feb. 7, 2002); SFF record, SFF and Imvume (operating as Imvume Resources) supply
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