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Oily goings on
Stephen Mulholland
Posted:
[miningmx.com] -- IT is difficult to understand why PetroSA, a subsidiary of the South African government’s Central Energy Fund, needs the services of black empowerment company Imvume Management.
This question arises following the 'Oilgate' disclosure by the Mail & Guardian, in a masterful piece of investigative journalism, that R11m of PetroSA’s money (the property of taxpayers) had made its way into the coffers of the African National Congress (ANC) instead of being paid to a Swiss company, Glencore, for the delivery of oil condensate to our refineries.
PetroSA paid R15m to Imvume well ahead of schedule in a manner foreign to its normal procedures. These funds were to be paid over to the Swiss. Instead, they were used to fund the ANC’s election campaign and for other purposes.
When Imvume failed to pay Glencore, the Swiss threatened not to supply the oil
condensate. So PetroSA paid up another R15m, which went, as the first payment should have, to Glencore.
If PetroSA can deal directly with Glencore, as evidenced by its payment to them, why does it need Imvume to act as middleman?
Threats of lawsuits are being flung about and the shutters are going up. Kgamela Motlanthe, secretary general of the ANC, has named the M&G, the Sunday Times and Business Day as possible targets in libel actions. Hopefully, this time the police will not surround the printing presses, as they did in the M&G gagging case, in a throwback to apartheid days.
In an editorial accompanying its blacked-out pages, another apartheid reminder, the M&G said: “This week’s story would have provided further information about high profile individuals who benefited from the Imvume deal, which we believe is unequivocally in the public interest.”
Mystifyingly, Acting Judge Vas Soni didn’t agree and, in
fact, severely criticised the M&G. If this movement of taxpayers’ money into political hands is not in the public interest, then I don’t know what is.
The Democratic Alliance called for an inquiry, and it was interesting to note that, in Johannesburg’s Saturday Star, the chairman of Parliament’s minerals and energy affairs committee, Nkosinathi Mthethewa, was quoted as saying that “we will follow all the normal processes, including calling PetroSA to come and explain”.
However, he quickly changed his tune. Soon after, he was quoted in Business Day as insisting that his committee would not launch an investigation into the scandal. Make up your mind, Nkosinathi. Or has it been made up for you?
Another interesting dimension of this saga is that the ANC insists that it has no interest in the “origins” of money donated to it. Really? One would think, in this age of massive vigilance in all matters financial, buttressed by a powerful array
of legislative weapons, any organisation would exercise great prudence when someone wants to donate R11m to it.
Then there is the matter of tax. Public companies, usually defined as those whose shares are listed on the JSE Securities Exchange, do not pay donations tax. However, private companies don’t have that exemption.
Normally, the South African Revenue Service will deem the donation to be made at the instigation of a particular shareholder. It’s that shareholder – and not the company – who will be liable for donations tax.
Thus it appears that Sandi Majali – the CEO of Imvume, an unlisted company – will be liable to pay within three months 20% in donations tax on at least R11m – an amount of R2,2m.
Chapter 24.5 Section 57 of South Africa’s Income Tax Act states that donations tax will be payable if it was “not made in the ordinary course of... normal income-earnings operations...” and that “the donee was selected... by the person
concerned”.
Further on the taxation front, it can be presumed that though Imvume saw fit to give away these many millions it received from PetroSA to South Africa’s ruling party, it will still be liable for company tax on these proceeds, net of costs.
Acting Judge Soni found that journalists “should not quote from a tainted source”.
As a journalist one often deals with informants who might well be described as “tainted”; but a good journalist will use judgment and discretion in using information so obtained. And those senior to reporters will bring their experience and judgment to bear before publication actually takes place.
In the United States two reporters, from the New York Times and Time magazine, are facing 18 months in jail for refusing to reveal their sources.
Their matter deals with something more serious than donations to politicians, in that it concerns the publication of the identity of a covert Central
Intelligence Agency operative.
However, the attorneys general of no less than 34 states and the District of Columbia have filed a brief in support of the reporters in the US Supreme Court.
These attorneys general believe that the Federal government should provide protection to journalists refusing to reveal their sources, in line with such protection currently provided by 49 states.
One of the attorneys general – Greg Abbott of Texas, a Republican – commented: “A free and open democracy requires a free and open press.” Another said: “If you don’t have protection, there’s going to be a chilling effect and people won’t talk. If people don’t talk, the public won’t hear important stories.”
Thus these law enforcers, whose work is often complicated by journalistic disclosures, are in favour of what are called “shield” laws in the US, which give journalists the right not to disclose their sources.
Let us hope that South Africa’s higher
courts take note. Our democracy deserves transparency – and transparency depends on freedom of the press.
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