April 26, 2013 / 11:37 AM / 4 years ago

South Africa police investigate PetroSA over alleged graft

JOHANNESBURG (Reuters) - South Africa’s police anti-corruption unit said on Friday it had opened an investigation at state oil company PetroSA, which reported “deviations” in financial procedures that a newspaper said involved millions of dollars of irregular payments.

In an investigative report published on Friday, the weekly Mail & Guardian questioned payments made when PetroSA last year secured crude oil acreage in Ghana through the acquisition of Sabre Oil and Gas Holding Ltd.

The newspaper alleged “irregular payments” ordered by top PetroSA managers totalling 200 million rand ($22 million) in what it called a “feeding frenzy” at the oil company, which explores for and produces oil and natural gas. It also sells petrochemical products.

“We are investigating PetroSA, but are not at liberty to talk about the nature of the investigation,” Captain Paul Ramaloko, a spokesman for the police’s special anti-corruption unit, the Hawks, told Reuters.

Responding to the Mail & Guardian allegations about the Sabre transaction and a separate plan to buy petrol stations in South Africa, PetroSA said in a statement that such deals often required “swift decision making and quick turn-around times”.

“In the process of increasing PetroSA’s chances of successfully closing these deals, unfortunately some deviations from our normal procurement processes have occurred,” the company said.

“These were duly declared in the annual financial report of last year,” it said, adding that its board of directors had commissioned a review and would report findings to shareholders.

The acquisition of Sabre gave PetroSA access to crude from the huge Jubilee field in Ghana.

Ghana is one of Africa’s newest oil exporters and has been attracting foreign firms. Oil production from the Jubilee field ranged from 110,000 to 115,000 barrels a day over the last 3 months, just short of the expected production plateau capacity, lead operator Tullow Oil (TLW.L) said this week.

PetroSA said in its statement that the final price of $500 million “plus contingencies” it paid for Sabre was “favourable to PetroSA”.

About a month ago, the South African government’s Central Energy Fund said an energy ministry probe had discovered “serious allegations” of top executives at PetroSA, a wholly owned subsidiary of the CEF, abusing their power.

The government has reported problems of serious mismanagement and inefficiency in many state-owned companies over the last few years, and some have also faced corruption probes.

President Jacob Zuma’s ruling African National Congress (ANC) admits successive corruption scandals have been eroding confidence in Nelson Mandela’s 101-year-old former liberation movement.

Local media frequently denounce suspected graft in government circles and the public sector, and investigations are often announced but relatively few lead to prosecutions.

The spectre of graft has caught the attention of international investors. Global credit ratings agency Fitch downgraded South Africa earlier this year citing rising corruption and deteriorating government performance among its reasons for the move.

South Africa, under ANC rule since the end of white-minority control in 1994, has slid in the influential Transparency International gauge of perceived corruption from 38th in the world in 2001 when Mandela was president to 69th in 2012.

($1 = 9.0576 South African rand)

Editing by Pascal Fletcher

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