ANC ‘DONATION’ TWIST TO SHELL FRACAS
Judge Gerald Bloem said it seems mining minister Gwede Mantashe has ‘made up his mind’ in support of Shell. Which looks bad, given a R15m donation to the ANC from a shareholder in Shell’s SA downstream business
And just like that, Shell’s imbroglio over the Wild Coast has taken a more sinister turn. And it’s a development that should force Ben van Beurden, the CEO of the oil firm based in the Netherlands, to pay attention to what’s happening at the foot of Africa. You’ll have seen the fuss about Shell’s seismic blasting along the West Coast. The company, pursuing gas reserves, hired a ship, Amazon Warrior, to conduct “seismic surveys” along a 6,011km² stretch of the Eastern Cape coast.
But on December 28, high court judge Gerald Bloem interdicted Shell from blasting, saying “the exploration right, which was awarded on the basis of a substantially flawed consultation process, is … unlawful and invalid”.
Bloem said mineral resources & energy minister Gwede Mantashe had “nailed his colours to Shell’s mast” when he accused those opposing Shell — including black fishing communities — of “apartheid and colonialism of a special kind”. Speaking of Mantashe’s “emotive language” in the judgment, Bloem said “it appears the minister had made up his mind”.
All of which adds a particular flavour to what happened next. Coincidentally, a report emerged on Christmas Eve in Independent Media describing how the cash-strapped governing party, the ANC, had received a last-minute R15m donation from the Batho Batho Trust which allowed it to pay salaries, settle its tax liability and keep the lights on.
The managing trustee, the Rev Molefe Tsele, said the trust had been approached to help the ANC since “we do have sufficient reserves to assist”.
For Shell, this is a major complication.
Inconveniently, the Batho Batho Trust is the 46% shareholder of the Thebe Investment Corp, which owns 28% of Shell’s downstream business in SA. So, when Shell does well, so does the trust. And, it seems, so does the ANC.
Yet Mantashe, besides being the mining minister with real influence over Shell’s exploration activities, also happens to be the national chair of the ANC. So when he “nails his colours to Shell’s mask”, as he was accused of doing in court, it takes on a particular context in light of this new donation.
It puts Shell in a bind. The fact that the multinational is listed on the New York Stock Exchange means it is subject to the US Foreign Corrupt Practices Act, which makes “the offer, promise or provision of anything of value to a foreign official, either directly or indirectly, for the purpose of influencing that official so as to obtain or retain business or other advantage” an offence.
Now, it’s clear the governing party has benefited from a donation from a shareholder of Shell. But it must be said there is no evidence yet that this payment was made “for the purpose of influencing” anyone — even if it looks awful.
Hloniphizwe Mtolo, the country head of Shell in SA, tells the FM that what Thebe does with its money is its own business.
“Thebe has a 28% shareholding in the Shell downstream business in SA, and [the Wild Coast exploration] is an upstream project … At this stage, Thebe has absolutely no link to our upstream operation [and] how they use the funds they generate from their investments, we cannot comment.”
In any event, he says, the partnership is entirely “above board”, adding: “We are very comfortable as things stand.”
Very comfortable, despite the flow of cash to the ANC? Is it not concerning for Shell’s compliance officers that one of its shareholders is effectively donating millions to the ruling party when a politically fraught contract is up in the air?
Here, Mtolo seems less certain. “I don’t have the details of this transaction, whatever the nature of it is — whether it’s a donation or a payment or whatever — somebody needs to speak to Thebe about it,” he says. “From a compliance point of view, we are continuously doing due diligence investigations on our partners and I suppose if there is anything that does not look right on this particular one, due diligence will be done by the relevant teams.”
But if there is anyone that needs to speak to Thebe about it, surely it is Shell?
This is, after all, a company that has already had one bruising run-in with the Foreign Corrupt Practices Act over its activities in Africa. In 2010, Shell paid a $30m criminal penalty to settle a lawsuit brought by the US department of justice involving bribes paid to Nigerian customs officers which helped Shell “obtain preferential treatment during the customs process”, according to the settlement order.
Another fracas like that won’t do Shell any favours. As it is, Mtolo was entirely unprepared for the backlash he received over the seismic blasting in the first place.
“It was a huge surprise,” he tells the FM. “It caught us offguard [because] this is not the first time seismic surveys have been done in SA. In the past five years, there have been 12 seismic surveys … so there was absolutely nothing that [suggested] we could face a backlash this time around.”
Second, he argues, there is no evidence of any environmental damage, as all these surveys were done “extremely safely”. The pictures of dead fish washing up on the beach are “propaganda of the highest order” and “just blatant lies”.
Bloem, it seems, disagrees, based on the scientific evidence led in court in December.
As the judgment puts it: “That evidence establishes that, without intervention by the court, there is a real threat that the marine life would be irreparably harmed by the seismic survey. Against the acceptance of the body of expert evidence, Shell’s denial that its activities will have an adverse impact on marine life cannot be sustained.”
Shell is appealing this ruling. But the revelations of the payment to the ANC has added a whole new layer of complication sure to make Mtolo’s life a lot harder.
When Shell does well, so does the trust. And, it seems, so does the ANC