US embassy cable - 05PRETORIA4438

C O N F I D E N T I A L PRETORIA 004438 
 
SIPDIS 
 
E.O. 12958: DECL: 11/02/2015 
TAGS: PGOV, PREL, ETRD, PINR, IZ, SF 
SUBJECT: SOUTH AFRICAN COMPANIES IMPLICATED IN IRAQI 
OIL-FOR-FOOD SCANDAL 
 
REF: A. PRETORIA 03513 
     B. PRETORIA 02162 
 
Classified By: CDA Jeff Hartley.  Reasons:  1.4 (B&D). 
 
1. (U) Adding to SAG/ANC woes over the domestic political 
fall-out from President Mbeki's firing of former Deputy 
President Zuma for alleged corruption (Ref A), South African 
companies reportedly are implicated in the scandal-ridden UN 
Iraqi oil-for-food program. The Iraqi Government under Saddam 
Hussein used the program to try and influence South Africa's 
foreign policy by giving oil contracts to ANC-aligned 
companies, according to a report by an independent UN 
commission of inquiry. 
 
2. (U) On November 1, Deputy ForMin Aziz Pahad denied any 
sinister SAG involvement with the Iraqi oil for food program 
and was not convinced of any "violation" by South African 
companies.  However, the Business Day newspaper reported 
November 3 that the SAG is considering whether to take action 
against several local companies that may have secured illicit 
contracts from Iraq under the UN oil-for-food program. 
Opposition Democratic Alliance Party leader Tony Leon has 
called for a national inquiry into the allegations.  He 
suggested that ANC/SAG alleged involvement in the bribery 
scheme was reinforced by Imvume CEO and ANC insider Sandi 
Majali's business trip several years ago to Iraq accompanied 
by ANC Secretary-General Kgalema Motlanthe and national 
spokesperson Smuts Ngonyama. 
 
3. (U) The UN report does not assess whether SAG foreign 
policy was manipulated but lists foreign-policy initiatives 
supportive of Hussein's regime that the SAG launched at the 
same time as the Iraqi government was handing out substantial 
oil contracts.  South African companies on the list include: 
 
- Mocoh Services: Mvelaphanda Chairman and senior ANC member 
Tokyo Sexale reportedly served as a director for Mocoh, a 
UK-based company with a local subsidiary, Mocoh Services of 
South Africa.  Mocoh allegedly received two oil allocations 
worth over $70 million from the former Iraqi government and 
paid $574,699 in kickbacks in turn. According to press 
reports, Mvelaphanda spokesman Chris Vick denied knowledge of 
any "surcharges" (i.e., kickbacks) paid and cut ties with 
Mocoh when informed of a possible surcharge on a future 
transaction.  Vick said "Mvelaphanda does not pay bribes." 
He added that Mvelaphanda received legitimate dividends 
amounting to $500,000 from the Iraqi oil allocations and said 
Mocoh Services South Africa had ceased operations in November 
2000. 
 
- Imvume: the company embroiled in the "Oilgate" scandal, 
which saw public money diverted to the ANC (Ref B). 
 
- Montega:  Montega is a partner of Imvume, headed by CEO 
Sandi Majali, listed on an Iraqi document as adviser to 
President Mbeki.  Majali reportedly promised the Iraqi regime 
$464,000 in kickbacks, but he denied the bribery allegation 
in the UN report. 
 
- Omni Oil: Omni and Montega reportedly obtained contracts 
for 13-million barrels of oil (valued at $145.5 million). 
 
4.  (C) Comment: For the SAG/ANC, timing could not be worse 
of the UN report's linkage of South African companies close 
to the SAG/ANC to the Iraqi "oil-for-food" scandal. President 
Mbeki is unlikely to welcome this connection since Sexwale 
and Majali are generally viewed as sympathetic to Mbeki's 
"camp." Zuma could use the issue to attack Mbeki for being 
soft on corruption.  The most vocal opposition party leader 
is taking full advantage to try and discredit the ANC-led 
government - but to no avail in post's review.  From all 
indications, the ANC stands to win big in upcoming local 
elections, notwithstanding "Oilgate," fall-out from Zuma's 
firing, and the more pressing threat to the SAG/ANC - failure 
to date to fully deliver municipal services and jobs for the 
largely Black and poor grass roots base of the ANC.  End 
comment. 
 
HARTLEY