Namcor probes botched N$60m military oil dea

The National Petroleum Corporation of Namibia (Namcor) is investigating transactions totalling about N$300 million involving a private company that supplies fuel and infrastructure to the military.

The latest investigation is part of the ongoing power struggle between suspended Namcor managing director Immanuel Mulunga and Namcor’s board of directors, who seem to have lined up ammunition to curb his dealings.

Caught in the crossfire is a company called Enercon, which was paid between N$50 million and N$60 million by Namcor last year in exchange for the fuel supply and related infrastructure deal with the Namibian Defence Force (NDF).

Enercon was forced to reverse the agreement with Namcor due to objections from the military, but failed to repay the N$50 million to N$60 million immediately.

Enercon Namibia is owned by brothers Peter and Malakia Elindi, as well as the NDF’s business wing, August 26 Holdings.

The joint venture has a 15-year contract (since 2014) to supply fuel to the Ministry of Defence and Veterans Affairs as well as to build and refurbish oil depots.
Enercon has a similar 10-year contract to do the same for Namibia Wildlife Resorts across the country.

THE ENERCON CONNECTION

The Elindi brothers founded Enercon and partnered with August 26 Holdings in 2009.

The Namibian was not able to establish what the shareholding structure is.

However, sources with close knowledge of the venture said August 26 owns 25%, paid for with N$15 million of taxpayers’ money and regarded as a discount.

The Namibian could not determine August 26’s exact shareholding in Enercon from available company registration documents.

August 26 originally wanted to buy 50% valued at more than N$100 million.

But the government blocked further payments after demanding and failing to obtain Enercon’s financial statements and professional valuations, sources have told The Namibian.

Peter Elindi was Enercon’s managing director until early this year, with his brother Malakia and August 26’s former chief executive, James Auala, listed as directors.

Enercon’s main business appears to have blossomed because of the lucrative 15-year contract with the ministry of defence to supply fuel and build, operate and transfer storage facilities.

Sources says the government has so far paid Enercon close to N$1 billion for fuel supplies and infrastructure.

Namcor saw the long-term opportunity and negotiated to buy out the Elindi brothers from the military agreement last year.

Several people familiar with the contract have told The Namibian that Namcor prematurely paid Enercon about N$60 million, but was stopped in its tracks when August 26 objected, arguing that the government has paid for the ‘assets’ which were being sold.

Enercon was required to pay back the N$60 million, but was apparently unable to return the money at once.

It is not clear how long after they were paid, the transaction with Namcor collapsed.

An agreement was eventually reached between the parties, according to which Enercon would repay Namcor’s money in monthly instalments of N$500 000.

The Namcor board confirmed to The Namibian this week that the parastatal was investigating its dealings with Enercon.

This probe has allegedly led to Mulunga’s suspension being extended by six months, soon after the Anti-Corruption Commission (ACC) cleared him of defying a board decision to save the parastatal and the country in another questionable payment.

“Namcor confirms that assets were procured from Enercon, and specific details pertaining to these assets are presently subject to investigation,” the board said in a statement.

“Consequently, it would be inappropriate and potentially prejudicial to provide further commentary until the investigation reaches its conclusion,” the statement reads.

Enercon’s affairs allegedly played a role in the board’s decision to suspend Mulunga. It also played a role in the board’s decision not to renew the contract of Namcor’s chief financial officer, Jennifer Hamukwaya.

Hamukwaya, who was paid a N$1,6 million golden handshake by the parastatal, did not respond to questions at the time of going to print. She left Namcor in April this year.

Mulunga in April this year told The Namibian: “Enercon owes us money, and we have an arrangement to pay us on a monthly basis.

“I can’t confirm the exact amount, but the payment arrangement is N$500 000 per month, and they are honouring it.”

People close to Enercon claim that the company has become a victim of Namcor’s boardroom fights.

They have told The Namibian that until Mulunga’s suspension, Enercon was one of Namcor’s biggest clients, buying about N$30 million a month on fuel products from the parastatal.

They have also bemoaned the fact that Namcor is currently owed over N$600 million, but only Enercon appears to be singled out by the board.

The parastatal is now battling survival with a debt burden of about N$2 billion owed to its suppliers.

Enercon’s managing director, Victor Malima, yesterday said: “I would like to clarify that the investigation in question took place before my tenure as managing director of Enercon, which commenced in February 2023.

“To the best of my knowledge, all of Enercon’s dealings have been conducted in a transparent and ethical manner. Unfortunately, we cannot divulge any specific details due to our confidentiality obligations to our stakeholders.”

THE ONGOING AFFAIR

August 26 Holdings chief executive Ndajoina Shalumbu in April said Enercon Namibia has new owners and management, although no changes are reflected in the Business and Intellectual Property Authority’s files.

Shalumu said Peter and Malakia Elindi were no longer partners in the venture as their stake was transferred to Peter’s relative Victor Malima and son Austin Elindi.

Malima replaced Peter Elindi as managing director of Enercon.
The changes took place this year.

Shalumbu said he was not familiar with operations at Enercon and referred The Namibian to the company for answers.

Shalumbu’s board at August 26 Holdings has allegedly been requesting a probe into Enercon and a review of their entire 15-year agreement.
Enercon sources say some officials at August 26 and the defence ministry have become envious and are now raising issues in the hope of scuttling the agreement with the military.

Since the partnership with Enercon in 2014, August 26 Holdings has allegedly received audited financial statements once.

The military has received no dividends, raising further questions about what value August 26 was gaining from its partnership.

KAPOFI EXPLAINS

Defence minister Frans Kapofi has been briefed around the controversy regarding the military oil supplier, but appears to have cooled his intense queries of the deal since last year.

Military sources said the ministry was on the verge of pulling the plug on its relationship with Enercon, but little has been done since.
Kafofi in April said it is not uncommon for the likes of the ministry of defence to use intermediary companies to source required goods and services.

“This is often done to streamline the procurement process, ensure competitive pricing and maintain a secure supply chain,” he said.

According to him, the decision to use a third party in this case was made after “careful consideration” of various factors influenced by the challenges the ministry had experienced over the years with the previous suppliers, including establishing strategic alliances with upstream and downstream oil operators.

“This is designed to enable the NDF to execute its mandate effectively.”
“Sourcing directly from Namcor may seem attractive. However, the contract with Enercon was not only about the supply of fuel, but it included provisions which have national security benefits.

“Ultimately, the Ministry of Defence and Veterans Affairs’ decision to use a particular supplier is based on strategic considerations, including enhancing self-sustenance both during times of war and peace,” he said.

• This article was produced by The Namibian Investigative Unit. Contact us from your secure email at investigations@namibian.com.na
• The article has been amended to clarify that Jeniffer Hamukwaya was not fired but her contract was not renewed.