The National Petroleum Corporation of Namibia (Namcor) has slapped suspended managing director Immanuel Mulunga with additional disciplinary charges for his alleged involvement in a N$53-million transaction between Namcor and military contractor Enercon.
Mulunga was already in the middle of a disciplinary hearing on charges emanating from the controversial Sonangol deal in which Namcor paid US$6,7 million (N$123 million at the time) on behalf of third parties to buy into an oil well owned by the Angolan state-owned oil company.
The new charges came while the disciplinary process was still ongoing. Namcor chairperson Jennifer Comalie this week declined to comment, saying: “As a matter of policy, we don’t comment on ongoing legal matters. Once the matter is finalised we will communicate the outcome appropriately.”
An internal investigation found that Mulunga has a case to answer regarding the Enercon transaction.
“I have no comment,” he said this week.
Enercon is owned by brothers Peter and Malakia Elindi, as well as military company August 26 Holdings.
The joint venture has a 15-year contract (since 2016) to supply fuel to the Ministry of Defence and Veterans Affairs, as well as to build and refurbish oil depots.
It also has a 10-year contract to do the same for Namibia Wildlife Resorts (NWR) across the country.
Central to Mulunga’s new charges is the N$53 million payment Namcor made to Enercon last year as part of a transaction which would have seen the national oil parastatal take over the fuel supply contract and related infrastructure business with the Namibian Defence Force (NDF).
The transaction also included Namcor buying a number of oil storage facilities from Enercon.
However, Enercon was forced to reverse the agreement with Namcor due to objections from the military, but failed to repay the N$53 million immediately.
It has now also turned out that the oil storage facilities and tankers sold to Namcor actually belong to the defence ministry, while Enercon is left to pay Namcor back in monthly instalments of N$500 000.
The investigation found that Mulunga failed to inform the board and to obtain board authorisation for the deal.
Despite the deal being concluded in July last year, a report on the transaction and acquisition of the assets was submitted to the board on 31 May, three days after minister of finance and public enterprises Iipumbu Shiimi received an anonymous tip from a whistleblower about the questionable deal.
The investigation found that internal procedures were not followed, including the fact that N$53 million exceeded Mulunga’s signing authority.
The head of the department responsible for supply and logistics was supposed to prepare a request for the fixed assets to be acquired, and such a request is supposed to be submitted to the procurement management unit for recommendation and approval together with a motivation letter, which should include budget verification and supporting documentation. Namcor’s board is also accusing Mulunga of having failed to establish whether Enercon was the lawful owner of the said assets and whether the company had the power to transfer such assets to Namcor.
Despite paying N$53 million to Enercon for the assets, there was no guarantee that Namcor would have benefited from the transaction, because there was no contract between the defence ministry and Namcor for the supply of fuel.
There was also no lease agreement between Namcor and Enercon that Enercon would use such assets in its obligation to supply the defence ministry with petroleum products.
INTERNAL EVALUATION ‘A SHAM’
The board further concluded that Namcor’s internal evaluation process of the said assets was a sham.
The qualifications of two Namcor officials who conducted the evaluation are being questioned, and they appear not to be registered with the Engineering Council of Namibia to conduct such an evaluation.
The internal evaluation was incomplete and did not provide details around the remaining life of the said assets.
The report also fails to detail when the assets were first acquired, by whom and at what price they were originally bought for.
Enercon allegedly failed to provide invoices to prove the original purchase of the tankers. The depreciation of the tankers was not considered in the report, and only the current replacement value was considered in arriving at the value of the tanks. The external valuation, dated 14 June 2022, was also deemed a sham.
This was because the company which did the valuation was not officially requested to conduct a valuation on behalf of Namcor, and no contract for such an arrangement could be found.
The entity appears to have done so as a favour to a Namcor employee.
The entity Seal Consulting was not paid for the work.
It allegedly did not visit the various sites where the assets were based, nor verified whether the assets exist or whether they are owned by Enercon or third parties, or are in any way bonded or restricted from being sold.
The external evaluation was based on what appeared in the internal evaluation report.
The oil parastatal’s board appears to be tightening the noose around Mulunga’s neck, despite media reports stating that the two sides are currently engaged in settlement negotiations.
Should these negotiations fail, Mulunga would have to appear for a disciplinary hearing in January.
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