Maravi

2 companies bidding for oil tenders linked to scandals

2 companies bidding for oil tenders linked to scandals
By Kabanda Chulu and Chiwoyu Sinyangwe
Wed 30 May 2012, 13:28 CAT

GUNVOR and Trafigura, the two companies negotiating with the government for oil supplies, have been involved in corruption and unsound environmental practices, it has been learnt.

Energy permanent secretary George Zulu on Monday dismissed concerns of corruption, lack of integrity and unsound environmental practices by preferred oil bidders, Gunvor and Trafigura.

According to an article in the Economist magazine dated May 5, 2012, titled 'Riddles, Mysteries and Enigmas: Gunvor's roots-from Petrograd to petrodollars', the Swiss-based Russian oil supplier doesn't report its profits despite recording a revenue increase from US$5 billion in 2004 to US$80 billion in 2011.

And Trafigura (">1, 2), the Netherlands-based oil and metals trader, has been named or involved in several scandals since its inception in 1993, ranging from waste dumping in Ivory Coast and oil-for-food deals in Iraq.

The article stated that Gunvor has been recording tremendous growth in revenue despite the decline in its share of Russian seaborne exports of crude oil.

The Economist stated that Gunvor, which is the Kremlin's favourite oil trader, trades in Urals crude, a benchmark blend in north-west Europe and there are indicators that the company buys oil in Russia cheaply and, in theory, earns inflated profits when it sells the same oil on the international market at full price.

But when asked to clear the above mentioned concerns, Zulu assured that Zambian security wings had cleared the entities and that they have done nothing illegal in Zambia.

"Inquiries were sent out by our security wings to look at concerns like that of corruption and environmental management and they have been cleared because they have done nothing wrong in Zambia," said Zulu during a briefing on Monday.

"We are committed to undertake the engagement of oil suppliers in a transparent manner considering that the petroleum business is associated with corruption."

The article in the Economist, stated that Gunvor was created in 1997 by Gennady Timchenko, whose early career had been in the Soviet oil trade in what is now St Petersburg, and Torbjorn Tornqvist, a Swedish oil trader who had worked at BP.

Gunvor has expanded into various businesses, including oil terminals and coal.

Its revenues have grown from US$5 billion in 2004 to an expected US$80 billion in 2011, even as its share of Russian seaborne exports has fallen. Gunvor Group does not report its profits, according to the Economist.

It stated that the company's break came in 2004 when the Russian government broke up Yukos, then Russia's largest producer, over a tax claim. Yukos' largest production unit, Yuganskneftegaz, ended up with state-owned Rosneft.

And Rosneft handed responsibility for its international trade to Gunvor. At first, it did not hold public tenders to see if another buyer would offer a better price than Gunvor's.

"Trust is a vital asset among Russia's ruling elite and Gunvor is a trusted ally in a crucial industry, Timchenko was in St Petersburg when President Vladimir Putin, was deputy mayor in the early 1990s," it stated.

"Timchenko says his involvement with President Putin has been negligible but in an interview last year, President Putin went into some detail, confirming that he had known Timchenko 'for a long time' but saying that he has played no part in his business affairs."

And Trafigura, the Netherlands based oil and metals trader, was fined US$1m (about K5.2 billion) for illegally exporting tonnes of hazardous waste to West Africa which resulted in 30,000 people falling ill when the waste was dumped in Ivory Coast.

And a court in the Netherlands ruled in 2010 that Trafigura, which is one of the world's biggest oil and metals traders with 2010 sales of US$79.2 billion, had concealed the dangerous nature of the waste when it was initially offloaded from a ship in Amsterdam.

The court also heard that Trafigura had put "self-interest above people's health and the environment".

In 2009, Trafigura was forced to pay compensation amounting to 30 million British pounds to thousands of Ivorians who needed medical treatment owing to its non-compliance of environmental laws.

In 2006, in another settlement, Trafigura paid 100 million British pounds to the Ivorian government to help clean up the waste.

Trafigura has consistently denied wrongdoing, insisting that the waste could not have caused serious illness.

In December last year, a Dutch court upheld a million-euro fine against Trafigura for illegally exporting chemical waste to Ivory Coast, where it was dumped in the open and blamed by residents for making them ill.

Labels: CORRUPTION

posted by MrK @ 2:51 AM