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Unaccountable 00045: Lawrence Mulaudzi — potential partner or perpetual pick-me?

Unaccountable 00045: Lawrence Mulaudzi — potential partner or perpetual pick-me?
Luvano Ntuli and Michael Marchant for Open Secrets
By Luvano Ntuli and Michael Marchant for Open Secrets
20 Nov 2024
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Lawrence Mulaudzi has been mired in controversy and allegations of corruption for several years. In choosing him and his apparent shell company for a billion-rand contract, state-owned petroleum company PetroSA has revealed the extensive potential corruption risks in the murky world of oil and gas.

New oil and gas projects, and more particularly gas in the South African context, have been positioned as a critical sector to boost the country’s economy and address questions around the transition to a low-carbon economy. In his keynote speech at Africa Oil and Gas Week 2024, Mineral Resources and Energy Minister Gwede Mantashe expressed his eagerness for ongoing fossil fuel development, arguing that discoveries off the South Coast indicate “a need to accelerate exploration efforts”.

However, the oil and gas sector is filled with a range of dubious characters, from large corporations to individual actors who stand to benefit immensely from the exploration and exploitation of our oceans. Aside from the devastating environmental and human rights impact of oil and gas production, the secretive nature of the sector, which we highlighted in Open Secrets’ fourth volume of the Corporations and Economic Crime Report, creates significant risks for corruption.

Our previous instalment in the Unaccountables series explored how state-owned oil company PetroSA has been at the centre of a range of controversies since its incorporation in 2002. One character in particular stands out amongst these controversies. Businessman Lawrence Mulaudzi, who has been embroiled in scandals of his own, resurfaced in reports that his company Equator Holdings was awarded a R21-billion deal by PetroSA in December 2023 to finance the refurbishment of its gas-to-liquids refinery in Mossel Bay. Open Secrets sent Mulaudzi detailed questions for his comment, and he responded saying that he had “nothing new to add”.

Major concerns were immediately raised around PetroSA’s choice of Mulaudzi as a partner for this megaproject, especially because instances of misconduct had been public record as far back as 2018. Perhaps unsurprisingly, the deal quickly fell apart, and Equator was liquidated mere months after it was selected for the contract. Yet the story remains a stark warning of the continued failures of governance at PetroSA, and the continued risks of corruption in the sector. It also reveals the consequences of not holding individuals properly to account.

PIC pick me 


In 2019, a year after Equator was registered, it was reported that Mulaudzi was deeply entangled with key decision makers at the Public Investment Corporation (PIC) and had lined up funding for various deals from the PIC as a result of these relationships. The story itself goes back to 2015, when Mulaudzi and his partners at investment holding company Kilimanjaro Capital approached the PIC for funding to purchase shares in Tosaco, which was the BEE partner of TotalEnergies. The R1.8-billion loan was approved, and was the first of several other loans from the PIC to other companies where Mulaudzi was director. 

These loans were revealed by a series of leaked WhatsApp messages, and included the approval of two loans of R400-million and R1.4-billion to Kefolile, where Mulaudzi was a director, to purchase shares in Bounty Brands and Ascendis Health respectively. In 2022, Daily Maverick alleged that Mulaudzi, through his company Blackgold Oil and Gas, paid R5.9-million into the account of an attorney linked to former ANC health minister Zweli Mkhize’s family trust, which then went to purchase a luxury apartment in Johannesburg. This was after Blackgold received a R47.5-million advisory fee from Bounty Brands’ holding company – linked to a deal in which the PIC funded Kefolile’s purchase of an indirect stake in Bounty Brands.     

Much of the information about the loans was uncovered at the Mpati Commission of Inquiry into Allegations of Impropriety at the PIC in 2019. According to emails from an anonymous source, which in part led to the establishment of the commission, Mulaudzi had a romantic relationship with Sibusisiwe Zulu, who was a board member at the PIC, and this was the reason he scored deals with the PIC. While Mulaudzi claimed to not have a personal relationship with Dr Dan Matjila, the CEO of the PIC, Mulaudzi allegedly sent Matjila a WhatsApp thanking him “for making (him) to be who (he) is”. At the Mpati Commission, Mulaudzi admitted that he facilitated numerous transactions at the behest of executives at the PIC. These transactions benefited himself, Matjila, and various other business and political players. 

One of the most damning allegations at the commission was that Mulaudzi made a payment of R300,000 to Pretty Louw, who was allegedly Matjila’s romantic partner at the time. In his testimony, Mulaudzi said that he never “would have said no to the CEO of the PIC (Dr Dan Matjila)”, and as such facilitated transactions, including the one to Louw, at his behest. Around the same time that the story broke about Mulaudzi’s entanglement with executives at the PIC, it was also reported that he channelled money to former EFF deputy president Floyd Shivambu.

Mulaudzi had several of his assets seized in 2022 and 2023 after getting into financial trouble. In 2022, it was reported that his R19-million mansion in Cape Town would be auctioned off following accusations of a contract breach on his part by property investment giant Acucap Investments. According to Acucap, Mulaudzi had defied a court order to settle a hefty rental bill of more than R600,000 two years prior, as well as breaching two settlement agreements that they had entered into in 2022. The rental bill was for commercial premises for his business Blackgold Oil and Gas in Johannesburg, the company implicated in the scandal with former minister Mkhize.

Just six months later, it was reported that Mulaudzi had been forced to surrender two of his luxury cars after his failure to pay the monthly instalments. Absa had applied for a writ of execution in March 2023 after he had not paid a shortfall amount of R1.3-million. 

The findings from the Mpati Commission, and reports that Mulaudzi had been struggling financially for several years to maintain his lifestyle and that his other business pursuits were shrouded in controversy, are all in the public domain. Yet at the end of 2023, near bankrupt PetroSA decided to throw Mulaudzi a R21-billion lifeline.

Troubled waters for PetroSA’s partner 


In January 2024, amaBhungane reported that PetroSA had signed a deal with Mulaudzi’s company Equator Holdings in December 2023 to fund and refurbish offshore gas infrastructure at PetroSA’s Mossel Bay operation. The signing of this deal came just weeks after, in a highly controversial move, PetroSA awarded the contract to restart the refinery to Gazprombank. The contract awarded to Equator Holdings, titled RFP 0004, was estimated to cost a staggering R21.6-billion, and required the bidder to show their financial credentials and be able to prove that they were an “established player” in the field. 

Despite these requirements, PetroSA selected Equator, which was registered in 2018, but had no relevant experience or any evidence of actual activities. In fact, PetroSA had scored Equator’s bid 0 out of 100 for a related tender, as it said it could not verify its authenticity. What Equator did have though was a well-connected director, whose reputation should have been a major red flag for an institution already embattled with governance issues and a history of corruption. 

Additionally, PetroSA had selected another bidder to fund the same project, namely Theza Oil and Gas, which would fund and execute the project. PetroSA thus had to arrange a partnership between the two companies, despite the fact, according to Theza, that Equator did not “add any value” to the company. PetroSA claims that it had no part to play in this partnership, but Theza maintained that Equator was “foisted on them”.

The opaque nature of this appointment extends further into Mulaudzi’s dealings with a potential Russian technical partner. According to amaBhungane, Mulaudzi went to Russia in October 2023, two months before signing the contract with PetroSA , claiming to be the executive director of EquaTheza, and met with a subsidiary of Gazprombank called Uralhimmash that specialises in gas equipment and infrastructure to see if would partner with Equator as its technical partner. While it is not apparent that anything came from this meeting, it is curious that Mulaudzi attended this meeting, because according to Theza, he was not there on EquaTheza’s business. 

In a bizarre twist, it was reported in July 2024 that Equator had been liquidated. The company also owned and traded as a South African football team, Tshakhuma Tsha Madzivhandila Football Club. The club owed one player, Cheslyn Chase Jampies, R725,000 in unpaid wages, and when it failed to pay up, the High Court ordered the liquidation of Equator. As Jampies told journalists at amaBhungane, “If you can’t properly run a football club that’s worth about a few million, how are you going to juggle R21.6-billion?” PetroSA refused to comment on the story, but it appeared to have been oblivious to the fact that it had awarded a R21-billion contract to a company that owned a third-tier football team and had since been liquidated.

Time for accountability


In early September 2024, Phezulu Natural Energy Resources — a bidder that had thrown its hat into the ring when PetroSA had issued a range of contracts in 2023 to begin the process of starting up the country’s offshore gas industry – went to the Western Cape Division of the High Court in Cape Town requesting that Mulaudzi’s deal be set aside. In addition to that, Phezulu also requested access to the records pertaining to the Gazprombank tender, which Phezulu alleges was “illegally split” to benefit Mulaudzi.

Phezulu submitted a bid to restart the gas-to-liquid refinery in Mossel Bay but PetroSA later announced that the bid had been awarded to Gazprombank — but that Gazprombank would only be responsible for the part of the refinery that dealt with liquids, while Mulaudzi’s Equator would be responsible for the gas infrastructure. 

According to the director of Phezulu, André Cilliers, Mulaudzi then approached Phezulu to find out more about the company’s technical expertise as well as its financial capabilities, and when Mulaudzi and Cilliers met at a later date, it appeared that the tender had been split. The obvious question is; why did PetroSA not just then award the contract to Phezulu or any other entity with the technical ability to do the job? As amaBhungane reported: “This, if true, is a classic example of how tenders are manipulated: an unqualified company wins the contract and then subcontracts a rival bidder that actually has the skills to complete the project.”

PetroSA announced that the deal with Equator would not be going forward, which might have implications for Phezulu’s claim. However, Phezulu has also asked the court to order the release of documents by PetroSA that might explain the decision-making progress. 

Open Secrets and amaBhungane have also submitted a joint Paia (Promotion of Access to Information Act) request to PetroSA in this regard, which it ignored. This is not the first instance in which the organisations had submitted Promotion of Access to Information Act requests to PetroSA that were ignored. Requests for information about who received R20-billion worth of diesel contracts to supply PetroSA have also been refused. The secrecy around Mulaudzi’s deal — and the lack of clarity around its end — speak of an endemic issue at the state-owned company.

Mulaudzi has shown himself to be a highly connected player and gained favour among some of the biggest institutions in the country. He seems to have found himself in the right place at the right time and secured massive deals because of it. Often, this has been because of his willingness to funnel benefits to others involved in these deals in various instances. 

His involvement in impropriety at the PIC as well as financial mismanagement at Tshakhuma Tsha Madzivhandila Football Club and in his personal life reveal a concerning pattern of behaviour. Scoring a massive deal with PetroSA — with no ability to deliver — despite much of this being public knowledge is indicative of concerning patterns of corruption within the oil and gas sector, but also the culture of secrecy at PetroSA. 

While PetroSA has told Parliament that the deal with Equator would no longer be going through, there is a large possibility that Mulaudzi will walk away from this ordeal without having to answer how he secured this deal. If that’s the case, he’s likely to find himself in a similar position again. DM

The questions Mulaudzi did not answer:




 

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Read more profiles from the Unaccountable series here.

https://www.youtube.com/watch?v=REeWvTRUpMk

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