First Oil involved in $2,7m botched fuel deal

via First Oil involved in $2,7m botched fuel deal – DailyNews Live 7 July 2014 by Maxwell Sibanda

HARARE – First Oil Company which is currently embroiled in a botched fuel deal involving a Hong Kong-based company says the Central Mechanical Equipment Department (CMED) and ZB Bank were all aware of the oil company’s $2,7 million transaction it made for the purchase of three million litres of diesel.

In February last year, CMED paid First Oil Company $2,7 million meant to purchase three million litres of diesel but the latter has since failed to deliver the fuel with the company accusing Tony Blanco of Micro Petroleum of United States, David Myburgh and Francois Shutte of Open Road Petroleum South Africa (ORPSA) of defrauding them.

The CMED has reported the matter to the Serious Fraud Squad and First Oil company has been charged with fraud as defined in Section 136 of the Criminal Law (Codification and Reform) Act: Chapter 9.23.

CMED says First Oil Company unlawfully and with intent to defraud, misrepresented to them that they had capacity to supply three million litres of diesel.

Alex Kudakwashe Mahuni, the director of First Oil Company has denied the allegations saying they were also victims of fraud perpetrated by Blanco, Myburgh and Shutte.

But it appears that Blanco was blaming US sanctions against Zimbabwe for failing to honour the CMED deal.

Sources claim the $2,7 million from ZB Bank was forfeited by the US government because the financial institution was under sanctions last year when the transaction went through.

Mahuni said in statements to the police that while they indeed received $2,7 million from CMED, the money was transferred through Telegraphic Transfer to Micro Petroleum-Hong Kong on March 7, 2013 for the Chinese-based company to facilitate the fuel deal.

He says this was done in consultation and agreement with both CMED and the ZB Bank that had facilitated the loan.

While the funds were confirmed to have been received by the supplier in Hong Kong, the fuel has never materialised to date. And the puzzle continues as it emerges that First Oil Company also made a report of fraud on June 26 at Harare Central Police Station which was later referred to CID Serious Fraud Squad.

In e-mail correspondence headlined ‘Release of Diesel – Ex Msasa’ copied to CMED staffers, Schutte  a South African who was the focal point for Micro Petroleum-Hong Kong confirms receipt of the funds.

Schutte’s e-mail reads: “Thursday, February 28th I visited Harare, on which First Oil Company, ZB Bank and CMED agreed to the terms and paperwork presented. Monies were to be released to First Oil Company the same day.

“USD 30 000 received and cleared on February 12th. On February 13th we received and cleared the balance of USD 2 360 000, the same day our bankers asked us for company documents of First Oil Company, in order to release payment and comply to International Banking Rules and Regulation as we understand.”

Schutte wrote that they had to wait two weeks for payment; “…. the priority of diesel was stressed to everybody February 28th, but we waited and had faith, we now ask of you to have faith as we are working to resolve and can assure you we are at the point of release, and to cement our relationship with First Oil Company and their client.

“Gents on any first deal one encounters speed humps, as pointed out to you and as we can see from the above, we need to weather the storm as the rainbow is in our grasp!”
Mahuni says up to now, they have called upon the supplier to deliver the product in various e-mails written both by the bank, CMED and his company.

“Instead of delivering the product the supplier has been generating one excuse after the other avoiding his clear duty to supply the product,” says Mahuni, in a statement he gave to the CID Serious Fraud Squad.

Mahuni said before the funds could be transferred to Micro Petroleum-Hong Kong, ZB Bank engaged SOCOTEC who are Collateral Managers to conduct product diligence and reported positively to ZB Bank about the availability of the product.

In a statement recorded at the CID Serious Fraud Squad in Harare on June 28, 2013, Brian Manjengwa, the fuels manager at CMED says sometime in January 2013, CMED Private Limited applied for a loan facility from ZB Bank after it had managed to renew its licence to trade and import fuel.

“The bank later advised us that our application was approved in February 2013,” Manjengwa said.

He says the Procurement Office invited some quotations from various companies in the business of fuel importation and awarded the tender to two companies — First Oil Company which was to supply four million litres of diesel at $1,21 per litre and Comoil which was to supply one million litres of diesel at $1,25 per litre.

He says, on the strength of supporting letters from Petro-trade which confirmed holding three million litres of diesel on behalf of First Oil Company, and National Oil Infrastructure Company of Zimbabwe, NOIC wrote to their bank, ZB Bank also confirming that they were holding the three million litres of diesel on behalf of Petro-trade Private Limited and that the fuel had been reserved for First Oil Company. CMED then released the money.

“By the strength of the confirmation from NOIC, I instructed the bank to transfer USD2 600 000 into First Oil’s ZB Bank account. The bank transferred the money into First Oil account.

“On March 6, 2013, after confirming that the funds were now accessible, First Oil Zimbabwe did not supply as they had promised prompting us to write a letter to them asking why they were failing to supply yet we had paid them.

“As a result of this misrepresentation, First Oil Company, Petrotrade Limited and NOIC Zimbabwe Private Limited, my company, CMED suffered an actual prejudice of USD 2 700 000.”

Both Petrotrade and NOIC said while they were approached by First Oil Company, they were never paid any money.

“As Petrotrade we were not paid any money and we are still able and willing to release the product upon payment as per the contents of our letter dated March 5 2013,” said acting chief executive Sikwila Tanaka in a statement to the police.

Wilfred Matukeni, NOIC chief executive says in his statement: “NOIC is an infrastructure company responsible for transporting fuel through the pipeline from Beira in Mozambique to Msasa in Harare. It stores the fuel for oil companies and re-delivers it on instructions from the owners of the fuel. It is not in the business of fuel trading.”

Matukeni says they wrote a confirmation letter to ZB Bank stating that; “We were holding three million litres of diesel on behalf of Petrotrade that has been reserved for First Oil Company at our Msasa Storage tanks.”