Namcor managing director Immanuel Mulunga’s decision to approve additional payments to secure a deal in Angola were not driven by criminal intent, a review has found.
Allegations around Mulunga’s conduct surfaced in April this year and led to the suspension of the MD. The Anti-Corruption Commission (ACC) concluded a review of his activities on July 24, with a copy of the report seen by Energy Voice.
The focus of the investigation was Mulunga’s decision to singlehandedly approve an additional payment for a stake in Angola’s Block 15/06. Namcor had agreed to partner with Petrolog Energies and Sequa Petroleum UK in a joint venture, Sungara Energies.
Namcor was on the hook for $10 million. However, when the time came to pay up, it became apparent that Sequa had no funds and Petrolog only $6mn. As a result, the group was $6.7mn short of the required $22.6mn.
Failure to pay would have seen the deal fall apart, but the group would still have been liable for the payment.
The ACC report said Mulunga took the position that the board had given him power to make the additional payment. The board had approved the deal with Angola’s Sonangol.
“The board could not be so naïve to give him unbridled powers to deal with the finance of Namcor without the approval of the board,” the review said.
Mulunga did attempt to win the board over and sent an email. However, the board had questions and set a date to discuss this – of after the closing date of the Sonangol deal.
The MD was “fully aware” that he could not pursue such a deal without board approval, the report said. His actions, of asking for approval, show “he knew very well” that he needed the board to agree. Mulunga was “between the rock and a hard object when it was discovered that the partners had no sufficient funds” to meet their commitments.
The ACC report raised questions about the due diligence carried out into Namcor’s partners, Sequa and Petrolog. The review said the lack of funds “begs questions regarding the intense due diligence” on the two. Both Comalie and Mulunga said TRACS International had worked on the deal.
TRACS, in an email to Energy Voice, clarified that the company’s work was solely on the technical and economic due diligence of the asset. Assessing the business partners was not in TRACS’ remit, a representative said. “Nor would we take on such a scope of work; we do not audit the financial capability of JV partners, this does not lie within our capabilities.”
The ACC review criticised the process by which the board suspended Mulunga. It noted that the suspension came shortly after the arrest of board chairperson Jennifer Comalie for possession of drugs. Following her arrest, she proposed the suspension of Mulunga.
As a result of these unclear circumstances, the ACC said the board or members of the board had been “at all cost, scrambling to hunt down the MD with a suspension”. The move raised concerns around whether the board was acting properly.
Ultimately, the review found the board had not approved Mulunga’s additional payment. However, he took the decision to do so “in the interest of Namcor and the country”. The board had “kept on deferring the discussions and decision on the matter”.
Namcor has not yet responded to a request on the ACC review and Mulunga’s current status. Mulunga continues to be listed on the Namcor website as MD. He is no longer a director of Sungara, though. Instead, Namcor’s Mtundeni Ndafyaalako holds the role now.
Whatever the specifics of the deal may have been, the purchase looks attractive. ACC, citing analysis of the purchase by TRACS, said it would have an internal rate of return of 63.03% and a net present value of $120mn. Namcor E&P acquires the stake with a payment of less than $20mn.
Updated at 2:09 pm to clarify TRACS analysed the Block 15/06 asset, rather than Sequa and Petrolog.