Trafigura is backing a South African fuel company that had ties to a US-sanctioned Zimbabwean businessman, more than a year after the global commodity trader officially said it cut links with him, fuel industry players said.
Kudakwashe ‘Queen Bee’ Tagwirei, a fuel magnate and ally of Zimbabwe President Emmerson Mnangagwa is at the heart of a growing corruption scandal in the southern African nation over his perceived grip on state resources and the ruling Zanu-PF party.
Trafigura is a major supplier of fuel to Zimbabwe, including loans to the government to fund purchases.
For many years Tagwirei’s group Sakunda was the trader’s local business partner through a joint venture, Trafigura Zimbabwe. But Trafigura ended all ties to him in 2019 when it took full control of Trafigura Zimbabwe, acquiring Sakunda’s 51 per cent stake. The buyout, terms of which were not disclosed, took place before the US imposed sanctions on both Tagwirei and Sakunda last year.
That seemed to be the end of Trafigura’s relationship with the controversial Queen Bee.
Yet this year Trafigura has backed a supplier to South Africa’s fuel market that was part of a corporate network under Tagwirei’s control, and whose executives served as his aides, according to executives whose companies worked with the supplier.
Suzako, a Cape Town-based company headed by former Trafigura trader Jozef Behr is pursuing a potentially lucrative contract to supply heavy fuel oil to South Africa’s Eskom power monopoly, these executives added.
Behr “totally represented Trafigura” and presented Suzako as “looking after their southern African business,” said an executive at a fuel company that was approached by Suzako to be its supplier. “The only way to work with Trafigura was through him.”
“Their words were — Trafigura has a handshake agreement with them to sell the product [heavy fuel oil] into southern Africa,” said an executive at another company that also dealt with Suzako. Trafigura “said they would like it if we bought from Jozef,” the executive added.
Eskom needs heavy fuel oil to restart its coal plants after shutdowns. These are an ever-present threat to the blackout-prone utility because of the poor shape of its coal fleet.
Eskom confirmed to Alphaville that Suzako is among the bidders for the contract. Trafigura said that it supported the bids of several companies on an arm’s length basis. Suzako said that it “has supply agreements with many different international oil companies.”
But the question is, who controls Suzako? The company told Alphaville that it is “100 per cent South African owned and controlled”.
Previous FT Alphaville reporting has shown that the company and its executives had substantial — albeit complex — ties to Tagwirei.
First, Suzako was described as a “fully integrated” part of Tagwirei’s Sakunda in a South African lawsuit last year, alongside several other companies.
Tagwirei authorised this lawsuit, which was filed by another company in the group. He did not respond to requests for comment on this story.
Second, according to emails and records reviewed by FT Alphaville, Suzako executives, including Behr, acted on Tagwirei’s instructions when running the group. This missive included Sotic International, a Mauritian commodity trader that was central to the network. Behr and others have previously declined to comment.
Third, three Suzako executives, Behr, Ronelle Sinclair, and Christian Weber, owned shares in Sotic. They also managed trades by Sotic that involved Suzako and a Zimbabwean group controlled by a close associate of Tagwirei, according to records.
Sotic founder Christopher Fourie, who is also a former colleague of the trio, has claimed this activity amounted to “conflicts of interests, financial mismanagement and lack of basic corporate governance”.
Behr, Weber, and Sinclair have previously said in response that they stepped down from all roles at Sotic in June 2020. Since then, they have added, they have had no insight into the affairs of Sotic, Tagwirei, or Fourie.
Last year’s lawsuit sought to prevent Fourie from disparaging Sotic, Suzako, and other companies. The dispute is unresolved.
Suzako, Sotic, Sakunda. It is a complex, alliterative dance. But it is important to remember that the ownership structures of companies such as Sotic appear to have been made highly complicated on purpose, in order to disguise Tagwirei’s involvement.
Fourie has also said that he ensured that Tagwirei did not directly own shares in Sotic in order to avoid ‘know your customer’ alarms at banks and counterparties. Tagwirei has never responded to a request for comment on this claim.
Suzako has had a trading relationship with Trafigura since at least 2018, according to company documentation reviewed by FT Alphaville.
“According to our KYC compliance processes, Mr Tagwirei does not control and is not a shareholder or a director in any company with which Trafigura currently does business,” Trafigura said.
“Trafigura complies in full with all applicable regulations and sanctions in the jurisdictions in which it operates,” it added.
The executives who worked with Suzako said it emphasised to them its close relationship with Trafigura, such as access to fuel tanks that are owned by the trader in Matola, a port in neighbouring Mozambique that is relatively close to Eskom’s biggest power stations.
Trafigura told Alphaville:
Trafigura supported the bids of a number of companies who tendered earlier this year to supply South African public utility Eskom with heavy fuel oil on a fully arm’s length basis. Each met our strict KYC standards.
The executives said Suzako also offered valuable access to financing from Trafigura, such as a 30-day credit facility, so their companies could buy fuel from the tanks in Matola.
Suzako told FT Alphaville that it was “against company business principles to discuss specific details relating to counterparties and business dealings, be they past, present or future.”
After the Eskom bidding, the two South African companies also learned through press coverage about their potential supplier’s previous links to Tagwirei. They recoiled. Had this been known earlier, “we wouldn’t have done business with them, plain and simple,” one executive said.
It seems to be a sentiment not shared by Trafigura.
Suzako’s bid is being considered by Eskom’s evaluation committee, “which applies Eskom’s strict procurement processes to look at all aspects of each prospective supplier,” the utility said. “In the interests of a fair process, Eskom is not in a position to give commentary on any aspect of a contract that is under such evaluation,” it added.
Suzako’s former counterparties are meanwhile bracing for Eskom to favour the company. “The reality is, it might happen,” one executive said. “There is a very good chance.”
The writer is the FT’s Southern Africa correspondent.