Former Namcor managing director Immanuel Mulunga was arrested yesterday for, among other things, his role in a N$53 million transaction between Namcor and military contractor Enercon in 2022 – a deal that appears to have been a poisoned chalice, New Era has learnt. The transaction, which would have allowed the national oil parastatal to take over the fuel supply contract and related infrastructure business with the Namibian Defence Force through Enercon, never materialised.
Enercon had to cancel its agreement with Namcor due to military objections but failed to repay the N$53 million immediately.
This money, sources say, has since vanished into thin air – without a trace. Mulunga’s arrest at his Windhoek residence followed a string of alleged corrupt dealings worth millions that occurred during his tenure at the helm of the financially bleeding Namcor.
Confirming the development yesterday, Anti-Corruption Commission director general Paulus Noa has warned that Mulunga’s arrest is but a small fraction of a deeper and widening net that will see the apprehension of more individuals linked to the downfall of the State-owned petroleum entity.
“Yes, I can confirm the arrest, but he [Mulunga] is yet to appear in court, as you know. At this point in time, we will not be issuing a statement on that because our investigations are still ongoing and more will be uncovered in the coming days.
“But what I can assure you is that more arrests are coming, as our investigations are underway now. This is just the beginning of the process [planned arrests], and we are not going to spare anyone who is found to have contravened the laws of the republic,” said Noa.
Sinking ship
On Sunday, Namcor, which made a net loss of over N$1.2 billion during the 2022/23 financial year and is facing debts worth over N$800 million, issued a statement, where it laid bare its precarious financial situation.
In the statement, Namcor attributed the poor performance to its trading company, Namcor Trading and Distribution, which it said caused “a combination of serious governance lapses, non-compliance with policies and operational systems challenges.
“These include inadequate internal controls, system overrides, stock theft, trading losses and potential reckless trading.
“Since 2018, the cumulative impact of these shortcomings has progressively weakened Namcor’s operational effectiveness and financial sustainability”.
Namcor’s revenue increased significantly from N$610 million in 2017/18 to N$7.4 billion in 2022/23. However, the company stated that this growth was accompanied by a steep rise in the cost of sales, which escalated by some N$7 billion from N$559 million to N$7.5 billion from 2017/18 to 2022/23.
Despite the substantial increase in revenue, Namcor did not achieve profitability.
In fact, the sharpest losses were recorded in 2023 when Namcor posted a net loss of N$1.3 billion, indicating that high revenue growth alone did not translate into financial sustainability.
Overall, the surge in trading activity adversely affected the company’s working capital, profitability and cash flow position, rather than strengthening its overall financial sustainability. Several additional factors have significantly eroded Namcor’s financial position over the past five years, including oversupply of petroleum products, lack of hedging and poor margin management, expensive credit facilities from suppliers eroding margins further, excessive credit facilities non-procedurally granted and poor debtors’ collections.
Alleged theft and loss of product, the acquisition of encumbered and unauthorised assets, charging of hosting fees below market rate and installation of a non-functioning ERP system are amongst the issues that contributed to Namcor’s stifling.
Troubled past
Last year, Mulunga hogged headlines when he was accused of committing fraud by withholding information from the company’s board and breaching conditions of his employment when he transferred funds for the purchase of an oil block in Angola.
He directed that an amount of US$6.7 million (over N$180 million) be paid from the bank account of Namcor E&P to an account of Sungara Energies Limited, a company incorporated in England and Wales, and which account is held with the Mauritius Commercial Bank Ltd.
However, the company claimed that Mulunga was supposed to disclose his intention about the transfer of funds before and not after he gave the instruction for payment to the finance executive.
The board was faced with a situation where an additional US$6.7 million was transferred to Sungara in circumstances where it had previously only approved the transfer of US$10 million instead of US$16.7 million.
This was in respect of an approved business transaction by the board for an investment of only US$10 million in Sungara.
The payment was part of the deposit for the acquisition of 10% interest in block 15/06 as well as two exploration blocks.
Sungara is a corporate entity incorporated in the UK, jointly owned by Namcor Exploration and Production (Pty) Ltd, Petrolog and Sequa with equal shareholding.
Sungara entered into a Share Purchase Agreement (SPA) with Sonangol to purchase a 10% stake in the Block 15/06 producing asset as well as participate in interest in two exploration blocks. This strategy led to Sungara winning the bid for the advertised producing asset.
However, the Namcor board later stated that it had severed ties with the seasoned executive.
“The board of directors of Namcor at its meeting held on 8 August 2024 deliberated on an ongoing case of misconduct relating to the unauthorised asset acquisition by the suspended managing director. Following extensive deliberations, the board resolved to terminate the services of Mulunga with immediate effect.
“The board believes that the misconduct by the managing director is of a serious nature and warrants the decision taken. The board is committed to ensuring a smooth leadership transition and will provide further updates as necessary,” the board’s statement read at the time.- ohembapu@nepc.com.na