CAMAC CEO says media are wrong, no bankruptcy or corruption

If you read the news, you’ve probably heard about the alleged corruption and mismanagement at CAMAC Energy, which recently received a substantial investment from the PIC and is newly listed on the JSE. With revelations of CAMAC’s contributions to Zuma’s Education Fund, and the allegedly precarious financial state of CAMAC, the story has plenty of salacious sizzle. But according to CAMAC CEO Kase Lawal, despite the smoke, there’s no fire. While his company does contribute to Zuma’s fund, it’s just routine corporate social responsibility stuff, nothing scandalous. The PIC investment has been two years in the making, and is a consequence of the PIC’s decision to invest more in oil and gas in Africa. And as for the idea that CAMAC is teetering on the brink of bankruptcy, nothing could be further from the truth – in fact, the company is investing heavily in its oil and gas assets, has many contracts with African governments, and is on track to be a profitable producer. Read the interview, read the news reports, check out this S&P report on the company, and make up your own mind. – FD

To watch this CNBC Power Lunch video click hereKASE LAWAL:- CAMAC

ALEC HOGG:  Energy Company CAMAC listed on the Stock Exchange today.  It’s a secondary listing.  Kase Lawal who is the Chief Executive of CAMAC Energy joins us for more.  The shares…quite nicely trade for 150 thousand volume, 25 deals, the share price is at R10.94, which is a reflection of where it’s trading at the New York Stock Exchange.  Kase, we have to get the major stuff out of the way to start with.  The Mail & Guardian in South Africa has a picture of you standing next to Jacob Zuma.  “Your company is about to go bankrupt” – that’s in the news.  The South African Public Investment Commissions puts 270 million dollars into your company, which rescues it and now you’re listing on the JSE.  What are we supposed to make of all of this?  What’s the real story?

KASE LAWAL:  It’s very interesting.  I’m glad to be here.  It’s very interesting.  I’m hearing information about a company I do not know.  What I mean by that is that it’s quite impossible to be on the New York Stock Exchange in good standing and not be delisted, and someone alleges that it’s on the brink of bankruptcy…that is really something that is news to me.

ALEC HOGG:  So the allegation that you need the 270 million dollars to bail you out is not accurate.

KASE LAWAL:  As a matter of fact, let me just give you a little background in the very short term.  Over the last 18 months this company has invested over 450 million dollars…and acquisition of ENI’s interest in Allied, which is in excess of 250 million dollars, and about 100 million dollars was just spent drilling a high impact, very successful deep water well, that will increase production by seven times within this year.  Anybody alleging that it can be on the brink of bankruptcy…that is the reason I say it’s a very strange that someone would write.  By the way, we do file quarterly reports on the New York Stock Exchange.  It really blows my mind when someone writes without actually doing research into information that is very public, quite transparent, that has been posted showing how liquid we are, and that we had not actually received a single penny from PIC when this report was written.  We have also then taken out about 685 million dollars’ worth of capital expenditure.  It just blows your mind when you read some of these stories.

ALEC HOGG:  That’s why we’re glad you’re here with us.  These are issues, which sometimes need clarification, but only one person can do that and that’s you.  Your relationship with Jacob Zuma – because that’s the golden thread, if you like – do you contribute to his Education Fund?

KASE LAWAL:  Well, we met the current President while he wasn’t in office.  He was actually talking about an Education Trust that was set up in 1994, during the RDP program in KwaZulu Natal, when he saw an opportunity to educate and empower young girls and boys that did not have the resources and the opportunity to get either secondary, tertiary, or college education.  It was a very moving story for me because he also informed us that he’d never had a formal education.  Yet, he’s well-read and he’s the leader of the wealthiest and most advanced country on the African continent.  Personally, that was something we took very seriously and it was very moving.  We talked to our foundation – CAMAC foundation – to look into it, because if you know about us; over the last 23 years we’ve been the vanguard of educating, sponsoring, and setting up endowments from the University of Houston in the United States, and bringing African students to be educated in the United States.  When we heard stories like that seven years ago then obviously, it was a no-brainer for us to enter into an agreement – five years ago – to be able to sponsor South African students.  At the last count…as at December 31st, we were informed that over 936 students, boys and girls in South Africa had benefitted from the contract we signed, which actually contributes one million rand per year to their education.  To me, it wasn’t something that was overnight.  It was something that has been going on for several years.  I might add that we have never in the 28 years’ history of the CAMAC Group, done any business/contract with any government of any nation in Africa or the United States either.

GUGULETHU MFUPHI:  Your relationship with President Jacob Zuma: did that play a part in the PIC investing in your company?

KASE LAWAL:  Absolutely not, and I certainly hope not.

GUGULETHU MFUPHI:  How did the PIC investment come about?

KASE LAWAL:  You will recall the PIC did announce, about three years ago, that they would actually fund fifty billion rand in Sub-Saharan Africa, in the areas of natural resources and infrastructure.  I believe that at that time, our corporate finance people approached the folks at PIC way back then, and they started the engagement with PIC two years ago.  That has been a very long and torturous period because at times I think our team believed that it just wasn’t going anywhere, not knowing that they were being very meticulous in going through their processes.  After all, it’s a 140 billion dollar organisation, and it’s been around for 100 years, so they do have the reputation of being very meticulous, taking their time, and being very conservative in the decisions, they made.  While I don’t know their internal processes, I can assure you that this process took almost two years to actually be announced.  In fact, I might add that I was just recently informed that some of the consultants they used were folks from the largest investment banking firms in the world.  Therefore, this story about an overnight investment by PIC, which only just took place last Friday – three days ago – while we were still investing hundreds and hundreds of millions of dollars in this company, is something that is really very strange.

ALEC HOGG:  But it’s good that we’ve had the opportunity to discuss it and bring it out into the open.  Kase, was there an obligation on you to list on the Johannesburg Stock Exchange as part of the PIC’s investment – in other words – the opportunity for South African investors to get a slice of your story?

KASE LAWAL:  That’s a very good question.  Indeed, it was an integral part.  It was a precondition that as a company that is focused on African assets it is an opportunity to be listed on the largest Stock Exchange in the world that they would like for us – as a part of their consideration to invest in our organisation – to be listed on the Johannesburg Stock Exchange.  They would like the opportunity, where individuals and South African institutions can have an opportunity to invest in this growing company of ours in the oil and gas base, from East Africa to West Africa.  Of course, over the last one year we have been looking at Southern Africa – and especially Mozambique and South Africa – in terms of the deep offshore where we have the expertise and knowledge.

ALEC HOGG:  You’re not in the shale area.  Would you look at it?

KASE LAWAL:  Well, our organisation continues to look at opportunity and if there’s an opportunity in the shale gas, as we have seen and looked at in Texas, we definitely will look at it.

ALEC HOGG:  We look forward to talking to you again every six months or, at least, to someone from your organisation.  It’s an exciting story and we appreciate the fact that you came here and were prepared to lay it all out on the table for us.

KASE LAWAL:  Thank you very much.  I’m glad to be here and I look forward to South African individuals and institutions investing in our organisation and indeed, all of Africa investing in our organisation.  Thank you very much for having me.

ALEC HOGG:  That was Kase Lawal; the Chief Executive and Chairman of CAMAC Energy.

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