(Bloomberg) -- Commodities trader Trafigura Group Ltd. had contacts with an ex-Israeli Defence Forces officer who was later sanctioned by the U.S. over alleged arms sales in South Sudan, according to a report by a Swiss NGO.
Trafigura’s head of oil trading, Jose Larocca, was sent an invitation letter in 2017, from the office of the President of the Republic of South Sudan, which referenced discussions between the trading house and the alleged arms dealer Israel Ziv, Public Eye said in a report on Monday.
Ziv, a retired Israeli Major General, was sanctioned by the U.S. in December 2018 for his involvement in South Sudan’s civil war and allegedly using an agricultural consultancy to conceal selling weapons to Sudanese rebels and government forces worth $150 million.
South Sudan has sub-Saharan Africa’s third-largest crude deposits but output was nearly halved by five years of fighting. Oil Minister Awow Daniel Chuang said in October the country plans to resume oil production in the northern Unity region by year-end, boosting South Sudan’s total daily output to 194,000 barrels a day.
In response to questions from Bloomberg News, a spokeswoman for Trafigura declined to comment beyond a statement that acknowledged the trading house has bought crude oil through so-called pre-payment deals with the government of the Republic of South Sudan.
“Under a contractual agreement, Trafigura provided pre-payments to the RSS Government. All pre-payments were made into bank accounts of the Central Bank of South Sudan. Trafigura sought to follow UN guidelines regarding the remittance of the crude oil prepayments,” the company said in the statement.
A spokesman for Ziv didn’t immediately reply to a request for comment. In earlier discussions Bloomberg News had with Ziv’s spokesman, he denied any wrongdoing regarding the sanctions and also said that Ziv had previously done some consulting for Trafigura. Ziv has also denied U.S. accusations against him.
A letter, which was included in the report published by Public Eye and dated Aug. 28, 2017, says Trafigura had contact with Ziv. The author references discussions with “Mr. Israel Ziv whom I believe is currently engaged in further discussions with Trafigura on various areas of investment and interest in South Sudan.”
The government staffer invites Mr. Larocca to come to South Sudan to meet the country’s ministers of finance and petroleum and “if the schedule allows, pay courtesy call on His Excellency the President of the Republic,” he says in the letter.
In its sanctions notice issued in December, the U.S. Treasury Department alleged that in South Sudan “Ziv has been paid through the oil industry and has had close collaboration with a major multinational oil firm.” The oil company was not identified nor has it been sanctioned.
Public Eye also reported on Monday that Trafigura has filed a lawsuit in London against the Government of the Republic of South Sudan and The Central Bank of South Sudan but it was not immediately clear why. The Trafigura spokeswoman also declined to comment on the lawsuit.
South Sudan suspended oil pre-payment deals after President Salva Kiir ordered an investigation into the way the country’s crude is sold after replacing his petroleum minister in June.
Oil pre-payment deals, where traders loan funds to governments, national oil companies or producers, to be repaid later in crude oil, are common practice in the commodities trading sector.
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