A panel of the Court of Appeal, led by Judge President Tebogo Tau alongside Issac Lesetedi and retired South African Constitutional Court Judge Edwin Cameron, has mandated the immediate repayment of millions of Pula misappropriated from the National Petroleum Fund (NPF), which the court described as a critical national asset.
The dispute revolves around a government claim seeking the return of P42 million, accusing Bakang Seretse and his asset management firm, Khulaco (Pty) Ltd, of breaching fiduciary duties by taking an excessive commission from the NPF. While a lower court initially declined the state’s request for summary judgment, this appeal scrutinizes evidence of undisclosed conflicts of interest and irregularities in the tender process.
The controversy dates back to December 2015 when the Department of Energy entrusted the management of the NPF to a private company, Basis Points Capital, later succeeded by Kgori Capital. For three years, this private firm held broad control over critical functions of the Fund, including daily administration, banking, and investments.
As managing director and shareholder of these firms, Bakang Seretse occupied a position of profound trust, serving as an advisor to the government on matters concerning the NPF.
The High Court had dismissed the government’s application for summary judgment, ruling that “the government’s case for repayment was not clearly cogent on its own; it would not be fair and just to grant summary judgment given the circumstances; and the issues between the parties would be better resolved through a full trial.”
Court documents reveal the suspicious diversion of NPF funds in August 2017. Initially, Isaac Kgosi, then Director General of the Directorate of Intelligence and Security Services (DISS), requested P250 million from the NPF for the construction of petroleum storage facilities. Yet within months, the project vanished, replaced by expenditures on security and surveillance equipment and training from an Israeli company, Dignia Systems Ltd.
Central to the government’s claim was the emergence of Khulaco—another company controlled by Seretse; demanding a 20 percent upfront fee for managing the P250 million disbursement, amounting to P50 million.
The government successfully argued that Seretse breached his fiduciary duty by failing to disclose his interest in Khulaco while managing the NPF through Kgori. The court underscored that Seretse should have explicitly informed the government that he and his company would be taking 20 percent of the Fund’s P250 million.
Judge Cameron delivered a sharp critique of the lack of transparency, noting that the contract Khulaco relied upon was purely oral, with no written record in government files, in direct violation of statutory tender procedures.
Seretse maintained that the fee was based on an oral contract with the Department of Energy and DISS, but the court found no written records, invoices, logs, or communications to support the work claimed to justify the P50 million payment.
“The Savingram dated 7 August 2017 from Mr. Kerekang, on behalf of the Department of Energy, acceding to the request for P250 million, asks DISS ‘to access the funds directly through our Fund Manager,’ named as Kgori, with Kgori’s details set out. Yet suddenly, the very next day, unheralded and unexplained, Khulaco pops up on the scene. How? Mr. Seretse signs a letter on its behalf advising of the top-slice of 20%; followed two days later, on 10 August 2017, by a Savingram in which DISS instructs Mr. Kerekang ‘to make payment therefore to Khulaco.’ ‘Therefore’ what? How?” the court questioned.
The judgment emphasized that the summary judgment application presented Seretse with a prime opportunity to address the glaring gaps and improbabilities in his case. Because he failed to offer a bona fide defense, the court concluded that a large-scale misappropriation was in progress at the expense of taxpayers and the citizens the NPF is meant to serve.