Tangled web of intrigue at Shaik trial

Deputy President Jacob Zuma’s name came up repeatedly as the corruption and fraud trial of his financial adviser Schabir Shaik got under way in earnest in the Durban High Court on Wednesday.

Using a PowerPoint display that included diagrams with spy-like figures in dark glasses and turned-up collars, lead prosecutor Billy Downer explained in an opening statement how the state planned to explore the complex web of financial relationships between Zuma and Shaik.

He also used icons of boats — representing South African navy corvettes — and piles of money as he gave the court an overview of the two men’s involvement in the multi-billion arms acquisition deal.

He said the state intended to prove that French arms dealer Thomson CSF had believed that an ”informal process” involving the support and influence of politicians was necessary for it to get a slice of the arms package.

Thomson, which eventually secured a share of the corvette deal, had believed it would be advantageous to gain Zuma’s goodwill irrespective of whether he was an actual participant in the arms deal.

”You can corrupt a politician by paying him to do what he should do every day,” Downer said.

He said the state would prove that the source of the funding Zuma expected for Nkandla was a bribe from French arms company Thomson CSF.

The purpose of the R500 000 a year bribe was to secure protection against a probe into irregularities in the arms deal, and support for future projects envisaged between Thomson and Shaik’s Nkobi group of companies.

Downer’s presentation came after Shaik formally pleaded not guilty to all the charges against him, and after a warning from presiding judge Hillary Squires that the hearing was not a commission of enquiry into the arms deal, and that Zuma himself was not on trial.

In a 35-page plea explanation read out by his advocate Francois van Zyl, Shaik detailed how from the end of 1996 he made a string of payments to or on behalf of Zuma, who he said was a close friend and who at that stage had ”serious financial problems”.

However Zuma would only accept this assistance on the understanding that the money would be repaid.

”I reluctantly agreed that such monies as I may expend on his behalf will be regarded as loans to him, on the clear understanding that no interest will be payable thereon due to my religious beliefs,” Shaik said.

Downer started his two hour address with a quote from the Roman poet Virgil, ”Arma virumque cano” — of arms and the man I sing, and described the story outlined in the indictment as an ”epic tale”.

He said that between 1995 and 2002, Zuma received a total of R1,27-million in payments from a number of entities connected with Shaik as well as from Shaik himself.

”What is at issue now is not whether they were paid, but why they were paid,” remarked Squires.

”That is correct, my lord,” said Downer, adding that payments made for Zuma’s benefit through Shaik’s Nkobi group of companies were generally not listed on the company’s books as loans, instead being entered as ”irrecoverable”.

Downer said the payments had had a debilitating effect on Shaik’s Nkobi group, and though there were fluctuations between 1999 and 2001, the trend had generally been towards and ”insolvent position”.

This had led to the late issue of financial statements, threats from auditors to qualify annual financial statements, and internal queries from Nkobi’s accounting staff.

It had also meant that when Nkobi entered into joint ventures, it did so unfunded, and had to be rescued by loans from its partners.

There were continuous threats from banks to reduce its overdraft, and it had been in a ”parlous financial situation”.

Downer said Zuma still owed at least R900 000 on the bond he took out to finance the development of his Nkandla traditional village project in KwaZulu-Natal.

In addition he owed R250 000 to the builder and other money for loans related to the development. Evidence would be that ”very, very recently” there had been ”some” repayment of the R250 000.

Former president Nelson Mandela’s name also cropped up on Wednesday. Downer said Mandela endorsed a R2-million cheque which was paid into Zuma’s personal account.

The money was meant to be split evenly between the Jacob Zuma Education Trust and Development Africa, which Downer said was ostensibly a charitable trust.

A sum of R1-million was paid into the education fund, but the remaining money went through a complex routine of being shuttled between Nkobi group accounts.

When Zuma did pay Development Africa R1-million, Shaik stopped the cheque. Shaik later paid R250 000 to Development Africa in partial settlement of Zuma’s debt.

The trial continues on Thursday when the first witness, Shaik’s former business associate Professor Themba Sono is to take the stand. – Sapa