/ 29 May 2008

Constitutional Court dismisses Shaik’s appeal

The Constitutional Court on Thursday dismissed an application by fraud convict Schabir Shaik to have over R33-million of his assets returned.

In a media summary — writing on behalf of the court — Justice Kate O’Regan concluded that the state had established that benefits ”flowed” to Shaik and his companies (Nkobi Holdings and Nkobi Investments) as a result of African National Congress president Jacob Zuma’s support and intervention.

After Shaik’s fraud and corruption conviction in 2005, he had to forfeit over R33-million worth of assets.

Shaik and the companies appealed to the Constitutional Court to question the validity of the confiscation order as it related to two particular benefits which the High Court had held to constitute proceeds of crime.

The first benefit was Nkobi Investments’ 25% shareholding in arms company Thint.

At the time the benefit was received, Thint held an 80% shareholding in African Defence Systems (ADS), a company which formed part of the consortium that won the bid in the arms deal to provide combat munitions suites for the navy’s new corvettes.

Nkobi Investments therefore gained an effective 20% share in ADS and Nkobi Holdings — a holding company of Nkobi Investments — gained the same share indirectly.

Shaik, as a 92% shareholder of Nkobi Holdings, gained a slightly smaller indirect interest in ADS.

The High Court found, and the Supreme Court of Appeals agreed, that Shaik and his companies had received their shareholdings in Thint as a result of ”the corrupt payments” made to Zuma.

The value of the shares, just over R21-million, therefore constituted proceeds of unlawful activities and was subject to the confiscation under the Prevention of Organised Crime Act (Poca).

The second benefit was the accumulated dividends received by Nkobi Investments from Thint and received in turn by Thint from ADS between 2001 and 2006.

The total amount of the dividends was R12,7-million.

The dividends were used to pay for the 25% shareholding in Thint.

O’Regan also conducted an analysis of the purposes of the Poca, finding that its main purpose was to ensure that no person benefits from wrongdoing.

She held that corruption is inimical to the values of our constitutional order and that South Africa is obliged to fight it.

She said corruption was a serious crime and closely related to the type of criminal conduct targeted by Poca.

O’Regan found that Poca permitted that all benefits that had arisen from the commission of a crime, whether directly or indirectly, may be confiscated by the court after it convicted an accused; and that the trial court had discretion to determine the appropriate amount in any given case.

In her conclusion, O’Regan said that Shaik and his companies had not shown that the High Court improperly exercised its discretion to determine the amount to be confiscated nor that the order confiscating both the shareholding and the dividend was ”disturbingly inappropriate”.

Shaik was convicted in June 2005 and is currently serving a 15-year prison sentence.

His companies had to pay the criminal fines. – Sapa