/ 7 April 2009

Zuma: Payments from Shaik were loans

African National Congress (ANC) president Jacob Zuma on Tuesday alleged that the more than R4-million payments he received from fraudster Schabir Shaik since the late 1990s were loans.

It was the first time Zuma spoke out on the criminal charges against him that were withdrawn by the Durban High Court on Tuesday morning. This comes after the acting National Director of Public Prosecutions, Mokotedi Mpshe, announced on Monday that the charges against Zuma would be dropped because of undue interference in the prosecuting process.

Zuma has in the past steadfastly refused to make public his possible defence against the state’s charges of corruption and fraud. He recently provided the National Prosecuting Authority (NPA) with representations on the charges against him, including the secret recordings that have led to the dropping of charges.

On Tuesday he told a packed press conference in Durban that the monies he received from Shaik were loans.

”I paid back some of the money. When I got my pension, I paid Schabir Shaik, which was from the MK Pensions Fund. It is on the record in court documents that there were loans. I paid it a long time ago; when I was still in KwaZulu-Natal [Zuma was provincial minister for finances] I repaid part of the loan. I have no hidden agenda on that,” Zuma said.

Shaik, Zuma’s former financial adviser, was convicted of corruption and fraud in 2005 by the Durban High Court and sentenced to 15 years’ imprisonment. He was released on medical parole a month ago.

In his case Shaik’s defence was also that he had a loan agreement with Zuma and that acknowledgements of debt for R340 000 were signed by the former deputy president. He could, however, not produce the original loan agreement between him and Zuma and Judge Hilary Squires rejected Shaik’s defence on numerous grounds.

Squires found that Shaik had no idea about how much his Nkobi companies were paying Zuma and that a limit of R2-million, that was alleged the limit set by Shaik to Zuma, was long exceeded.

”When one compares that difference in the answer in cross-examination to his original statement that he lent these sums out of friendship and did not mind if they were never repaid, it becomes difficult to know just where the truth of the matter lies,” Squires said.

He further found that the Nkobi Group was in no position to keep on paying Zuma’s expenses and that the group’s dire financial position was further proof that the payments to Zuma weren’t loans.

”Throughout 1998 the group had largely been kept going by bank overdrafts, first from Standard Bank until the middle of that year and thereafter from Absa. By 16 May 1999, when the overdraft limit was R450 000, R384 902 of this had been used, yet the payments to Zuma by then amounted to R528 080. The group was, in effect, borrowing money to keep up its payments to Zuma,” Squires found.

The company was in no position to pay Zuma and the fact that a loan agreement was allegedly signed at that stage is further proof that the payments weren’t loans.

”Besides these there are these other features of the evidence that indicate these payments were not really loans,” Squires said in his judgement. ”One is the fact as mentioned before, that even after Zuma became executive deputy president and leader of government business in Parliament, with an annual remuneration — of some R850 000 from his two offices, Shaik still continued to make these payments, when there can have been no possible reason to do so, whether they were regarded as loans or friendly payments to help a deserving comrade whose work was inadequately rewarded.”

The continuation of such payments after this, Squires found, could only have been to allow Zuma to live at an ”even higher standard of material comfort than his official remuneration provided” and can only have been to ”continue the existence of a sense of obligation towards Shaik in return”.

Zuma vows to focus on elections
Zuma said on Tuesday he had been ”vindicated” after the charges were dropped and vowed to focus on leading the country after the April 22 election.

Zuma said the eight-year battle by prosecutors to convict him was ”political and manipulative” and any suggestion that a ”cloud” would hang over him because the case was dismissed on a technicality was a media fiction.

”There never was a case against me … I have been vindicated,” Zuma said.

”There is no cloud. There has never been a cloud … At the moment we have a country to run.”

Zuma’s ANC party is widely expected to win the April 22 election and choose him as president of Africa’s biggest economic power, although it faces an unprecedented challenge from the new Congress of the People (Cope), which hopes to attract voters uneasy with the ANC’s record on corruption.

Election boost
The move gives Zuma a big boost ahead of the election, but analysts and the opposition say suspicion will continue to dog him because the case was never settled in court.

Zuma, whose ANC party ousted Mbeki as president last year, said he would not seek revenge against his political enemies but would concentrate on tackling issues such as poverty, crime and HIV/Aids.

”Retribution will not take us anywhere,” he said. ”Now is the time for us to focus on improving people’s lives.”

The opposition Democratic Alliance said prosecutors had been ”hopelessly compromised” and filed an application with a high court for a judicial review into the decision.

Zuma had faced charges of corruption, fraud, money laundering and racketeering in relation to the largest government arms deal in post-apartheid South Africa.

The case has been closely followed by investors looking for political stability and has raised concerns about the independence of South Africa’s judiciary.

Zuma said the case showed state institutions such as parliament needed to be strengthened to avoid abuse of power.

”Something clearly needs to be done to make them more effective in their oversight roles,” he said.