/ 22 January 2021

No way out for Thales in arms deal case, court rules

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Advocate Barry Roux, for Thales, had contended that the prosecution had failed to give a summary of available and admissible evidence when formulating charges of racketeering, corruption and money-laundering, and instead "simply alleged" that such existed.

The state’s endlessly delayed arms deal case against Jacob Zuma was strengthened on Friday when the high court in Pietermaritzburg threw out an application by Thales South Africa (TSA) to have charges linking it to alleged corrupt payments to the former president set aside.

The court, in a 34-page ruling, dismissed the local subsidiary of the French arms maker’s application with costs, rejecting an argument that the decision to prosecute it along with Zuma did not rest on evidence submitted to successive heads of the National Prosecuting Authority (NPA).

Advocate Barry Roux, for Thales, had contended that the prosecution had failed to give a summary of available and admissible evidence when formulating charges of racketeering, corruption and money-laundering, and instead “simply alleged” that such existed.

Therefore, he said, legality principles were violated because there was nothing to support a reasonable belief implicating Thales in racketeering, leaving the national director of public prosecutions (NDPP) to decide on the mere “say-so” of the prosecutor.

Roux also argued that nowhere in the thousands of pages in documents supporting the state’s case was there evidence to show that his client was aware of hundreds of indirect payments to Zuma, some allegedly required to pay for work at his Nkandla home.

He further submitted that because there were no facts to show that the money flow on which the case rested was the proceeds of crime, there was no viable charge of money-laundering.

But Judge Alsa Bezuidenhout dismissed this argument as well, ruling that the crime of money laundering was so much broader than a mere requirement that the money was “hot” or “dirty”. This judgment states that Thales will remain accused number two when the case proceeds later this year, a decision welcomed by the NPA in a brief statement that concluded: “We look forward to the criminal hearing.”

Zuma faces 16 charges of fraud, corruption, racketeering and money-laundering stemming from the 1999 Strategic Arms Procurement Programme to overhaul post-apartheid South Africa’s military hardware.

The racketeering charge relates to an alleged agreement for Thales to funnel half a million rand a year to Zuma — a retainer meant to buy the company political influence and protect its dealings from close scrutiny.

As part of the German Frigate Consortium, Thales had won a contract to provide combat equipment for the navy’s corvettes as part of the arms deal.

In on the deal as empowerment partners were Zuma’s financial adviser Schabir Shaik and his company Ngobi Holdings, from which 783 payments flowed to Zuma. In the main the money came from Thales.

Shaik remains crucial to the case in that he served, until September 1999, as a director of Thales and that this arguably imputes knowledge to the company of the nature of payments to Zuma.

Bezuidenhout concluded: “It is clear in my view that sufficient information was placed before the NDPPs on which they could rationally conclude that there was reasonable and probable cause to believe that TSA had directly or indirectly or with common purpose participated in the enterprise run by Mr Shaik, through a pattern of racketeering activity compromising the planned, ongoing, continuous or repeated participation or involvement in at least two Schedule 1 offences.” 

The payments came to just more than R4-million, a sum that now seems like small change compared with the billions state entities bled in state capture deals inked while Zuma was president.

The arms deal charges have haunted Zuma since 2005 when Shaik was found guilty of soliciting a bribe on his behalf and sentenced to 15 years in prison.

Zuma was due to go on trial in 2006, with the NPA having added Thales to the indictment. Zuma lost a bid to set the charges aside on appeal but they were controversially withdrawn in 2009, paving the way for him to be elected president, and only reinstated in 2018, mere months after his forced resignation.

The interim saw the Democratic Alliance’s ultimately successful legal battle for the release of the so-called spy tapes on which then-NDPP Mokotedi Mpshe had based his decision to bin the charges on the basis of political interference by the former president Thabo Mbeki administration in the timing of Zuma’s initial indictment.

But last year the case was again delayed pending the ruling on Thales’s application for dismissal. The high court application was the company’s third bid to have the charges scrapped, with direct presentations to the NPA and an approach to the Constitutional Court having failed.

The corruption case against Zuma was postponed last year until February 23 to allow pre-trial matters to be resolved.