Who, What, When and How Much?
|Date||August 2003, Issue 48|
FirstRand and Maharaj : Chronology of a sweet deal (Part 1)
From Broederbond to Brothers Shaik
Back in the 1970s and 1980s Bruinette, Stofberg and Kruger were a Pretoria-based firm of consulting engineers with all the Broederbond credentials needed to get top government contracts. Defence and roads contracts were their biggest and most lucrative. Another Afrikaner-controlled company with similar credentials, Altech Defence Systems, was the government's biggest local supplier of defence electronics.
In the early 1990s Bruinette, Stofberg and Kruger assumed the more neutral name BKS, and Altech Defence Systems changed its name to African Defence Systems - ADS for short by mid-1990s, possibly still nervous about their past and the country's future, the Venter family sold ADS to French defence conglomerate Thomson International (aka Thomson-CSF).
Both BKS and ADS (under new ownership) rushed to find "black economic empowerment" (BEE) partners with the sort of government connections that in their experience would ensure that business continued as before.
Back when A stood for Altech and B for Bruinette, the three brothers Shaik, Mac Maharaj and Jacob Zuma, along with the now-deceased Joe Modise, were key players in the ANC's military and intelligence wing (Zuma recruited the Shaiks to his intelligence network, Maharaj headed up its most famous assignment, Operation Vula, which was aimed at mobilising funds and supporters for the ANC's participation in its first general election).
When the ANC was unbanned in 1992, Shabir Shaik was advisor to ANC treasurer Thomas Nkobi, who died soon after. Following Nkobi's death, Shabir continued as financial advisor to Jacob Zuma. In 1994, when the ANC came to power, Maharaj was appointed transport minister, Modise became defence minister and Zuma KwaZulu-Natal MEC for economic affairs and tourism. Shabir Shaik's brother Mo advised the government on security and brother Chippy was appointed chief of defence procurement.
With all those friends in high places, Shabir reckoned it was time to go into the BEE business. In February 1995 he registered two companies, Nkobi Holdings and Nkobi Investments (The choice of name suggested links to the ANCs fundraising machinery). The latter company would, in due course, have numerous subsidiaries.
Mac and FirstRand Shaik on it
June : Maharaj's Department of Transport awards a R265m contract for new credit-card driver's licences to Prodiba - a consortium of which Shaik's Kobitech and ADS-parent company Thomson CSF are members. Almost immediately a mysterious pattern of selfless generosity begins to emerge. Shaik pays for the Maharaj family to visit Disneyland, Nkobi Holdings pays R47,587 for computers installed at Maharaj's home.
April : Having been authorised by the cabinet to hand over the management of public roads to private business consortia, Maharaj establishes the National Roads Agency, with FirstRand director Barry Adams as its first chairman. He also appoints FirstRand director Kehla Shubane to the NRA board.
25 May : A further R25 000 is deposited into Maharaj's account by Shaik. Shaik's records show two more payments that month to Maharaj or his wife R25 000 on 10 May and R25 000 on 30 May (Later when asked by the Sunday Times, Maharaj declines to say if he received these amounts from Shaik or his companies).
August : Maharaj names the "preferred bidder" for the N3 contract the N3 Toll Road Consortium. Among the consortium members are BKS (Joe Modise would become chairman of the company in 2000), Rand Merchant Bank (part of FirstRand), Women's Empowerment Bank, and Shaik's Nkobi Investments. Shaik's records reveal more payments to Maharaj, R50 000 on 17 August, R55 000 on 19 August, R75 000 on 4 September, R10 000 on 9 October.
18 November : A senior delegation from Thomson International of France, consisting of Messrs Moynot, Thetard and Perrier, meet with Shabir Shaik at Nkobi's offices in Durban. They negotiate the sale of 10% of Thomson's shares in local defence company ADS to Nkobi. Mysteriously, the meeting is also attended by "Minister JZ". This was the first evidence suggesting that Jacob Zuma, then shortly to become deputy president, had an interest in Nkobi and, through ADS, in the massive arms deals about to go down.
January : Maharaj signs a two-year contract with WesBank (a FirstRand subsidiary) to provide R750m-worth of vehicle finance for government employees. Shortly before that, Maharaj had awarded a three-year contract with a turnover of R750m a year to FirstAuto - another FirstRand subsidiary. The two contracts would ensure that well over R3bn of taxpayers' money churned through FirstRand's books, earning the bank hundreds of millions.
Meanwhile, more Shaik payments to the minister of transport are recorded R25 000 on 20 November 1998 (noted as a "social facilitation cost"), R20 000 on 24 November 1998, R25 000 on 18 December 1998 and R13 157 on February 28, 1999.
27 May : The final N3 toll road contract is signed between the National Roads Agency and N3 Toll Concession Ltd.
September : President Mbeki's legal advisor Mojanku Gumbi announces that a draft of a new executive ethics act has been circulated to provincial leaderships of the ANC for comment. The code is intended to regulate the conduct of public office bearers both during and after their terms of office. It will prohibit those who leave public office from using privileged state information to further their business careers. The Finsancial Mail notes that this suggests the need for a "cooling-off period" during which senior officials may not take private jobs in the same sector. It quotes Richard Calland of Idasa saying that internationally the trend is to such a "cooling-off" period. It also quotes Mac Maharaj disagreeing with this view. Interviewed in FirstRand's executive suite, he is quoted as saying that we should "simply adopt international practice". He is in favour of setting only a "basic, minimum"code, and then strengthening this over time.
What was he going to be doing at FirsRand, the FM asked the former minister? "I don't know yet - only that I'm going to have a great time," he replied.
29 September : Thomson Holdings (South Africa) issues thousands of new shares and allots them to its own parent company, Thomson-CSF of France, at R1 000 per share.
30 September : Thomson CSF executive Alain Thetard and Nkobi CEO Shabir Shaik have meeting in Durban, at which Shaik conveys a "request" concerning Jacob Zuma to Thomson (Although Zuma was apparently not present at the meeting, he was in Durban that day). The "request" it later emerges, was for "one or more" payments of R500,000 to Zuma by Thomson in return for his support and protection.
Also on that day, Thomson-CSF buys Nkobi Investments 10 shares in Thomson Holdings (SA) for R500 000, and Shaik resigned from the Thomson Holdings board (But retains a directorship and shares in another local Thomson company).
Remarkably, the price paid for Nkobi's shares in Thomson Holdings is 50 times the price at which the same shares have been issued to Thomson International the day before, leading Scorpions investigators to suspect that the price may have been inflated to generate R500,000 for Zuma.
10 November : Thetard meets with Perrier and Shaik in Paris (at Shaik's request) to discuss "JZ". Thetard asks Shaik to obtain a "clear" confirmation of the request from "JZ" or, failing that, for an "encoded declaration" from Zuma "validating" the request that had come via Shaik in September.
25 November : The cabinet authorises the Department of Defence to sign the final arms procurement contracts Defence Minister Joe Modise then numbly resigns from the cabinet and parliament, so the contracts are signed by his successor a week later.
11 February : Shabir Shaik writes, in his capacity as "executive chairman" of Nkobi Holdings, to Alain Thetard of Thomson-CSF "I refer to our understanding re Deputy President Jacob Zuma and issues raised I will appreciate it if you can communicate to me your availability to meet". Thetard, in reply, scribbled his willingness at the foot of the letter.
11 March : Thetard, Shaik and Zuma meet in the morning in Thetard's room at the Marine Parade Holiday Inn in Durban. Shortly after, Thertard sends an encrypted note to Perrier in Paris, telling him that at the meeting Zuma had given him the "clear confirmation" he had required - "in an encoded form".
Thetard then spells out the deal;
May I remind you that the two main objectives of the "effort"requested of Thomson are:
Protection of Thomson CSF during the current investigations (Sitron) (the SA Navy's codename for its new corvettes).
Permanent support of JZ for the future projects.
Amount 500K ZAR per annum (until the first payment of dividends by ADS).
This last statement is the second bit of evidence to suggest that Zuma had a hidden stake in Nkobi/ADS. Advocate William Downer of the Scorpion concluded that Zuma had made a request for a bribe and was complicit with Shaik and Thetard in "some prior plan".
In the months that follow, according to Shaik's notes, payments to Maharaj continue between 15 October 1999 and 1 March 2000, a further R60 000 is paid. And he continues to make payments on Zuma's behalf, mostly for flat rental and his children's school and university fees (The Scorpions traced payments totalling about R90 000 over a three-year period, of which he appears only ever to have repaid R15 000)
July : The auditor general completes a "regularity" audit of the arms acquisition process. The audit finds that all was not regular.
31 August : Shaik writes to Thetard reprimanding him for not answering his calls over the previous three weeks about "matters requiring urgent attention". Such as the very "very important matter" raised with Perrier in Paris several months earlier, the matter that "he (Perrier) had sanctioned for implementation by yourself".
15 September : The auditor general submits his report on the arms acquisition process to parliament's Standing Committee on Public Accounts (Scopa). His conclusion there have been "material deviations from generally accepted procurement practice" and the explanations provided by the Department of Defence are unsatisfactory. The audit dealt mainly with the awarding of contracts to the five primary defence contractors Thomson's (and Nkobi's) ADS was one of them. The auditor general recommends a further, special, investigation into alleged irregularities relating to sub-contractors (ADS was one, too)
6 October : Shaik writes again to Thetard "Two weeks ago you undertook to call me back from your Mauritius office. Herewith a list of matters urgently requiring our attention". Number five on the list "The matter agreed by ourselves in Pretoria over breakfast. My party is now saying that we are renegading (sic) on an agreed understanding. I share the sentiment with my party that he has been let down, this is particularly unpleasing given the positive response from Mr Perrier, (in consequence of which) my party proceeded to an advanced stage on a certain sensitive matter that was required to be resolved."
15 October : Zuma addresses the world anti-corruption conference in Durban. He speaks about"regaining the moral high ground". "Even as we conclude this conference," he declares, "an act of corruption is being committed somewhere in our country". He has a message for those who thrive on corruption. "We have the will to deal with you decisively."
November : A year has passed since Shaik first met with Therard to discuss "JZs" request for a fee in return for protection. Now he again arranges to meet with directors of the French arms supplier, this time in Mauritius. He takes to the meeting a file containing newspaper articles on the growing controversy surrounding the arms deal (one is headlined, "I smell a very big, dirty rate here!") and the Scopa hearings. In Mauritius Shaik, Thetard and others discuss "damage control". According to investigators, "Shaik expressed his concern about the possibility of further involvement in the investigation by the Heath Investigation Unit."
8 December : IFP MP Gavin Woods, chairman of Scopa, writes a confidential letter to President Mbeki, urging the involvement of Heath's Special Investigative Unit (SIU) in the arms investigation. During the Christmas parliamentary recess, many behind-closed-doors meetings are held between senior ANC and government members to discuss how best to deal with Scopa and the growing arms controversy. Deputy President Zuma plays a leading role.
19 January : Woods gets a reply to his letter - not from Mbeki, but from Zuma. In it Zuma accuses Woods of "misdirecting himself" and now storms about Woods' "assumption that our government, the transnational corporations and foreign governments are prone to corruption and dishonesty."
"The government will act vigorously to defend itself against any malicious misinformation campaign," he tells Woods. Despite Woods' letter having been confidential, Zuma copies his reply to all the contracting parties in the arms deal and their local representatives (To ensure that they note his efforts to protect them?) The government's website still hosts the letter. Heath is fired but other agencies proceed to investigate the arms deals.
March 2001 : Advocate William Downer is designated by the Scorpions to conduct a preliminary investigation.
24 August : Downer has obviously turned up enough evidence to justify a fuller investigation he is designated to probe the "suspected commission of offences of fraud and/or corruption involving the supply of armaments" Thomson and Nkobi's company ADS are among both the contractors and the subcontractors named in Downer's brief.
The Durban high court issues warrants authorising Downer's unit to search and seize documents from the offices of all the Nkobi companies and the homes and offices of Shabir Shaik and Colin Isaacs, financial director of the group.
9 October : The Scorpions team seizes scores of files at the offices of Nkobi Holdings and at Shabir Shaik's Yarningsdale penthouse on the Marine Parade. There to witness the latter search are Shaik's wife Zuleikha and her brother Yusuf Vahed (Their father, wealthy Durban businessman Ahmed Sadek Vahed, serves, together with Mac Maharaj, on the board of FirstRand Bank Holdings Ltd)
Among the files seized by the investigators is one labelled "Dr Sadek Vahed"
To be continued.
With acknowledgement to Noseweek.