Publication: Business Day Date: 2005-03-03 Reporter: Tim Cohen Reporter:

Shaik Blames His Accountants for 'Comedy of Errors'



Business Day




Tim Cohen

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The vagaries of accounting and the psychology of accountants were a feature of the corruption trial of Schabir Shaik yesterday, with the accused blaming his accountants for errors in the books of his Nkobi group.

Corruption accused Shaik sought to divert responsibility for substantial adjustments in the accounts of his group from himself to his accountants, saying at one stage that his accountants were responsible for “a comedy of errors”.

Under cross-examination by state advocate Billy Downer, Shaik admitted that despite all the errors, he had not changed his accounting firm David Strachan Tayler or his internal accounting officer.

He would, however, attend to the issue at the end of the trial depending on its outcome, he said.

Downer was questioning Shaik in connection with the second of three charges he faces concerning the keeping of incorrect accounts and tax evasion. The state alleges that Shaik improperly wrote off money used to fund Deputy President Jacob Zuma and his family.

In his initial pleading, Shaik argued that in preparation for the trial, his auditors had discovered they had made a “fundamental error”, and the funds were reinstated as repayable loans made to Shaik.

When questioned about this issue and a host of others of a similar nature, Shaik said he was not in a position to second-guess the advice he received from his auditors and relied on them to give him the correct information. “I would really want to understand the psychology of accountants,” he said.

Shaik acknowledged that at an early point in Nkobi’s history, the money he paid Zuma ­ about R70 000 ­ meant that the company was technically insolvent. But he did so in any event because of the nature of his friendship with Zuma.

Judge Hillary Squires then asked whether paying Zuma “came first”.

Shaik denied this, saying: “It could have been done with the macro view *1 I have of my company”.

“Even though it placed a strain on your company?” Squires asked.

“Well, what would be a problem today would not be a problem tomorrow,” Shaik replied.

Downer put it to Shaik that his comments were a smokescreen to disguise his untrustworthiness, the kind of man who would lie about his qualifications and presented false statements to the bank.

In reply, Shaik recalled a statement made earlier by Downer about another key figure in the trial, French businessman Alain Thetard.

Downer pointed out that just because some of the things Thetard had said were lies did not mean that everything he said was a lie *2.

“There is some good in me, there is some bad in me,” Shaik said.

It was also a day of testy exchanges, with Shaik claiming that some of Downer’s questions were “petty”. Squires intervened and asked Shaik not to provide “offensive answers”. Shaik apologised.

With acknowledgements to Tim Cohen and Business Day.

*1 Can see all of the sons of the earth at the same time and enrich just those most important to enriching oneself - Bumiputera - Vi Va.

*2 The double-edged sword of cross-examination.

But more often than not, there is a fallacy of logic involved here, specifically the tu quoque ("you also" or "you too") fallacy - a regular pitfall of the ill-educated.