Publication: Daily News Issued: Date: 2004-10-26 Reporter: Tania Broughton

Dissecting the Arms Deal



Daily News

Date 2004-10-26


Tania Broughton

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He performed a clinical dissection of South Africa's arms deal, taking it to pieces bit by bit, exposing "high political influence" and how, through this, businessman Schabir Shaik managed to secure a stake in it.

So detailed is KPMG forensic auditor Johan van der Walt's report, it prompted presiding Durban high court Judge Hilary Squires to inquire at one stage if this was all relevant.

But the full picture is now beginning to emerge through the dozens of documents handed in to the court - minutes of meetings, letters and aides memoir which, van der Walt says, is proof of the shady dealings.

Shaik, who is Deputy President Jacob Zuma's financial advisor, is charged with two counts of corruption and one of fraud.

The charges relate to a "generally corrupt" relationship between them, with Shaik and his Nkobi group of companies making payments amounting to R1.2 million to Zuma in return for business influence.

Shaik is also accused of arranging a bribe for Zuma - R500 000 a year - from French arms dealing company Thomsons CSF.

Explaining the history of R6 billion corvette deal, van der Walt said the South African government had sent out requests for information to foreign countries and had received 37 responses.

In 1998, a short-list was drawn up by the Strategic Offers Committee (SOFCOM) of which Shaik's brother, Chippy Shaik was the co-chairman.

Chippy Shaik then had input on the matter at a ministerial briefing where the preferred bidders were named.

This was ratified by Cabinet in November that year, the preferred bidder for the corvette contract being the German Frigate Consortium (GFC).

But while the "formal" process was under way, there was another "informal" behind-the scenes process going on - a corrupt one, according to the state.

The international arm of the French firm Thomsons had shares in African Defence Systems, a leading South African arms company, which was part of GFC.

Shaik's Nkobi group already had shares in Thomson's South African division but were initially excluded from the corvette deal.

"It was the perception of the Thomson group that political connectivity was regarded as a precursor in order to ensure it received favourable consideration in the adjudication process.

"Shaik shared the same view," said van der Walt.

"Indications are that at least Nelson Mandela and Thabo Mbeki were involved in negotiations and discussions leading up to the day when Cabinet approved the list of bidders.

"However, it appears their involvement was limited to attempts to resolving disputes regarding a black empowerment partner component in Thomson-CSF and ADF.

Van der Walt also claimed:

That Chippy Shaik attended a number of meetings with Thomson-CSF representatives during the formal bidding process.

That Schabir Shaik was upset about being excluded from the deal.

That on the day of the Cabinet decision, November 18, 1998, Zuma attended a Thomson CSF meeting after which there was a complex shareholding reshuffle, resulting in Shaik ultimately acquiring a 20% indirect interest in ADS.

That at a later shareholders meeting, Shaik had confirmed that there had been "disputes" which had been resolved "at a high political level".

At that time of acquiring the ADS shares Nkobi Investments had no money to buy this stake and it was funded by the Thomson group.

The trial continues today.

With acknowledgements to Tania Broughton and the Daily News.