Publication: Business Day Issued: Date: 2004-10-14 Reporter: Grant Clark

Shaik Denies Graft Charges



Business Day

Date 2004-10-14


Grant Clark

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A financial adviser to Deputy President Jacob Zuma Wednesday pleaded not guilty to graft charges in a trial which could jeopardise the career of the top politician, a possible successor to President Thabo Mbeki.

In one of post-apartheid South Africa's biggest trials, local businessman Shabir Shaik is facing three main charges of fraud and corruption which include claims that he paid Zuma to use his political clout to secure business deals.

"I plead not guilty to all such counts presented to me," a calm but tired-looking Shaik told a packed courthouse in this east coast port city.

"I have been given a summary of fact. I am happy with the facts as they stand," said Shaik, whose trial started in full after two days of argument on whether the electronic media should be allowed to transmit a live broadcast of proceedings.

Shaik, a scion of prominent Durban family, admitted paying a cash-strapped Zuma money, but insisted that they were loans which Zuma intended to repay.

"As a close friend (of Zuma), I was prepared to do whatever I could to help him," said Shaik in a statement, read to court by his lawyer Francois van Zyl.

"Over the years, a close friendship had developed between Zuma and myself as well as between our respective families which endures to this day," it added.

The businessman said he undertook to restructure Zuma's debt and became his financial adviser in 1995.

Shaik faces three main counts of fraud and corruption and secondary counts including money laundering, tax evasion, fraud and contravening the Companies Act.

He allegedly paid Zuma R1.3 million between 1995 and 2001 to use his political influence to help secure lucrative business deals.

He also stands accused of brokering a bribe between Zuma and French arms firm Thint, the South African subsidiary of Thales International - formerly known as Thomson-CSF - in which Thint would pay Zuma R500,000 a year in return for protection in investigations into suspected irregularities in the controversial arms deal.

The trial, which has sparked a nationwide media frenzy, could have far-reaching implications for the political career of Zuma, seen by some to be a possible successor to Thabo Mbeki who is serving his final term as South Africa's president.

However, Judge Hilary Squires on Wednesday warned that Zuma was not in the dock.

"The deputy president is not on trial," he said as proceedings got under way, adding that anything that implied otherwise "is irrelevant and inadmissible."

Squires underlined that the trial was also "not a commission of inquiry" into a controversial multi-billion-dollar arms deal in which Shaik has been implicated.

"It should be clearly understood that the summary of fact is not established fact and unless proven it should not be regarded as truth," the judge said.

The prosecution on Monday dropped corruption charges against Thint, which was listed as one of the co-accused, in return for confirmation from its director Alain Thetard that he was the author of a document that allegedly records a bribe offer to Zuma.

Prosecutor Billy Downer said the state would seek to prove that Zuma owed more than R1 million in construction costs while building a private housing complex in his home state of KwaZulu-Natal and that he had "very, very recently" repaid some money to a builder.

He said the deputy president had hoped to fund the construction through the alleged bribe, the SAPA news agency reported.

Prosecutors also plan to present evidence that Shaik not only made improper "loans" to Zuma, but also picked up the tab for the leader's children's education, family allowances and personal items amounting to more than R1 million.

Shaik however said that Zuma had insisted on repaying the money with interest and had insisted on drawing up a formal loan agreement for a revolving loan of up to R2 million.

With acknowledgements to Grant Clark and the Business Day.