Publication: Sapa Issued: Durban Date: 2004-10-21 Reporter: Sapa

Zuma Couldn't Pay for His Lifestyle : Audit Report






Date 2004-10-21


An audit report on the dependency of financially embattled Deputy President Jacob Zuma on fraud and corruption accused Schabir Shaik was presented to the Durban High Court on Thursday.

The 259-page document says there is no sign that Shaik's payments to Zuma were loans as Shaik has claimed.

"We could not find any evidence or indication of an intention of the Nkobi group and Shaik to recover such payment from Zuma," it says.

The document, commissioned by the Scorpions detective unit, was presented by Johan van der Walt, forensic director at international auditing and accounting firm KPMG.

Van der Walt, who described himself as a "bloodhound" to Judge Hillary Squires, is expected to be in the stand for several days.

He said the forensic investigation, which he started in September 2003, was based on a National Prosecuting Authority strongroom full of documents.

The report was accompanied by a 20-page addendum and 22 lever-arch files crammed with annexures and supporting documents, stacked around the front of the court.

Van der Walt also gave the court a "dramatis personae" listing the personalities named in his report.

The supporting documents included copies of original material related to Shaik's Nkobi group, its partner, the French Thomson arms group, their involvement in the multi-billion rand arms deal, payments made to and on behalf of Zuma, and Zuma's own financial position.

The report says Zuma's financial woes surfaced as early as January 1995 when he received a letter of demand from his banker regarding a mortgage bond that was in arrears.

Van der Walt said an analysis of Zuma's financial position revealed the deputy president "could not settle the debts with the means at his disposal".

He said there were times when not even the first payment due by him cleared the bank, and legal proceedings were instituted against him to recover debts.

Van der Walt said Shaik presented himself as Zuma's financial advisor to various institutions, and these institutions communicated directly with Shaik about Zuma's money matters.

However, Zuma's financial position did not improve while Shaik acted as his financial advisor.

Van der Walt's report says: "It is evident from the information at our disposal that Zuma, in his personal capacity, did not have access to sufficient funds derived from his position as an official employed by the South African government, to fund his lifestyle.

"As a consequence (he)had to rely on funds from external sources, such as borrowing from financial institutions, Shaik, third parties and the Nkobi group."

Shaik and other entities related to the Nkobi group ended up settling debts and other personal expenses "for and on behalf of Zuma"' to the tune of R1.2-million.

These payments were made between October 1995 and September 2002.

Van der Walt said it was evident that Zuma "attended meetings and visits with individuals, representing the Nkobi group, on issues that were of interest to the Nkobi group".

This happened especially in relation to Nkobi's dealings with the Thomson group of companies. Nkobi also had financial problems.

The report says the group financed its operations mainly from facilities provided by commercial banks on overdraft.

It says Nkobi made various representations to banks, especially ABSA, about its overdraft position.

"At times, the Nkobi group exceeded its overdraft limits; the bank, due to insufficient funds being available, returned material numbers of cheques and debit orders."

Despite this position the Nkobi group and Shaik continued to support Zuma financially.

The report says the payments by Nkobi and Shaik to Zuma had a "direct correlation" to the group's overdraft.

Despite this, KPMG "could not find any evidence or indication of an intention" to recover these payments from Zuma.

Van der Walt spent several hours giving the court a detailed exposition of the structure, shareholding and directorships of companies in the Nkobi group, and other firms that feature in the Scorpions probe.

He also said he had been instructed to conduct the investigation independently and to come to his findings on an independent basis.

He said on accepting the appointment he explained to prosecutor Billy Downer that he would prefer not to meet anyone who might be involved in the prosecution team until he had completed a substantial part of his work.

It was only later that year, in 2003, that he met Downer again.

Van der Walt said his team did not undertake the audit on generally-accepted accounting principles.

"This investigation goes much wider than conducting an audit," he told the court.

With acknowledgement to Sapa.