'Creative Accounting' Used in Nkobi Books
Wendy Jasson da Costa
Schabir Shaik's Nkobi group used "creative accounting" when doing the books of subsidiaries Kobitech and Kobifin, the Durban High Court heard on Tuesday.
This occurred during the establishment of the Prodiba project which was involved in the manufacture of credit card driver's licences, forensic expert Johan van der Walt said.
He said this issue related to count 2 of fraud against Shaik for the writing off of R1.2 million from Nkobi's books as Prodiba development costs.
Shaik faces two charges of corruption and one of fraud relating to payments of R500 000 per year to deputy president Jacob Zuma for alleged protection in investigations into arms deal irregularities.
In December 1995 a consortium agreement was signed between Image Database Technologies (Pty) Limited , Idmatics S A and Nkobi Holdings with the aim of tendering for the supply and personalisation of driver's licence cards in South Africa.
In the Prodiba business plan it was envisaged that the contract value would total R263 000*.
The initial contract was six years with five production years. Van der Walt said each of the shareholders was to provide financing for the projects as well as goods and services. These goods and services were to be supplied via sub-contracts to be signed between Prodiba and the shareholders.
The funding needed for the set up would come from an Industrial Development Corporation loan and the balance of the funding would come from shareholders funds which was estimated at R9-million each.
Van der Walt said documents indicated that Kobitech borrowed this amount from Thomson-CSF (Holding) to cover their shareholders costs after several unsuccessful attempts to get financing from the banks.
He said Kobifin and Prodiba entered into a sub-contract in terms of which Prodiba would pay Kobifin R39 million over the lifespan of the contract.
Van der Walt said it was evident that Prodiba initially under-performed in relation to the business plan and that during the Prodiba period the Nkobi group had solvency problems.
The court heard that a review of the audit planning memorandum in 1999 revealed that the auditor identified a "red light" before auditing Nkobi's books and was of the view that "the group is due for a bank review; the most favourable position will want to be depicted."
He said the financial results of Nkobi were misrepresented several times, with the:
This inflated the assets of the Nkobi group by R3,5 million.
He said the financial statements of Kobifin in the year ended 2000 reflected an amount of R3,5-million as "capital surplus on disposal of workshare".
An amount of R1,2 million was written off against the surplus in the income statement and the net amount of R2,2 million transferred to the Non-Distributable reserve.
At one stage during Van der Walt's testimony on Tuesday he looked up from his report, locked eyes with Shaik with both men sharing a smile before he continued.
Meanwhile the huge media contingent which jostled for seats in the first two weeks of the trial has thinned out considerably with remaining journalists now having the option of choosing where to sit.
With acknowledgements to Wendy Jasson da Costa and Sapa.
* More likely R263 million
** Might be creative, but it's unlawful (ito Companies Act) and surely frowned upon by PAAB.