The Story of the State v Schabir Shaik and Others
Estelle Ellis, Jeremy Gordin
Having returned from exile, Jacob Zuma had to rebuild his life. He was appointed as MEC for Economic Affairs and Tourism in KwaZulu Natal from May 1994. But he would need much more than his salary to make up for the time spent building a new South Africa, instead of a career and a bank balance.
An old friend and comrade, Schabir Shaik of the extended Shaik family of KZN, was a good partner to have. They had a profitable relationship. And how the relationship worked was pretty well hidden. It was visible only in some unusual and incomplete documents. Most were undated, some were hurriedly signed in the wrong places. Almost all showed interest-free loans with no date of repayment. In 1999, the loans were all inexplicably written off.
Shaik, who was Zuma's financial adviser, knew Zuma could at no stage afford to repay the "loans". He knew about the unpaid home loans, an overdraft with Nedbank, a debt owed to Wesbank, money borrowed from SA Permanent Bank and Standard Bank. He knew about the threatened applications for sequestration. He knew that every month Zuma was spending more than his salary. He knew about the dishonoured cheques and unmet debit orders.
Shaik never expected to be paid back. To him it was more a question of buying influence than lending money.
Dishing out money to Zuma made no business sense, but Shaik was thinking of long-term projects, dreaming of profitable new business for his company, Nkobi Holdings, and how Zuma would help him.
Through a series of share transactions, Nkobi Holdings joined hands with the French company Thomson-CSF - a massive international arms company. On May 21, 1996, Thomson Holdings, a South African company, was born and declared itself ready to do business.
The first joint ventures it attempted had nothing to do with arms. It tendered for the upgrading of Durban airport, the ID card contract, the N3 and N4 road projects, the third cellular telephone network, and smart card technology.
Then came the arms deal.
The international company, through its South African subsidiary was seeking influence in government circles at this period, as the change of government in 1994 had left it with few friends in high places. To get one of the arms deal contracts, it had to have strong political backing.
Enter Chippy Shaik, brother of Schabir and in charge of arms acquisition at the Department of Defence. Chippy indicated that he would facilitate matters for Thomson if Thomson's "position" regarding Chippy and his friends proved acceptable. He would otherwise make things difficult.
The international company also chose to invest in the arms deal by buying shares in African Defence Systems, a bidder for one of the lucrative contracts in the arms deal. This bid excluded Nkobi Holdings which was a shareholder of Thomson-CSF in South Africa - to Schabir Shaik's great consternation.
In June 1996, Schabir Shaik held a bosberaad to tell his directors that they must get ready to bid for the electronic defence systems needed for SA's soon-to-be-acquired fleet of corvettes. Shaik said he would use his political connections in order to facilitate the contracts and tenders.
By then he and Zuma were confident that Zuma would be deputy president in the post-Mandela government. Zuma was paid to open doors for Schabir Shaik, as well as to get Nkobi in on the arms deal bonanza. This needed some pretty complicated share transactions, and that was done.
Then the first newspaper article appeared.
It was a story so insignificant that anybody who missed it could be forgiven. Published in the Cape Times, it was squeezed in between a report on a gangster gunned down in Cape Town and a car accident that claimed the lives of three people. Years later people would look back and say: "This was how it all started." But in January 1997 it was merely a brief news story.
"The police are investigating the circumstances surrounding the theft of classified military documents during an armed robbery at the home of Shamin 'Chippy' Shaik, which were in his car," the report read. "The suspects were reported to have fled with Shaik's wallet, watch and briefcase, which contained the documents. Shaik was not injured. Nobody was arrested."
Meanwhile, Schabir Shaik and Zuma wanted to establish a new venture, Nkobi Bank, to act as financial adviser to a bidding consortium on any large-scale public or private sector project. The bank would also compete for government and various ministry budgets as a deposit taker.
But first there were bigger fish to fry.
With the dawn of the millennium, things were looking up for Zuma. He had just been appointed deputy president. Now was the time to consolidate - assets, influence and bank accounts.
He started by developing his traditional residential village estate at Nkandla in rural northern KwaZulu Natal. A building contractor estimated that it would cost R2,4-million (excluding VAT) to make the dream come true. Some negotiations ensued and this was reduced to R1,3-million. Zuma was promised that it would be completed in six months. It took nine. The money was paid in instalments by Bohlabela Wheels, Fakude PZN, and some in cash by Durban businessman Vivien Reddy, both in his personal capacity and with one of his company's cheques.
Then Zuma took out a bond and Reddy signed as surety for R400 000. He also paid the monthly instalments of about R12 000.
Meanwhile, the Nkandla development was becoming more and more expensive.
It was time to sell more influence.
One of Thomson-CSF's directors, Alain Thétard, and Schabir Shaik met on September 30 1999. Shaik asked for money. In exchange, he was offering Zuma's protection against the then current investigation into the arms deal, and also permanent support for future projects.
The price was agreed upon. In March 2000 a meeting was held in Durban at 10.30am between Thétard, Zuma and Schabir Shaik. "Zuma gave the necessary confirmation or encoded declaration," the State will say.
The payment was R1-million. Striking the deal was easy. Getting the French to pay was not. Passionate discussions ensued. Zuma's development was costing a lot of money (he needed R1-million at least) and words like "embarrassing" and "detrimental" were bandied about. Shaik wanted an urgent response to what he called an "extremely delicate matter".
By October 19 2000 Schabir Shaik,as financial adviser to Zuma, was determined to pull the plug on the development. Zuma told the building contractors to ignore Shaik's orders. Zuma drew a cheque of R1-million. Shaik stopped the cheque.
(Tomorrow : What happened next ... )
With acknowledgements to Estelle Ellis, Jeremy Gordin and The Star.