Publication: Mail and Guardian Issued: Date: 2004-10-13 Reporter: Ben Maclennan Reporter: Wendy Jasson da Costa Reporter: Sapa

Zuma Debt Aired in Shaik Trial



Mail and Guardian

Date 2004-10-13


Ben Maclennan, Wendy Jasson da Costa, Sapa

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Deputy President Jacob Zuma still owes more than R1-million for costs incurred in the construction of his Nkandla traditional village in KwaZulu-Natal, the Durban High Court heard on Wednesday.

Prosecutor Billy Downer told the Shaik corruption trial that Zuma owes at least R900 000 on the bond and R250 000 to the builder.

In addition, he owes other amounts for loans he secured to fund the development.

Downer said evidence will be that "very, very recently" there was some repayment of the R250 000.

He said the state will prove that the source of the funding Zuma expected for Nkandla was a bribe from French arms company Thomson CSF.

The purpose of the R500 000-a-year bribe was for protection against a probe into irregularities in the arms deal and for support for future projects involving the arms company and Shaik's Nkobi group of companies.

These envisaged projects included military deals, government contracts and the third cellular network.

Shaik faces two charges of corruption and one of fraud relating to alleged payments to Zuma.

Downer said the state will prove that R1,2-million given to Zuma was written off falsely and that both Shaik, Zuma's financial adviser, and Zuma stood to gain by making the money disappear from the books of Shaik's company Nkobi Investments.

Downer said Nkobi Investments suffered as a result of the money paid to Zuma. The company had daily cash-flow problems and was not able to fund shareholder loans.

Its overdraft worsened, and it had a negative effect on the solvency of the overall Nkobi group.

Downer said the state will prove that there was manipulation of creditor payments, and late issuing of audited financial statements.

Earlier on Wednesday, Shaik pleaded not guilty to all charges against him.

His advocate, Francois van Zyl, read a 35-page explanation plea that confirmed he had made a string of payments to, and on behalf of, Zuma and members of his family.

However, he insisted the payments were loans and that Zuma had intended to repay the money.

In the plea explanation, Shaik outlined his friendship with Zuma and explained how he had acted as a banker for the African National Congress when the organisation was still banned in the apartheid years.

"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 read.

After the 1994 elections, Zuma was appointed economic affairs minister for KwaZulu-Natal and in that capacity asked Shaik to act as an adviser to him without remuneration.

Shaik said that in October 1995, Zuma's late wife, Kate, phoned to ask him to "help her" with R3 500 as she was unable to contact her husband.

"I arranged for the amount to be transferred to her account."

Kate Zuma made a similar request in March 1996 for R2 500.

"I do not recall whether I ever mentioned these incidents to Zuma," Shaik said.

At about the end of 1996, Zuma confided to Shaik that he had serious financial problems and was considering leaving politics.

Shaik said that as a close friend he was prepared to do what he could to assist Zuma.

"I undertook to look into his affairs, to restructure his debt and/or to make arrangements with his creditors for the settlement thereof and to put his children on a bursary scheme in my group of companies.

"He was, however, insistent that he would only accept my assistance on the understanding that whatever funds I may spend on his behalf, will be repaid to me.

"I reluctantly agreed that such moneys as I may expend on his behalf would be regarded as loans to him, on the clear understanding that no interest will be payable thereon, due to my religious beliefs."

Later, a formal acknowledgement of debt was drawn up at Zuma's insistence.

This was later superseded by a loan agreement for a revolving loan up to R2-million.

"Despite my protestations, Zuma insisted that an interest clause should be inserted. I told him I will donate any interest that I may receive to charity."

The court adjourned shortly after 3pm and the trial will continue on Thursday.

With acknowledgement to Ben Maclennan, Wendy Jasson da Costa, Sapa and the Mail & Guardian.