'Zuma's Tab Runneth Over'
Bouncing cheques, threats of lawsuits and sequestration, overdrawn accounts and defaulting bonds - this was the financial crisis of Deputy President Jacob Zuma.
This is was what forensic auditor Johan van der Walt discovered during his probe into the somewhat empty pockets of the senior politician.
An analysis of bank accounts, van der Walt told Judge Hilary Squires yesterday, revealed that from July 1996 until December 2003, Zuma had an income of R3,8 million - R2,7m being his salary*1. And yet he spent R4,294m, mostly on "personal expenses".
"As a result, he was reliant on increased overdraft facilities to fund the shortfall."
van der Walt testified that: Zuma bounced cheques or dishonoured debit orders to the tune of R4 477 000 in the seven-year period. He defaulted on bond repayments. He failed to make a first instalment on a new Mercedes Benz. One debtor, Abdool Qadir Mangerah, had threatened him with sequestration over a bill of R150 000. His insurance on another Mercedes Benz, which he crashed, lapsed because he had not paid the instalments.
Repeatedly, Shaik and his companies bailed him out.
The State alleges that in total Shaik and his companies made payments to and on behalf of Zuma amounting to R1.2m over the same period.
This is the essence of one of the corruption charges Shaik is facing - that he paid Zuma for business influence.
Shaik denies a corrupt relationship but admits making most of the payments, saying it was done out of friendship. It is evident from van der Walt's report before the court that neither of the men were financially flush.
Evidence has been that Shaik and his Nkobi group of companies were constantly in overdraft and that there was a direct correlation between this and the payments made to Zuma.
At a time when Nkobi's overdrafts amounted to more than R1m, the companies and Shaik had made payments to Zuma of more than R1m.
van der Walt disclosed yesterday that Absa, Shaik and Zuma's bankers, had originally declined Shaik as a "private bank" client because of his high-risk rating and history of exceeding his overdraft. The decision to take them on as clients in May 2001 had been a "political one".
Only two months later, a bank document reflected that Shaik was a high-risk client with no tangible security. The following year his accounts were downgraded and moved from the private bank to the business centre.
The probe into Zuma's bank accounts was even less impressive.
"He could not pay his debts ... the only alternative was that he incurred them with the knowledge that somebody else would pay them for him," said Van der Walt.
And they did. And according to the report it was not only Shaik but others, including Durban business tycoon Vivian Reddy, who helped.
Reddy bailed Zuma out when he incurred a debt of more than R1m on his Nkandla traditional village development.
Not only did Reddy help him to get a R900 000 bond, he signed surety for part of it and then made the monthly R12 000 repayment on it until March this year - a total of more than R181 756.
The financial problems Zuma had with the Nkandla project are linked to the other charge of corruption against Shaik - that he facilitated a bribe from French arms company Thomson-CSF.
The state claims that the bribe - originally R1m - was solicited by Shaik under the guise of a service provider agreement with the foreign company at a time when Zuma needed money for the development.
Only R250 000 of it was paid, hence the need for Zuma to raise the bond.
Shaik denies this charge.
After seven days in the witness box, van der Walt will conclude his report today with a break-down of the payments.
Next week he will be cross-examined by defence advocate Francois van Zyl.
With acknowledgements to Tania Broughton and the Cape Times.
Simplistic Accounting II
R3,8 m - R2,7m = R1,1 m : just where could this income have come from, Was it the Parliamentary Subsistence and Travel Allowances? No wonder Suraya Beukes wrote him a letter asking for intervention in the Parliamentary Travel Scam.
R4,3 m (outflow) - R3,8 m (inflow) = R0,5 m : unexplained shortfall
Shaik gave him R1,3 m and T-CSF gave him R1,0 m = R2,3 m : benefits not due
One wonders what the South African Revenue Services say about all this.