Publication	The Natal Witness
Date	2006-02-01
Reporter	Nivashni Nair
Web Link	www.witness.co.za

Fraudster to file for leave to appeal as court confiscates R34 mln

In a landmark ruling at the Durban High Court, convicted fraudster Schabir Shaik was on Tuesday stripped of R34 million.

However, his legal team will appeal Judge Hilary Squires’ judgment on the grounds that it could be unconstitutional.

Shortly after the judgment was handed down on Tuesday, Shaik’s attorney Reeves Parsee said that the Prevention of Organised Crime Act has been put in place to strip a convicted person of proceeds from criminal activities. However, in Shaik’s case, certain amounts that are to be confiscated relate to charges that the Durban businessman was not found guilty of.

He indicated that an application for leave to appeal will be filed within the next 14 days. The proceedings will only take place after Shaik’s current appeal against his fraud and corruption convictions, expected to take place later this year. If Shaik’s sentence is overturned, the confiscated R34 million will be returned to him.

Parsee on Tuesday indicated that if Shaik’s conviction stands, his legal team will make a separate appeal to have his assets returned.

Besides stripping Shaik of R34 million, Squires has ordered that Shaik pay the state’s legal costs, which include the cost of two counsels. In turn, the state has been ordered to pay the “wasted costs”, incurred when it requested a postponement of the proceedings on November 14 last year.

The amount that Squires has ordered Shaik to pay arises from shares and proceeds derived from his criminal activities.

Last year, Squires also found Shaik guilty of paying Zuma over R1,2 million for his influence to secure business deals for his Nkobi group of companies.

The court also found that Shaik facilitated an annual R500 000 bribe from French arms manufacturing company Thomson-CSF to Zuma in exchange for his protection against a probe into SA’s multi-billion rands arms deal.

Nkobi Holdings and Thomson-CSF partnered under the umbrella of African Defence Systems (ADS) to win part of the arms deal tender.

On November 18, 1998 Cabinet chose German Frigate Consortium as its preferred bidder. ADS was part of this consortium. *1 Nkobi Holdings and Thomson-CSF shared the winnings through ADS.

One of the benefits which the state brought before Squires is Shaik’s 20% shareholding in ADS. The shares are worth R21 million.

Although the defence argued that Shaik’s shares were acquired before Zuma was involved in the equation, the court ruled that Shaik is liable to hand over the shares as it only saw success through Zuma’s intervention.

The second amount that will be confiscated is the R12,8 million, which is the ADS dividends that Shaik and his companies received from Thomson SA.

The third benefit is the R500 000 Shaik’s Nkobi Investments received for the sale of its shares in Thomson Holdings to Thomson International. The basis for this confiscation is that the sale of the shares for R500 000 was connected to Shaik’s corrupt payments to Zuma.

The final amount the state claimed was the R250 000 which was the first instalment of the bribe that Shaik facilitated from Thomson-CSF to Zuma.

The bribe was disguised as a service provider agreement between the parties.

The payment of R500 000 was to be made in two instalments, R250 000 before the end of December 2000 and R250 000 on February 28, 2001. In the contract document, two additional payments of R250 000 were “added by hand underneath the typed references to payment of R250 000”. The total amount payable was R1 million.

Evidence heard at Shaik’s fraud and corruption trial last year indicated that only the first instalment of R250 000 materialised.

In his ruling relating to the confiscation application, Squires said that Shaik has been punished by his sentence and therefore it would be senseless to strip him of the R250 000 which he no longer has in his possession.

The National Prosecuting Authority yesterday welcomed Squire’s ruling. “The NPA is obviously very pleased with the judgment. It sends a very clear message that the Prevention of Organised Crime Act [POCA] is a very effective piece of legislation that can and will be used by the State to confiscate proceeds of crimes, no matter how substantial or minor they are. This is one of the first major asset forfeiture cases where POCA has been tested by the courts and proven to be effective. The landmark judgment will assist in future similar asset forfeiture cases as it has set a useful precedent,” spokesman Makhosini Nkosi said.

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*1  Not actually.

The GFC offered in their May 1998 to include ADS as the Combat Suite supplier, but by February 1999 ADS had not been accepted by the Department of Defence and Armscor as the Combat Suite supplier. This only happened unofficially on or about 26 May 1999 and officially on 8 June 1999.

Indeed, negotiations for the supply of the Combat Suite commenced from mid-December 1998 until about 24 May 1999.

ADS and Thomson-CSF Navale joined the GFC in early 1999 to form a new consortium called the Corvette Consortium for South Africa (CCSA), later changed to the European South African Corvette Consortium (ESACC).