In the High Court of South Africa
(DURBAN AND COAST LOCAL DIVISION)
In the matter between :
THE NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS
NKOBI HOLDINGS (PTY) LTD
NKOBI INVESTMENTS (PTY) LTD
KOBIFIN (PTY) LTD
KOBITECH (PTY) LTD
Heads of Argument
On the roll: 18 January 2006
THE NDPP'S SUBMISSIONS
1. This is an application for a confiscation order in terms of section 18(1) of Prevention of Organised Crime Act 121 of 1998.
2. We will refer - to the defendants as Mr Shaik, Nkobi Holdings, Nkobi Investments, Kobifin and Kobitech; - to the Thomson companies as Thomson International, Thomson France, Thomson Mauritius, Thomson Holdings and Thomson SA and - to African Defence Systems (Pty) Ltd as ADS.
3. On 2 June 2005 this court convicted the accused of a number of crimes. The convictions material to this application were the following:
3.1. On count 1, all the accused were found guilty of contravening s 1(1)(a) of the Corruption Act 94 of 1992 by making corrupt payments to Mr Jacob Zuma.
3.2. On count 3 Mr Shaik was found guilty of contravening s 1(1)(a) of the Corruption Act by conspiring with Mr Thetard of Thomsons to pay bribes to Mr Zuma of R500 000 per year.
3.3. On count 3, Kobifin and Kobitech were convicted of money laundering in contravention of s 4 of POCA in that they participated in the disguise and concealment of the first instalment of the annual bribe destined for Mr Zuma.
4. On 3 June 2005 this court granted a restraint order against the defendants in terms of s 26 of POCA. The purpose of the restraint order was to preserve the defendants' assets pending the finalisation of this application for a confiscation order.
5. In terms of the restraint order, a curator bonis was appointed and he was required to render interim reports to this court. He has filed three reports which are before the court.
6. By agreement between the parties they have filed statements, answers and replies in terms of s 21 of POCA. Those statements are also before the court.
7. The state asks for confiscation orders to be made against the defendants in respect of four benefits they received in connection with the crimes of which they have been convicted or other criminal activity intimately related to those crimes. We will devote a chapter of these submissions to each of these four benefits and the confiscation orders that we submit should be made in relation to them. Before we do so however, we devote a chapter to submissions on confiscation orders generally and the rules that govern them.
8. Chapter 5 of POCA vests the criminal courts with a discretionary power to make a confiscation order against anybody convicted of any crime who benefited from it. The purpose of such an order is to deprive the defendant of the proceeds of his crime. It in turn serves broader penal and public purposes by ensuring and demonstrating that crime does not pay.
9. A confiscation order is a civil judgment for payment to the state of an amount of money determined by the court. Although its purpose is to deprive the defendant of the proceeds of his crime, it is not an order for the confiscation of the proceeds themselves. It is a civil judgment for payment of an amount of money determined inter alia with reference to the value of the defendant's proceeds of his crime.
10. An application for a confiscation order may only be made after conviction of the defendant. An application for a confiscation order follows a criminal conviction as an adjunct to the criminal proceedings. This is where the confiscation mechanism under chapter 5 of POCA differs from the forfeiture mechanism under chapter 6. The latter provides for forfeiture by a civil process which is separate from any criminal proceedings and may be undertaken even in the absence of any criminal proceedings.
11. When a defendant is convicted of an offence and the prosecutor applies for a confiscation order, the court must first determine whether the defendant derived any benefit from his crime. If it is not already evident from the evidence before the court, then it may undertake an enquiry into the question. The enquiry is not limited to the benefits the defendant derived from the offences of which he has been convicted but also extends to the benefits he derived from any other criminal activity "which the court finds to be sufficiently related to those offences".
12. The offences concerned need not be of any particular kind. Any offence may underpin a confiscation order as long as the defendant derived benefit from it. If a court finds that the accused has so benefited, then it may make a confiscation order against him for payment to the state of "any amount it considers appropriate".
13. The court's discretion in determining the amount of a confiscation order is however subject to the lesser of the two limitations imposed by s 18(2):
13.1. The first is the value of the defendant's proceeds of the offences or related criminal activity as determined by the court in accordance with the provisions of chapter 5. We will later deal more fully with the determination of this amount. It is in this case the effective upper-limit of the confiscation orders the court may make.
13.2. The second limit is "the amount which might be realised as contemplated in s 20(1)". It is the sum of two amounts namely, - the value of the defendant's own realisable property less certain secured and preferent claims against his estate plus - the value of the "affected gifts" he made to others. This limit however only comes into play "if the court is satisfied" that it is less than the amount of the first limit. It is in other words incumbent upon any party who seeks to rely on this second limit, to satisfy the court of its application. None of the parties have done so in this case. It consequently does not come into play in the determination of this case.
The "benefits" and "proceeds" of crime
14. As appears from this discussion of the requirements for a confiscation order under ss 18(1) and (2), they work with two related concepts. The first is the "benefit" the defendant derived from his crimes and the second is the "proceeds" of his crimes. The court must first determine whether he derived any "benefit" from his crimes. Only if it finds that he has, may it make a confiscation order against him for any amount up to the value of the "proceeds" he derived from his crimes.
15. The two concepts of "benefit" and "proceeds" are interrelated. That is so because s 12(3) provides that a person "has benefited from unlawful activities" if he or she has at any time "received or retained any proceeds of unlawful activities". It follows that in both cases the enquiry is one into the proceeds the defendant derived from his crime. If he derived any proceeds from his crime, then he has benefited from it. If he has benefited from it, a confiscation order may be made against him. It may be made for any amount up to the value of the proceeds he derived from his crime.
16. The enquiry into the value of the proceeds the defendant derived from his crime, brings into play two provisions which are sufficiently important to quote in full:
16.1. The first is s 1(1) which defines the "proceeds of unlawful activities" as, "any property or any service advantage, benefit or reward which was derived, received or retained, directly or indirectly in the Republic or elsewhere, at any time before or after the commencement of this Act, in connection with or as a result of any unlawful activity carried on by any person, and includes any property representing property so derived."
16.2. The second is s 19(1) which tells one how to determine the value of a defendant's proceeds of unlawful activities: "Subject to the provisions of subsection (2), the value of a defendant's proceeds of unlawful activities shall be the sum of the values of the property, services, advantages, benefits or rewards received, retained or derived by him or her at any time, whether before or after the commencement of this Act, in connection with the unlawful activity carried on by him or her or any other person."
17. These two provisions must be read together to determine what benefits may be taken into account in the determination of a defendant's proceeds of his crimes. We will consider them more closely and identify some of their features.
Any kind of benefit
18. Both provisions make it clear that the kinds of benefit taken into account include any property, service, advantage, benefit or reward. It is presumably implied that they must have economic value. It accordingly means that any benefit of any kind is taken into account as long as it has economic value.
Directly or indirectly obtained
19. One of the questions arising in this application, is whether a confiscation order may be made against a defendant who has not received any direct benefit but has indirectly benefited from his crime in that his company has been enriched by it. We submit that the answer is clearly that an indirect benefit of this kind suffices and can found a confiscation order against the guilty shareholder who benefited indirectly via his company. That is so for two reasons:
19.1. The first is that the definition of "proceeds of unlawful activities" in s 1(1) makes it clear that it includes benefits received "directly or indirectly". The ordinary meaning of that phrase means that the "proceeds of unlawful activities" include benefits indirectly obtained through another person or entity.
19.2. The second is that both the definition in s 1(1) and s 19(1) make it clear that the kinds of benefits that must be taken into account, are so wide as to include the economic benefit a shareholder receives when his company is enriched. Section 19(1) for instance makes it clear that the value of a defendant's proceeds of unlawful activities includes any "advantages, benefits or rewards". Those concepts are wide enough to include the advantage, benefit or reward a shareholder receives if his company is enriched by his crime.
The connection between the crime and the benefit
20. Both the definition of "proceeds of unlawful activities" in s 1(1) and s 19(1) make it clear that the connection between the proceeds and the crime need not be direct:
20.1. The proceeds include everything "derived, received or retained". It for instance includes benefits which the defendant legitimately acquired but retained by or as a result of his offences.
20.2. The proceeds need not have been derived, received or retained "as a result of" the defendant's offences. It also suffices if they were derived, received or retained "in connection with" the offences. The causal link in other words need not be close.
20.3. The Appellate Division held in Van Streepen that the phrase "in connection with" is one devoid of precise meaning and that its meaning must be determined from the context in which it is used.
20.4. It is consequently significant that in POCA, parliament chose to include in the proceeds of crime subject to confiscation, any benefits received, retained or derived "in connection with" the defendant's crimes rather than to limit it to benefits received, retained or derived "from" or "as a result of" those crimes.
20.5. It follows that although there must be some connection between the benefit and the crime, it need not be close or direct. The legislature intended the net to be cast significantly wider so as to include all benefits received, retained or derived "in connection with" the crime.
"Proceeds" means "gross proceeds"
21. Both the definition of "proceeds of unlawful activities" in section 1(1) and section 19(1) make it clear that "proceeds" means "gross proceeds". It does not mean "nett proceeds" or "profit". One must disregard the price or other quid pro quo the defendant might have paid or given for the proceeds he received in connection with his crime. The definition of "proceeds of unlawful activities" in s 1(1) makes it clear that it includes "any property or any service advantage, benefit or reward which was derived, received or retained … in connection with or as a result of any unlawful activity". It speaks of gross values and does not leave room for the deduction of expenses. Section 19(1) is perhaps even more explicit when it says that the value of a defendant's proceeds of unlawful activities is "the sum of the values of the property, services, advantages, benefits or rewards received, retained or derived by him". It is clearly the value of everything the defendant received in connection with his crime without taking into account what he gave for it in return.
22. This understanding accords with the interpretation adopted by his lordship Mr Justice van der Merwe in Joubert's case. He also undertook a wide-ranging survey of English learning on their confiscation provisions on which ours were modelled. As appears from the survey, all the English authorities make it clear that the value of the proceeds of crime taken into account, is the gross value received by the defendant without regard to the value given for it in return.
23. The most recent and authoritative of the English cases is the judgment of the House of Lords in Smith's case. Lord Roger said that, "the courts have consistently held that 'payments' received in connection with drug trafficking means gross payments rather than nett profit and that the 'proceeds' of drug trafficking means the gross sale proceeds, rather than the nett profit after deducting the cost of the drug trafficking operation."
It does not matter what happened to the proceeds
24. It does not matter what happened to the proceeds. It makes no difference if the defendant spent or lost it. What matters is the value of the property, services, advantages, benefits or rewards he "received, retained or derived" in connection with his crime. It means that, if the defendant "received" a benefit in connection with his crime, then its value constitutes the proceeds of his crime whether he has since then retained it or not. The value of the defendant's proceeds of his crime is determined when he receives or retains it and is not dependent on what he does with it or what happens to it thereafter.
25. This is how the SCA interpreted s 18 of POCA in Kyriacou. The defendant was convicted of receiving stolen property found in his possession to the value of R4,5m. The court ordered that the stolen property be returned to its rightful owners. The defendant was in other words deprived of all the proceeds of the crimes for which he was convicted. The SCA nonetheless held that it did not deprive the court of its discretion to make a confiscation order. It went on to say that it would be an improper exercise of the court's discretion to make a confiscation order for the value of proceeds of which the defendant had been wholly deprived. The important point for present purposes however is that the SCA held that it was a factor bearing on the exercise of the court's discretion. The "value of the defendant's proceeds" of his crime remained R4,5m despite the fact that he had been deprived of all of it.
26. The TPD and WLD have also adopted this interpretation. His lordship Mr Justice van der Merwe did so in Joubert and his lordship Mr Justice Malan did so in Swanepoel. His lordship Mr Justice van der Merwe for instance concluded in Joubert that, "a defendant will be liable to a confiscation order once he has obtained the benefit but has lost it or passed it on to another".
27. This understanding also accords with the interpretation of similar legislation by the English courts. In Smith's case Lord Rodger for instance said the following in the House of Lords: "These provisions show that, when considering the measure of the benefit obtained by an offender in terms of section 71(4), the court is concerned simply with the value of the property to him at the time when he obtained it or, if it is greater, at the material time …. It therefore makes no difference if, after he obtains it, the property is destroyed or damaged in a fire or is seized by customs officers: for confiscation order purposes the relevant value is still the value of the property to the offender when he obtained it. Subsequent events are to be ignored … Such a scheme has the merit of simplicity. If in some circumstances it can operate in a penal or even a draconian manner, then that may not be out of place in a scheme for stripping criminals of the benefits of their crimes. That is a matter for the judgment of the legislature, which has adopted a similar approach in enacting legislation for the confiscation of the proceeds of drug trafficking."
The same proceeds in different hands
28. If a benefit is received by X and he passes it on to Y, it may constitute the proceeds of crime in the hands of both X and Y. In other words, if the same proceeds flow through a succession of criminal hands, there may be a multiplicity of confiscation orders against each of them for the same benefit passed from one to the other.
29. The English Court of Appeal recognised as much in the case of Simpson. His lordship Mr Justice van der Merwe quoted it with apparent approval in Joubert's case. Both recognised, "that there can be multiple recovery of the same sum which passes through the hands of successive dealers, regardless of the amount of profit made by the dealer or dealers or of whether any profit was made at all".
30. There is no anomaly in the potential for a multiplicity of confiscation orders in those circumstances. That is because the purpose of confiscation is inter alia to strip criminals of the gross proceeds of their crimes so as to deter others from it.
The court's discretion
31. Subject to the limitations imposed by s 18(2), a court that makes a confiscation order in terms of s 18(1), exercises a wide discretion in its determination of the amount of the order. It "may" make a confiscation order in "any amount it considers appropriate".
32. The defendants complain that some of the confiscation orders sought by the state would be out of all proportion to the seriousness of their crimes and the benefits they derived from it. But their complaints are based on the wrong premise that proportionality and fairness involve a balance between the amount of the confiscation order on the one hand and the seriousness of the underlying crimes and the benefits derived from them on the other. We accept that the court will in the exercise of its discretion seek to strike a balance between means and ends, that is, between the impact of its confiscation order on the one hand and the purposes sought to be achieved by it on the other. However, we submit for the reasons that follow that the objectives of confiscation go much wider than the defendants seem to assume.
33. POCA does not merely have a "backward-looking justification" of stripping criminals of the proceeds of their crimes. It also has a "forward-looking justification" that seeks to reduce the levels of crime by deterring people from engaging in it.
34. The SCA for instance made the point in Cook's case that the objectives of POCA include "removing incentives, deterring the use of property in crime, eliminating or incapacitating the means by which crime may be committed and at the same time advancing the ends of justice".
35. The SCA more recently again held in Prophet's case that, "any proportionality analysis would have to weigh the impact of the forfeiture on a respondent, not only against the severity of his crime but also against the public interest in the prevention of crime, since the public interest is considered to be a legitimate objective that forfeiture is designed to serve".
36. Lord Steyn also made this point in Rezvi's case under the English Criminal Justice Act of 1988: "It is a notorious fact that professional and habitual criminals frequently take steps to conceal their profits from crime. Effective but fair powers of confiscating the proceeds of crime are therefore essential. The provisions of the 1988 Act are aimed at depriving such offenders of the proceeds of their criminal conduct. Its purposes are to punish convicted offenders, to deter the commission of further offences and to reduce the profits available to fund further criminal enterprises. These objectives reflect not only national but also international policy."
37. The European Court of Human Rights made the same point in the case of Phillips in relation to the confiscation provisions in the English Drug Trafficking Act of 1994: "the making of a confiscation order operates in the way of a deterrent to those considering engaging in drug trafficking, and also to deprive a person of profits received from drug trafficking and to remove the value of the proceeds from possible future use in the drugs trade".
38. It must in conclusion be borne in mind that proportionality in cases of this kind cannot and should not be "measured with fine legal callipers". Their approach should be more robust as the SCA recently emphasized in Prophet's case: "The introduction of the forfeiture procedures by the Act was brought about because of the realisation by the Legislature that there was rapid growth, both nationally and internationally, of organised criminal activity and the desire to combat these criminal activities by, inter alia, depriving those who use property for the commission of an offence of such property. The consequences may be harsh, but as Willis J said in NDPP v Cole, forfeiture may play an important role in the prevention and punishment of drug offences. In my view, courts should thus guard against the danger of frustrating the lawmaker's purpose for introducing the forfeiture procedure in the Act. A mere sense of disproportionality should not lead to a refusal of the order sought. To ensure that the purpose of the law is not undermined, a standard of 'significant disproportionality' ought to be applied for a court to hold that a deprivation of property is 'arbitrary' and thus unconstitutional, and consequently refused to grant a forfeiture order. And it is for the owner to place the necessary material for a proportionality analysis before the court."
Evidence and procedure
39. Section 13 of POCA makes it clear that these are civil proceedings governed by the civil rules of evidence and the civil burden of proof.
40. The proceedings are inquisitorial in that they take the form of an enquiry undertaken by the court itself in terms of s 18(1). It is the court's enquiry held subject to its control and not the parties' lis placed before the court for its determination. The evidence upon which it is based, includes all the evidence before the court adduced in all the phases of the criminal proceedings as well as the evidence adduced as part of the court's own enquiry under s 18(1).
41. The significance of the parties' statements in terms of s 21 is two-fold. The first is that the statements constitute evidence on oath. They constitute additional evidentiary material upon which the court may base its decision. The second is that s 21(2)(b) provides that, insofar as the defendants do not dispute the correctness of any allegation made in the prosecution's statements, "that allegation shall be deemed to be conclusive proof of the matter to which it relates". This is a significant implication because, as will appear from the statements, most of the prosecution's statements of fact are not disputed. The debate between the parties is largely confined to the inferences that may legitimately be drawn from those facts and the legal implications of them.
42. The state is also aided in these proceedings by the presumption created by s 22(3)(a)(i) of POCA. It provides that, for the purpose of determining the value of the defendant's proceeds of unlawful activities in an enquiry such as this one, if the court finds that the defendant has benefited from an offence and that "he or she held property at any time at, or since, his or her conviction", then that fact must be accepted "as prima facie evidence that the property was received by him or her at the earliest time at which he or she held it, as an advantage, payment, service or reward in connection with the offences or related criminal activities referred to in s 18(1)".
43. It appears from the affidavits made by the defendants which are attached to the curator's second interim report, that they hold the following assets which they are prima facie deemed in terms of s 22(3) to have received as an advantage, payment, service or reward in connection with their offences or related criminal activities:
43.1. Mr Shaik holds an effective interest of 92% in the Nkobi group through Starcorp (Pty) Ltd. The value of this interest is R44 795 424.
43.2. Nkobi Holdings holds 100% of the shares in Nkobi Investments.
43.3. Nkobi Investments holds, - 25% of the shares in Thomson SA now known as Thint (Pty) Ltd which in turn holds 80% of the shares in ADS. The value of this investment is R21,018m. - 100% of the shares in Kobitech which are worth R13,9m, and - 100% of the shares in Kobifin which are worth R20,6m.
44. We will submit that there are no material disputes of fact on the evidence before the court relevant to the application for a confiscation order. If we are mistaken however and if this court should hold that there are material disputes of fact that cannot be determined on a balance of probabilities on the available evidence before the court, then we submit that the court should, in the exercise of its control over its inquiry in terms of s 18(1), refer the disputes to oral evidence.
THE FIRST BENEFIT
45. The first benefit is an effective 20% interest in ADS. The defendants acquired and continue to hold it as follows:
45.1. Thomson SA holds 80% of the shares in ADS.
45.2. Nkobi Investments holds 25% of the shares in Thomson SA and thus indirectly holds 20% of ADS.
45.3. Nkobi Holdings holds 100% of the shares in Nkobi Investments and thus also indirectly holds 20% of ADS.
45.4. Mr Shaik directly and indirectly holds 92% of the shares in Nkobi Holdings and thus effectively holds 18,4% of ADS.
46. The first benefit may also be expressed in terms of the economic benefit each of the defendants received in the form of the enhancement of the value of their shares by the underlying acquisition by Thomson SA of an 80% interest in ADS. That acquisition enhanced the value of all the shares along the chain from ADS to Thomson SA to Nkobi Investments to Nkobi Holdings and ultimately to Mr Shaik.
47. It follows that the first benefit may either be expressed as the indirect acquisition of an interest in ADS or as the enhancement in the value of the defendants' shares as a result of the underlying acquisition by Thomson SA of an interest in ADS. They are not different things. They are merely different ways of looking at the same thing.
The acquisition of the benefit
48. It is not necessary to tell the story again of how Mr Shaik and the Nkobi companies acquired an effective interest of 20% in ADS. The story was fully told in this court's main judgment. It is again told in considerable detail in the affidavits of Mr du Plooy and Mr Van der Walt. The defendants do not dispute their account in any material respect.
49. At the heart of the story of the defendants' acquisition of a 20% stake in ADS, is the broader story of the Thomson group's entry into the South African market to win and exploit government contracts. They took on local partners to do so. They ultimately included Mr Shaik and his Nkobi group as well as General Lambert Moloi and his FBS group. It was however not all plain sailing. Thomsons initially decided to go into partnership with Shaik-Nkobi, then had second thoughts about them but was ultimately persuaded to get into bed with them after all. Their partnership was ultimately housed in Thomson SA held as to 75% by the Thomson group and 25% by Nkobi. Thomson SA in turn acquired 80% of ADS with the balance of 20% going to General Moloi's FBS.
50. The defendants in other words acquired their 20% interest in ADS by and through their partnership with the Thomson group. The next question is whether the formation of their partnership was in any way connected to their crimes and more particularly their corrupt relationship with Mr Zuma.
The connection between the crime and the benefit
51. We refer to our earlier submissions on the required connection between a crime and its benefit for them to give rise to a confiscation order. In terms of the definition of "proceeds of unlawful activities" in s 1(1) and in terms of s 19(1), the benefit need merely be one derived, received or retained "in connection with" the crime. The question is in other words whether there was such a connection in this case between the defendants' corrupt relationship with Mr Zuma on the one hand and their acquisition of a 20% stake in ADS on the other.
52. We submit on two different bases that there was such a connection: ? The first is that Mr Shaik used the defendants' corrupt relationship with Mr Zuma to sell himself and his companies to Thomsons. They were persuaded to go into partnership with Mr Shaik and his companies because of their relationship with Mr Zuma. In this way, the stake in ADS was a benefit the defendants derived from their relationship with Mr Zuma. ? The second is that Mr Zuma intervened on the defendants' behalf and persuaded Thomsons to go into partnership with them at a critical point when Thomsons seemed to veer the other way.
53. We will deal with each of these connections between the defendants' corrupt relationship with Mr Zuma and their acquisition of a stake in ADS.
The defendants used Mr Zuma as a selling point
54. We submit that it is clear and this court has indeed explicitly held, that the very purpose of the corrupt retainer paid to Mr Zuma, was to buy his protection and support. It gave the defendants "political connectivity" which they flaunted and exploited in the marketplace. They did so as a matter of course and in selling themselves to Thomsons in particular. Their method succeeded in that it was a material consideration that persuaded Thomsons to go into partnership with the defendants.
55. This court has very explicitly held that the defendants' motive with the corrupt payments to Mr Zuma was to buy his protection and support and that their method of doing business in general and with Thomsons in particular, involved the flaunting and exploitation of their relationship with Mr Zuma:
55.1. The court referred to and apparently accepted the evidence of Mr John Sono that it was commonplace for Mr Shaik to explain to his potential business partner audiences that Nkobi had "political connectivity" which meant that, "We, Nkobi, had political connections in government, and this meant an ability to deliver contracts to any joint venture that enlisted Nkobi as a Black Economic Empowerment partner". Mr Sono said that this connectivity had nothing to do with black economic empowerment. He in fact resigned from the group because this claim to black economic empowerment "was a sham".
55.2. Ms Bianca Singh testified that Mr Shaik had said on occasion in effect that he did not mind being exploited by political figures. He did what they wanted because they did what he wanted.
55.3. Mrs Bester testified that political connectivity at Nkobi meant "Zuma's high position in the ANC and Shaik's link to him" which was regarded as "an important factor in making Nkobi attractive as a black economic empowerment partner".
55.4. The court was explicit in its finding that Mr Shaik's intention was to buy Mr Zuma's protection and support: "If Zuma could not repay money, how else could he do so than by providing the help of his name and political office as and when it was asked, particularly in the field of government contracted work, which is what Shaik was hoping to benefit from and Shaik must have foreseen and, by inference, did foresee that if he made these payments, Zuma would respond in that way".
55.5. The court also referred to a number of letters by Mr Shaik to various would-be business partners, in which he invited them or recommended them to meet Mr Zuma "to whose political officers and close association with Shaik, reference would then be made". In some of them "there are quite obvious suggestions that any joint venture with Nkobi would be sure of political favour from this quarter".
55.6. In the same vein, the court noted that Mr Shaik's self-assumed title of "financial advisor to the Deputy President" or "economic advisor to the Deputy President", was "blazoned across letterheads, business cards and business brochures".
55.7. The court described this conduct of Mr Shaik as "blatant advertising" of his association with Mr Zuma which was, "patently aimed at attracting business partners on the basis of political support for any eventual joint venture would be forthcoming from Jacob Zuma and in our view, that clearly underlies the reason why these payments were made."
55.8. In its judgment on sentence, this court described the defendants' corrupt payments to Mr Zuma as an effective "investment in Zuma's political profile … from which the accused could benefit".
56. This technique of Mr Shaik of using his relationship with Mr Zuma both as a carrot and a stick to advance his business interests, is also illustrated by the exhibits identified in this application:
56.1. In his letter to Mr Perrier of 17 March 1998 Mr Shaik referred to "my recent discussion with the Honourable Minister Jacob Zuma Vice President of the African National Congress" and said that the latter was "extremely concerned with the conduct of the Thomsons-CSF group". Mr Shaik added that "the Vice President, the Honourable Mr Jacob Zuma (accordingly) requests an urgent meeting with yourself in Durban, South Africa to address these concerns". To add further weight, Mr Shaik indicated on the letter that he was forwarding copies to both Mr Thabo Mbeki and Mr Jacob Zuma.
56.2. In his letter to Mr Perrier of 13 May 1998 Mr Shaik again reminded him of the request for a meeting by "the Minister Jacob Zuma".
56.3. In Mr Shaik's meetings with Thomsons on 4 and 5 February 1999, he assured them that, if Thomson SA could help to form consortiums for certain projects, "Mr Zuma and Mr Shabir Shaik are ready to come to Paris immediately".
56.4. In a meeting with Mr Arrubarrena on 7 or 8 June 2000, Mr Shaik asked Thomsons in effect to relieve him of liability for repayment of the loan he used to pay for the Nkobi shares in Thomson SA "in exchange for his political support in order to grow the business".
56.5. Lastly, Mr Shaik was reported to have inquired from Mr Chabas on 21 February 2001 when he was going to receive dividends from Thomson SA beyond those needed to repay the loan because he said he was "concerned about being able to help those who have helped him".
57. One obviously looks in vain for any confession by Thomsons that they went into partnership with Mr Shaik and his group because of their relationship with Mr Zuma. As a matter of inference however, the overwhelming probability is that it was precisely their "political connectivity" that Thomsons were looking for and that was a decisive or at least a material consideration in their decision to go into partnership with the defendants.
58. Thomson's approach to business generally and to business in South Africa in particular, was made absolutely clear in evidence. This court mentioned the following in that regard:
58.1. Mr Moynot said "with charming Gallic candour" that it was "standard practice in the armaments industry" to cultivate the services of the confidantes of the decision-makers. He added that in the armaments industry, the ultimate choice between competing bids, was inevitably "made at political level" despite the existence of apparently impartial institutions like tender boards and the like.
58.2. Mr Moynot added that in the instant case, "the final choice was always going to be made at a political level" and thus there was a "need to meet the relevant political figures to impress on them the wisdom of selecting one's own offerings and to cultivate the individuals who claimed to facilitate such access still remained".
58.3. Mr Shaik himself testified that Mr Perrier's explanation for Thomson's hesitation in going into partnership with Nkobi in ADS, was that "the South African government was Thomson's only customer" and that it accordingly "had to be careful that it selected an economic empowerment partner that was acceptable to that customer".
59. The exhibits relied in this application also illustrate Thomson's anxiety over the years to ensure that its South African partner would bring maximum political influence to the partnership:
59.1. Mr Moynot's fax of 23 September 1997 gives a glimpse of the consternation Thomson experienced, after they had initially agreed to go into partnership with Mr Shaik and his group, when Mr Youssuf Surtee suggested to them that Mr Shaik and his companies might have become persona non grata.
59.2. At the critical time that Thomsons was persuaded to go into partnership with Mr Shaik and Nkobi after all, Mr Moynot noted in his memo of 17 July 1998 that "Zuma is the rising man".
59.3. At about the same time, Mr Thetard's note of 23 July 1998 also manifested their anxiety to find out where the greatest political influence lay in their selection of a partner.
60. Since the formation of the Thomsons-Nkobi partnership, their conduct has made it clear how central their relationship with Mr Zuma has always been to their partnership. It fortifies the inference that the partnership was built on and around the defendants' relationship with Mr Zuma. This court for instance convicted Mr Shaik on count 3 of making an agreement with Mr Thetard "to offer or give to Jacob Zuma the sum of R500 000 per year until dividends from ADS became available". The significance of this agreement in the context of the present inquiry is two-fold: It firstly vividly illustrates the importance that both Nkobi and Thomson attached to their relationship with Mr Zuma. Thomson was persuaded to make a very substantial further investment of R500 000 per year in their relationship with Mr Zuma. It is consistent only with our submission that the Nkobi-Thomson partnership was created in the first place on and around the defendants' relationship with Mr Zuma. It is secondly particularly significant that the payments of R500 000 per year were intended to fill the gap until dividends from ADS became available, that is, beyond those required to pay off the loan. It is consistent only with our submission that Nkobi was given a stake in ADS in the first place, in consideration for its relationship with Mr Zuma that it brought into the partnership. It was Nkobi's contribution to the partnership and the carrot that attracted Thomsons to it.
61. We submit that the probabilities are overwhelming that the defendants' relationship with Mr Zuma was the main consideration or at least a material consideration in Thomson's decision to go into partnership with them. The partnership in turn gave the defendants a 20% stake in ADS. There is in other words a direct causal connection between the defendants' corrupt relationship with Mr Zuma on the one hand and their acquisition of the first benefit on the other.
Mr Zuma's interventions
62. It is common cause that when Thomsons reneged on their earlier promises to go into partnership with Nkobi in ADS, Mr Zuma intervened and persuaded Thomsons to go into partnership with Nkobi after all. This court described these events in its main judgment. We merely emphasize a few features of this story.
63. We have already referred to Mr Shaik's angry and anxious letter to Mr Perrier of 17 March 1998 when he had discovered that Thomsons had second thoughts about a partnership with Nkobi. What is significant for present purposes is how Mr Shaik used his relationship with Mr Zuma as a big stick on this occasion.
64. When he received no reaction from Mr Perrier, Mr Shaik again wrote to him and again waived the Zuma stick on 13 May 1998.
65. When the parties met on 9 June 1998 Mr Shaik fulminated about Thomsons' betrayal. He was however stonewalled by Thomsons and achieved nothing on his own.
66. Mr Shaik eventually managed to arrange for Mr Zuma to meet Thomsons in London on 2 July 1998. Mr Shaik was the only witness who testified about the discussion at this meeting and his account was unreliable. It is common cause however that Mr Zuma persuaded Thomsons to go into partnership with Mr Shaik and Nkobi in ADS after all. The defendants say in this application that, as a result of the discussion between Mr Zuma and Mr Perreir, the dispute about their participation in ADS through Thomson SA was resolved.
67. After the London meeting of 2 July 1998, flesh was put to the bones of the decisions taken at that meeting. The structure by which effect was given to those decisions was discussed and agreed at the meeting of 18 November 1998. There is some uncertainty about the purpose of Mr Zuma's attendance and the role he played at this meeting. Two things are however clear. The first is that his presence at the meeting was not fortuitous. It is clear from Mr Perreir's schedule of 13 November 1998 that he knew before the meeting that Mr Zuma would attend. The second is that at the very least Mr Perrier wanted to and did in fact use the opportunity to explain to Mr Zuma how they were going to give effect to the decisions taken in the meeting with him on 2 July 1998. It emphasizes the importance that Thomsons attached to the views of Mr Zuma and the role he played in their decision to go into partnership with Nkobi.
68. We submit that it is clear that, as a result of the defendants' corrupt relationship with Mr Zuma, he interceded on their behalf at a critical stage and persuaded Thomsons to go into partnership with them. That was how they acquired their stake in ADS. This is a second and close connection between their corrupt payments to Mr Zuma on the one hand and their acquisition of the first benefit on the other.
A prior contractual right?
69. The defendants argue that Mr Zuma's intervention was not the cause of their acquisition of a stake in ADS because they had a prior contractual right to it. Even if Mr Zuma had not intervened on their behalf, they would still have acquired a stake in ADS, if needs be by litigation.
70. We submit with respect however that this contention is unfounded or in any event not an answer to the application for confiscation for the following reasons: First, the defendants did not have an enforceable contractual right to a stake in ADS. Secondly, whether they had such a contractual right or not, the fact of the matter is that in the event they acquired their stake in ADS by Mr Zuma's intervention and not by the enforcement of their right. Thirdly, as we have already demonstrated, the defendants in any event acquired a stake in ADS through their partnership with Thomsons by selling the "political connectivity" of their relationship with Mr Zuma. There was a close connection between their corrupt payments to Mr Zuma on the one hand and their acquisition of a stake in ADS on the other, quite independently of Mr Zuma's interventions on their behalf.
71. The defendants do not identify the contract on which they rely when they say that they had a prior contractual right to a stake in ADS. In fact, it is not clear whether they rely on a contract in terms of which they had such a right or on a contract in terms of which Thomson SA had such a right. Be that as it may, we submit that the defendants had no such contractual right:
71.1. Nkobi and Thomsons signed a letter of understanding on 10 August 1995. It was however firstly no more than a letter of understanding and was clearly not intended to be a binding and enforceable contract. It secondly merely envisaged a joint venture for which they would incorporate a company jointly held by both parties. It was recorded that the object of the company "would be primarily to participate in a number of civilian and military projects that are due to be implemented in the Republic of South Africa". It did however not begin to promise Nkobi a stake in all the projects that Thomsons might undertake in South Africa.
71.2. The shareholders agreement of 17 July 1996 also did not create such a contractual right. It was in the first place merely an agreement between the shareholders in Thomson SA, that is, between Thomson Holdings and Nkobi Investments. It did not bind any other entity in the Thomson group. It secondly merely regulated the relationship between the two shareholders as between the two of them and gave neither a right to participate in any other projects that Thomson might undertake in South Africa.
71.3. The defendants presumably rely on the understandings reached at the meetings of the shareholders and directors of Thomson SA and Thomson Holdings on 25 August 1997. It is clear that both the Thomson shareholders and directors and the Nkobi shareholders and directors were ad idem that Thomson SA should attempt to acquire a stake in ADS. But an agreement reached at a meeting of the shareholders and directors of a company who are merely present and merely act in that capacity and no other, can never create binding rights against and obligations to outside parties. Mr Shaik and his Nkobi group could justifiably feel betrayed when Thomsons decided to acquire ADS for themselves but the fact of the matter is that they did not have any contract binding and enforceable against Thomsons not to do so.
71.4. The same goes for Mr Moynot's letter to Mr Shaik of 22 September 1997. It was no more than an expression of intention or perhaps even an agreement in principle but clearly did not create a valid and enforceable contractual right to participate in the acquisition of an interest in ADS.
71.5. We accordingly submit that Mr Shaik and the Nkobi companies in fact had no contractual right to a stake in ADS.
72. But even if they had such a contractual right, the sequence of events that ultimately led to their acquisition of a stake in ADS, was that Mr Zuma successfully intervened on their behalf and persuaded Thomsons to go into partnership with them. They did not acquire their stake in ADS by the enforcement of any contractual right they might have had. In other words, as a matter of historical fact, Mr Zuma's intervention on the defendants' behalf was one of the links in the chain which ultimately led to their acquisition of a stake in ADS. This actual chain of causation which exists as an historical fact, does not disappear merely because it might have been possible for the defendants to acquire the same benefit in a different way. The fact is that they did not acquire it in a different way. They acquired it by Mr Zuma's intervention. He in turn intervened because it was the kind of protection and support for which they had made the corrupt payments to him.
73. We have in any event demonstrated that the defendants' relationship with Mr Zuma was a material consideration in the creation of their partnership with Thomson and thus in their acquisition of a stake in ADS. The connection between the corrupt payments to Mr Zuma on the one hand and the defendants' acquisition of the first benefit on the other, in other words exists quite independently of Mr Zuma's intervention on their behalf at the critical stage. Even if he had never intervened, their acquisition of a stake in ADS would still have been a product of their corrupt payments to Mr Zuma. The connection between the two was in other words not only established by his intervention and accordingly also not depends on it.
Was Mr Zuma's conduct criminal?
74. The defendants argue that Mr Zuma's intervention on 2 July 1998 and again on 18 November 1998 "did not constitute criminal activity".
75. We are not sure what the relevance of this contention is. It is irrelevant for our purposes whether Mr Zuma was guilty of a crime or not. What is relevant is that this court has already found that the defendants had made corrupt payments to Mr Zuma. The question is whether their criminal conduct was connected to their acquisition of a stake in ADS. It is irrelevant for purposes of this inquiry whether Mr Zuma's conduct was criminal or not.
The capacity in which Mr Zuma acted
76. The defendants also argue that Mr Zuma's interventions on their behalf on 2 July 1998 and 18 November 1998 "were not found by the court to be corrupt interventions" because it accepted that Mr Zuma had acted as Deputy President of the ANC and the indictment did not contend that he had been bribed to influence his conduct in that capacity.
77. We are not sure that we understand this argument. We assume that the defendants in effect say the following. The court held that we made corrupt payments to Mr Zuma to influence his conduct in various specified capacities. When he intervened on our behalf with Thomsons however, he acted or might have acted in a different capacity, that is, beyond the scope of the corrupt relationship we have been held to have had with him. His conduct on those occasions and the benefit we derived from it was not a product of the corrupt payments we made to Mr Zuma but fell beyond it. There is consequently no connection between our crime on the one hand and our acquisition of the benefit of a stake in ADS on the other. We submit with respect however for the reasons that follow that this contention is unfounded.
78. First, we have already submitted that there is a close connection between the defendants' corrupt payments to Mr Zuma on the one hand and their acquisition of a stake in ADS on the other, quite apart from and independently of Mr Zuma's interventions on their behalf. They sold themselves to Thomson on the basis of the "political connectivity" that their relationship with Mr Zuma brought them. That was the main consideration or at least a material consideration in Thomson's decision to go into partnership with Mr Shaik and his Nkobi group. The necessary causal connection between crime and benefit accordingly exists quite independently of any intervention by Mr Zuma.
79. Secondly, Mr Zuma could not slough off his duties as MEC:
79.1. This court found that "it is at least the duty of state officials in the discharge of any power conferred by the state to exercise their administrative capacity as required by s 195(1) of the Constitution". Section 195(1)(d) of the Constitution requires that such duties must be performed "impartially, fairly, equitably and without bias".
79.2. As MEC Mr Zuma's duties included those described in s 136 of the Constitution. It provides that a member of the provincial executive council may not, - undertake any other paid work' - act in any way that is inconsistent with his office, or expose himself to any situation involving the risk of a conflict between his official responsibilities and private interests, or - use his position or any information entrusted to him, to enrich himself or improperly benefit any other person. We submit for the reasons that follow that Mr Zuma acted contrary to these provisions when he intervened on the defendants' behalf.
79.3. He undertook other paid work. By the time he met with Thomsons in London on 2 July 1998, he had already received payments in an aggregate amount of R333 225 from Mr Shaik and the Nkobi group. At the time of the meeting on 18 November 1998, this amount had increased to R421 996. We submit that Mr Zuma received these payments in breach of his duty as MEC under s 136 of the Constitution not to undertake any other paid work.
79.4. He also exposed himself to the risk of conflict between his official responsibilities as MEC and his private interests. By deepening Mr Zuma's financial dependence, Mr Shaik ensured that Mr Zuma acquired a private interest in the well-being of Mr Shaik and his companies. This relationship had the potential to cause Mr Zuma to act in his own private interest in a manner that conflicted with his official responsibilities as MEC. Mr Zuma accordingly accepted the payments and allowed himself to become financially dependent on Mr Shaik and his companies in breach of his duty as MEC under s 136 of the Constitution not to expose himself to any situation involving the risk of a conflict between his official responsibilities and private interests.
79.5. He also enriched himself or improperly benefited others in breach of his duties as MEC under s 136 of the Constitution. His intervention to resolve what was essentially a private business matter between Mr Shaik and Nkobi on the one hand and Thomsons on the other, had the effect of securing the financial position of Mr Shaik and his companies. The intervention required of Mr Zuma to use his position as MEC to influence Thomsons and thereby indirectly to enrich himself.
79.6. We accordingly submit that it was not possible for Mr Zuma to slough off his duties and responsibilities as MEC merely by donning a different cap when he intervened with Thomsons on behalf of Mr Shaik and his companies.
80. Thirdly, Mr Zuma's interventions with Thomsons were not undertaken in any particular capacity. Nobody made those distinctions. He intervened because of his political stature and influence associated with all the offices he held:
80.1. Mr Shaik involved Mr Zuma's status as Deputy President of the ANC, as MEC and generally as "rising star" in South African politics. One must in this context have regard to "what the accused intended he … would achieve in making the payments" and whether he actually achieved the intended result.
80.2. The court emphasized that a payment is made corruptly "if it is done with the intention of influencing the recipient of the benefit to perform or disregard his duty, so as to give the donor of the benefit an unfair advantage over others or as a reward for having done so before the benefit is given".
80.3. The defendants' intention was to exploit Mr Zuma's political status as MEC and as President of the ANC. When they called on Mr Zuma to intervene with Thomsons, they relied on the fact that he would persuade Thomsons to heed his recommendations as a result of his overall political stature and influence and not particularly because of any specific capacity. Indeed, in his request for a meeting on 17 March 1998, Mr Shaik significantly referred to Mr Zuma, not only as Deputy President of the ANC but as "the Honourable Minister Jacob Zuma Vice President of the African National Congress".
80.4. In response to a question why he felt the need to recommend to Mr Perrier that he meet with Mr Zuma, Mr Moynot said that it was because ADS was active in Mount Edgecombe and "Mr Zuma at that time, was an MEC here in Kwazulu-Natal in charge of economics". He also added that it was important for representatives of the company to meet with Mr Zuma because he was "a very high ranking member of the ANC" but the fact of the matter is that it was not only in that capacity that they were anxious to please him.
80.5. We accordingly submit that none of the parties intended or did in fact distinguish in their interaction between the various offices that Mr Zuma held at the time. His interventions on behalf of the defendants were undertaken in all his official capacities including those contaminated by the defendants' corrupt payments.
81. Fourthly, even if Mr Zuma intervened only in his capacity as Deputy President of the ANC and even if that conduct fell beyond the charge and consequently also beyond the conviction of the defendants on count 1, we submit for the reasons that follow that it constituted other criminal activity which was "sufficiently related" within the meaning of s 18(1)(c) of POCA, to the crime of which the defendants were convicted on count 1:
81.1. We submit for the reasons already advanced that, when they made the corrupt payments to Mr Zuma, the defendants did not distinguish in their own minds between his various capacities and did not intend to influence his conduct only in some capacities and not in others. There is no evidence to justify such an artificial distinction. The distinction was made in the criminal trial only because of the limited basis upon which the charge was framed. The question in this inquiry is however a wider one. It is not limited to the crimes of which the defendants have been convicted. It also extends in terms of s 18(1)(c) to any other criminal activity that the court finds to be "sufficiently related" to those crimes.
81.2. By virtue of his office as Deputy President of the ANC, Mr Zuma was bound by its constitution. It provided in rule 26 subsection 3.2.c that it was a serious offence to behave "corruptly in seeking or accepting any bribe for performing or for not performing any task".
81.3. We accordingly submit that the defendants' payments to Mr Zuma were also made to corruptly influence him in his conduct as Deputy President of the ANC. Insofar as this conduct might not have been covered by the indictment, we submit that it was "sufficiently related" to the crimes of which the defendants have been convicted to be taken into account in terms of s 18(1)(c) of POCA.
The confiscation order
82. The first benefit is the indirect interest that the defendants acquired in ADS through Thomson SA. It is common cause that the current market value of that interest is R21 018 000.
83. It means that the values of the defendants' proceeds for purposes of s 18(2)(a) of POCA, are as follows:
83.1. The value of Nkobi Investments interest in Thomson SA is R21 018 000.
83.2. Nkobi Holdings holds 100% of the shares in Nkobi Investments. The value of its interest is accordingly also R21 018 000.
83.3. Mr Shaik has an effective interest of 92% in Nkobi Holdings. The value of his interest is accordingly R19 336 560.
84. We submit that it would be competent for this court to make confiscation orders against all three of these defendants for the full amount of the proceeds each of them acquired. We do however not contend that the court should in the exercise of its discretion make a confiscation order for the payment of more than the total benefit of R21 018 000.
85. The state asks for a confiscation order in the following terms: "Subject to a combined aggregate liability of R21 018 000, - the first defendant is ordered to pay the state R19 336 560; - the second defendant is ordered to pay the state R21 018 000, and - the third defendant is ordered to pay the state R21 018 000."
THE SECOND BENEFIT
86. The second benefit is the ADS dividends that the defendants received via Thomson SA. It is common cause that they have received dividends from Thomson SA in an aggregate amount of R12 797 331 and that all of it comprised dividends that Thomson SA had in turn received from ADS.
87. The facts upon which the state bases its application for a confiscation order relating to the second benefit, are essentially the same as those relating to the first benefit. The ADS dividends the defendants received via Thomson SA are merely a return on their 20% stake in ADS.
The confiscation order
88. We repeat the submissions we made in relation to the first benefit. We accept that the application for a confiscation order based on the second benefit will follow the fate of the application for a confiscation order relating to the first benefit.
89. The defendants complain that it amounts to double-counting to seek a further confiscation order in relation to the dividends because they were used to pay for the defendants' shares in Thomson SA. The defendants say that this "would result in a double repayment".
90. We submit with respect that this contention is unfounded. The defendants acquired both their shares in Thomson SA and dividends on those shares. The shares and the dividends constitute separate benefits. The fact that the defendants might have chosen to use the one to fund the other, is irrelevant. That is so because a confiscation under ss 18(1) and (2) of POCA is based on the defendants' gross proceeds of his crimes and not on his nett profit. We refer to our earlier submissions in this regard.
91. The values of the defendants' proceeds of the second benefit are accordingly as follows:
91.1. The value of Nkobi Investments' proceeds is R12 797 331.
91.2. Nkobi Holdings holds 100% of the shares in Nkobi Investments. The value of its proceeds is accordingly also R12 797 331.
91.3. Mr Shaik has an effective interest of 92% in Nkobi Holdings. The value of his proceeds is accordingly R11 773 544.
92. The state asks for a confiscation order in the following terms: "Subject to a combined aggregate liability of R12 797 331, - the first defendant is ordered to pay the state R11 773 544; - the second defendant is ordered to pay the state R12 797 331 and - the third defendant is ordered to pay the state R12 797 331."
THE THIRD BENEFIT
93. The third benefit is the amount of R500 000 (or R499 568 to be more precise) that Nkobi Investments received for the sale of its shares in Thomson Holdings to Thomson International.
94. The facts upon which the state relies for its application for a confiscation order relating to the third benefit are substantially the same as those upon which it bases its application for a confiscation order relating to the first benefit.
95. It was one of the terms of the agreements reached between Mr Shaik and Nkobi on the one hand and Thomsons on the other pursuant to Mr Zuma's interventions of 2 July 1998 and 18 November 1998, that Nkobi Investments would sell its shares in Thomson Holdings to Thomson International. They ultimately concluded such a sale on 30 July 1999 in terms of which Thomson International purchased the shares held by Nkobi Investments in Thomson SA for an amount of R500 000.
96. Thomson International paid the purchase price on 5 October 1999 by two deposits of R299 568 and R200 000 in a total amount of R499 568.
The confiscation order
97. We repeat our submissions in relation to the first benefit. We accept that the state's application for a confiscation order in relation to the third benefit will follow the fate of its application for a confiscation order in relation to the first benefit.
98. The defendants complain that the confiscation order would be "completely disproportionate to any advantage Nkobi Investments allegedly achieved". The basis of their complaint is that part of the value of their shares in Thomson Holdings for which they received the benefit of R500 000 comprised an interest that Thomson Holdings held in Prodiba.
99. We submit with respect however that this contention is unfounded. It goes to the question whether their interest in Thomson Holdings was corruptly acquired in the first place. But that is not the basis of the state's application. The basis of the application is not that the acquisition of their shares in Thomson Holdings was tainted but that the sale of those shares for R500 000 was connected to their corrupt payments to Mr Zuma. That was manifestly so because the sale was merely a component of the larger transaction in 1998 of which the first and second benefits also formed part.
100. The values of the defendants' proceeds are as follows:
100.1. The value of Nkobi Investments' proceeds is R499 568.
100.2. Nkobi Holdings holds 100% of the shares in Nkobi Investments. The value of its proceeds is accordingly also R499 568.
100.3. Mr Shaik holds an effective interest of 92% in Nkobi Holdings. The value of his proceeds is accordingly R459 603.
101. The state asks for a confiscation order in the following terms: "Subject to a combined aggregate liability of R499 688, - the first defendant is ordered to pay the state R459 603; - the second defendant is ordered to pay the state R499 568 and - the third defendant is ordered to pay the state R499 568."
THE FOURTH BENEFIT
102. The fourth benefit is an amount of R250 000 that Thomson Mauritius paid to Kobitech for the account of Kobifin on 16 February 2001. It was disguised as a payment under a Service Provider Agreement between Thomson Mauritius and Kobifin. It was however in truth a first instalment of a bribe destined for Mr Zuma pursuant to the agreement between Mr Shaik and Mr Thetard which formed the subject matter of the third count.
103. This court described the facts underlying the third count in its main judgment. It is not necessary to repeat them in any detail. We merely emphasize some of them.
104. It is common cause that Thomson Mauritius paid an amount of R250 000 to Kobitech ostensibly for the account of Kobifin on 16 February 2001.
105. The payment was disguised as one under a Service Provider Agreement purportedly entered into between Mr Shaik acting on behalf of Kobifin and Mr Thetard on behalf of Thomson International at the end of 2000 or beginning of 2001. According to the defendants, the final version of this agreement is the one dated January 2001.
106. This court however found that the Service Provider Agreement was a sham and was merely "the means whereby money was to come from Thomson for the benefit of Zuma as arranged in the meeting that is recorded in the encrypted fax".
The confiscation order
107. The defendants say that Kobitech received the money as "banker" for Kobifin. But the court has already held that to have been a fraudulent disguise. Even if one were to accept it at face value however, all it means is that Kobitech in fact received the money and acquired ownership of it and at the same time incurred a corresponding debt to Kobifin. The relationship between bank and customer is one of debtor and creditor and not principal and agent. It means that Kobitech received the money in its own right but that it created a debtor-creditor relationship between Kobitech and Kobifin. It does not detract from the fact that Kobitech received the money as principal and not as agent. The value of its proceeds was accordingly R250 000.
108. Kobifin acquired a claim against Kobitech of R250 000. The value of its proceeds was accordingly also R250 000.
109. Mr Shaik had an effective interest of 92% in Nkobi Holdings and through it in Kobitech and Kobifin. The value of his proceeds of this benefit was accordingly R230 000.
110. It is common cause that Kobitech in turn paid the amount of R250 000 to Development Africa on 28 February 2001. It does however not detract from the application for confiscation. A confiscation order is based on the defendant's receipt or retention of the proceeds of crime and not on the ultimate fate of those proceeds. We refer in this regard to our submissions on this issue in the second chapter of these submissions.
111. The state asks for a confiscation order in the following terms: "Subject to a combined aggregate liability of R250 000, - the first defendant is ordered to pay the state R230 000; - the fourth defendant is ordered to pay the state R250 000 and - the fifth defendant is ordered to pay the state R250 000."
112. The state asks for orders in the following terms:
112.1. Subject to a combined aggregate liability of R21 018 000, - the first defendant is ordered to pay the state R19 336 560; - the second defendant is ordered to pay the state R21 018 000 and - the third defendant is ordered to pay the state R21 018 000.
112.2. Subject to a combined aggregate liability of R12 797 331, - the first defendant is ordered to pay the state R11 773 544; - the second defendant is ordered to pay the state R12 797 331 and - the third defendant is ordered to pay the state R12 797 331.
112.3. Subject to a combined aggregate liability of R499 688, - the first defendant is ordered to pay the state R459 603; - the second defendant is ordered to pay the state R499 568 and - the third defendant is ordered to pay the state R499 568.
112.4. Subject to a combined aggregate liability of R250 000, - the first defendant is ordered to pay the state R230 000; - the fourth defendant is ordered to pay the state R250 000 and - the fifth defendant is ordered to pay the state R250 000.
112.5. The first to fifth defendants are ordered jointly and severally to pay the applicant's costs including the costs of two counsel.
Wim Trengove SC
Chambers Johannesburg 18 January 2006