In the High Court of South Africa
(Durban and Coast Local Division)
Case No. : CC358/05
In the matter between :
1. Jacob Gedleyihlekisa Zuma
2. Thint Holding (Southern Africa) (Pty) Ltd (formerly known as Thomson-CSF Holding (Southern Africa) (Pty) Ltd) (hereinafter also referred to as Thomson Holdings) (as represented by Pierre Jean-Marie Robert Moynot)
3. Thint (Pty) Ltd (formerly known as Thomson-CSF (Pty) Ltd) (hereinafter also referred to as Thomson (Pty)) (as represented by Pierre Jean-Marie Robert Moynot)
(hereinafter also referred to as the accused)
SUMMARY OF SUBSTANTIAL FACTS IN TERMS OF SECTION 144(3)(a) OF ACT 51 OF 1977
A. THOMSON-CSF/THALES/THINT GROUP
1. The French Thomson-CSF (hereinafter referred to as Thomson-CSF) group of companies has global industrial interests, including interests in the international arms industry.
2. Thomson-CSF was later renamed the Thales group of companies.
3. Thomson-CSF International (France), which later became Thales International, is a division within the Thomson-CSF group.
4. Thomson-CSF International was headed at all relevant times by Jean-Paul Perrier (hereinafter referred to as Perrier).
5. Thales International in its turn had a subsidiary Thales International Africa Ltd (Mauritius).
6. Thales International Africa was headed at all relevant times by Yann Leo Renaud de Jomaron (hereinafter referred to as de Jomaron).
Thomson Holdings (Accused 2)
7. On 21 May 1996, Thomson-CSF Holding (Southern Africa) (Pty) Ltd was incorporated in South Africa to promote the development of South African industry by entering into joint ventures.
8. Thomson Holdings had an authorized share capital of 100 ordinary shares at a nominal value of R1000.00 per share. On 27 May 1996, 85 shares were issued to Thomson-CSF (France), 10 shares to Nkobi Investments (see below) and 5 shares to Gestilac SA (Switzerland). On 9 June 1998, the authorised share capital was increased with 17 000 1% redeemable non-cumulative preference shares at R1 000.00 per share and 14 450 shares were issued to Thomson-CSF (France). On 26 July 1999, Gestilac SA transferred its 5 ordinary shares in Thomson Holdings to Thomson-CSF (France) for $1 000.00 (R6 145.00). On 27 July 1999, Thomson-CSF (France) transferred its 90 ordinary shares to Thomson-CSF International (France) for R90 701.98. The effect of these transactions was that Thomson-CSF International (France) and Nkobi Investments became the only shareholders in Thomson Holdings. Also on 27 July 1999 Thomson-CSF (France) transferred 14 450 preference shares to Thomson-CSF International (France) for R14 554 679.00. On 16 September 1999, the authorised share capital was increased with 22 412 ordinary shares at R1 000.00 per share. On 29 September 1999, 22 412 ordinary shares were issued to Thomson-CSF International (France). On 30 September 1999, Nkobi Investments transferred its 10 ordinary shares to Thomson-CSF International (France) for R500 000.00. The effect of this transaction resulted in Thomson Holdings being wholly owned by Thomson-CSF International (France).
On 4 April 2001, Thales International (formerly Thomson-CSF International), transferred 22 512 ordinary shares and 14 450 preference shares to Thales International Africa Ltd (Mauritius), the latter company thereby replacing the former as sole shareholder of Thomson Holdings.
9. Thomson Holdings changed its name to THINT Holding (Southern Africa) (Pty) Ltd on 23 October 2003.
10. Schabir Shaik (hereinafter referred to as Shaik) was a director from the date of incorporation in 1996 to 30 September 1999, when he resigned from the board.
11. Alain Thétard (hereinafter referred to as Thétard) was appointed as a director on 1 April 1998. Thétard resigned from the board on 30 January 2002.
12. Pierre Jean-Marie Robert Moynot (hereinafter referred to as Moynot) was a director from the date of incorporation in 1996 to 1 April 1998, when he resigned from the board. He was re-appointed as a director on 1 October 2002 and he remains as such.
Thomson (Pty) (Accused 3)
13. On 16 July 1996 Thomson-CSF (Pty) Ltd was incorporated in South Africa, also to promote the development of South African industry by entering into joint ventures.
14. Thomson Holdings has been the majority shareholder and Nkobi Investments the minority shareholder since 1 August 1996 when 70 shares were issued to Thomson Holdings and 30 to Nkobi Investments. On 16 September 1999 the share capital was increased and on 29 September 1999 shares were issued to Thomson Holdings and Nkobi Investments to cause Thomson Holdings to become the owner of 75% and Nkobi Investments 25% of Thomson (Pty).
15. Thomson (Pty) changed its name to THINT (Pty) Ltd on 19 August 2003.
16. Shaik was a director since the date of incorporation in 1996 to 13 June 2005 when he resigned from the board.
17. Thétard was appointed as a director on 1 April 1998 and resigned on 30 January 2002.
18. Moynot was a director from the date of incorporation in 1996 to 1 April 1998, when he resigned from the board. He was re-appointed as a director on 16 January 2004 and he remains as such.
B. THE NKOBI GROUP
19. Nkobi Holdings (Pty) Ltd was registered on 27 February 1995 as a holding company. It was initially wholly owned by Shaik. The shareholding went through various permutations subsequently. Shaik has an effective majority shareholding in Nkobi Holdings, through his interests in the following shareholders of Nkobi Holdings, namely Star Corp SA (Pty) Ltd, Clanwest Investments (Pty) Ltd and Floryn Investments (Pty) Ltd.
20. Nkobi Holdings' only investment is Nkobi Investments.
21. Floryn Investments is ostensibly wholly owned by Shaik. He initially intended to hold the shares as nominee or cedent for the African National Congress, which would have made the latter, from the point of view of Shaik and/or the Nkobi group, a 10% shareholder in Nkobi Holdings.
22. Nkobi Investments (Pty) Ltd was registered on 24 February 1995 as an investment company. It was initially wholly owned by Shaik. The shareholding went through various permutations until, on 20 August 1998, Nkobi Holdings became the sole shareholder.
23. As described above, Nkobi Investments had an initial minority shareholding in Thomson Holdings. In addition it had, and continues to have, a minority shareholding (25%) in Thomson (Pty).
Other relevant corporate entities within the Nkobi group
24. The following companies are all entities within the Nkobi group, being 100% owned by Nkobi Investments. (There are a number of other entities within the Nkobi group.)
a. Kobifin (Pty) Ltd
b. Kobitech (Pty) Ltd
c. Proconsult (Pty) Ltd
d. Pro Con Africa (Pty) Ltd
e. Kobitech Transport Systems (Pty) Ltd
Other relevant corporate entities
25. Shaik was the sole shareholder and a director of Clegton Investments (Pty) Ltd.
26. Shaik was the majority shareholder and sole director of Chartley Investments (Pty) Ltd.
Control of the Nkobi group and other relevant entities
27. Shaik was at all relevant times a director of, and exercised effective control over, all the corporate entities within the Nkobi group and the other relevant corporate entities mentioned above (Floryn Investments (Pty) Ltd, Clegton Investments (Pty) Ltd and Chartley Investments (Pty) Ltd).
C. AFRICAN DEFENCE SYSTEMS (PTY) LTD
28. African Defence Systems (Pty) Ltd (hereinafter also referred to as ADS) was first registered in 1967 under another name. After a history of various owners, Thomson-CSF (France) acquired 7 000 001 shares on 14 April 1998, to become a joint shareholder with Allied Technologies Ltd. On 19 February 1999 Allied Technologies Ltd transferred its shareholding in ADS to Thomson-CSF (France). On 9 June 1999 Thomson-CSF (France) transferred its shareholding in ADS to Thomson-CSF International (France). On 15 September 1999 Thomson-CSF International (France) transferred its shareholding in ADS to Thomson (Pty) (80%) and FBS Holdings (Pty) Ltd (20%).
D. ZUMA (ACCUSED 1)
29. Accused 1 was a member of the KwaZulu-Natal legislature and the Minister of Economic Affairs and Tourism for the Province of KwaZulu-Natal from May 1994.
30. In terms of section 136 of the Constitution of the Republic of South Africa, 1996, accused 1, as a member of the executive council of a province, may not have-
a. undertaken any other paid work;
b. acted in any way that is inconsistent with his office, or exposed himself to any situation involving the risk of a conflict between his official responsibilities and private interests; or
c. used his position or any information entrusted to him, to enrich himself or improperly benefit any other person.
31. In December 1997 accused 1 was elected Deputy President of the African National Congress.
32. In terms of Rule 16.2 of the African National Congress Constitution as amended and adopted at the 50th National Conference in December 1997, the duties and functions of the Deputy President are described as follows:
"The Deputy President shall assist the President, deputise for him or her when necessary and carry out whatever functions are entrusted to him or her by the National Conference, the President or the NEC (National Executive Committee). He or she shall be an ex-officio member of the NWC (National Working Committee)."
33. In terms of Rule 16.1 of the African National Congress Constitution as amended and adopted at the 50th National Conference in December 1997, the President has, inter alia, the following duties and functions:
"…He or she shall:…
b. Make pronouncements for and on behalf of the NEC outlining and explaining the policy or attitude of the ANC on any question…
d. Under the overall supervision of the NEC, orient and direct the activities of the ANC."
34. In terms of Rule 26.3.2 of the African National Congress Constitution as amended and adopted at the 50th National Conference in December 1997, the following shall be regarded as serious offences:
c. Behaving corruptly in seeking or accepting any bribe for performing or for not performing any task;
d. Engaging in……abuse of office to obtain…..any other undue advantage from members or others;
e. Abuse of elected or employed office in the organization or in the State to obtain any direct or indirect undue advantage or enrichment.
35. Accused 1 was appointed as Deputy President of the Republic of South Africa and a member of the National Assembly of Parliament on 17 June 1999. The Code of Conduct in Regard to Financial Interests, as adopted by the Joint Meeting of the Rules Committees of the National Assembly and the Senate on 21 May 1996, applied to him in this capacity. In terms of paragraph 1.1, accused 1 was duty bound to maintain the highest standards of propriety to ensure that his integrity and that of the political institutions in which he serves are beyond question. In terms of paragraph 1.2, accused 1 was duty bound not to have placed himself in a position which conflicts with his responsibilities as a public representative in Parliament, nor may he have taken any improper benefit, profit or advantage from the office of Member.
36. In terms of section 96(2) of the Constitution of the Republic of South Africa, 1996, accused 1 as a member of the cabinet may not have-
a. undertaken any other paid work;
b. acted in any way that is inconsistent with his office, or exposed himself to any situation involving the risk of a conflict between his official responsibilities and private interests; or
c. used his position or any information entrusted to him, to enrich himself or improperly benefit any other person.
37. In June 1999 accused 1 was appointed Leader of Government Business in the National Assembly of Parliament in terms of section 91(4) of the Constitution of the Republic of South Africa, Act No 108 of 1996.
38. Accused 1, by virtue of the various offices he held, had the powers and/or duties attendant to such offices.
E. ZUMA'S BENEFIT FROM SHAIK, THE NKOBI GROUP AND OTHER RELEVANT ENTITIES
39. Shaik and/or the relevant corporate entities within the Nkobi group and/or the other relevant corporate entities have benefited accused 1 in the period 25 October 1995 to 30 September 2002 in the amount of R1 269 224.91, as set out in the schedule (hereinafter referred to as the schedule benefits). This is by way of payments from Shaik and/or the relevant corporate entities within the Nkobi group and/or the other relevant corporate entities to accused 1 and various parties for the benefit of accused 1. The said payments for the benefit of accused 1 have continued in the period after 30 September 2002 to 18 August 2005, in an aggregate amount as yet undetermined by the State (hereinafter referred to as the undetermined benefits).
40. The schedule payments to accused 1 make no legitimate business sense, in that neither Shaik, the Nkobi group, nor the other relevant entities could afford the payments, being at all times in a cash-starved position relying on and at times exceeding bank overdrafts and thus effectively borrowing money from banks at the prevailing interest rates to make the said payments interest free. On the other hand, the group's survival depended upon obtaining profitable new business, inter alia, with the assistance of accused 1.
41. The abovementioned schedule benefits were paid to accused 1 in circumstances where he would not have been able to obtain such funding commercially. The following features of the payments constitute benefits to accused 1:
a. The facility of providing the funds to accused 1 is itself a benefit.
b. Inasmuch as the funds may have been provided interest-free, this is a benefit.
c. Inasmuch as interest may have been charged, interest payments were deferred. This is a benefit.
d. Inasmuch as capital payments may have been due, these were deferred. This is a benefit.
e. The funds were paid without security. This is not a usual commercial practice with banks and it constitutes a benefit.
f. An appraisal of a debtor's ability to repay a loan is a matter of some importance to banks who lend money. Inasmuch as accused 1's ability to repay the money that Shaik and/or Nkobi advanced to him is seriously questionable, the "loans" are not commercial and they benefit accused 1. The notional interest payments alone are unaffordable.
g. Despite Nkobi's precarious position with the banks, Shaik and Nkobi made no effort to recover any of the payments from accused 1. This failure to demand repayment is itself a benefit to accused 1. Shaik did not intend to enforce the terms of the "loan" and neither has he done so. This is a benefit.
42. The abovementioned benefits are hereinafter referred to as the facility benefits.
43. Shaik acted as accused 1's financial adviser and/or special economic adviser without charging any fee or demanding any remuneration for this service. Shaik provided the following types of services in this capacity free of charge:
a. Managing accused 1's financial affairs;
b. Corresponding with and meeting accused 1's creditors;
c. Negotiating with accused 1's creditors and their legal representatives;
d. Corresponding with, meeting and dealing with accused 1's bankers, and introducing accused 1 to new bankers and services;
e. Providing legal advice and services to accused 1 through Shaik's attorneys;
f. Utilizing the administrative, secretarial and personnel resources of the Nkobi group for managing the affairs of accused 1 and his family;
g. Attending to the accommodation requirements of accused 1;
h. Attending to the financial and other affairs of accused 1's family members;
i. Assisting accused 1 to complete his tax returns;
j. Assisting accused 1 to complete the prescribed declarations of interests to Parliament and to the Secretary to the Cabinet.
44. The abovementioned services provided free of charge constitute benefits to accused 1 (hereinafter referred to as the service benefits).
45. It is alleged that the schedule payments and the undetermined benefits were intended as bribes, whatever their description.
46. The following facts are relevant in determining the true nature of the schedule and undetermined benefits :
a. Such amounts are not reflected as a liability in any financial documentation relating to accused 1.
b. Such amounts are not reflected as an asset in any financial documentation relating to Shaik.
c. Acknowledgements of debt in accused 1's name have been found in the Nkobi documentation, amounting to some R340 000. These documents are patently incomplete and irregular, being undated, seemingly hurriedly signed in the wrong place, and indicating interest-free loans with no date of repayment. They seem to reflect consolidated expenses over a period. The first page of one is missing, with the result that no amount appears. They were all compiled in 1998, which is prior to the date in 1999 when the amounts owing were written off in Nkobi's books. No acknowledgements of debt were discovered in the Nkobi documentation which accurately reflect the total amount owing to Shaik or Nkobi or which were compiled after 1998.
d. On 28 February 1999 an amount of R1 282 027.63 was irregularly written off in the Nkobi accounting records (Kobifin (Pty Ltd)) under the description of development costs of Prodiba. This included an amount that was paid to accused 1. The balance represented amounts that Shaik and Floryn Investments (Pty) Ltd owed to the Nkobi group. This resulted in the misrepresentation of the 1999 Annual Financial Statements of Kobifin (Pty) Ltd, in that accounts receivable or director's and/or related third party loans were understated. Alternatively, retained income was overstated.
e. Also on 28 February 1999, a non-distributable reserve was created against a loan account of Kobi-IT (Pty) Ltd. The development costs amounting to R1 282 027.63 were finally written off against the non-distributable reserve. The annual financial statements reflect the net amount of the non-distributable reserve i.e. R2 217 972.00 as a "surplus" on disposal of work share in Prodiba (Pty) Ltd.
f. Accused 1 could at no stage afford to repay the "loans". Shaik knew this as he had intimate knowledge of accused 1's financial affairs. Accused 1 was in financial difficulties. This is illustrated, inter alia, by the following:
i. During October 1997, Standard Bank instituted action against Michigan Investment CC (the close corporation in whose name accused 1's home loan account had been opened) for R443 618.52. On 19 February 1998 Standard Bank was provided with a number of cheques in settlement of a portion of the outstanding amounts.
ii. He had a constant overdraft with Nedbank from at least 1996. By August 2001 the overdraft reached an amount of R118 908.58.
iii. By 28 February 2000 he had an outstanding debt with Wesbank in respect of the purchase of a motor vehicle of R265 179.78. He later incurred a further debt with Wesbank in respect of another vehicle which at August 2003 stood at R370 622.80
iv. By May 1999 the outstanding balance on an SA Permanent Bank account was R110 907.85.
v. By October 2002 accused 1's personal overdraft with Standard Bank totaled a further R128 301.18.
vi. On 7 October 1998 accused 1 owed AQ Holdings (Pty) Ltd an amount of R86 500. AQ Holdings (Pty) Ltd threatened him with an application for sequestration. Shaik through Nkobi settled the debt.
vii. Accused 1's expenditure constantly exceeds his income.
viii. An analysis of accused 1's financial records reflects an unfortunate history of dishonoured cheques and unmet debit orders.
47. The schedule and/or undetermined and/or service and/or facility benefits received and/or to be received by accused 1 as aforementioned from or on behalf of Shaik and/or the other relevant corporate entities, as set out above, constituted benefits which were not legally due to accused 1.
F. THE SHAREHOLDERS' AGREEMENT BETWEEN THE THOMSON AND NKOBI GROUPS
48. Shareholders agreements were entered into between the Thomson and Nkobi groups on 22 May and 17 July 1996. In terms of these agreements, Thomson business in South Africa conducted through accused 3 would be in partnership with Nkobi.
49. It was agreed in Paris and SA that a strategy be developed for Nkobi's meaningful participation in Thomson's local business ventures. This took place at a time when SA was first becoming known as a military power and arms supplier. It was also made clear that decisions would be made in South Africa on political rather than business interests. Nkobi received financial assistance in the form of loan equity. This was in return for Nkobi providing an opening into SA for Thomson-CSF.
50. Consequently, Thomson and Nkobi were joint venture partners (together with Denel) in obtaining the award of the contract for the drivers' licences during 1996 - 1997 (the Prodiba joint venture).
51. There were a number of joint ventures and possible future joint ventures between Nkobi and Thomson, including projects in transport, tourism, justice, finance, prisons, hospitals, water, the Durban airport, the ID card contract, the N2, N3 and N4 road projects, the third cellular telephone network, the arms deal set out below and other military deals, and smart card technology.
G. THE ARMS DEAL
52. In the design for the South African Defence Force, which was recommended in the Defence Review, military equipment types were identified as being required by the Force.
53. In order to procure the said military equipment, requests for information were submitted on 23 September 1997 to various other countries, and after receipt of such information by the closing date of 31 October 1997, requests for offers were issued to short listed potential suppliers.
54. The process to procure the various types of equipment was generally known as the Strategic Defence Package Acquisition Programme, or the arms deal.
H. THOMSON'S STRATEGY IN PREPARATION FOR THE ARMS DEAL
55. The Thomson group positioned itself at an early stage to obtain a slice of the arms deal in South Africa. The group considered that it was necessary to obtain black empowerment partners to assist in achieving this goal. It was anxious that the partners it chose should meet the approval of the South African Government and the ANC leadership.
56. The French conglomerate was urgently seeking influence in South African government circles in this period, as the change of government in 1994 had left it with few friends in high places.
57. Thomson-CSF had originally, and as early as 1995, envisaged supplying combat suites for corvettes, through the vehicle of ADS, in partnership with Nkobi.
58. At approximately the same time as the request for information was submitted by the South African government to foreign suppliers in September 1997, Thomson-CSF became concerned that its choice of Nkobi as its South African partner for the proposed acquisition of ADS (all with a view to successfully bidding for the combat suites), did not carry the approval of influential figures within the South African government. It was thus decided that Thomson-CSF (France) would acquire a share directly in ADS, to the exclusion of accused 3 and thus to the exclusion of Nkobi, until the issue of suitable local partners could be resolved. This decision to exclude Nkobi was despite the shareholders' agreement between Thomson and Nkobi. Consequently, Thomson-CSF (France) acquired 50% of ADS on 14 April 1998.
59. In response to the request for offers, inter alia for corvettes, the German Frigate Consortium submitted an offer dated 11 May 1998 to supply the corvettes. The bid included ADS as the proposed supplier of the combat suites. It was also proposed in the bid that ADS would join the joint venture as a consortium partner in the final contract.
60. As indicated above, Nkobi was at this stage excluded from ADS. Thomson-CSF, on the other hand, was urgently seeking the informal political support it considered necessary to improve its chances of a successful bid involving ADS.
I. NKOBI'S STRATEGY IN PREPARATION FOR THE ARMS DEAL
61. Shaik had as early as June 1996, informed other directors that Nkobi should strategically place itself to tender for the corvettes. He did not consider its lack of applicable expertise a problem, since its political connectivity would ensure a partnership with a big international company with the necessary expertise or skills. It was understood that Shaik would use his political connections in order to facilitate the contracts and tenders.
62. It was understood from Shaik as early as 1996 that he had confidence that accused 1 would become the deputy president in the post Mandela government.
J. ACCUSED 1'S ASSISTANCE TO THOMSON AND NKOBI
63. Moynot, as the then director of accused 2 and 3, suggested as early as 28 November 1997 that a meeting between Perrier and accused 1 should be sought, inter alia to resolve the issue of informal approval for Thomson's ADS partner.
64. Shaik also sought to rectify the situation of Nkobi's exclusion from ADS, inter alia, with the assistance of Zuma, who was being paid for performing such favours, and on 17 March 1998, he indicated that accused 1 wished to meet Perrier to resolve the issue.
65. Apart from the German Frigate Consortium, the South African government also received offers from the other short-listed parties. After the closing date for the receipt of offers on 13 May 1998, the next step in the official process was to select a preferred bidder. The Strategic Offers Committee met on 1 and 2 July 1998 for this purpose and specifically to consolidate the scores of the various technical teams that were evaluating various aspects of each bid.
66. Accused 1 met Perrier in London on 2 July 1998 with Shaik, in accordance with both Thomson's and Shaik's wish. Thomson required his approval of its ADS partner. Shaik required his approval of Nkobi as such ADS partner in order to cause Thomson to reverse its decision to exclude Nkobi from the ADS acquisition.
67. Accused 1 indicated that he approved of Nkobi as a suitable partner and it was decided in principle to reverse the earlier Thomson decision to exclude it from ADS.
68. Chippy Shaik is Shaik's brother. He was at this time Chief of Acquisitions in the department of defence and as such he directed the arms acquisition process. Thétard sought a meeting with him on 3 July 1998, which was held on 8 July 1998. During this meeting Chippy Shaik indicated that he was aware of the meeting in London on 2 July 1998 between accused 1, Perrier and Shaik at which accused 1 had indicated his approval for Nkobi as a partner with Thomson in ADS. Chippy Shaik indicated that he would facilitate matters for Thomson if Thomson's position with partners and friends was convenient to Chippy Shaik. He would otherwise make things difficult. Chippy Shaik confirmed that accused 1 would be a member of the next cabinet.
69. Thomson continued to regard Zuma as a rising force, whilst at the same time regarding it as necessary that what was regarded as "the Zuma problem" must be resolved.
70. The resolution of the dispute between Thomson and Nkobi was taken further, once again with the assistance of accused 1, at a meeting on 18 November 1998 at the Nkobi offices between Nkobi and Thomson-CSF France. The subject matter of the meeting was the sale of 10% of Thomson-CSF France's share in ADS, through accused 3, to Nkobi. The minutes reflect that the meeting was attended by Shaik, Moynot, Thétard, Perrier, Anand Moodley (attorney) and "Minister JZ" (accused 1).
71. Accused 1 was there as a mediator to resolve the dispute between Thomson and Nkobi and to facilitate Nkobi (also in the promotion of empowerment) obtaining effective shareholding in ADS.
72. The formalities of the earlier agreement, reached in principle on 2 July 1998, were decided upon at this meeting on 18 November 1998. It was agreed that Thomson-CSF (France) would sell to Nkobi Investments, through accused 3, an effective shareholding in ADS. The result of this would be effectively the resumption of the partnership between Thomson and Nkobi and thus Nkobi's entry into the corvette bid, whilst simultaneously satisfying Thomson's aim to gain advance informal political approval for its partner and improving its chances in the corvette bid. The ADS portion of the corvette contract was worth R1,3 billion, with R450 million coming directly to ADS and the balance going to sub-contractors. In the result, the Nkobi and Thomson groups stood to benefit from profits arising from the corvette contract.
73. The German Frigate Consortium bid was approved as the preferred bidder by the South African cabinet on 18 November 1998.
74. The actual transactions involving the sale of shares were registered in 1999. The most relevant transaction is that of 15 September 1999, when Thomson-CSF International (France) transferred 25 500 000 shares in ADS to accused 3, giving accused 3 80% of ADS and consequently Nkobi Investments an indirect 20% interest in ADS.
75. A negotiating phase between the South African government and the German Frigate Consortium as the preferred bidder followed after 18 November 1998. The final contract was signed on 3 December 1999 between the government and a new consortium named the European South Africa Patrol Corvette Consortium (ESAPCC). This new consortium included ADS as a principal as originally proposed in the German Frigate Consortium bid to supply the combat suites.
76. The aggregate dividend declaration up to 31 December 2004 by ADS arising from its successful participation in the combat suite contract is as follows:
77. In accordance with the aforementioned synopsis of events, the Thomson-CSF group, both independently and through the intermediation of Shaik, sought and obtained accused 1's informal assistance. In so doing, the Thomson-CSF group corruptly associated themselves with and/or relied on the benefits hitherto bestowed on accused 1 by Shaik and his Nkobi group, as a means to obtain the assistance from accused 1 in respect of the ADS dispute as mentioned above, for the benefit of accused 2 and 3 and the Thomson-CSF group.
78. The corrupt aim of the conspiracy to seek the assistance of accused 1 was also to maintain the said benefits to accused 1, hitherto bestowed on accused 1 by Shaik and his Nkobi group, by joining with Shaik in obtaining accused 1's approval for the partnership between Shaik and Nkobi Investments, on the one hand, and accused 3, on the other hand, in the ADS acquisition, and thereby ensuring the survival of the Nkobi group and ensuring that Shaik and the Nkobi group would be sufficiently in funds derived, inter alia, from future ADS dividends to give the said benefits to accused 1. In so doing, the "Zuma problem" would be "solved".
79. Furthermore, as will be described below, when the investigations into alleged irregularities in the arms deal were gaining momentum from 1999, the Thomson-CSF group made common cause with Shaik in once more corruptly calling upon the assistance of accused 1 to seek to prevent the said corrupt benefits from being discovered, in exchange for the annual benefits as described below.
K. FURTHERING OTHER PRIVATE BUSINESS INTERESTS OF SHAIK AND NKOBI
80. Accused 1 also received the benefits from Shaik and/or Nkobi to further their general private business interests other than those specifically related to Nkobi's entry into the arms deal.
81. Shaik and accused 1, from approximately the period when the first schedule benefits were paid to or on behalf of accused 1, conspired to ensure that Shaik and the Nkobi group would continue to fund accused 1's excess of expenditure over his income and to bestow the other benefits upon accused 1, in return for obtaining accused 1's support, assistance and protection for Shaik and the Nkobi group wherever and whenever it was considered appropriate.
82. All the instances listed below are also in furtherance of the aforementioned generally corrupt conspiracy.
83. Shaik accords specific prominence to his relationship with accused 1 in promotional material relating to Shaik and the Nkobi group.
84. Shaik's apparent appointment as accused 1's special economic adviser was not in terms of any regulations relating to such appointments, and Shaik received no remuneration for apparently performing such an office. Shaik used the terms "special economic adviser", "financial adviser", "personal adviser" and "special adviser" variously. He enjoyed full power of attorney in respect of accused 1's personal financial affairs and in respect of funding and managing them. He assisted accused 1 in his official duties, advised on matters pertaining to the economy and policy and assisted in ANC party matters.
85. Shaik made it clear that Nkobi Holdings' role was to provide political connections (as opposed to financial backing or technical expertise) and everybody understood that the political connection was so strong from Shaik's side that there was no need for Nkobi to come up with the money.
The Point Development, Durban
86. The Renong group ("Renong") is a large diversified Malaysian conglomerate with close ties to the Government of Malaysia.
87. Renong owns several international hotels in Malaysia and an extensive land bank for future development and was interested in finding similar opportunities for investment in South Africa after 1994. After investigating several potential investment opportunities in South Africa, the Hilton Hotel and the Point Development in Durban were identified as possible investments in the third quarter of 1995. In particular, the Point Development was seen as a potential empowerment project, because the land was effectively owned by the Government through Transnet, Portnet and the City of Durban.
88. Discussions were held with Mzi Khumalo, the chairman of Point Waterfront Company (Pty) Ltd, the Minister of Public Works and the Director General of the Public Works Department at which Renong outlined their ideas on how the Point Development could be implemented as an empowerment project.
89. Subsequently Renong was advised through Khumalo of the names of the representatives who had been nominated to look after the empowerment interests. Renong understood that these nominees had been endorsed and approved by the South African Government.
90. In the third quarter of 1995, an initial shareholders agreement was signed between Renong Overseas Corporation Sdn Bhd, representing Renong, and Secprop 60 (Pty) Ltd, a shelf company representing the empowerment interests. The shareholders' agreement set out the principles upon which the shareholders were to work together to bid for and, if successful, implement the Point Development and, inter alia, described the arrangements by which Renong would provide the funding for the 49% shareholding of Secprop 60 (Pty) Ltd in the proposed development. The nominated empowerment representatives were the directors of Secprop 60 (Pty) Ltd and the company was later renamed as Vulindlela Investments (Pty) Ltd.
91. In October 1995 the Point Waterfront Company called for proposals from interested parties in the private sector for the development of the Point and presentations were made to the Board of the Point Waterfront Company in November 1995. Besides the Renong / Vulindlela joint venture, two other consortia made proposals including one consortium led by the Nkobi group.
92. The day before the presentation to the Point Waterfront Company, the managing director of Renong, David Wilson ("Wilson"), was requested by Shaik to attend a meeting in the Nkobi group's offices in Durban. Shaik said that the meeting would be to Renong's benefit.
93. Wilson attended the meeting. When he confirmed that Renong intended to make a presentation to the Point Waterfront Company, Shaik and others present indicated that the consortium whose members were present at the meeting, was very powerful and influential and that it would not be in Renong's interests if they proceeded with the presentation with their current partners. Shaik proposed that a joint presentation should be made with his consortium.
94. Wilson rejected this proposal and went ahead with its presentation as planned, which was well received. Renong was left as the only bidder. Wilson experienced delays as a result of Shaik's interference and insistence that his consortium should be involved in the project.
95. As a result of this interference and the uncertainty that it caused, it was considered necessary to obtain confirmation at a political level that the empowerment partners that had been chosen were indeed acceptable. In June 1996, the chairman of Renong sent a letter to accused 1 asking his assistance in resolving the matter of suitable partners.
96. Shaik addressed a letter dated 10 June 1996 to the chairman of Renong, in which he confirms Nkobi's interest to acquire 49% equity in the Point Development. Shaik reminded the chairman that he should send a letter to accused 1, whereafter Shaik would be in a position to influence and accelerate the development.
97. Accused 1 eventually invited the chairman or a representative to meet with him in Durban. Arrangements were made by Shaik for a representative of the Renong chairman to meet accused 1 as proposed. The meeting took place in late 1996 or early 1997 and was attended by accused 1, Shaik and the Renong representative, Wilson. The meeting was held in the evening in Shaik's apartment in Durban.
98. Accused 1 appeared to be uncomfortable during the meeting. Shaik led the discussions and accused 1 supported him and expanded on the topics.
99. Accused 1 said that he was not happy with the persons nominated to represent the empowerment interests in the Point Development and proposed that Shaik should be involved in the project. At one point accused 1 made mention of the support and assistance he had received from Shaik.
100. Wilson indicated that he regarded the selection of empowerment nominees as a matter for the South African Government to decide. It was Renong's intention to continue with its partners unless formally advised otherwise by the South African Government. Such an instruction was not forthcoming.
101. A further meeting between Wilson and Shaik was held on 3 February 1997, during which Wilson indicated to Shaik that Renong would not make any changes unless and until it had accused 1's written affirmation as ANC chairman that he was happy with the representatives of the empowerment interests in the Point Development. Accused 1's queries regarding the nominees were a source of frustration to Renong, since he raised no objections initially and had previously endorsed the involvement of Vulindlela.
102. Because of the difficulties that Shaik had caused Renong, no further business discussions were held with him after 1997.
Peter Watt of Altron
103. Shaik had correspondence and meetings with Peter Watt of Altron in mid-1996 concerning, inter alia, their respective groups' synergies in the Malaysian market from a defence and other technologies point of view. Shaik arranged a meeting between Peter Watt and accused 1 and recommended that this contact should be maintained.
Eco-tourism school in KZN
104. In January 1999, Shaik and his UK associate, Deva Ponnoosami, attempted to position Nkobi as a joint venture partner for a project regarding the opening of a tourism school in KwaZulu-Natal with the assistance of Professor John Lennon of Glasgow University. Ponnoosami and Shaik drafted letters in accused 1's name for his signature. Accused 1 signed two letters dated 4 February 1999, both on the letterhead of the KwaZulu-Natal Ministry of Economic Affairs and Tourism.
105. In the first letter, addressed to the SA Development Bank, and drafted with Shaik's assistance, accused 1 expressed his "full support" for Professor Lennon's proposal, and stated that he would "appreciate if funding could be rapidly progressed in order for this project to commence as soon as possible."
106. In the second letter, also drafted with Shaik's assistance, addressed to Professor Lennon himself, accused 1 recommended that a local partner was required to form a joint venture with Professor Lennon. Accused 1 stated that he had had discussions with one such local company, being Nkobi Holdings. Nkobi Holdings was keen to participate and he had suggested to Nkobi that it should make direct contact with Professor Lennon to speed the process. Accused 1 hoped that together Nkobi and Professor Lennon would both enhance the KwaZulu-Natal tourism industry through raising the profile and excellence of the personnel involved in this industry.
107. Shaik pursued accused 1's recommendation of Nkobi to Lennon, by addressing a letter to Lennon on the same day as accused 1's letter to Lennon (4 February 1999), confirming Nkobi's interest in the project and suggesting that Nkobi and Lennon should form a partnership for the project. When Lennon replied that he did not wish to engage Nkobi as a partner at that stage, Shaik indicated that he regarded Nkobi's exclusion seriously. He threatened to inform accused 1 and seek to do whatever was necessary to stop Professor Lennon's progress.
108. A Thomson-CSF France mission visited South Africa in February 1999, and a meeting was held with Shaik during which he enumerated big investment plans for which the South African government (Ministries of Transport, Tourism, Justice and Finance) wished to find partners, on the basis of SDI (Special Development Initiative). This included a proposed new airport at Durban and the possibility of Thomson's involvement. Shaik offered to travel to Paris with accused 1 to give a full account of the projects if Thomson-CSF could help to form consortiums for the airports or any other project.
109. On 27 October 1999 Shaik wrote to Kuwaiti businessman Fouad Alghanim that he hoped the latter, if he eventually decided to visit South Africa, would have the pleasure to meet his close friend, accused 1,whom he reported had recently been appointed Deputy President of the country. Shaik noted that both accused 1 and he shared a long time common economic goal, i.e. to establish an investment bank. They were still pursuing this socio-economic and socio political objective for critical economic and political reasons. Shaik suggested that this should be one of the key issues of discussion in a meeting with accused 1.
Vision of an Nkobi Bank
110. This strategy is further elaborated in a letter to Ronald Coopersmith dated 18 May 1999 setting out Shaik's "Vision of an Nkobi Bank". In the document, Shaik outlines his and accused 1's strategy to establish an Nkobi Bank to act also as financial adviser to a bidding consortium on any given large scale public or private sector project, thus deriving the necessary fees for its investment advice in structuring the debt element of the transaction and/or the equity. The bank would also compete for Government and various Ministry's budgets as a deposit taker and the financial management thereof, for example, the Ministry of Economic Affairs and Tourism, KwaZulu Natal, headed by accused 1, where they believed they stood a better than equal chance on receiving a Ministry's deposit.
111. During November 1999, the Nkobi group and Crane (Africa) were in a joint venture, attempting to obtain financing for various tourist initiatives in the province of KwaZulu-Natal. Crane suggested that Shaik should travel with accused 1 to the opening function of the Kosi Mouth campsite and further solidify accused 1's support
United Bank PLC
112. On 31 March 2000 Shaik extended an invitation to the chairman of United Bank for Africa PLC, Hakim Belo-Osagie, to visit the Nkobi head office during his visit to South Africa. He also stated in the letter that he would like to introduce him to "our Deputy President Mr. Jacob Zuma either in Pretoria or at his private residence in Durban during the weekend of the 15th / 16th April".
113. The proposed meeting was to discuss mutually beneficial business opportunities. These included participation with Nkobi on the 3rd Cellular Network in South Africa and banking opportunities specifically with regards to structured finance on Public Sector Contracts.
114. Shaik suggested that the chairman should meet accused 1, being the Deputy President of the country and the ANC. Apparently, accused 1 indicated that there was an extremely good political goodwill in developing bilateral ties with both countries. Shaik suggested that both he and the chairman needed to take advantage of this "conduciveness" to develop their business relations.
Grant Scriven of Venson PLC
115. On 5 October 2000 Shaik wrote to accused 1 requesting that accused 1 arrange a meeting between Shaik's UK partner Grant Scriven, and then Minister of Safety and Security Steve Tshwete, regarding the possibility of creating a fleet service for the SAPS. Accused 1 duly arranged the meeting in Cape Town before the end of the year. Tshwete, however, did not pursue Shaik's and Scriven's proposal. Shaik complained to Tshwete in a letter dated 3 May 2001 that the meeting had been arranged through the office of accused 1 and after taking advice from accused 1. Shaik pointed out further that the lack of response from Tshwete was contrary to the advice from accused 1.
116. Shaik, through accused 1, arranged it so that Scriven attended a function attended by the cabinet and others in July 2001, during which Scriven received "bear hugs" from accused 1 in public view. Scriven replied to Shaik: "I think I can safely say I am in!"
L. INVESTIGATIONS RELATING TO ALLEGED IRREGULARITIES IN THE ARMS DEAL
117. During November 1998, the Defence Audit Centre of the Office of the Auditor-General identified the procurement of the Strategic Defence Package Acquisition Programme as a high-risk area from an audit point of view and decided on the need to perform a special review of the procurement process.
118. On 9 September 1999, Patricia de Lille gave notice in Parliament that she wished to table a motion regarding alleged irregularities in the Arms Deal. The Presidency immediately issued a statement denying accused 1's involvement. De Lille's motion was tabled in Parliament on 21 September 1999. She called for a commission of inquiry into the matter. She handed over documentation pertaining to these allegations to the Heath Special Investigation Unit on 30 November 1999. The Heath Special Investigation Unit was a statutory agency mandated to investigate irregularities. The matter received extensive publicity.
119. Also at about this time and on 28 September 1999, the Minister of Defence approved the Arms Deal for the Auditor General's special review.
120. As the matter progressed, the South African government eventually faced a barrage of public requests to appoint the Heath Special Investigation Unit to investigate irregularities relating to the arms deal.
121. The publicity continued through February 2000 when it was reported in the press that the Heath Special Investigation Unit intended requesting the appropriate proclamation in order to commence with an inquiry into the matter.
M. THE BRIBE AGREMENT
122. Shaik, also acting on accused 1's behalf, met with Thétard on 30 September 1999 in Durban. During and/or before this meeting, Shaik requested Thétard to arrange the payment of a bribe by Thomson-CSF to accused 1. The two main objectives of the bribe were accused 1's protection against the then current investigation regarding project SITRON and permanent support for future projects.
123. This first documented meeting was a marker in a series of events that constituted the development of a conspiracy between Thomson-CSF (France) and/or Thomson-CSF International (France) and/or Thales International Africa Ltd (Mauritius) and/or accused 2 and/or accused 3, together also with Shaik and his Nkobi group, to pay accused 1 the amount of R500 000 per annum (hereinafter referred to as the annual benefits) as a bribe in exchange for accused 1's protection of the Thomson-CSF group in respect of the investigation into the corvettes ("Project SITRON") part of the Arms Deal and for his support of the Thomson-CSF group for future projects. These annual payments were to continue until the first payment of dividends by ADS.
124. Thereafter, and also in furtherance of the common purpose to achieve the purposes of the conspiracy to pay and receive the bribe and to secure accused 1's protection of and support for the Thomson-CSF group as described, a series of correspondences and meetings occurred, involving different combinations of Shaik, Thétard (acting as director of accused 2 and 3 and as the representative of the Thomson-CSF group in South Africa), accused 1, Perrier and de Jomaron.
125. At a stage, Thétard requested Shaik to obtain confirmation or an encoded declaration from accused 1 to validate the request.
126. In a parallel development, and also on 30 September 1999, Nkobi Investments transferred 10 ordinary Thomson Holdings shares to Thomson-CSF International France for R500 000. The price was agreed upon in mid 1999. Nkobi insisted on the payment in cash. Nkobi was in a characteristically cash starved position and refused the suggestion that the payment be set off against Nkobi's obligations to Thomson arising from the Thomson loan to Nkobi to purchase Thomson (Pty) shares. The money was paid to Nkobi.
127. Some of the correspondences and meetings in furtherance of achieving the aims of the conspiracy were the following:
a. Immediately after the meeting on 30 September 1999, Shaik sought a meeting with Perrier in Paris on 22 October 1999.
b. Thétard met Perrier in Paris on 10 November 1999. The discussion concerned accused 1.
c. Shaik was due to meet accused 1 in Cape Town on 8 and 9 February 2000.
d. Shaik and Thétard corresponded on 11 February 2000 concerning their "understanding re: Deputy President Jacob Zuma and issues raised" and a meeting was proposed to discuss the issue. The meeting was set to be held on 11 March 2000.
e. Shaik was due to meet accused 1 in Durban on 15 February 2000.
f. Shaik was due to meet Thétard on 25 February 2000.
g. Shaik was due to meet accused 1 in Johannesburg on 2 March 2000.
h. On 8 March 2000, Thétard thanked Shaik for confirming the meeting with accused 1, now said to be on 10 March 2000.
i. The meeting which was scheduled to be held on 11 March 2000 in Durban at 10h30 between Thétard, accused 1 and Shaik took place either at the appointed time and date, or on the previous day, namely 10 March 2000. Accused 1 gave the necessary confirmation or encoded declaration.
j. Thétard noted the proceedings of the meeting in a draft encrypted fax, composed in order to inform de Jomaron and Perrier of Thomson-CSF in France and Mauritius of such proceedings and so to further the purposes of the conspiracy, in particular to keep de Jomaron and Perrier, on behalf of Thomson-CSF, informed of developments, and to secure their further approval and ultimately to secure payment of the bribe as agreed.
k. Shaik met Perrier and Thétard in Paris on 22 May 2000 concerning the issue, and at least by this date Perrier signified his approval to Shaik.
N. PAYMENT OF THE BRIBE
128. In terms of the agreement confirmed between accused 1, Shaik and Thétard on 10 or 11 March 2000, accused 1 would receive R500 000 per annum until the first ADS dividends were paid. ADS dividends were paid in September 2001, being almost exactly two years after the bribe was requested on 30 September 1999 as described above. The bribe due was thus in the order of R1 million.
129. Shaik experienced difficulty in securing payment of the bribe from Thomson. He threatened Thétard in a letter dated 31 August 2000 to seek alternative remedy as a result of Thétard apparently ignoring this concern.
130. On 6 October 2000 Shaik complained to Thétard that his party (accused 1) was accusing them of reneging on the agreed understanding, the request having been agreed to by Perrier, and which understanding had been communicated to accused 1. Accused 1 apparently felt let down. Shaik shared this sentiment and was particularly displeased, given Perrier's positive response. Furthermore, accused 1 had proceeded to an advanced stage on a matter that was requiring to be resolved. (Accused 1 needed funds at this time to pay for his development at Nkandla - see below) The delay was proving to be extremely detrimental and embarrassing for all the parties. Shaik urged Thétard to respond timeously on this "extremely delicate matter."
131. Nkobi eventually entered into a so-called "service provider agreement" with Thomson-CSF International Africa Ltd in Mauritius as a device to disguise the payment of the bribe.
132. The application form attached to the service provider agreement is dated 1 November 2000. The agreement that is signed by Shaik is undated. The agreement indicates that it was to be signed in January 2000.
133. Shaik, Thétard and de Jomaron met in Mauritius in November 2000. They discussed the arms deal investigations.
134. The covering letter by which Shaik forwarded to Thétard the application form for the service provider agreement is dated 8 December 2000. He urged Thétard to expedite "our" arrangement as soon as possible, as matters were becoming extremely urgent with Shaik's client (accused 1).
135. During this period in the last quarter of 2000, accused 1 was liable to make payments in respect of his Nkandla development but he was failing to do so. The total amount looming in the near future was in the region of R1 340 000 - see below.
136. Article 7 of the Service Provider Agreement deals with remuneration. Nkobi's annual fee charged to Thales was R500 000. The printed form provides for 2 payments of R250 000 (before end December 2000 and on 28 February 2001). Shaik added two further handwritten figures of R250 000. The total due as stipulated by Shaik in terms of the proposed agreement was R1 million.
137. Article 3 provides for the extension of the contract for successive 1 year periods.
138. A warranty clause relating to non-bribery has a handwritten note in the margin (it is Shaik's handwriting) as follows:
"Conflicts with intention"
139. In a further letter from Shaik to Thétard dated 11 December 2000, Shaik confirmed sending documentation relating to the service provider arrangements to Mauritius on 8 December 2000. Shaik remarked further that he assumed that the first service arrangement payment was to occur before 15 December 2000 so that he could give effect to its intended purpose before the Nkobi offices closed on 15 December. This intended purpose was payment to accused 1.
140. Nkobi experienced difficulty in receiving payment of this fee, and had to reflect the fees as still to be received in its frequent cash flow financial statements for the period.
141. The initial fee of R250 000 was eventually paid on 16 February 2001 into the ABSA current account of Kobitech (Pty) Ltd. (The further analysis of this payment is continued below).
142. Nkobi did little by way of any service to justify this fee of R1 million (or the amount of R250 000 that was paid during February 2001), beyond providing a letter dated 15 April 2001 referring to a submission regarding guidelines and procedures for counter trade offset obligations that would follow and a letter dated 16 July 2001 dealing with potential offsets projects, all of which would in any case benefit Nkobi.
143. Shaik drafted both letters. Both letters were prepared on the same day and backdated. Both letters were created for the first time on 23 August 2001 on the same Nkobi computer.
144. At the time of the creation of the documents in question, Shaik was attending a Thomson board meeting in Mauritius.
145. Jean-Daniel Chabas, another member of Thomson senior management, visited South Africa from 19 to 21 February 2001. He met with Shaik in Durban on 21 February 2001. The subject of the loan repayments by means of the dividends was discussed. Shaik enquired when the dividends could be paid, over and above the loan repayments. Shaik was concerned about being able to help those who had helped him.
146. Accused 1, Shaik and Perrier had supper together in Cape Town on 28 March 2001.
147. In a letter dated 17 July 2001 from Shaik to Moynot regarding an unrelated issue he threatens to "withdraw from all structures of ADS and Thompson……[I]n addition to me throwing in the towel on matters in which I believe will be in the interest of our state."
148. At this time the multi-agency investigation into the arms deal had already commenced and the first witnesses in respect of this leg of the investigation had already been questioned by the Investigating Directorate of Serious Economic Offences (IDSEO), later called the Directorate of Special Operations (DSO), a division within the National Prosecuting Authority.
O. ACCUSED 1'S REACTION TO THE INVESTIGATION OF THE ARMS DEAL
149. In a letter dated 19 January 2001, written in his capacity as "Leader of Government Business" in parliament, accused 1 wrote to Gavin Woods, then chairperson of the Parliamentary Standing Committee on Public Accounts:
"Furthermore, we are convinced that [..] there is no need for the 'Heath Unit' to be involved in any 'investigation' of the defence acquisition.
We hope this strange manner of proceeding was not driven by a determination to find the Executive guilty at all costs, based on the assumption we have already mentioned, that the Executive is prone to corruption and dishonesty."
P. FUTURE THOMSON/NKOBI PROJECTS
150. As mentioned above, Nkobi's meaningful participation in all Thomson's local business ventures was planned. Nkobi and Thomson had a number of joint business ventures. Apart from being joint venture partners in obtaining the award of the national contract for the drivers' licences and their partnership in respect of the corvette bid, possible and planned future joint ventures included projects in transport, tourism, justice, finance, prisons, hospitals, water, the Durban airport, the ID card contract, the N2, N3 and N4 road projects, the third cellular telephone network, the arms deal set out below and other military deals, and smart card technology.
151. As mentioned above, Thomson regarded as very important the approval of the South African Government and the ANC leadership for its business ventures, including its choice of empowerment business partners.
Q. NKANDLA DEVELOPMENT
152. In the year 2000, accused 1 commenced with a project to develop his traditional residential village estate at Nkandla in rural northern KwaZulu-Natal.
153. A site plan drawn by architects Tasker & Schuman is styled "Proposed New Traditional Village at Inkadla (sic) Kwazulu Natal" and is dated March 2000.
154. By way of an informal agreement with accused 1 during July 2000, Eric's Industrial Plumbing and Building CC (Eric's Industrial) was appointed as the construction developer. Eric Malengret is the sole member of Eric's Industrial.
Cost of the development
155. A document resembling a quotation, dated 19 July 2000, is addressed to accused 1. This refers to plans and a site layout upon which a "tender" was prepared. The "tender" amount is R2 428 360 (excluding VAT). According to the quotation, payment was required on a contract valuation every two weeks with a 10% retention being withheld until contract completion and then reduced to 2½ % for a maintenance period of six months.
156. The estimated time for completion was noted as six months.
157. At a stage, the tender was amended to an amount of R1 340 000.00, which was accepted.
Progress with the development
158. The development commenced on 20 July 2000.
159. During the period of the development from 20 July 2000 to 30 March 2001, Eric's Industrial incurred expenses of R926 538.28 in respect of the development on accused 1's behalf.
160. In terms of the informal tender agreement, payment was required from accused 1 every two weeks from after 20 July 2000.
Payments for the development
161. Arrangements were made during the development and after its completion for payments to be made by various third parties on accused 1's behalf.
162. On 14 August 2000, an amount of R100 000 was deposited in the bank account of Eric's Industrial. This comprised three different amounts as follows :
a. R30 000.00 ex Bohlabela Wheels (Middelburg);
b. R60 000.00 ex Bohlabela Wheels (032 89 2075); and
c. R10 000.00 ex Fakude P.Z.N.
163. On 4 October 2000 an amount of R40 000 was deposited in the bank account of Eric's Industrial by way of a Bohlabela Wheels cheque.
164. On 18 October 2000 an amount of R50 000 was deposited in the bank account of Eric's Industrial in cash.
165. On 31 October 2000 Vathasallum Reddy, a businessman, made a payment in the amount of R50 000 from one of his companies, Edison Health (Pty) Ltd, to Eric's Industrial.
166. On 3 November 2000 a cheque in the amount of R50 000 drawn on Reddy's personal account, was also deposited into the account of Eric's Industrial. The close corporation's cashbook reflects the receipt of the R50 000 on 3 November 2000 as 'RECEIPT JZ'. Both payments of R50 000 are reflected as 'members loan account - long term'. This is the manner in which Eric's Industrial treated all monies received for accused 1's Nkandla development.
167. Steps with a view to obtaining a bank loan for accused 1 were commenced in March 2002. On 9 December 2002 a bond in the amount of R900 000 was registered over the Nkandla property in favour of Firstrand Bank Ltd. On 18 November 2002, Reddy had signed as surety (limited to R400 000) for the payment of the loan. He had also accepted responsibility to pay accused 1's monthly installments which amount to R12 117.11 per month. Accused 1 signed a deed of indemnity whereby he indemnified Reddy and held Reddy harmless against any loss or damage or claim as a result of accused 1's indebtedness to the bank.
168. Reddy commenced payment of the monthly installments of R12 117.11 from 25 January 2003.
169. The proceeds of the bond, being an amount of R900 000, was reflected as having been received by attorneys Franke & Associates in its trust account on 12 December 2002 under the name of "Zuma." Franke & Associates, during the period 12 December 2002 to 14 February 2003, made various disbursements on behalf of Malengret. No amounts owing to Eric's Industrial are reflected as having been settled in the accounting records of the close corporation.
170. In terms of an 'Acknowledgement of Indebtedness Memorandum of Agreement' concluded between Malengret and accused 1 on 22 February 2003, accused 1 still owed Malengret an amount of R250 000. The sum due, payable together with interest calculated at a rate of 15,5% per annum, had to be paid in installments of R10 000 per month as from March 2003. Accused 1 was also liable for the related legal costs.
171. Accused 1 remained liable in total for the development costs of Nkandla and related expenses through the various mechanisms described above, being at least R1 340 000.00. No evidence had been discovered as at October 2004 to show that accused 1 had yet made any personal contribution in respect of any amount owing by him relating to the Nkandla development.
Shaik's involvement in the Nkandla development
172. On 19 October 2000 Shaik, in his capacity as adviser to accused 1, instructed Malengret in writing to stop the development with immediate effect. Accused 1, however, requested him to ignore Shaik's instruction and asked him to continue with the development. Accused 1 informed him that he was arranging a bond. As described above, negotiations regarding a bond commenced only in March 2002.
173. Accused 1 drew a cheque dated 4 December 2000 in the amount of R1 million. Development Africa was the payee. By this date, Eric's Industrial had received R290 000 from the parties mentioned above, leaving a balance on the agreed tender price in respect of the Nkandla development of R1 050 000.00.
174. The account into which the cheque was initially deposited was opened on 7 November 2000 by Reddy in his name trading as Development Africa. Reddy is the only signatory to the account and operates the account. The account was opened as the account for a charitable trust styled Development Africa Trust. This trust had not been registered as a fundraising institution and neither had it been registered for tax purposes. Reddy was both the founder of the trust and a trustee.
175. Accused 1's cheque was presented but payment was stopped on the instruction of Shaik on 7 December 2000.
176. Since Reddy's last payment of R50 000 on 3 November 2000 to Eric's Industrial on accused 1's behalf, further expenses of approximately R100 000 had been incurred up until 4 December 2000 in respect of the Nkandla development. No payment had been forthcoming in respect of such expenses. No further payments were recorded up to the completion of the development in March 2001.
177. On the 16 February 2001, R250 000.00 was transferred from Thales International Africa - Mauritius to the ABSA current account of Kobitech (Pty) Ltd. The amount was paid ostensibly in terms of the service provider agreement, as explained above.
178. Within eight days, on 24 February 2001, Kobitech (Pty) Ltd paid Development Africa R250 000, as part of the scheme, for the credit of accused 1.
179. At the same time, Nkobi issued three post-dated cheques, with numbers sequential to the first paid cheque of R250 000, each also in the amount of R250 000 and each in favour of Development Africa.
180. On 19 April 2001 Kobitech (Pty) Ltd requested ABSA Bank to stop payment on the three cheques each for R250 000 in favour of Development Africa.
181. On 4 September 2001 Shaik received a deposit of R175 000 from Kobitech. On 5 September 2001, a cheque in the amount of R125 000 was drawn against Shaik's account in favour of Development Africa, for the credit of accused 1. On 17 September 2001 a further cheque of R125 000 was drawn against Shaik's account in favour of Development Africa, for the credit of accused 1..
182. The abovementioned synopsis constitutes a scheme to disguise the payment of the money due to accused 1 in terms of the agreement to bribe him.