Durban - Nkobi Holdings, an industrial holding company, this week signed a R500 million leisure resort development deal with a southeast Asian investor, despite the recent arrest of its chief executive, Schabir Shaik.

The investor is expected to contribute between 30 percent and 40 percent to the cost of the project, the location of which has not been disclosed.

The investor will also provide top-class management for the first five years while members of the local community undergo five-star resort management training.

Construction is expected to start during the last quarter of 2002.

Shaik was charged in November under the Protection of Information Act for his alleged illegal possession of confidential cabinet minutes seized during a Scorpions raid on his home in October. The information contained in the minutes is believed to have boosted Nkobi’s chances of winning a R2,6 billion tender to supply combat suites for navy corvettes.

Shaik has denied any knowledge of the documents and believes he has a strong defence for his trial, which is set down for the Durban regional court between May 27 and 31.

Despite his status as a hot potato, Shaik’s visit to southeast Asia in October last year has paid off, with the investor committed to developing the resort. However, the project hinges on the outcome of the trial, as a negative verdict could jeopardise domestic funding, putting indue strain on the investor’s equity contribution.

While Shaik’s attorney, Reeves Parsee, is confident of his client’s prospects, the act provides for a maximum sentence of a R10 000 fine or a suspended sentence should Shaik be found guilty.

Parsee believes the arrest of Shaik and his brother, Shamin "Chippy" Shaik, who was chief of procurement for the military when the tender was awarded, is a frantic barrel-scratching exercise to justify the millions spent on the arms deal investigation.

Chippy Shaik has been charged with passing confidential information from a parliamentary report to his attorneys and has been suspended pending the outcome of a defence department inquiry.

In Friday’s Financial Mail, the chairman of parliament’s standing committee on public accounts, Gavin Woods, argued that the leaking of the report was a side issue. The findings of the report were far more important, he said.

Schabir Shaik said that while a guilty verdict could put paid to any further government tenders, which account for 70 percent of Nkobi’s R300 million annual turnover, it would have little effect on private contracts.

The latest project will comprise four- and five-star boutique resorts of less than 100 rooms each, with a ratio of two staff to every occupant.

"As the project kicks in and southeast Asian staff are replaced by locals, this will provide up to 600 full-time jobs in the poverty-stricken area. Eventually, only a small core of foreign management will be retained to ensure that their financial interest and standards are maintained," Shaik said.

Nkobi intends linking with a tertiary institution to provide the necessary hospitality training and to create special programmes to meet five-star requirements.

"The investor’s wife, an expert in small business integration, is also very excited about the opportunities afforded for developing the sector to provide all the interior furnishings for the resorts," Shaik said.

Guests will be charged a rural skills levy, which Nkobi will match rand for rand. The levy will be used to fund training and improve products, which could be exported under a reciprocity deal with the investor’s southeast Asian developments.

If criminal charges against him are cleared, Shaik intends to take action against the Scorpions for what he believes are acts beyond the limit and scope of the search warrant.

In what he claimed was a "violent raid" on his home and offices, the unit seized all Nkobi’s business files, completely disrupting the firm’s operations. Only copies have been retained, adversely affecting its credit facilities.

Several existing projects had been put on hold pending the outcome of the trial, he said.

Investments and acquisitions totalling R155 million and involving the creation of 650 jobs had been held up. The ventures involved the information technology, petro-chemical, transport and leisure industries.

Public sector contracts that Nkobi could lose include a R700 million taxi recapitalisation project, which would provide 2 700 jobs over three years.

The loss of the contracts during the financial year to February was expected to slash Nkobi’s turnover by 30 percent.

The former activist said he was not cynical about his treatment at the hands of those he fought and sacrificed for during the apartheid struggle, and he was optimistic about the future.