A company involved in the arms deal, Nkobi Holdings, has been misleadingly trading off the names of at least two purported shareholders in an attempt to boost its black empowerment credentials.

The shareholders are the Durban-based Workers' College, which trains union officials, and a trust set up in the name of the family of Thomas Nkobi, the late treasurer general of the African National Congress, after whom the company is named.

Representatives of both shareholders said this week they had not received any money from Nkobi Holdings, and that they had not been aware that they were shareholders in the company.

Nkobi Holdings was set up in 1995 by Schabir Shaikh, a Durban businessman who prides himself on his association with leading lights in the ANC. The relationship to which Shaikh most commonly refers are with Thomas Nkobi, whom Shaik claims died at his house, and Deputy President Jacob Zuma, for whom Shaikh once served as a financial adviser.

Nkobi Holdings has recently been in the spotlight because of its stake in Thomson CSF Southern Africa, the local arm of a French arms company that won a controversial R 2,6-billion contract to supply systems to the navy's corvette ships. Shaikh said last week that Nkobi Holdings had secured about R10-billion in government contracts since its inception.

The Nkobi family has instructed its lawyers, the Johannesburg firm of Jordaan&Wolberg, to investigate the Mail&Guardian's report last week that the Nkobi family is a shareholder of Nkobi Holdings.

The family's attorney, Ian Jordaan, this week asked the M&G where it had found out that the Nkobi family was a stakeholder in the company. It is understood that the Nkobi family was deeply distressed by last week's article, as they had not known about their alleged stake in the firm.

The family was also unaware of the existence of the Nkobi Family Trust. Jordaan said : "To the best of our knowledge we are not shareholders (in Nkobi Holdings). We are currently in negotiations with Nkobi Holdings with a view to clarify the situation.

Shaik confirmed the Workers' College and the Nkobi Family Trust last week in a wide-ranging interview with the M&G. He listed other shareholders in his company as the Educational Trust Fund (10%), the company's management (25%) and Starcorp (50%). Starcorp belongs to Shaikh himself, who said the Workers' College stake was also linked to the South African Clothing and Textile Worker's Union (Sactwu). It is unclear whether dividends are yet payable to Nkobi Holdings's shareholders.

Nkobi Holdings has won tenders for, among other things, the new driver's licence format and for the upgrade of the N3 toll road. In these tenders - and indeed all tenders since 1996 - the company has presented itself as a black empowerment company, using the Workers' College to bolster this claim.

The Workers' College is also in the dark about its association with Nkobi Holdings. The college is a training institution registered in terms of the Manpower Act to provide adult education to trade union officials. It teaches labour law, economics and gender studies to trade union members who could not otherwise afford the tuition.

The courses are presented in order to empower the members of the trade union movement and are subsidised by the college, that operates on a shoestring budget. Lecturers, including some of Durban's top labour lawyers, donate their time to for a fraction of the fees they normally charge - and in some cases for nothing. Since 1996 the college has owned - on paper - a 10% shareholding in Nkobi Holdings.

This week however the director of the college, Kessie Moodley, told the M&G that he had never received any funds from Nkobi Holdings and had in fact written to Nkobi Holdings asking whether it cease using the name of the Workers' College when it was brought to his attention late last year.

The Workers' College name was first linked to Nkobi Holdings in 1996 at a time when Schabir Shaikh's brother, Yunis, was working at the college as a director.

Moodley said : "The board did not know about the shareholding until November last year when it was raised at a board meeting. The matter was brought up and we decided to write to Nkobi (Holdings) breaking ties. We had no benefit from the association at all."

The former secretary general of Sactwu, Jabu Ngcobo, initially confirmed Moodley's story this week. "We knew nothing about all these deals and we knew nothing about Nkobi," he said. "It was all a surprise to us."

However, the following day Ngcobo admitted that, far from knowing nothing about Nkobi, he was in fact a director of Nkobi Holdings. Ngcobo said that he nevertheless still did not know the Workers' College had a share in Nkobi Holdings. He claimed to have never attended Nkobi Holdings board meetings - nor to have been invited to them.

Ngcobo has a long history of friendship with Yunis Shaikh through his involvement in the trade union movement and Sactwu. Yunis Shaikh is presently senior convening commissioner of the Commission for Conciliation, Mediation and Arbitration.

News that Ngcobo serves as a director of Nkobi was met with outrage by Patrick Mkhixe, the general secretary of the Azanian Workers' Union who sits on the board of directors of the Workers' College.

Mkhize said that he did not know about Ngcobo's directorship at Nkobi Holdings and would have "raised hell" had he known.

Said Mkhize : "We will be calling an urgent meeting to deal with this crisis. I smell a rat here, a very big and very dirty rat. How can someone be a director of a company and not know who the shareholders are? But more than that we have had discussions and we have some questions.

"First off we want to know why Ngcobo kept his directorship of Nkobi secret. He never disclosed his directorship to us like he should have. Something stinks here."

The current secretary general of Sactwu, Ibrahim Patel, told the M&G that his union had no formal relationship at all with Nkobi. When asked if he might consider legal action against the firm, Patel declined to comment saying : "I first want to get myself fully briefed on the situation."

Moodley said this week : "We have received nothing, absolutely nothing form Nkobi. Some time ago when Yunis (Shaikh) worked here he suggested at a board meeting that we would be able to obtain funding by getting involved in business schemes. However, that is the last we ever heard of it. We received no funds, no correspondence and certainly did not attend any shareholders' meetings."

The college fears the plundering of its name by Nkobi Holdings may deprive it of funding and tarnish its reputation. It also fears that upon reading that the college has a 10% stake in Nkobi, potential funders could channel donations elsewhere.

When contacted this week for comment Yunis Shaikh told the M&G it would not be appropriate for him to comment on matters concerning the Workers' College.

Schabir Shaikh is currently visiting his brother Mo, who is South Africa's ambassador to Algeria and could not be reached this week. Schabir Shaikh's other brother, Shamin "Chippy" Shaikh, is head of the defence secretariat's procurement committee. He says he recused himself when the committee considered the corvettes deal.

Thomson CSF Southern Africa, of which Schabir Shaik is a founding director, won its contract as a joint venture with African Defence Systems, a company it bought in 1990 of which Schabir Shaikh is also a director.

With acknowledgements to Paul Kirk, Mungo Soggot and the Mail&Guardian.