Durban - The latest high profile person to be drawn into the Scorpions' investigation into alleged corruption by businessman Schabir Shaik and deputy president Jacob Zuma is casino boss Vivian Reddy who, according to court papers, stood guarantor for a loan for Zuma and then also serviced the loan.

Reddy is a shareholder in Newcastle's Monte Casino and boss of the Edison group of companies.

Shaik, Zuma's personal financial adviser and director of the Nkobi group of companies, is charged with four counts of corruption, fraud and tax evasion. Alternative charges include crime and theft, money laundering or possessing the proceeds of crime.

Court papers allege some of a R1m bribe was used to pay for the construction of Zuma's house at Nkandla in KwaZulu-Natal.

It was alleged Zuma, Shaik and Thales director Alain Thétard agreed on March 11, 2000 Zuma was owed R1-million in terms of a bribe of R500 000 per year. Nkobi Holdings entered into a "service provider agreement" with Thales in Mauritius charging R500 000 per year. Two further handwritten figures of R250 000 were added bringing the total to R1m. Nkobi, however, did little work to justify the R1m fee.

Thales, however, did not pay the amounts as promised at the end of 2000 forcing Shaik to write to Thétard saying he should expedite their arrangement as soon as possible "as matters are becoming extremely urgent with my client".

At this time Zuma was experiencing difficulties paying for the construction of his R1.3m residence at Nkandla by Eric Malengret and his construction company. Construction began in July 2000 and finished in April 2001.

Shaik had in October 2000 told Malengret to stop construction, but Zuma insisted the development continue because he was arranging a bond. At that point he owed about R200 000 and about R700 000 in expenses were later incurred without any payments made.

Reddy then made two payments of R50 000 each to Malengret's company in October and November 2000. One payment was from Edison Health (Pty) Ltd and the other from his personal account.

Long term loan account

Malengret's company recorded the payments as "Receipt JZ" and they were handled as a long-term loan account.

The remaining R900 000 was settled by a bank loan from First National Bank for which Reddy signed surety of R400 000. He also signed a debit order to pay instalments of R12 117.11 from an account in his own name and has been servicing the bond since January this year.

Zuma, however, still owed Malengret R250 000 from February this year and began paying monthly instalments of R10 000 beginning in March this year.

Reddy opened a bank account for his Development Africa Trust, of which he was the founder and sole trustee, in November 2000. The trust was not registered as a fundraising institution, nor was it registered for tax purposes, according to the court papers.

Zuma drew a cheque of R1m to pay Development Africa in December 2000, but the cheque bounced. This was when Shaik wrote the letter to Thétard saying matters were "extremely urgent". An amount of R250 000 was transferred from Thales International Africa-Mauritius to Kobitech in February 2001.

Nkobi issued a cheque for R250 000 to Development Africa within eight days and also issued three post-dated cheques for R250 000 to Development Africa.

'Sinister transactions'

"This indicates that Nkobi intended to pay Development Africa R1m, which is an amount equivalent to the R1m cheque that Zuma issued to Development Africa, and which bounced. It is also an amount equivalent to the bribe agreed to between Zuma, Thomson and (Shaik)," the charge sheet says.

Nkobi's financial accountant, however, sent a letter to Absa Bank to stop payment on the three postdated cheques. Shaik later received a R175 000 cheque from Kobitech and then made two payments of R125 000 to Development Africa.

Reddy spoke of a very close relationship with Zuma and expressed shock at being linked to seemingly sinister transactions. He said his business dealings with Zuma were strictly formal. He said the R100 000 loan on behalf of Zuma was a formal agreement and Zuma signed an acknowledgement of debt. He said the Scorpions had a copy of the agreement.

Reddy understood he was not the subject of an investigation by the Scorpions but said he had had meetings regarding Zuma with them recently.

He also disputed that the Development Africa Trust was not registered. He said the trust had five trustees and the Scorpions had copies of bank statements and knew how the trust operated.

With acknowledgements Zoubair Ayoob and The Natal Witness.