Shady dealing, says auditor

It was another long day at the Schabir Shaik trial and the evidence about Shaik's alleged "creative accounting" even had Durban High Court judge Hilary Squires a bit confused.

In the witness stand is KPMG forensic auditor Johan van der Walt, who is still wading through his 250-page report - the paper trail through which the state seeks to prove two charges of corruption and one charge of fraud against Shaik.

The corruption charges relate to an alleged corrupt relationship which Shaik had with the man he gave financial advice to, Deputy President Jacob Zuma.

It is alleged that Shaik and his Nkobi group of companies gave Zuma money or made payments on his behalf in return for business influence.

It is also alleged that Shaik facilitated a bribe for Zuma from French-based arms company Thomson-CSF.

Today, like yesterday, the fraud charge is under the spotlight. It is alleged that Shaik altered his accounting records to "write off" R1,282 million, part of which had been paid to Zuma. The state says the write-off was done under the guise of development costs for Prodiba - a consortium Shaik was involved in and which secured the contract for the supply of South Africa's new credit card-type driver's licences.

In essence, the charge relates to bad accounting practices and to van der Walt's assertions that the financial statements of Shaik's companies had been deliberately misrepresented.

Regarding the Prodiba deal, van der Walt said Shaik and Thomson-CSF each had a 33% stake in the consortium.

Not only did they stand to realise profit from Prodiba itself, but also from an allocated "workshare" and from interest on loans they made to Prodiba which would attract interest.

However, in terms of the contract, Prodiba had to supply card verification devices as well* - and this put the profits in jeopardy. In an apparent double-deal, Shaik - wearing one of his Nkobi hats - had negotiated with Symbol Technologies, an American supplier of the hand-held scanners, for them to buy a 25% stake in his company, Kobitech. He claimed to Symbol that he would "inject" a R150 million deal for the supply of 40 000 scanners.

"On the strength of this, Symbol was prepared to pay $2 million for its shares . . . I can find no record that the board of Prodiba was aware that Shaik was negotiating with Symbol. Nor can I find any evidence of the contract with the Department of Transport referred to by Shaik as the 'R150 million contract' . . . In fact, at this stage, Prodiba was projecting substantial losses even if it had to supply just 500 of the verification devices," Van der Walt said.

He also testified that Shaik had made similar misrepresentations to Absa Bank at a meeting to raise finance.

Shaik had stated that "Nkobi would bring in a R150 million contract over five years through the driving licence project". This was at a time when Absa was reconsidering the facilities of the Nkobi group because the results were not favourable.

The deal with Symbol ultimately fell through.

It was against this backdrop, the auditor said, that Shaik had taken a "future workshare" from Prodiba and reflected it as an asset against which a non-distributable reserve had been set up. The debt - which is alleged to have been partly incurred by payments to Zuma - was written off against this.

After the day's evidence, there was laughter among journalists outside the court.

"What are you laughing at?" Shaik asked as he walked past.

"Oh, just accountants," was the reply.

"Don't talk to me about accountants," he muttered.

The trial is continuing.

With acknowledgements to Tania Broughton and the Daily News.

* It seems that the taxpayers paid for these scanners - where are they?

If 400 000 scanners were deliverable, they would cost about R100 each (maybe R200 each, maybe more) then it would seem that R40 million (maybe more) worth of the contract is still deliverable after at least five years - enough to cover an Indonesian marble table, some top-of-the-range Pentium PCs and a couple of tickets to Disneyland for Mac and Zarina.

Just a counting.