By the time Johan van der Walt was called in to help the Scorpions in their investigation of the business dealings of Durban businessman Schabir Shaik, they had already decided to prosecute him.

To remain objective, Van der Walt and his team isolated themselves from the State's team to come to their own conclusions.

The state firstly alleges that Shaik made R1,2 million in payments to Deputy President Jacob Zuma in exchange for Zuma's loyalty to Nkobi Holdings and the use of his name.

This, the leader of the prosecution Billy Downer SC, said in his opening remarks would be a pivotal part of the "backdoor" process followed to obtain lucrative contracts. He added that the payments made no business sense as Nkobi was often in a "cash-starved" position.

Secondly the State alleges that Shaik was involved in the fraudulent "writing-off" of amounts "loaned" to Zuma in Nkobi's books.

The other charge of corruption against Shaik relates to an allegation by the State that Shaik was involved in procuring a R1 million bribe for Zuma from French arms company Thint.

In his plea explanation Shaik admitted the bulk of the payments, but said it was an effort to help a close friend.

He admitted the writing-off of some of the Zuma loans, but said this was done in error and later rectified. He further denied attempts to solicit a bribe for Zuma.

Van der Walt was called to explain the network of documents, financial deals and money trail that formed the background to these charges.

He started off by explaining to the court that what he had to do was analyse the financial relationship between a number of entities.

Shaik is a director of a number of businesses. Most of these form part of the Nkobi group set up in 1995.

Shaik held effective shareholding in the Nkobi group through a company called Star Corp SA. Van der Walt said it seemed to them that the close financial ties between Shaik and Zuma were made when Shaik started his companies in 1995, as there is no evidence that it was in existence before then.

From the report it is clear that even before 1995 Shaik planned to involve Zuma closely in his business. Van der Walt said that they found a yellow notebook in his office in which he had planned the structure of the Nkobi group. In the notes it looked like he planned to give Zuma either a direct or an indirect share.

It was around the same time that Zuma's financial difficulties started, Van der Walt said. Zuma could not pay his debt. Shaik appointed himself as Zuma's financial adviser. But, Van der Walt explained, Shaik's financial advice did little to improve Zuma's money trouble.

"A good financial adviser would have told him to stop making debt," he said. "Shaik just paid Zuma's debts." These debts, Van der Walt said, totalled about R1.2 million by September 2002.

Zuma, Van der Walt said, in turn involved himself in the business of Nkobi Holdings. He attended meetings and visits with individuals especially with those of the French arms company now known as Thint. "Zuma represented the Nkobi group on issues that were of interest to the Nkobi group."

Thint, Van der Walt said, was one of the main entities involved in the business dealings of the Nkobi group. Firstly through African Defence Systems (ADS), in which Nkobi held an indirect share. ADS won a R1,3 billion subcontract in the arms deal. Nkobi also held an investment in Thint through its South African holding company Thomson CSF.

The other major project in which the Nkobi group was involved during the time covered by the report was the Prodiba venture, a company set up to handle the conversion of South Africa's drivers licences to credit card format.

Van der Walt also discussed the business dealings around a development in Durban called the Point Development. Even though the development never got off the ground, Van der Walt said the negotiations made it clear that Shaik was confident that he could influence and accelerate the development.

The report also showed that Shaik involved Zuma closely in getting the best deal for Nkobi.

The other ventures of the Nkobi group, Van der Walt said, were not particularly successful and "a fairly large amount of expectation was placed on the returns expected from the association with Prodiba and Thomson".

Yet he said that they found a number of references by Shaik to Nkobi's "majority shareholding" in the arms industry of South Africa, even though the best case scenario of its shareholding in Thint, then known as Thomson, was 37.5% at any time.

His report also made it evident that the major players in the arms industry from early in the 1990s positioned themselves to get a share of the billion rand arms deal.

To do this Thomson first bought a share in ADS. This angered Shaik as their direct investment in ADS excluded his company from sharing in the proposed profits. Zuma intervened and negotiated a better deal for Nkobi. It was also during this period that payments to Zuma were made with greater frequency, Van der Walt said.

According to his report, President Thabo Mbeki and former president Nelson Mandela were also involved in the protracted negotiations that eventually led to Nkobi's indirect shareholding in ADS.

During the discussion on the bidding process for the arms deal it was the figure of "Le Tailleur" loosely translated as the tailor surfaced. A previous witness said that this was the French code name for Mandela's friend and shirt maker Yusuf Surtee.

Van der Walt said it could also refer to the person who was responsible for drawing up the list of preferred bidders during the protracted decision taking process in concluding the arms deal.

Whoever "Le Tailleur" was, the report said Thint had pinned their hopes on his influence with top government officials to get them a part of the arms deal.

The other aspect of the report is that there is no evidence of Deputy President Jacob Zuma's involvement in the decision-making process around the arms deal.

Van der Walt concluded that his evaluation of the documents involving Thint, Nkobi and the arms deal led to the conclusions that the French arms company regarded political connectivity as necessary to get a government contract and that this view was shared by Shaik.

Van der Walt also found a "service provider agreement" concluded between Shaik and Thint. The agreement, which was only valid for six months, made no business sense, Van der Walt said.

He concluded that this was an agreement to facilitate payments of R1 million to Nkobi.

He also said that from some of the correspondence between Shaik and Alain Thetard, of Thint, Shaik "could only have been referring to Zuma".

Van der Walt also analysed what happened to R2 million given to Zuma by Mandela, for an education trust. Half of the money went to the KwaZulu-Natal RDP Education Trust, but R900 000 was diverted from Zuma's account to that of Floryn Investments, one of Shaik's entities. Van der Walt concluded that the money was used to reduce the overdrafts of Shaik's companies.

The R100 000 that remained in Zuma's bank account was used to reduce his own overdraft.

According to Van der Walt, Shaik first demanded money for "his client" from the French at the time that Zuma was building a traditional homestead in Nkandla and ran into financial difficulty. The R1 million Shaik asked for was what Zuma needed to get him out of trouble.

Van der Walt said that during the time he studied their activities, the Nkobi group financed its operations almost exclusively on overdraft. He said he found a number of presentations by both Shaik and Nkobi for more credit from especially Absa.

"At times the Nkobi group exceeded its overdraft limits, the bank - due to insufficient funds being available - returned a number of cheques and debit orders. Zuma experienced a similar position," Van der Walt said. But he added that despite this, Nkobi and Shaik continued to support Zuma financially.

"Even during times of difficulty, the cumulative amount paid by the Nkobi group and Shaik over time had a direct correlation with the overdraft of the Nkobi group," he said. "We could not find any evidence or indication of an intention of the Nkobi group and Shaik to recover such payment from Zuma."

Van der Walt said the State had evidence that these payments continued after September 2002.

The money paid on behalf of Zuma included money paid to an exclusive men's clothing store, Casanova; school fees; R15 372 paid to Singapore Airlines; almost R100 000 paid towards two luxury vehicles and a variety of payments to ward off legal action taken against the deputy president for non payment of debts.

Van der Walt also found that from 1999 onwards Nkobi's financial statements "fundamentally overstated its net position".

With acknowledgements to the Daily News.