Top ANC leaders — among them President Thabo Mbeki — blocked an attempt by corruption-accused Schabir Shaik to set up a massive ANC investment company which would have seen Malaysian partners paying off the party's huge 1994 R40-million overdraft.

The scheme, the brainchild of Shaik and former ANC treasurer-general Thomas Nkobi, was hatched in 1994.

It would have seen "key and extremely prominent" Malaysian investors, in particular Renong, which made billions out of privatisation of Malaysian state assets, secretly paying off the ANC's overdraft as part of a joint venture.

A letter from Shaik to ANC chief representative in Malaysia Ismail Coovadia in May 1994 lists the areas of investment as including steam coal, steel, motor assembly and palm oil.

However, in May the following year, Nkobi's replacement in the ANC, the Rev Makhenkesi Stofile, pulled the plug on Shaik after a meeting with ANC top brass.

This emerged this week from a series of letters which are part of the exhibits presented by the state at Shaik's corruption trial in Durban.

In an August 10 1994 letter to then ANC President Nelson Mandela, Nkobi — who was introduced to Shaik by Jacob Zuma — said he, Shaik and Coovadia had been involved in talks with top Malaysian politicians and businessmen since June that year.

"I was assured that given our joint co-operation, they would be in a position to immediately assist the ANC to a value of R40-million in removing our current and growing bank debt," Nkobi said.

His letter was copied to four ANC Cabinet members, one of them Mbeki.

Nkobi said the Malaysian deals would have to be done "sensitively and with confidentiality", with the resulting company "envisaged as being outside of the structures of the ANC but with necessary reporting mechanisms".

However, after Nkobi's death on September 25 1994, Stofile was appointed as ANC treasurer-general and, in May 1995, he wrote to Shaik telling him the deal was dead in the water.

Further, the party was to have no more dealings with Shaik.

Stofile told Shaik he had consulted the ANC leadership and had insisted that Shaik's "status within the ANC be defined categorically". While Shaik had been "appointed to assist with the last elections", as such "you have no position within the ANC", Stofile said.

He added that all communication with Shaik on behalf of the ANC "should come to an end, including imminent programmes or plans".

"This, comrade, throws all our plans for Malaysia and elsewhere completely overboard. I regret this terrible inconvenience and personal embarrassment for me. But so be it. As a disciplined member of the organisation I have to stand by this decision."

Despite this freezing out, letters written by Shaik show he travelled to Malaysia with Zuma in July 1995 to pursue joint ventures with companies in the defence industry.

The court has also heard that Shaik's French partners, Thomsons, were informed by Mbeki that Shaik's Nkobi Group was not a legitimate Black Economic Empowerment concern.

A letter from Shaik to Thomsons' Jean-Paul Perrier on March 17 1998 raises concerns about "allegations made to me by yourself and other representatives of your group attributed to ... President Thabo Mbeki, with regards to our South African business affairs".

Shaik's counsel, Francois van Zyl, told the court his client had found out Mbeki had indicated he did not view Shaik and Nkobi as suitable BEE partners. "Shaik will say he wrote the letter to "stop the rumours."

With acknowledgements to Paddy Harper and the Sunday Times.