Court reserves judgment

Bloemfontein: Convicted Durban businessman Schabir Shaik will have to wait and see if he has to turn over R34 million to the State, after the Supreme Court of Appeal here reserved judgment on his civil appeal yesterday.

The state says the R34m is proceeds from the benefits Shaik and his Nkobi group reaped from their relationship with former deputy president Jacob Zuma.

Shaik's legal team did not argue that the confiscation order be thrown out - as set out in their heads of argument - but alternatively that Shaik should only have to pay R21m for shares held in arms company African Defence Systems (ADS). Shaik got hold of these shares through his association with Zuma.

The appellants argued that R12.7m worth of ADS dividends were used to pay off a loan with which the shares were initially bought. Shaik should not have to pay both the value of the dividends and that of the shares.

Francois van Zyl, SC, said the dividends were not the "fruits of crime" that must be forfeited according to the Prevention of Corruption Act.

He said it was "disproportionate in the extreme" to have both the dividends and the shares declared forfeit.

State prosecutor Wim Trengove did not agree with the appellant that profits should become the benchmark of forfeiture.

He said the act referred to the gross proceeds of a crime, the "fruits of the poisoned tree" and not merely the profit of a crime.

Another of the benefits in question is the R500 000 Nkobi Investments received when it sold its shares in Thint Holdings to Thales.

Van Zyl argued that this R500 000 was based on a legitimate investment.

Trengove said it was part of the same transaction - involving Zuma's influence - which got Nkobi the shares in ADS and that gave them the shares in Thint Holdings.

He said the benefits were achieved not only by Zuma's interventions with the French on behalf on Nkobi, but in the way Shaik used Zuma as a selling point.

The forfeiture sought not only to achieve punishment, but also the greater public interest of deterring others from such crimes and removing the assets from society.

Shaik's assets, currently in the custody of a curator, will only be returned to him if his bid to have the state's ruling overturned is successful.

An additional 15.5% interest - which could amount to an additional R5m - could be added to the R34m if the appeal does not succeed.

This civil appeal follows Shaik's criminal appeal against his fraud and corruption convictions. The Supreme Court of Appeal reserved judgment on Tuesday in this appeal after two days of argument.

The appeals arose from the seven-month trial last year in which Shaik and several of his companies were found guilty on two charges of corruption and one of fraud. Shaik was sentenced to 15 years in jail, in effect, and his companies were sentenced to pay fines of more than R4 million. The state then ordered that a further R34 million assets be forfeited.

It is not known when judgment will be delivered.

With acknowledgements to Fran Blandy and Cape Times.