Publication: Business Day Issued: Date: 2006-09-29 Reporter: Ernest Mabuza

Shaik Contests Forfeiture Order

 

Publication 

Business Day
Date 2006-09-28

Reporter

 Ernest Mabuza

Web Link

www.businessday.co.za

 

BLOEMFONTEIN ­ Lawyers representing Durban businessman Schabir Shaik argued in the Supreme Court of Appeal yesterday that the Prevention of Organised Crime Act’s asset forfeiture provisions were not meant to punish, but were meant to deprive a convicted person of ill-gotten gains.

Shaik’s counsel, Francois van Zyl, was appealing against the Durban High Court decision in January that ordered Shaik to forfeit R34m- worth of assets seen as proceeds of crime. These are shares worth R21m Shaik holds in African Defence Systems (ADS), the joint-venture company between Shaik’s Nkobi Holdings and French arms group Thomson-CSF to secure arms contracts.

Other assets are dividends worth R12,7m Shaik earned from the ADS shares, and the R499 568 profit earned from the sale of several Thomson-CSF shares to Thales.

The forfeiture order came after Shaik and some of his companies were convicted of fraud and corruption last year.

Van Zyl argued that Shaik should pay only the R21m for shares held in ADS, and that the R12,7m-worth of dividends should not be forfeited to the state as the money was used to pay off a loan with which the ADS shares were initially bought.

Van Zyl said the dividends were not the fruits of crime. He also said the R499 568 profit from the sale of Thomson-CSF shares was based on a legitimate investment and should not be forfeited.

The state, however, argued that the act defined proceeds of unlawful activities as any benefits that were received without any regard.

State counsel Wim Trengove said the appeal court should intervene only if there was a dispute about disproportionate forfeiture of gross proceeds of crime.

Trengove said Shaik had used Jacob Zuma to ensure that Nkobi Holdings got a stake in ADS. He said that in a letter to Thomson-CSF, dated March 18 1998, Shaik had said Zuma, the deputy president of the African National Congress, was “concerned” about the conduct of Thomson-CSF in SA.

Trengove said this had led to a two meetings in London between Shaik, Zuma and the Thomson-CSF France senior directors that year. Nkobi Holdings was later included as part of ADS. “What Shaik intended Zuma to do was to make him to act in a way that was inconsistent with the office he held,” he said.

Trengove said forfeiture sought not only to achieve punishment, but also to deter others from committing crime.

The court reserved judgment.

With acknowledgements to Ernest Mabuza and Business Day.