Publication: Business Day Issued: Date: 2006-02-01 Reporter: Nicola Jenvey Reporter: Reporter:

Court Orders Shaik to Pay Back R34m

 

Publication 

Business Day
Date 2006-02-01

Reporter

 Nicola Jenvey

Web Link

www.businessday.co.za

 

DURBAN ­ The Durban High Court yesterday ruled that convicted fraud Shabir Shaik (pictured) must pay R34m to the state, said to be proceeds of crime.

Judge Hilary Squires also ordered Shaik to pay the cost of the application by the national director of public prosecutions as well as the cost of two counsel. Shaik’s legal team said it would appeal against the ruling.

This was one of the first major asset-forfeiture cases in which the Prevention of Organised Crime Act was tested by a court and proven to be effective. National Prosecuting Authority spokesman Makhosini Nkosi hailed it as a landmark judgment that would assist in similar cases in the future by setting “a useful precedent”.

Last June Shaik was convicted on two counts of corruption and one of fraud linked to a “generally corrupt relationship” with former deputy president Jacob Zuma, and sentenced to an effective 15 years and a R3,9m fine. Shaik is expected to appeal against his sentence in Bloemfontein later this year, while Zuma’s corruption trial opens in July.

Nkosi said the judgment by Squires sent “a very clear message” that the act was an effective piece of legislation that could and would be used by the state to confiscate proceeds of crime, “no matter how substantial or minor they are”.

The decision allows the state to confiscate 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 ­ dividends worth R12,7m Shaik earned from the ADS shares and the R499 568 profit earned from the sale of several Thomson-CSF shares.

However, Squires believed the Nkobi subsidiaries Kobitech and Kobifin were “simply the conduit” by which Thomson-CSF paid a R250 000 instalment for Zuma’s annual R500 000 bribe, and had thus not benefited from the proceeds of crime.

There was therefore nothing of which the state could strip either Nkobi or Shaik, and he dismissed the application. He acknowledged that the limited contact as the money flowed from Thomson-CSF Mauritius to Nkobi and onward to Development Africa Trust Fund to pay for Zuma’s rural house at Nkandla, constituted money laundering.

Shaik was found guilty on the main corruption charge in this regard. However, Squires was damning of Zuma in his judgment, reflecting on the corrupt relationship between Shaik and Zuma.

Shaik’s lawyer, Reeves Parsee, said the defence would appeal against the confiscation order, meaning the assets remained with curators PricewaterhouseCoopers until the legal process had run its course.

With acknowledgements to Nicola Jenvey and Business Day.