Publication: Sunday Independent Issued: Date: 2007-02-18 Reporter: Chiara Carter Reporter: Niyanta Singh Reporter: Jeremy Gordin

Licence Deal Blow Adds to Shaik's Woes

 

Publication 

Sunday Independent

Date

2007-02-18

Reporter

 Chiara Carter, Niyanta Singh, Jeremy Gordin

Web Link

www.sundayindependent.co.za

 

South Africa's most controversial jailbird may lose millions as transport department takes legal advice on contract

In the latest of a week of blows for convicted businessman Schabir Shaik, his beleaguered business empire is bracing itself for the loss of its multimillion-rand stake in the company producing the country's driving licences.

The department of transport is to announce how it intends dealing with a situation where it finds itself contracted to an enterprise that includes business interests of Shaik, a convicted fraudster serving a 15-year prison term.

Other setbacks for Shaik this week included: his removal on Thursday from hospital to the infirmary at Westville Prison amid flashing lights, armed guards and shackles; a full investigation by his medical aid, Discovery Health, of his 83-day stay and treatment at St Augustine's; and forking out R100 000 this week to the hospital until the medical costs issue is resolved.

Shaik's driving licence interests are in jeopardy after the department of transport took extensive legal advice following pressure from parliament's standing committee on public accounts. This is because the Public Finance Management Act prohibits the government from dealing with convicted criminals.

Shaik resigned from the helm of Nkobi Holdings when he faced the prospect of prison, but it is his role at Kobitech that is under scrutiny.

Mpumi Mpofu, the transport department director-general, this week confirmed that an announcement was imminent but provided no further details.

"We have no comment to make," said Mo Shaik, Schabir's brother and the family spokesperson, yesterday. "It seems to us that the department is doing this because they can. We will await its announcement and then we will deal with the issue."

The department awarded the contract for manufacturing driving licences to Prodiba in 1997.

Prodiba was formed from a consortium of Face Technologies, Kobitech (representing Shaik's Nkobi Holdings) and Thomson CSF (later renamed Thales), the French company named in the case against Shaik.

It is reliably understood that the transport department intends announcing that it cannot be contracted to Kobitech. The five-year contract was renewed under controversial circumstances in 2004, concluded by a relatively junior official who did not have the authority to do so and without the appropriate authorisations. He subsequently resigned, reportedly to work for Prodiba.

The driver's licence contract is highly lucrative. Prodiba gets R40 of each licence fee and possibly more depending on the volume of cards it produces. The total contract value was in 2004 said to be R650 million. Close to 14 million people have so far acquired the credit-card type licence. *1

Meanwhile, it has emerged that Discovery suspended payments for Shaik on January 31, and that a team of investigators visited the hospital this week to scrutinise all treatment after his admission on November 24. According to sources, Shaik's bill as of Thursday stood at more than R400 000 - for hospitalisation only, excluding doctors and the cost of prison officials to guard him. It is understood R100 000 was paid to the hospital via a direct bank deposit by the Shaik family on Wednesday evening.

Sources said the bill after his discharge was still being calculated and as far as they know the Shaik family was responsible for it following Discovery's decision to suspend payment pending its probe into the validity of the medical claims.

Having spent an hour in theatre for an angiogram procedure on December 19, Shaik's stay in hospital has been justified by maxillo-facial surgery (for the removal of a gum abscess), a mild stroke, fluctuating blood pressure and depression.

The bulk of his medication during his stay of almost three months included painkillers, sedatives, antidepressants, anti-histamines and medicine for cholesterol and high blood pressure.

Shaik was arrested on November 15 2001 and sentenced to 15 years for corruption and fraud on June 8 2005. He lost all his appeals against his fraud and corruption convictions and sentences on November 6 last year.

He began serving his sentence on November 9 by reporting to Westville Prison. He was immediately transferred to Qalakabusha, Empangeni, and was treated for hypertension (high blood pressure) there.

He apparently *2 suffered a mild stroke and was transferred to St Augustine's private hospital in Durban on November 24. Last week he was discharged from St Augustine's Hospital and transferred to Durban-Westville Correctional Centre on Thursday.

With acknowledgements to Chiara Carter, Niyanta Singh, Jeremy Gordin and Sunday Independent.


*1       14 million licences @ R40 apiece equates to R560 million paid to Prodiba over 5 years. If Nkobi owns a third of Prodiba then this equates to income of some R37 million per year with a nett profit after tax of say R20 million per year.

But it's worse - every South African driver needs to renew their licence every five years. So it's an infinite money-printing machine.

Not only are this great contracts to get from one's buddy bumiputerian Minister of Transport Mac Maharaj, but surely who needs Discovery Health with this kind of wonga splodging its regular way into one's current account. Even the yearly interest at 8,35% amounting to R1,4 million per year should just about pay for one's yearly hospital bill at St Augustine's (that's ensuring one doesn't have three Dr Ali Babas billing one R100 000 per month each to keep those palpitations in check each time one thinks back to The Hunchback of Qalakabusha).

But now it's time to look at Mac's role in giving his old buddy Schabir these lucrative driver's licence and toll road concessions.

Come on Vusi - it's your job.


*2      Just about anyone would experience a few heart palpitations when one notices The Hunchback of Qalakabusha eyeing out the new arrivees just before lights out.