Deny, Deny, Deny: Thabo Mbeki, who threatened to sue the Sunday Times

'Whoever made these allegations has a very fertile imagination' - Mbeki spokesman Mukoni Ratshitang

A meeting between Thabo Mbeki and Schabir Shaik in the early '90s laid the foundation for the convicted fraudster's business empire - and the ANC's links to alleged corruption in the multibillion-rand arms deal.

Today the Sunday Times can reveal how Mbeki, who was deputy president of South Africa at the time, advised Shaik to set up a business empire - specifically for the benefit of the cash-strapped ruling party.

This, despite Mbeki's repeated denials that he played any such role in the rise to prominence of Nkobi Holdings.

A 1995 document titled President's Report, addressed to then-ANC president Nelson Mandela, who was also head of state at the time, claims that Mbeki was central in advising Shaik to create the company that would fund the ANC through "patriotic" dividends paid out for major government contracts.

According to the document, Mbeki told Shaik "to dislodge from party control" and "contribute to the ANC treasury as a patriotic member (and) ... urged Shaik to develop (Nkobi) into another structure like that of Thebe Investment (Corporation)".

Mbeki suggested that "the fact Shaik knows several ministers, both in terms of a common ANC membership and as friends, does not disqualify him to meet with them in their personal or private capacities".

The report forms part of a collection of explosive documents from Mandela's archives which were salvaged from a neglected storeroom at Eastern Cape's Fort Hare University in April.

The ANC stopped public access to the archive after a series of exposés by the Sunday Times, including one on the ANC front company, Thebe Investments.

According to the report, the meeting between Mbeki and Shaik, also attended by the former ministers of defence and intelligence, Joe Modise and Joe Nhlanhla, took place at Mbeki's official residence.

Senior officials within the National Prosecuting Authority believe the comprehensive report was compiled by Shaik for Mandela's attention.

On Friday, a spokesman for Mbeki, Mukoni Ratshitanga, denied that the former president had ever played a role in advising Shaik to set up Nkobi Holdings.

"Whoever made these allegations has a very fertile imagination," he said.

He also denied Mbeki had ever held the meeting with Shaik, Modise and Nhlanhla at the then-deputy president's official residence.

"No meeting to discuss the creation of an empowerment company ever took place. There was similarly no meeting between Mr Mbeki, Mr Shaik, former ministers Modise and Nhlanhla at Mr Mbeki's Cape Town residence while he was deputy president," said Ratshitanga.

But the document details the events leading up to the establishment of Nkobi in the early '90s as the party battled to get out of a reported R65-million debt and remain afloat - especially in the months after the 1994 elections.

It also reveals :

• Shaik's secret negotiations with arms-deal beneficiaries Advanced Technology and Engineering and electronics giant Plessey Tellumat (now known as Tellumat) for a joint venture - four years before contracts in the arms deal were awarded. Both companies were eventual beneficiaries of the arms deal;
• How Shaik started secret "negotiations" with the two companies after the talks with Mbeki, Modise and Nhlanhla;
• That Shaik also had regular meetings with the then-deputy minister of defence, Ronnie Kasrils, on potential military and armaments contracts in the early '90s; and:
• That he also lobbied ministers and senior ANC-aligned government officials to support his initiatives to financially empower the party.

Also documented is Shaik's meteoric rise and influence within the ANC leadership, often holding meetings with government ministers, including Jeff Radebe, now the minister of justice; Trevor Manuel, who now serves as minister in the presidency; Alec Erwin, a former minister of public enterprises; and Jay Naidoo, a former minister in president Mandela's office.

Shaik was anointed as party fundraiser by ANC treasurer-general Thomas Nkobi - who died shortly after the 1994 elections. The document details Shaik's involvement in generating billions of rands' worth of investment from Malaysia for both the ANC and South Africa.

The document says Nkobi urged Shaik to: "Always put the party above himself in all his business dealings ... and to ensure that whatever financial structures will come to be eventually agreed upon, that the ANC must move to a growing and sustaining financial position."

According to the document, Shaik introduced a group of Malaysian business investors to Manuel - who was then the minister of trade and industry.

"Since then, this particular business group has invested approximately R200-million in South Africa," the report said.

It added: "By the end of August 1994, several Malaysian companies had already established a head office and had acquired major interests in their respective fields in South Africa, (totalling) approximately R500-million, with a projected R1-billion by June 1995."

Several pages in the document revealed business deals that Nkobi Holdings, which has gone through various name changes, was negotiating on behalf of the ANC in the '90s.

A senior ANC member confirmed that the party had secretly backed the formation of Nkobi Holdings as well as Thebe Investment Corporation and Chancellor House in the early '90s.

"These companies were created to generate patriotic capital to fund the party," he said.

This can be verified in records from Shaik's corruption trail, which revealed how he and his companies had given millions to Jacob Zuma and the ANC - despite being barely able to stay afloat.

Ratshitanga referred the Sunday Times to a letter written by the party's former treasurer-general, Makhenkesi Stofile in May 1995, "for an accurate view of the ANC's attitude towards Shaik's business relations with the ANC".

When Shaik was convicted and sentenced to 15 years in jail for fraud and corruption, Judge Hillary Squires referred to Stofile's letter, in which Shaik was asked to "continue his plans on his own".

The judge said: "Stofile, with whom Shaik seems to have been on good terms personally, advised Shaik in his official capacity that the initiatives begun by Nkobi for the ANC and which he, Shaik, was to lead, would not be pursued and authorised."

Mbeki, who has been dogged by claims of corruption in the controversial arms deal, was also the chairman of the cabinet committee that oversaw the arms acquisition process.

Two years ago, the Sunday Times revealed extracts from a report compiled in 2007 by a UK specialist risk consultancy. According to that report, a German shipping company, MAN Ferrostaal, paid Mbeki R30-million to guarantee it winning the contract to supply submarines to South Africa.

The arms deal, an estimated $4-billion arms procurement package, was to re-equip the South African army with patrol corvettes, submarines, jet trainers and light fighter aircraft.

MAN Ferrostaal won the contract to sell three submarines to the SA Navy for more than R6-billion.

When the Sunday Times' report was published two years ago, Mbeki's office issued a statement that it would sue this newspaper over the allegations. The threat has yet to be carried out.

This week, parliament's public spending watchdog, the standing committee on public accounts (Scopa), postponed a scheduled three-day public hearing which would have re-opened investigations to uncover continuing allegations of fraud and corruption in the arms deal.

Ratshitanga said: "Any decision to re-open investigations into the Strategic Defence Procurement Package rests with the appropriate institutions, Scopa included."

The ANC declined to comment, but its spokesman, Jackson Mthembu, warned that it would investigate the "originality, content, authenticity and acquisition" of the document.

"We refrain from commenting on any information, which we are not certain of its legal standing and whether it was acquired legally ... (and which) we are uncertain of its originality, content, authenticity and acquisition," Mthembu said.

"Nonetheless, if the information was acquired legally and is authentic, we still need to enquire from all alleged individuals about the content of your enquiry.

"The ANC will therefore investigate the originality, content, authenticity and acquisition of this information due to be published," said Mthembu.

Shaik's brother, Yunis, declined to comment on whether Nkobi Holdings had been created as an investment company for the ANC. "I am not at (liberty) to disclose any information linked to the party," he said.

Until recently, Nkobi Holdings, which Shaik claims he founded in a coffee shop in 1995, was involved in private and government contracts worth over R8-billion.

An ANC member close to the Shaik family told Sunday Times: "The shocking truth about Nkobi (Holdings) will one day come out."

Asked why Shaik had never disclosed in his court case that Mbeki had advised him to create Nkobi Holdings, the ANC member said: "It was either the entire party being deemed corrupt or just one person taking the fall ... taking the bullet. He felt almost duty bound to take the blame."

In September 2008, shortly before KwaZulu-Natal Judge Chris Nicholson threw out corruption charges against Zuma, clearing the way for him to become the country's president, the judge said: "The court can hardly be unaware of the other dark mutterings emanating from (Zuma) that if he goes down others will follow him. Like a blinded Samson he threatens to make sure the temple collapses with him. The impression created is that the applicant has knowledge he will disclose if he is faced with conviction and sentence."