S v Shaik and Others

• Jurisdiction: South Africa
• Court: Supreme Court of Appeal
• Judge: Howie P, Mpati DP, Streicher JA, Navsa JA and Heher JA
• Judgment Date: 06 November 2006
• Citation: 2007 (1) SA 240 (SCA)
• Docket Number: 62/06
• Counsel: J J Gauntlett SC (with him F van Zyl SC) for the appellants W J Downer SC (with him A L J Steynberg and G D Baloyi) for the respondent

The court:

Introduction A

[1] This appeal, which was heard together with an application for leave to extend its scope, follows on a protracted criminal trial before Squires J and assessors in the Durban High Court. [1] The trial lasted more than six months, B generated huge media interest and attracted a great deal of public attention. More than 40 witnesses testified. The record comprises more than 12 000 pages with oral testimony constituting more than 6 000 pages. Although, as will become apparent, some legal issues such as the admissibility of documents will be addressed, the matter is ultimately C to be decided within a fairly narrow compass. Conclusions will largely follow upon an analysis of the facts that are common cause in conjunction with an assessment of the merits of the evidence adduced by or on behalf of the appellants and the State. Although the parties are variously applicants for leave or appellants we shall, for convenience, refer to them throughout as appellants. D

[2] The first appellant, Mr Schabir Shaik (Shaik), is a businessman. The other appellants are corporate entities which he controlled or in which he had a major interest. It is common cause that between October 1995 and September 2002, Shaik personally, and some of the corporate appellants, made numerous payments totalling a E substantial amount of money to or on behalf of Mr Jacob Zuma (Zuma), the erstwhile Deputy President of the Republic of South Africa.

[3] At material times Zuma held high political office. He was a member of the KwaZulu-Natal legislature and the Member of the Executive F Council (MEC) for Economic Affairs and Tourism for that province from April 1994 to June 1999. [2] He became a member of the National Assembly of Parliament in June 1999. He was appointed the Deputy President of the Republic of South Africa on 19 June 1999 and became leader of government business in Parliament. During the period referred to in para [2] he held high office within the G structures of the African National Congress (ANC), the ruling party in Parliament. He was the ANC's national chairman until 1997, and thereafter became its deputy president.

The offences charged H

[4] Discovery of the payments referred to in para [2] ultimately led to the prosecution of the appellants. They were charged with three main counts and in each instance with a number of lesser alternate charges. The main charge on count 1 was that of contravening s 1(1)(a)(i) and (ii) of the Corruption Act 94 of 1992 (the CA). [3] The State alleged that during the I

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period referred to in para [2], Shaik and one or other of the corporate A appellants had made 238 separate payments of money either directly to or for the benefit of Zuma. The State alleged that the object of the payments was to influence Zuma to use his name and political influence for the benefit of Shaik's business enterprises or as an ongoing reward for having done so. B

[5] The second main count was one of fraud. It was common cause that for the financial year ending 28 February 1999 an amount of R1 282 027,63 was irregularly written off in the annual financial statements of the Nkobi group of companies, under the banner of which most of the corporate appellants operated. The amounts that were written off in the books of the fourth appellant C comprised the respective debit loan accounts of Shaik in the amount of R736 700,73 (this included his debit loan account in the amount of R57 668 with the seventh appellant as well as an amount of R171 000 transferred from his director's fees to his loan account), of the ninth appellant in the amount of R198 167,40 and of the tenth D appellant in the amount of R347 159,50. It was further common cause that the amounts were written off on the false pretext that they were expenses incurred in the setting-up of a card-form driver's-licence project in which the Nkobi group had an interest. It was alleged that this misrepresentation concealed the true nature of the writing-off, E which was to extinguish the debts owed by the above-mentioned persons to the fourth appellant, which debts included R268 775,69 of the money paid to or on behalf of Zuma. This fact, so it was alleged, was concealed from shareholders, creditors, the bank that provided overdraft facilities and from the South African Revenue Service. F

[6] The main charge on count 3 was one in terms of s 1(1)(a)(i) of the CA. The circumstances giving rise to this charge were as follows: During September 1999, Ms Patricia de Lille, a member of Parliament, made corruption allegations concerning a lucrative armaments deal (the arms G

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deal) concluded between the Government of the Republic of South Africa and a number of overseas and A local contractors. She proposed a motion for the appointment of a judicial commission of enquiry. It was contemplated that for purposes of the enquiry the investigation was to be carried out by the then special-investigation unit headed by the former Mr Justice Heath. Eventually a number of State institutions, including the B Auditor-General, the National Prosecuting Authority and the Public Protector, became involved. Thomson-CSF (Thomson), a French company with which Shaik had participated as part of a consortium (the German Frigate Consortium), had acquired a significant stake in the arms deal, in particular, the provision of an armaments suite for corvettes for the South African Navy purchased by the Government. The State alleged C that Shaik's participation (as a black-empowerment partner) in the consortium, through a local company called African Defence Systems (ADS), in which Thomson acquired a majority stake, was as a result of Zuma's influence. It alleged further, that during September 1999 and at Durban, Shaik, acting for himself and the corporate appellants, met D Alain Thétard, a Thomson executive, and that a suggestion was made that in return for payment by Thomson to Zuma of R500 000 per year, until dividends from ADS became payable to Shaik, Zuma would shield Thomson from the anticipated enquiry and thereafter support and promote Thomson's business interests in South Africa. The State alleged that E the suggestion was then approved by Thomson's head office in Paris and that a seal was set on this arrangement at a meeting in Durban during March 2000 involving Thétard, Shaik and Zuma. This led to a document described in the evidence as 'the encrypted fax' being sent by Thétard from Pretoria to Thomson's head office. An important issue is the admissibility of Thétard's original handwritten draft of the F faxed communication which the State alleges is a record of the conspiracy to corruption involving Thomson, Zuma and Shaik, which is central to this count.

The issues in outline

[7] As regards count 1 the State alleged that the total amount paid by Shaik to or on behalf of Zuma is R1 249 224,91. It is admitted that G Shaik or the corporate appellants paid amounts totalling an amount of R888 527 to or on behalf of Zuma. Shaik stated that these payments were intended to assist Zuma, a former comrade in the struggle against H apartheid, and were made out of friendship or, alternatively, were intended to be loans that would be repaid. Shaik testified that although he had initially intended to make payments gratuitously he later reluctantly agreed when Zuma insisted that they should be repaid. The greater part of the difference between the amounts alleged by the State and admitted by the appellants was contended by the appellants to I constitute donations to the ANC. Apart from that difference the appellants contested a few small amounts alleged by the State to have been paid to or on behalf of Zuma.

[8] It is to be noted that the admitted payments made to or on behalf of Zuma included school and university fees for Zuma's children, travel costs, motor-vehicle repair J

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costs, new tyres for a motor vehicle, bond arrears, instalment-sale arrears for a number of A motor vehicles, R15 000 Christmas spending in 1997, clothing costs and telephone accounts.

[9] A substantial part of the amount alleged by Shaik to have been contributions to the ANC was made up of rentals paid for a flat in B Durban occupied by Zuma, in a building named Malington Place. The appellants contended that the flat was a 'safe house' and that Zuma was accommodated there as a leader of the ANC during a time when there was political volatility in KwaZulu-Natal.

[10] Other than the question of whether a substantial part of the total allegedly paid truly constituted donations to the ANC, the C difference in the amount alleged by the State to have been paid and that admitted by the appellants is not material. What is important is the intention with which the payments were made.

[11] On count 2, in respect of the alleged falsification of the accounting records, namely, the Nkobi annual financial statements for D the financial year ending 28 February 1999, Shaik contended that he had no knowledge of the false entries and that they were made by auditors without reference to him.

[12] In respect of count 3, the material allegations were denied by the appellants. Although Shaik admitted receiving R250 000 from E Thomson, channelled through an associate Thomson company in Mauritius, the appellants relied on a written 'service provider' agreement concluded between one of the corporate appellants and Thomson as justification for accepting the money. This agreement was said by the appellants to flow from the requirements by the South African F Government that contractors who were successful in their bids in terms of the arms deal, should invest in development programmes in this country. Nkobi undertook, so it was asserted...