S v Shaik and Others (Criminal Appeal) (62/06) [2006] ZASCA 105; [2007] 2 All SA 9 (SCA); 2007 (1) SA 240 (SCA); 2007 (1) SACR 247 (SCA) (6 November 2006)

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[2006] ZASCA 105
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S v Shaik and Others (Criminal Appeal) (62/06) [2006] ZASCA 105; [2007] 2 All SA 9 (SCA); 2007 (1) SA 240 (SCA); 2007 (1) SACR 247 (SCA) (6 November 2006)

Links to summary

Case no: 62/06
In
the matter between:
SCHABIR
SHAIK
First Appellant
NKOBI
HOLDINGS (PTY) LTD
Second Appellant
NKOBI
INVESTMENTS (PTY) LTD
Third
Appellant
KOBIFIN
(PTY) LTD
Fourth Appellant
KOBITEC
(PTY) LTD
Fifth Appellant
PROCONSULT
(PTY) LTD
Sixth Appellant
PROCON
AFRICA (PTY) LTD
Seventh Appellant
KOBITEC
TRANSPORT SYSTEMS (PTY) LTD
Eighth Appellant
CLEGTON
(PTY) LTD
Ninth Appellant
FLORYN
INVESTMENTS (PTY) LTD
Tenth Appellant
CHARTLEY
INVESTMENTS (PTY) LTD
Eleventh Appellant
and
THE
STATE
Respondent
_____________________________________________________________________________
Coram
:
Howie
P, Mpati DP, Streicher, Navsa, et Heher JJA
Date of hearing:
25-26
September 2006
Date
of delivery:
6 November 2006
Summary
: Businessman
and several corporate entities paying highly placed public official
with significant political influence to intervene
in commercial
negotiations/transactions for their benefit ─ held to have
contravened s 1(1)(a)(i) or (ii) of the Corruption Act
94 of 1992 ─
irregular write-offs of loans in annual financial statements ─
constituting fraud ─ admissibility of ‘encrypted
fax’ in terms
of
s 3
of the
Law of Evidence Amendment Act 45 of 1988
─ together
with other evidence proved a conspiracy to bribe public official ─
sentence ─ seriousness of offence of corruption
discussed ─ no
substantial and compelling circumstances justifying departure from
prescribed minimum sentences.
Neutral
citation:
This judgment may be referred to as
Shaik v The
State
(1) [2006] SCA 134 (RSA).
_____________________________________________________________________________
JUDGMENT
_____________________________________________________________________________
THE COURT
THE COURT:
INTRODUCTION
[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, 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
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.
[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 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
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 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
[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 period referred to in para [2],
Shaik and one or other of the corporate 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.
[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 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 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 which
was to extinguish the debts owed by the abovementioned 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 Services.
[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 deal) concluded
between the Government of the Republic of South Africa and a number
of overseas and 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 Auditor-General, the National Prosecution Authority and the
Public Protector became
involved. Thomson-CSF (Thomson), a French
company, with whom 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 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 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 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
hand-written draft of the 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 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
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 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 costs, new tyres for a motor vehicle, bond arrears, instalment
sale arrears for a number of 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 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
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 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 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 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,
in terms of the service provider agreement to
research and identify potential investment opportunities. The State
on the other hand,
contended that the agreement was contrived and
designed to conceal the true nature of the payment.
THE TRIAL COURT’S JUDGMENT
[13] The judgment of the court below
is extensive, thorough and detailed. The court had regard to Shaik’s
exposure to the Malaysian
business model which permitted Government
involvement in commercial activity and its influence on him,
particularly in respect of
black economic empowerment (BEE)
opportunities that arose post-1994. The court dealt with the needs of
the South African military
establishment post-1994 and set out the
process followed for the acquisition of military hardware from
overseas and local contractors.
It is common cause that at relevant
times Shaik’s brother, Shamin (Chippy) Shaik, was the Defence
Force’s chief of acquisitions.
The court recorded Shaik’s
awareness and interest in the South African Government’s Defence
Programme and that the German Frigate
Consortium in which ADS
participated became the successful bidder for the provision of the
ammunition’s suite for corvettes for
the South African Navy.
[14] Time in relation to specific
incidents is an important element of the State’s case. Such details
as are material to the present
appeal will be dealt with in due
course.
[15] In
considering the appellants’ guilt on count 1, the court below had
regard to the alleged interventions by Zuma to protect
or further
Shaik’s business interests as counter performance for the payments
made to him. It found for the prosecution in all
respects.
[16] The first was Zuma’s
involvement in ensuring that Shaik was not excluded as one of
Thomson’s BEE partners after it was rumoured
that former president
Mandela and the then Deputy President of South Africa, Thabo Mbeki,
had expressed their disapproval of Shaik
and the Nkobi group’s
participation in the arms deal. It is common cause that after an
agreement in principle for joint participation
with Nkobi in the
corvette bid, Thomson reneged on that agreement and acquired ADS
without Shaik’s participation. It is also common
cause that Zuma,
who at that time was MEC for Economic Affairs in Kwa-Zulu Natal,
intervened on Shaik’s behalf urging that Nkobi
be included as a BEE
partner. The appellants contend that Zuma’s intervention was merely
to explain that the rumour referred to
at the beginning of this
paragraph was false and that a meeting between one of Thomson’s
chief executives, Mr Jean-Paul Perrier,
and Zuma took place in
order for Zuma to dispel this rumour. As a result Perrier undertook
to transfer an interest in ADS to Thomson’s
operating South African
subsidiary in which Shaik held a minority interest. This was then
done. The court upheld the State’s contention
that Shaik and Nkobi
benefited from the intervention and that it was improper and part of
an overriding corrupt relationship that
existed between Zuma and
Shaik.
[17] The second instance was Zuma’s
alleged intervention on Shaik’s behalf in respect of the
redevelopment of the Point area of
Durban that had attracted the
attention of Renong Berhad (Renong), a Malaysian Company with which
Shaik had tentative connections.
The evidence led by the State in
this regard included two affidavits of Mr David Wilson, a former
executive of that company
(head of its foreign operations arm). The
admissibility of Wilson’s affidavits was an issue in the trial and
will be mentioned
later in this judgment.
[18] According
to the State, Zuma intervened after Renong chose to proceed to bid
for a construction contract with a BEE partner that
excluded Shaik
and Nkobi. Renong ultimately became the preferred bidder. Shaik
sought to replace Renong’s chosen partner, threatening
to use
political influence through Zuma to obstruct Renong’s plans. Delays
occurred in the project. According to Wilson he reported
to his head
office that this was due to Shaik. This led to Renong’s senior
executives approaching Zuma, at Shaik’s urging, to
try to find a
way forward. Correspondence was produced at the trial on which the
State relied to show Zuma’s intervention on Shaik’s
behalf.
According to the State this was followed by meetings at which Renong
was urged to admit Nkobi as its BEE partner. Eventually,
as a result
of a subsequent South-East Asia currency crisis, Renong put this
project on hold.
[19] The third instance involved Shaik
and Nkobi’s foray into a possible eco-tourism opportunity in
KwaZulu-Natal. Professor John
Lennon from Glasgow applied academic
learning to commercial enterprises, his field of expertise being in
hotel and tourism management.
In September 1998 Lennon was part of a
United Kingdom trade mission to this country. At that stage he had
projects in Mpumalanga
and KwaZulu-Natal in mind. He thought he could
set up training centres for the tourism industry. He testified that
he had met Shaik
after a lecture which he had presented. This claim
was denied by Shaik. However, it is common cause that correspondence
was later
exchanged between them. Lennon sought Zuma’s written
approval for his projects after Zuma had apparently shown enthusiasm
about
them. Shaik obtained the written approval. It is common cause
that Shaik was instrumental in drafting and forwarding a letter
signed
by Zuma (which contained the approval sought) on the latter’s
official letterhead and that it was sent by fax from Nkobi’s
offices.
Further correspondence was produced in support of the
State’s case. In the end Lennon abandoned the envisaged projects.
[20] The fourth instance of Zuma’s
alleged intervention was Zuma’s involvement in arranging for Shaik
and one Grant Scriven, a
businessman representing an English company,
Venson plc, to meet the then Minister of Safety and Security, Mr
Steve Tshwete, during
October 2000. The basis of the State’s
case was a letter dated 5 October 2000, from Shaik’s office signed
on his behalf,
addressed to Zuma’s secretary, requesting him to
arrange a meeting to apprise Tshwete of fleet management services
that Venson
could provide. The meeting was arranged and took place.
Nothing further materialised. The appellants’ case is that Zuma did
nothing
other that to arrange a meeting with a cabinet colleague with
a foreign businessman and that this in itself did not constitute
criminal
wrongdoing.
[21] In weighing up the evidence the
trial court made certain credibility findings adverse to Shaik. In
respect of all the counts
faced by Shaik the court made an assessment
of Shaik’s credibility in general and in specific instances. The
court was of the view
that some of the criticisms by the State of
Shaik as a witness were overstated. It accepted that many others of
substance were well-founded.
[22] The court was forgiving of
Shaik’s lies (in promotional publications) about his professional
qualifications and business achievements
and saw them as a form of
puffing. It did, however, consider his lack of embarrassment or
regret in this regard. It took into account,
as part of a pattern of
conduct, Shaik’s wild overstatement, in a presentation to a bank,
of the value of a contract he said had
been secured by Nkobi ─ no
contract had been secured and the statement was made to impress the
bank.
[23] The trial court rejected Shaik’s
evidence that when (as Zuma’s financial adviser ─ a title he
milked for all that it was
worth) he submitted a list of assets and
liabilities to the bank which excluded monies allegedly owing to him
by Zuma he did so with
the knowledge and possible connivance of the
bank manager. The court saw this too as part of yet another
calculated deception on
the part of Shaik to achieve his own ends.
[24] The court below considered the
preparation by Shaik, through his attorney, of a list of Zuma’s
debtors for presentation to
former President Mandela who was
contemplating some form of financial assistance to Zuma. The list
included an indebtedness of R200 000
to the Pitzu Trust, which
was Shaik’s alter ego. This, the court concluded, was done to
deliberately conceal the fact that the
money was owed by Zuma to
Shaik for fear of former President Mandela’s reaction. The trial
court saw this as yet another confessed
falsehood purposely resorted
to in order to mislead Mandela and his attorney.
[25] The following passage from the
judgement of the court below is important:
‘
But
the assessment of credibility goes further than that. Shaik’s
performance as a witness was, on the whole, not impressive. His
answers in cross-examination, at first glance, were a curious
mixture, being mostly long and frequently irrelevant replies to a
question,
but interspersed with occasional and surprising flashes of
candour. The lengthy and irrelevant replies may have been the result
of
a natural verbosity stimulated perhaps by the stress of
cross-examination. But when one scrutinises his replies to some
disputed
facts of the evidence, no other conclusion can reasonably be
reached than that he had no coherent answer to the question.’
[26] The court went on to record that
apart from a number of falsehoods there were instances where Shaik
contradicted his own evidence.
According to the court below Shaik was
either quite heedless of what he said or had no truthful answer to
give. The court below also
considered instances where Shaik sought to
answer the evidence of a State witness with evidence or an
explanation that was never
put to that witness. It also considered
that there were a number of instances where witnesses called in
support of the appellants’
case either contradicted Shaik or gave a
different version of events. The court came to the following
conclusion:
‘
In the result, we were
not impressed by his performance as a witness, either in content of
evidence, or the manner in which he gave
it.’
[27] The court below concluded that
Zuma was involved in ensuring Shaik’s inclusion as part of the
consortium which won the bid
for the corvettes but held that this was
done by Zuma in his capacity as Deputy President of the ANC and would
not, in the absence
of any alleged and known duty vested in that
office, constitute a contravention of the CA. The court held,
however, that it clearly
showed, as did the other instances, a
readiness on the part of Shaik to turn to Zuma for his help and
Zuma’s readiness to give
it.
[28] Squires J admitted the two
affidavits by David Wilson in terms of s 222 of the Criminal
Procedure Act 51 of 1977 (the CPA). He
accepted Wilson’s
correction, in his second affidavit, of a date of a relevant meeting
at Shaik’s apartment and took into account
that since Wilson no
longer worked for Renong he had no incentive to conceal or
misrepresent the facts. Much of what is stated by
Wilson in the
affidavits is accepted by the appellants. What is disputed is
Wilson’s assertion that during a meeting with Zuma
in January 1997
the latter expressed disapproval of Renong’s existing BEE partner
in the Point Development and stressed that Nkobi
would be the ideal
partner. That meeting was denied by the appellants. The court had
regard to the minutes of a meeting attended
by Wilson and Shaik
during February 1997, which the latter accepted as correct.
Considering the probabilities, the court concluded
on the totality of
the evidence that Wilson’s version of events, namely, that Zuma had
intervened to pressure Renong to admit Nkobi
as an empowerment
partner, was truthful and reliable.
[29] In respect of Lennon’s
contemplated projects, the trial court, after considering the
evidence, including relevant correspondence,
concluded that Zuma did
in fact intervene to try and assist Shaik’s business interests.
[30] In relation to the meeting
arranged by Zuma between Shaik, Minister Steve Tshwete and Mr Grant
Scriven of Venson Plc the court
held that the latter had obtained
access in a manner that an ‘unconnected’ businessman could not
have achieved. The court held
that Zuma undoubtedly had the authority
and influence to persuade Minister Tshwete to accommodate Shaik’s
request for the meeting.
[31] In analysing the evidence the
court below concluded that Shaik realised the value of political
support for his business enterprises.
He also always thought, as did
many others, that Zuma was destined for the highest political office.
The court below considered that
Zuma’s extravagant lifestyle with
concomitant debt was fertile ground for Shaik’s patronage and for
corruption. The substantial
payments were made for and on behalf of
Zuma at a time when the Nkobi group was experiencing cash-flow crises
and could therefore
least afford them ─ notwithstanding substantial
underlying assets and potential future income. The court below
concluded that no
sane or rational businessman would conduct his
business on such a basis without expecting some benefit that would
make it worthwhile.
[32] The trial court described Shaik
as ambitious, far-sighted, brazen, ‘if not positively aggressive in
pursuit of his interests
and discernibly focused on achieving his
vision of a large successful multi-corporate empire’.
[33] The following passages from the
judgement are central to the conclusion of the court below on count
1, namely, that Shaik was
guilty of a contravention of s 1(1)(a)(i)
and (ii) of the CA:
‘
It would be flying in
the face of commonsense and ordinary human nature to think that he
did not realise the advantages to him of
continuing to enjoy Zuma’s
goodwill to an even greater extent than before 1997; and even if
nothing was ever said between them
to establish the mutually
beneficial symbiosis that the evidence shows existed, the
circumstances of the commencement and the sustained
continuation
thereafter of these payments, can only have generated a sense of
obligation in the recipient.
If Zuma could not repay
money, how else could he do so than by providing the help of his name
and political office as and when it
was asked, particularly in the
field of government contracted work, which is what Shaik was hoping
to benefit from. And Shaik must
have foreseen and, by inference, did
foresee that if he made these payments, Zuma would respond in that
way. The conclusion that
he realised this, even if only after he
started the dependency of Zuma upon his contributions, seems to us to
be irresistible.’
And later:
‘
It seems an
inescapable conclusion that he embarked on this never ending series
of payments when he realised the extent of Zuma’s
indebtedness . .
. and the extent to which Zuma was living beyond his income; and he
also realised the possible advantages to his
business interests of
providing the means to retain Zuma’s goodwill by helping him to
support a lifestyle beyond what he could
afford on his Minister’s
remuneration.’
[34] The court had regard to a number
of letters in which Shaik flaunted his relationship with Zuma
suggesting quite obviously that
any joint venture with Nkobi would be
sure of political favour from that quarter. The court was of the view
that genuine friendship
would not have resorted to such blatant
advertising of the relationship.
[35] The court below rejected Shaik’s
version that the payments were intended to be loans. He considered
that until February 1998
there was no indication that anybody
regarded them as such. Shaik himself said so in his evidence and
stated further that if they
were not repaid he would not have minded.
The court rejected the genuineness of two written acknowledgments of
debt by Zuma to Shaik,
in amounts of R140 000 and R200 000
respectively. These appear to have been completed in February 1998.
It considered that
in respect of the acknowledgment of debt in the
amount of R140 000 the list of payments did not tally with the
amount. Furthermore,
Shaik testified that the payments were said to
be contributions to the ANC, yet Zuma acknowledged a personal
indebtedness to Shaik
in respect of such payments. The court also
took into account that Shaik provided no satisfactory answer as to
why there were two
acknowledgements of debt rather than a
consolidated one.
[36] The court below was equally
dismissive of a purported consolidated acknowledgment of debt called
a loan agreement and which was
dated 16 May 1999. This provided for
revolving credit up to a limit of R2m. No consolidated amount was
acknowledged as a debt and
since interest was payable this was a
strange omission. In addition, Shaik had no idea of the total amount
owing and could not say
whether it exceeded the limit of the loan
agreement. The court held that the acknowledgments of debt and loan
agreement were merely
for public consumption and in anticipation of
legislation which obliged members of Parliament to disclose personal
financial details.
[37] The court also rejected Shaik’s
claim that substantial amounts, including the rent for the flat in
Malington Place, were indeed
contributions to the ANC. In this regard
it considered a letter by Dr Zwelini Mkhize, the then
Treasurer-General of the ANC in KwaZulu-Natal
in which he listed
contributions made by Shaik to the ANC, which did not include the
payments in question. In respect of the rental
for the flat, the
court held that even accepting that there had been a threat to Zuma’s
security, as was the defence case, it was
strange that the National
Government itself took no steps to protect Zuma and that there was in
any event no justification for a
three-year period of rent-free
accommodation. The court also took into account that Zuma owned other
property in Durban on the Berea
and that Dr Mkhize himself was never
approached in his capacity as Treasurer-General for financial
assistance in respect of secure
accommodation. Furthermore, Nkobi’s
own books of account did not reflect the amounts as contributions to
the ANC. The court was
of the view that the invitation for Zuma to
move into Malington Place was part of Shaik’s longer term vision of
cultivating and
maintaining the goodwill of a patron whose political
stature promised to be a source of protection for and promotion of
Shaik’s
commercial interests.
[38] In respect of count 2 the court
rightly considered that the only question was whether Shaik knew of
the false representations
in the financial statements. It will be
recalled that the falsity of the representations and the potential
prejudice to probable
readers were admitted. Mr Ahmed Paruk, an audit
partner with David Strachan and Tayler, the auditors in charge of the
audit, testified
that Shaik knew of the representations as they had
been discussed at a meeting with him. As against the finding that
Paruk himself
was an unsatisfactory witness, the court had regard to
the fact that at the time that the audit was conducted there was a
concern
about the Nkobi group’s cash flow and that a presentation
to its bankers was contemplated. It was important from Shaik’s
point
of view that the best possible picture of the group’s
financial position and its future prospects be presented. There was
anxiety
that there would be difficulty in certifying that the group
was a going concern. The court below took into account that Shaik
faced
the problem of his growing debit loan account and the tax
liability inherent in that. Concurrently Shaik was busy negotiating a
joint
venture with an American concern, Symbol Technologies, to bid
for handheld barcode scanners to verify driving licences. It was
important
that the fifth appellant, Kobitec (Pty) Limited, the
vehicle to be used by the joint venture, be shown to have underlying
value.
The mechanism used to effect the write-off had this
consequence and will be dealt with later when the merits of the
conviction are
discussed. The court below considered that it was
important to take into account that at the time of the write-off
there was a public
debate about an investigation into corruption in
the arms deal.
[39] Seen against that background the
court held that the representations in the financial statements were
resorted to by Shaik who
was the most likely source of information
and that he knew about them. It therefore found corroboration for
Paruk’s version of
events in the objective factors referred to
earlier. In concluding that Shaik was guilty on the main charge on
count 2 the court
below also relied on the evidence of Mrs Cecilia
Bester, an accounting graduate employed at Nkobi at the relevant
time.
[40] In respect of the main charge on
count 3 the court below had regard to the evidential foundation which
is the hand-written draft
and the actual encrypted fax. It was not
disputed that the draft fax message was written by Thétard.
Nor was it disputed that
at the time Thétard and Shaik were
directors of Thomson’s South African operating subsidiary which
controlled ADS. The court
accepted that the plain and obvious meaning
of the fax is that a proposed arrangement discussed at two previous
meetings by Shaik
and Thétard on 30 September 1999
in Durban and by Thétard and Perrier on 10 November 1999 in
Paris respectively,
was confirmed at a third meeting in Durban on 11
March 2000 involving Shaik, Thétard and Zuma, and agreement
was reached on
that proposal. It was also accepted that a draft of
the fax was composed to be sent in encrypted form to Thétard’s
two superiors
in Paris, including Perrier. What was in dispute was
the nature of the proposal upon which agreement was reached.
[41] The content of the fax and our
analysis of it appear later in this judgment when the merits on the
conviction on this charge
are discussed.
[42] The State’s case was that the
fax spoke for itself and that the arrangement discussed on 30
September 1999 was payment of a
sum of money to Zuma in return for
his help. That proposal was put by Thétard to Perrier on
30 November 1999 and
thereafter at the meeting of 11 March
2000. The State submitted that in return for the sum of money Zuma
agreed to protect Thomson
in relation to the enquiry into the arms
deal and to promote its interests in its bid for Government-driven
public contracts in the
future.
[43] Shaik’s answer to this is that
he had no idea why Thétard ever composed the fax and that he
was wholly unaware of it
until he saw it reproduced in the media. He
admitted to meeting Thétard on 30 September 1999 in what was
one of a number of
meetings to discuss a donation by Thomson to the
Jacob Zuma Education Trust, a Government initiated reconstruction and
development
programme fund for the education of poor rural children
and of which Zuma had been elected patron. Thétard was
supportive
and optimistic of a favourable response from Thomson’s
head office and undertook to communicate the request to Perrier which
he
did on his visit to Perrier on 10 November 1999. Shaik
subsequently wrote several letters to Thétard protesting and
stating
that Zuma’s unrealised expectations were causing him dismay
and embarrassment. In October 2000 a generous gift of R1m to the
Trust
was received from former President Mandela which relieved the
Trust of a strain on its finances and Thomson’s unrealised promises
did not bother Shaik any longer.
[44] The court below admitted the fax
into evidence as being an executive declaration in the carrying out
of an unlawful conspiracy
of bribery which ‘was no less an
executive statement because it mentioned the two historical earlier
meetings that led to the third
meeting’. The court held that those
references were an integral part of the executive statement and
explained the basis on which
the final arrangement was made. It was
admitted on the basis that it was one of the accepted vicarious
liability statements that
are received as exceptions to the hearsay
rule when a charge is brought against a co-conspirator or in support
of a conspiracy to
commit an offence. The trial court did not
consider it necessary to decide whether the document in question
could also be received
in evidence in terms of
s 3
of the
Law of
Evidence Amendment Act 45 of 1988
.
[45] The court addressed the dispute
between the State and the appellants on this charge by considering
first, that by September 1999
Shaik knew that he had been mentioned
in a statement by the Presidency denying corruption in the arms deal
involving Zuma. Shaik’s
concern would have been heightened by
approval at Ministerial level of a high risk rating given by the
Auditor-General to the arms
deal audit which meant a closer look at
the arms deal. Media attention was intensifying. Second, Nkobi’s
finances, especially its
cash flow situation were in a critical
state. Against this Shaik was struggling to pay Zuma’s expenses
whilst Zuma’s propensity
for spending remained unabated and the
dividends from ADS were still some time away. Third, the court below
considered ensuing correspondence
in relation to the fax. Fourth, the
court considered that Shaik, who controlled Zuma’s bank account had
appropriated R900 000
which was part of R2m given by former
President Mandela to Zuma and was required to refund the money as it
was destined for an entity
called Development Africa. A fifth
consideration was the service provider agreement referred to earlier
in this judgement which contained
a warranty by the service provider
(Nkobi) that it would not be party to any bribery of ‘the
Government concerned’. In the margin
Shaik wrote the words
‘Conflicts with intention’. The court considered that Shaik had
asked for payment purportedly in terms
of the service provider
agreement before rendering any service. It also considered that
reports contemplated by the service provider
agreement were backdated
to make it look as though Nkobi had complied with its obligations.
Shaik’s explanation was that Thomson
required this to be done to
square its accounting records. The court below also took into account
the evidence of Ms Bianca Singh,
a former employee of Nkobi, that on
6 November 2000 Shaik met with Thomson’s officials in
Mauritius and after presenting
press cuttings relating to the arms
deal, spoke of the need for ‘damage control’. She also testified
that Shaik had remarked
that some ANC person (whose name she could
not recall) might cause trouble if the true picture emerged. He
thereafter said he hoped
that she was not taking minutes of the
discussion and asked her to leave the meeting.
[46] In considering the language of
the fax the trial court found it strange that a discussion of the
donation should involve the
use of a code for acceptance. The court
found it stranger still that, if Thomson had indeed been asked for a
donation that it would
have responded in this hesitant and cautious
manner, when in the circumstances in which it found itself it could
easily have used
the occasion as a public relations exercise. It
considered that the subsequent correspondence was in opaque and
cryptic terms and
that if Shaik’s explanation was true, there would
have been no need for that kind of language. The court could find no
indication
that the Jacob Zuma Education Trust anticipated such a
donation from Thomson. It could consequently find no justification
for Zuma’s
embarrassment as referred to by Shaik in his
correspondence since there could have been no commitments to students
by the Trust or
Zuma. Shaik’s explanation for the fax was thus
rejected.
[47] Considering the totality of the
evidence the court below held that Thétard, Shaik and Zuma
were parties to the bribe alleged
in the indictment. The court held
that the service provider agreement was the means whereby the bribe
was paid.
[48] The court held that since all the
corporate appellants were used at one time or another to pay sums of
money to Zuma, as directed
by Shaik, all of the appellants were
guilty on count 1 of a contravention of
s 1(1)(a)(i)
or (ii) of the
CA. On count 2 the court held that Shaik was party to the
representations made and that he used appellants 4, 7, 9
and 10 in so
doing and consequently found them guilty on count 2. The remaining
appellants were found not guilty on that count. On
the main charge on
count 3, Shaik was found guilty of contravening
s 1(1)(a)(i)
of the
CA. Appellants 4 and 5 were found guilty on the first alternative
charge of contravening s 4(a) and 4(b) of the Prevention
of Organised
Crime Act 121 of 1998 (POCA).
4
Appellants 2, 3, 6, 7, 8, 9, 10 and 12 were found not guilty on count
3.
[49] On the matter of sentence we
shall, for convenience, refer to the corporate appellants’
respective numbers in numerals. In
sentencing the appellants Squires
J considered that insofar as Shaik was concerned all three offences
of which he had been convicted
fell within the ambit of Part II of
the second schedule of the
Criminal Law Amendment Act 105 of 1997
which prescribed 15 years imprisonment for those offences, unless
there were substantial and compelling circumstances which justified
the imposition of a lesser penalty.
[50] Squires J considered corruption
in terms of the CA as a phenomenon that can ‘truly be likened to a
cancer, eating away remorselessly
at the fabric of corporate probity
and extending its baleful effect into all aspects of administrative
functions’. He stated that
this manner of corruption had to be
checked and prevented from becoming systemic as the effects of
systemic corruption can quite
readily extend to the corrosion of any
confidence in the integrity of anyone who had a public duty to
discharge, leading unavoidably
to a disaffected populace. The learned
judge had regard to the evidence of Mr Hendrik van Vuuren of the
Institute of Strategic Studies,
a student and qualified observer of
this phenomenon. Mr Van Vuuren testified about the effects of
corruption on human rights and
political processes and ultimately on
democracy. The court was of the view that it was a ‘pervasive and
insidious evil’ and that
the public interest required its
‘rigorous’ suppression.
[51] The trial judge considered the
effect of the conviction on Shaik’s business empire. He also took
into account against Shaik
that the payments he made were not to a
low-salaried bureaucrat, who was seduced into temptation. Squires J
considered it axiomatic
that the higher the status of the beneficiary
of corruption, the more serious the offence. Another factor that the
trial judge held
against Shaik was that the payments which extended
over more than five years allowed Zuma to maintain an extravagant
lifestyle and
constituted an investment in Zuma’s political profile
from which Shaik could benefit. The learned judge considered that
this entire
saga represented a subversion of the ideals to which
Shaik had subscribed in his involvement in the struggle against
apartheid.
[52] In regard to the fraud conviction
he took into account in the appellants’ favour that the
representations had no effect on
shareholders and no-one was
actually
prejudiced.
[53] In respect of count 3 the judge
held that the object of the bribe was to undermine the law and to
further intensify corrupt activity.
[54] In respect of counts 1 and 3
Squires J was unable to see his way clear to finding substantial and
compelling reasons to deviate
from the prescribed sentences.
[55] In respect of count 2 he took
into account that it was not proven that the representations were
Shaik’s idea to begin with.
The learned judge concluded that in
this instance a lesser sentence was justified and in the result
sentenced Shaik to 15 years’
imprisonment on each of counts 1 and 3
and to 3 years’ imprisonment on count 2. Considering that the
offences were all part of
the same sustained course of corruption
Squires J ordered that the sentences should run concurrently.
[56] The corporate appellants were
sentenced to fines. The court below took into account that appellants
6, 7, 9, 10 and 11 were either
dormant or had no assets, or both. Of
the appellants that were active the Asset Forfeiture Unit, acting
under POCA, had seized part
or all of the assets of the successor to
Thomson’s operating South African subsidiary (Thomson CSF (Pty)
Ltd) in which appellant
3 had a 25% share.
[57] Squires J noted that appellants
2, 3, 4, 5 and 8 were able to pay fines. On count 1 the second
appellant was sentenced to a fine
of R125 000, appellant 3 to a
fine of R1m, appellants 4, 5 and 8 to a fine of R125 000 each.
In respect of appellants 6,
7, 9, 10 and 11 the court below imposed
on each a fine of R25 000 but in each case ordered that the fine
be suspended for five
years on condition they were not found guilty
of any offence involving corruption, fraud or dishonesty, committed
during the period
of suspension.
[58] Of the corporate appellants
convicted on count 2, appellant 4 was the only one that had the
ability to pay a fine and was consequently
ordered to pay a fine of
R1 400 000. Appellants 7, 9 and 10 were sentenced to a fine
of R33 000 each suspended for
five years on the same conditions
set out in the preceding paragraph.
[59] On count 3 appellants 4 and 5
were each sentenced to a fine of R500 000.
THE AMBIT OF THESE PROCEEDINGS
[60] Leave to appeal was sought
against conviction and sentence. The court below granted leave to
appeal to this court in restricted
terms, as follows:
‘
1. On Count 1, the
Third Appellant is given Leave to Appeal against its Conviction on
the main charge on the ground that the evidence
eventually submitted
by the State did not conclusively prove that it had been used in
making any payment to or for the benefit of
Jacob Zuma or taking any
part in a common purpose to do so. Save to this extent, the
application in respect of this Count is refused.
2. On
Count 2, the First, Fourth, Seventh, Ninth and Tenth Appellants’
are given Leave to Appeal against their Convictions on the
main
charge on the following grounds: whether the trial Court was
justified in approaching the issue of the first appellant’s
presence at the auditor’s meeting on the basis it did; and whether
the evidence so relied on justified the conclusion reached
that the
first appellant was present. The Application for Leave to Appeal
against the sentences is refused.
3. On Count 3, the First,
Fourth and Fifth Appellants’ are given leave to appeal against
their Conviction on the main charge and
the first alternative charge
respectively on the following grounds: (i) whether the trial Judge
was correct in admitting in evidence
the encrypted fax in its
several exhibit forms, as evidence against the accused; and (ii) even
if the document was properly admitted,
whether the trial Court erred
in attaching any weight to its contents in view of the subsequent
prevarications of the author. Save
as aforesaid, the Application for
Leave to Appeal against the Convictions and Sentence is refused.’
[61] This court on application to it
to extend the scope of the appeal made the following order:
‘
Ad
Count 1
(a) The
application of the first, second, fourth, fifth, sixth, seventh,
eighth, ninth, tenth and eleventh applicants for leave to
appeal
against their convictions and the application of the first applicant
against sentence are referred for oral argument in terms
of s
21(3)(c)(ii) of the Supreme Court Act 59 of 1959 at the hearing of
the appeal on those counts in respect of which leave to
appeal is
granted. [The parties must be prepared, if called upon to do so, to
address the court on the merits in terms of s 21(3)(c)(ii)
of the
Act.]
(b) To
the extent that the third applicant’s application for leave to
appeal against its conviction was refused by the court
a quo
,
the application is similarly referred for oral argument.
(c) Leave
is granted to the second, third, fourth, fifth and eighth applicants
to appeal against the sentences imposed by the court
a quo
.
Leave to appeal against the sentences imposed on the sixth, seventh,
ninth, tenth and eleventh applicant is refused.
Count 2
(i) Leave to appeal is
granted to the first, third, fourth, seventh, ninth and tenth
applicants against their convictions to the
extent that such leave
was refused by the court
a quo
.
(ii) The application for
leave to appeal against the sentences imposed on this count is
refused.
Count 3
(i) Leave to appeal is
granted to the first, fourth and fifth applicants against their
convictions to the extent that such leave
was refused by the court
a
quo
.
(ii) The
application of the fourth and fifth applicants for leave to appeal
against the sentences imposed by the court
a quo
is refused.
(iii) The
application of the first applicant for leave to appeal against the
sentence imposed by the court
a quo
is referred for oral
argument as in count 1.
For
this purpose the applicant is to file five additional copies of the
application for leave to appeal. Both parties are to comply
with all
the remaining rules relating to the prosecution of an appeal.’
It
must be pointed out that the third appellant was not in fact
convicted on count 2. The order relative to it on that count can
therefore
be ignored.
[62] We turn to deal with the
correctness of the rulings, assessments, reasoning and conclusions of
the court below in respect of
each count, in turn.
COUNT 1:
Section 1(1)(a)(i) of the CA
[63] On this count, in respect of
which leave to appeal is sought by all the appellants, it is
appropriate to begin by considering
the relevant provision of the CA.
[64] Section 1(1)(a)(i) of the CA is
quoted in footnote 3. In terms of the section
the corrupt giving of, offering to
give or agreeing to give
a benefit
which is not legally due
to a person
upon whom any power has been
conferred or who has been charged with a duty
by virtue of any employment or the
holding of any office or any law
or to anyone else
with the intention to influence the
person upon whom such power has been conferred or who has been
charged with such duty
to commit or omit to do any act in
relation to such power or duty
constitutes an offence.
[65] It is not in dispute that Shaik
gave benefits which were not legally due to Zuma at the time that
Zuma held public office, being
initially that of MEC for Economic
Affairs and Tourism in KwaZulu-Natal and later Deputy President of
the Republic of South Africa.
It is in dispute that such benefits
were given corruptly. In this regard it is contended that they were
not given with the intention
to influence Zuma to commit or omit to
do any act in relation to a power conferred on him or a duty with
which he had been charged.
It is, therefore, necessary to determine
on what powers and duties the State relied.
[66] Reference is made in the
indictment to sections 136(2) and 96(2) of the Constitution. It is
then alleged that Zuma had the powers
and duties attaching to the
offices held by him namely: Member of the KwaZulu-Natal legislature
and Minister of Economic Affairs
and Tourism from May 1994 until 17
June 1999 and Deputy President of the Republic of South Africa,
Leader of Government Business
in Parliament and a member of the
National Assembly of Parliament from 17 June 1999. Sections 136(2)
and 96(2) provide, in the case
of the former, that a MEC, and in the
case of the latter, that a member of the cabinet (which includes the
Deputy President
5
),
may not –
undertake any other paid work;
act in any way that is inconsistent
with his office or expose himself to any situation involving the
risk of a conflict between
his official responsibilities and private
interests; or
use his position or any information
entrusted to him, to enrich himself or improperly benefit any other
person.
In addition, the Constitution provides
in s 92(3)(a) that a member of the cabinet and in s 133(3)(a)
that a member of an
executive committee must act in accordance with
the Constitution.
[67] Before us the appellants conceded
that Zuma’s obligations in terms of these sections of the
Constitution qualified as duties
within the meaning of ‘duty’ in
the phrase ‘charged with a duty’ in s 1(1)(a)(i) of the CA.
In their heads of argument,
however, they contended that ‘duty’
in terms of the section should be interpreted to mean ‘function’
and not to include contractual
or statutory obligations. They
submitted that one does not naturally speak of charging a person with
a duty such as the obligation
to act in accordance with the
provisions of sections 136(2) and 96(2) of the Constitution; that
‘power’ and ‘duty’ are to
be read
eiusdem generis;
and
that to interpret ‘duty’ so as to include contractual and
statutory obligations would expand the reach of corruption further
than was ever the case under the common law.
[68] Linguistically
there is no reason why one would not speak of a MEC or a member of
the cabinet being charged with duties such
as the obligations in
terms of sections 136(2) and 96(2) respectively. The Shorter Oxford
Dictionary describes the chief current
sense of ‘duty’ as
follows: ‘Action, or an act, that is due by moral or legal
obligation; that which one ought or is bound
to do.’ The word
‘duty’ can however also be used in the more restrictive
connotation of ‘function’. The question to be
decided is
therefore whether the word, as used in s 1(1)(a)(i), should be
interpreted restrictively. The common law and the
preceding
legislation afford assistance in this regard.
[69] In an early edition of Gardiner
and Lansdown
South African Criminal Law and Procedure
vol 2,
namely the fourth edition published in 1939, at p 985 the common
law crime of bribery is defined as follows:
‘
It is a crime at
common law for any person to offer or give to an official of the
State, or for any such official to receive from
any person, any
unauthorised consideration in respect of such official doing, or
abstaining from, or having done or abstained from,
any act in the
exercise of his official functions.’
The definition, in so far as it
restricted the crime to ‘any act in the exercise of [an official’s]
official functions’ was,
however, subsequently held to be incorrect
(see
R v Chorle
1945 AD 487)
and in later editions the phrase
‘in the exercise of his official functions’ was replaced with the
phrase ‘in his official
capacity’ which the authors said should
be given a wide interpretation.
6
[70] Chorle gave money to a municipal
official to influence him to use his influence as a municipal
official to expedite the issuing
of a building permit in respect of a
dwelling house. The municipal official concerned had no powers or
functions in respect of the
issuing of such permits but worked in the
same department as, and in an office adjoining that of, the official
who dealt with these
permits. The court held that Chorle committed
the common law offence of bribery.
Schreiner
JA said in regard to the common law:
7
‘
Two
Placaats of the States General of the United Netherlands, promulgated
respectively in 1651 and 1715, are generally regarded as
laying down
what constitutes bribery in Roman Dutch Law. It may not be possible
to affirm that no conduct that cannot be brought
within the language
of the Placaats amounts to bribery; but on the other hand it can be
affirmed that whatever acts the Placaats
penalise are, in the absence
of abrogation by disuse or modification by subsequent legislation,
crimes to-day and punishable as bribery.
. . . They penalise the
direct or indirect giving of presents of any kind to State officials
in order to obtain, or because the donor
has obtained, any of a
number of listed advantages . . .’
Referring
to the phrase ‘in the exercise of his official functions’ in
Gardiner and Lansdown Schreiner JA said that he could find
nothing
corresponding to these words in the Placaats and added:
8
‘
It may . . . be
necessary to read it as applying only to matters relating to some
aspect of the administration of the State’s affairs.
But I can see
no reasonable necessity for limiting the operation of the Placaats to
cases in which the official’s assistance is
sought in a matter
covered by his official functions, however widely this expression is
interpreted.
.
. .
The
law of bribery is designed to protect the State against those who by
gifts tempt its officials to use their opportunities as such
to
further private interests in State affairs and there is no reason why
the law, which in its original form was wide enough to secure
that
protection, should by restrictive interpretation, be cut down to
something less than is necessary to achieve its object.’
Schreiner JA concluded
9
that the municipal official was offered money because he was an
official and because Chorle hoped that he ‘would take the money
and
actuated by its receipt, would use the opportunities afforded by his
official position to expedite the issue of a building permit.
In
making that offer the appellant was guilty of bribery and he was
rightly convicted.’
[71] Chorle
had been charged in the alternative with having contravened s 2(b)
of the Prevention of Corruption Act 4 of 1918
(‘the 1918 Act’).
In terms of that Act the crime of bribery was extended from employees
of the State to agents, who by definition,
amongst others, included
employees in general. Section 2(b) provided as follows:
‘
If any person
corruptly gives or agrees to give, or offers, any gift or
consideration to any agent as an inducement or reward for
doing or
forbearing to do, or for having after the passing of this Act done or
forborne to do, any act in relation to his principal’s
affairs, or
business, . . . he shall be guilty of corruption . . .’
[72] In
1958 the 1918 Act was replaced with the Prevention of Corruption Act
6 of 1958 (‘the 1958 Act’). Section 2(b) of this
Act provided:
‘
2 Any person who –
. . .
Corruptly gives or
agrees to give or offers any gift or consideration to any agent as
an inducement or reward for doing or forbearing
to do or for having
done or forborne to do any act in relation to his principal’s
affairs or business; or
. . .
shall be guilty of an
offence . . .’
As in the case of the common law,
neither the 1918 Act nor the 1958 Act required that the matter in
respect of which a person’s
assistance was sought had to be covered
by his functions as official or his functions in terms of his
employment.
[73] In terms of the CA the 1958 Act
as well as common law bribery was repealed. The CA did away with the
requirement that the relevant
act had to relate to the principal’s
affairs and replaced it with the requirement that it had to relate to
the powers and duties
of the person sought to be influenced by the
giving or offering or paying of the benefit. In the light of the
legislative and common
law history and for the reasons that follow
‘duty’ was in our judgment not intended to be restricted to
‘function’. First,
the legislature would have been aware of the
decision in
Chorle
which was a leading case on the subject of
corruption at the time, and if it intended to introduce, contrary to
the common law and
the 1958 Act, the requirement that, for a
conviction, assistance had to be sought only in respect of the
functions of the person
concerned it would have made that intention
clear by using the word ‘function’ instead of ‘duty’. Second,
the result of restricting
the meaning of ‘duty’ to ‘function’
would be that, had the CA applied at the time, Chorle would have been
found not guilty
in terms s (1)(a) thereof even if, to the
knowledge of Chorle, the relevant municipal official’s contract of
employment provided
that he was not allowed to use his position as
employee to enrich himself. We find it difficult to conceive that
that could have
been the intention of the legislature. In our view
the legislature intended to restrict the ambit of the 1958 Act and of
common law
bribery to the extent that it would not be an offence if
the act sought to be influenced bore no relationship at all to the
powers
and duties of the person concerned but not to the extent which
would be brought about by the further restrictive interpretation of
‘duty’ so as to mean ‘function’. Like Schreiner JA in respect
of the Placaaten, we can see no reasonable necessity for limiting
the
operation of the section to cases in which the assistance of the
person referred to is sought in respect of matters covered by
his
official powers and functions. As was said by him
10
the corrupt intent of the offeror would be the same whether the act
fell within the sphere of the official’s functions or not and
so
would be the corruptive effect on the official if he accepted the
benefit.
[74] It follows that the concession by
the appellants was correctly made; if Shaik gave benefits to Zuma
with the intention to influence
him to commit or omit to do any act
in relation to his duties in terms of s 96(2) or s 136(2)
of the Constitution Shaik
committed an offence in terms of
s (1)(a)(i) of the CA.
The facts and conclusions in
respect of count 1
[75] Apart from the sum of R888 527
admittedly paid by one or other of the appellants to or on behalf of
Zuma, it was conceded by
them in argument that the amounts which they
had contended at the trial were not paid for Zuma but regarded as
donated to the ANC,
had in any event benefited him. This concession
may appear to render it unnecessary to decide whether those amounts
could indeed
have been regarded by Shaik as donated to the ANC.
However, in addition to our recording our agreement with the
conclusion reached
by the trial court in this connection, the true
purpose of all the payments beneficial to Zuma is relevant to the
question whether
they were made with the intention alleged in the
charge – to influence him to use his name and political standing to
benefit Shaik’s
business.
[76] The
amounts which Shaik said he regarded as having been donated to the
ANC comprised, firstly, repayment of loans made by a company,
AQ Holdings (Pty) Ltd to Zuma and, secondly, payment of the
monthly rental of apartment accommodation at Malington Place where
Zuma stayed from May 1996 until July 1999.
[77] Evidence for the State concerning
the AQ Holdings debt was given by Mr AQ Mangerah. He was also
treasurer of the Stanger branch
of the ANC and knew Zuma well. They
served together on the ANC regional executive for Southern Natal. He
said that Zuma had spent
a lot of money on ANC activities. In this
regard it was Shaik’s evidence that Zuma had told him that his debt
to AQ Holdings arose
from borrowings he spent on ANC causes which he
(Zuma) said he intended personally to repay. Shaik said this was why
he viewed the
payments to settle Zuma’s debt to AQ Holdings as
contributions to the ANC. Significantly, this was certainly not how
Mangerah saw
the matter. When Zuma failed to repay him he not only
contemplated suing Zuma but even envisaged sequestration proceedings.
That
attitude was quite inconsistent with Zuma’s borrowings having
been, in effect, for donations to ANC projects rather than loans
for
personal expenditure. It was also inconsistent with Zuma having
possibly conveyed to Mangerah that the loans were for ANC purposes.
[78] That
the AQ Holdings loans were incapable of believably prompting Shaik’s
professed view of their repayment is borne out by
two further
features. One was the signature by Zuma of an undated acknowledgement
of debt, the sum of which was specifically inclusive
of the AQ
Holdings repayments. Leaving aside, for the moment, the question
whether this instrument was a genuine acknowledgment,
both Shaik and
Zuma were involved in its creation, which they could not conceivably
have been had they truly regarded the appellants’
repayments to
Mangerah as non-recoverable contributions to the ANC.
[79] The second feature destructive of
Shaik’s evidence on the present subject is a disclosure made by
Mkhize who was called as
a defence witness. He was Treasurer-General
of the ANC in KwaZulu-Natal during the relevant times. He said that
Shaik was a generous
benefactor of the ANC but that none of the
recorded payments made or promised by Shaik included those which
settled Zuma’s indebtedness
to AQ Holdings.
[80] As
regards the Malington Place rental payments, these were also included
in the amount of the acknowledgment of debt just referred
to. What we
have said about the AQ Holdings repayments in that respect applies
equally to the Malington rental payments. Obviously,
whatever Shaik
and Zuma intended by the acknowledgment of debt, they could not have
regarded the rental payments as non-recoverable
contributions to the
ANC.
[81] In the Nkobi books of account the
rental payments were not reflected with consistency. Until January
1997 they were not shown
at all. Then, for some months, the payments
were shown but without a description or classification, and without
indicating the company
finally debited. After that the fourth
appellant was consistently shown as the party finally debited and the
description and classification
were respectively reflected as ‘Rent
paid’ and ‘Expensed’. From March 1998 however, ‘Rent paid’
was replaced by ‘Loan
account – Floryn Investments’ (tenth
appellant) and the classification now read ‘Development Costs’.
As will be recounted
in relation to Count 2, these so-called
development costs falsely described amounts actually debited to
Shaik’s own loan account
in the fourth appellant. The gravamen of
the charge in Count 2 is that, having been so misdescribed, the
amounts in question were
written off as part of a fraudulent scheme.
[82] For
the appellants it was argued that the later rental payments having
been accounted for in the loan account of the tenth appellant
in the
books of the fourth appellant, and Mkhize’s evidence having been
that the tenth appellant was the vehicle by means of which
Shaik made
contributions to the ANC, it followed that Shaik could believably
have regarded the rental payments as payments not to
Zuma but to the
ANC. This argument cannot be accepted. In the first place, whatever
the Nkobi books did reflect in regard to these
payments they never
showed them as contributions to the ANC. Secondly, and more
importantly, it is simply not open to Shaik to say
he regarded these
payments as contributions to the ANC. The evidence on Count 2 shows
that they were initially reflected as amounts
borrowed by him to
spend on Zuma and then, by dishonest manipulation, many of them were
later represented to be amounts expended
on developing his corporate
business and which were then written off.
[83] The
trial court said it did not believe Shaik’s evidence that he
regarded the AQ Holdings and Malington payments as contributions
to
the ANC. In the light of what we have said, we consider the trial
court’s rejection of that evidence to be unassailable. We
shall
revert to the question of Shaik’s credibility presently but remark
at this point that it is, in the circumstances, unnecessary
to
discuss the evidence, the arguments and the findings of the trial
court concerning the reason why Zuma moved to Malington Place
and the
issue whether his security was a governmental, party or personal
issue.
[84] In
our view the State successfully proved that Shaik or one or more of
the appellant companies made payments to or on behalf
of Zuma in the
total amount of R1 249 244.91 over the period 1 October 1995 and 30
September 2002.
[85] Before
considering the defence evidence that these payments were made purely
out of friendship or were loans, it is appropriate
to refer to the
trial court’s conclusions regarding Shaik’s credibility. They
were not attacked on appeal but something was sought
to be made of a
passage in the judgment, part of which has been quoted in para [26]
above and which in full reads as follows:
‘
In the result, we were
not impressed by his performance as a witness, either in content of
evidence, or the manner in which he gave
it.
That, of course, does not
make him guilty of any offence. It does not even mean he is never to
be believed in anything he says. Some
of his evidence was plainly
truthful. But measured against an otherwise convincing State witness,
it may be something of a disadvantage
.’ (Our emphasis.)
[86] Building on the emphasised words,
the appellants argued that the trial court did not reject Shaik’s
evidence, it merely approached
his evidence with caution. We disagree
with that argument. The passage just quoted was in the form of a
concluding general comment
which followed upon a careful and detailed
discussion of a multitude of criticisms levelled by the prosecution
against Shaik’s
evidence. Not only was that evidence exhaustively
examined and weighed by the trial court but it is clear in the
overall picture
that the underlined words were in the nature of an
understatement. One finds elsewhere in the judgment, when specific
issues were
resolved in favour of the State, passages in which his
evidence was unmistakably said to be rejected as false. Obviously
there was
much in his evidence that was not only believable standing
alone but there were parts that were supported by documentary
evidence
or circumstance. The real issue on this count is whether it
is a reasonable inference (not just a possible inference) that the
payments
made to Zuma or on his behalf were prompted by friendship,
or were just loans, and in neither event made with the criminal
intent
alleged in the charge. In that regard Shaik’s credibility is
crucial. Having deliberated painstakingly, the trial court rejected
Shaik’s evidence on that issue and held that the inference referred
to was not a reasonable one and could therefore be ruled out.
[87] It
is settled law that a court of appeal will not lightly disturb a
trial court’s factual findings, including conclusions on
credibility, where the trial court has been able to hear the evidence
being given and observe the witnesses while giving it. This
is
because a trial court has that peculiar advantage and a court of
appeal does not. Nor is the present case one in which we are
in just
as good a position as the trial court to draw inferences from the
facts found proved. And we are certainly in nowhere as
good a
position to assess the personalities of the witnesses or their
apparent propensities for truth or falsehood. What is important
in
this case is that the trial lasted not just weeks. It was in progress
from October 2004 until mid-2005. That was an extensive
period in
which the trial court was able to immerse itself, as it were, in the
evidence and the inherent probabilities. In particular
the court was
able to observe Shaik in the witness box for many days, thus
acquiring an exceptional opportunity to assess his trustworthiness.
The product of its labours is a judgment which subjects the evidence
to close analysis before stating its conclusions with care and
clarity.
[88] The
question, then, is whether the appellants have shown that the trial
court overlooked important evidence or materially misconstrued
the
evidence it did consider. If so, there would be a basis on which we
could endeavour to form our own conclusions on credibility,
difficult
as that exercise might be based purely on the printed record. If not,
we would at least defer to the factual findings of
the trial court
even if not entirely satisfied that all those findings were correct.
What is stated in this and the preceding paragraph
outlines the
long-established approach to appellate adjudication. It is all the
more to be borne in mind where the judgment under
consideration is as
comprehensive, and covers as many issues and as much evidence, as
that of the trial court in this matter.
[89] The
main basis for the defence contention that the payments in issue were
loans comprises two written acknowledgements of debt
prepared in
about February 1998 and signed by Zuma in favour of Shaik, and a loan
agreement signed by Shaik and Zuma on 16 May 1999.
Shaik testified
that he was prepared to regard the payments as gifts but Zuma
insisted that they be regarded as loans. One acknowledgment
of debt
was in the amount of R140 000.00 and the other in the sum of R200
000.00. The former was said by Shaik specifically to reflect
what
Zuma owed him for having settled Zuma’s debts in respect of AQ
Holdings and Malington Place. The contradiction inherent in
regarding
the self-same amounts as the subject of contributions by Shaik to the
ANC and at the same time debts due by Zuma to Shaik
has already been
pointed out.
[90] The
acknowledgments of debt bear the printed date 5 February 1998 which
can be accepted as indicative of when they were drafted.
However the
signatures were neither dated nor witnessed.
[91] Once
the version is discarded that the AQ Holdings and Malington Place
payments were regarded by Shaik as contributions to the
ANC it
follows that there was no credible basis for drawing up two separate
acknowledgments of debt in respect of Zuma’s alleged
indebtedness.
In addition, as the trial court mentioned, some of those payments
post-dated 5 February 1998.
[92] The evidence also shows that
there was in existence a third, uncompleted and unsigned
acknowledgment of debt form also bearing
the compilation date
5 February 1998. Shaik was unable to explain why that document
was created. All these forms were drafted
by his then attorney.
[93] The appellants sought to argue
that notwithstanding their compilation date the acknowledgments
reflected Zuma’s indebtedness
to Shaik as at September – October
1998. That submission overlooks that by then the payments made by the
appellants to or on behalf
of Zuma totalled approximately R400 000.00
in round figures.
[94] As regards the loan agreement
dated 16 May 1999, Shaik testified that it was intended to
consolidate all Zuma’s alleged indebtedness
to him and to supersede
the acknowledgments of debt. However, it did not do that. What the
agreement referred to was a revolving
credit of R2m and although it
referred to interest, there was no capital sum stated on which
interest could conceivably be calculated.
[95] The
forensic accounting evidence of Mr J van der Walt for the State made
two things clear that are important in this connection.
One is that
the Nkobi group was in no financial position to afford at the
relevant time to pay its own business expenses and to keep
on
advancing money to Zuma. True, it was able to obtain bank loans but
the situation was one in which the group was having to borrow
in
order to maintain the flow of payments to Zuma.
[96] The
other fact established by Van der Walt’s evidence is that the Zuma
payments were not consistently treated in the Nkobi
accounts. We have
referred to this feature already in so far as it affected the
Malington rent payments. But the trend was general.
Without a
reconstruction such as the witness achieved, the accounts could not
have been used as a means by which to recover the payments
accurately. This must count against it ever having been the intention
to treat them as loans.
[97] The
cumulative effect of all these considerations concerning the
acknowledgments of debt and the loan agreement justify the conclusion
that there was never a genuine intention to reflect any specific
amount as actually owing by Zuma to Shaik. That, in turn compels
the
question whether there was a genuine indebtedness at all. A professed
debt in no definable amount is in reality no debt.
[98] Obviously
the documents would have been drawn up with some objective in mind
and the question, then, is whether, as the trial
court thought, they
were intended for disclosure in terms of contemplated future
legislation or perhaps simply to have on hand if
the payments to Zuma
became publicly known and questions were asked. In either event the
documents would have been merely part of
a false cover story. Bearing
in mind that during the relevant periods of 1998 and 1999 the arms
deal and the uncertainty of Nkobi’s
involvement in it were matters
contemporaneously on Shaik and Zuma’s minds it is a strong
inference that the debt documentation
was contrived to be held in
readiness in case Shaik’s apparent beneficence was queried.
[99] Up
to now we have considered the documents in narrow perspective. So
seen, we agree with the trial Court’s conclusion that
they were not
genuine.
[100] To recapitulate thus far, Shaik
paid over R1.2m to or for Zuma during the period stated in the
charge. Occasionally in that
time, in exercising control of Zuma’s
bank account, he would withdraw amounts from the account and deposit
them to one or other
Nkobi company. The total he appropriated in this
way was about R144 000.00. However he neither sought repayment nor
asserted any
right to repayment. His case was that he made all the
payments to help Zuma and that it was Zuma who insisted that they be
regarded
as loans.
[101] The
forensic accounting evidence shows, as we have mentioned in one
respect already, that the Nkobi group did not have surplus
funds
which could have accommodated Shaik’s professed charitable
intentions. In fact it was only able to continue making the payments
by increasing its substantial debt to its bankers. Zuma, on the other
hand, had no realistic prospect of being able to repay the
amount by
which he was benefiting. The present analysis therefore begins with
the stark financial truth that Shaik could not afford
to play
samaritan and Zuma could not afford to borrow. At the very outset,
therefore, the inference presents itself that some ulterior
reason
moved Shaik to expend on Zuma what he did.
[102] Making
full allowance for the personal bonds of friendship there would
understandably have been between them arising out of
their
relationship and their mutual interests prior to 1994, it is
nevertheless clear that Shaik was keenly aware of the many business
opportunities that the new political era offered and anxious not to
miss them. For his part Zuma was seen by Shaik and by others
in the
know as destined for very high political office and possessed of the
potent influence appropriate to that situation. Added
to that there
was Zuma’s almost crippling financial vulnerability. He had heavy
family commitments but wanted a smart and publicly
visible lifestyle.
[103] An early indicator that Shaik
wanted to make commercial capital out of knowing Zuma and out of the
latter’s political position,
was the fact that Shaik initially
earmarked him for Nkobi shareholding. In the end that did not
materialize because it was ANC policy
that neither the governing
party nor its Ministers would become involved in Government-backed
commercial enterprises.
[104] Shaik’s
drive to harness political support for his economic ambitions was
described by Professor J Sono, who was a director
of the second
appellant and involved with Nkobi and Shaik from about April 1996
until early 1997. He testified that Shaik placed
heavy and repeated
emphasis on what was referred to at the trial as ‘political
connectivity’. The term conveyed that Nkobi had
political
connections in government. And that was principally via Shaik’s
relationship with Zuma. Such connectivity had to be used
to procure
government contracts for Nkobi. From Sono’s evidence it is plain
that the purpose of using the Zuma connection was not
to advance
their friendship. Its purpose was commercial exploitation. It found
its most telling expression in Shaik’s constant
assertion to
potential contracting parties that Nkobi was especially well placed
for inclusion in joint ventures because of its political
connections
despite its lack of financial strength.
[105] Two
projects in particular that Sono recalled Shaik’s eagerness to get
Nkobi involved in were the development of the Point
area in Durban
and the supply of corvettes for the South African Navy as part of the
arms acquisition program. This was during the
first half of 1996,
even before the White Paper on the arms deal was presented.
[106] Bianca
Singh, Shaik’s receptionist and secretary for some years from
mid–1996, enlarged on this picture of Shaik. Apart
from confirming
his interest in corvettes she recounted Shaik’s explicit
explanation of how he was ever ready to do things for
politicians
because they would do things for him in return. As to the use to
which he put the Zuma connection she said she overheard
what she
inferred was an anxious cell phone call to Shaik from his brother
Chippy who was Defence Force Chief of Acquisitions and
a major figure
in the arms procurement program. She then heard Shaik telephone Zuma
and tell him that Chippy was under pressure and
‘we really need
your help to land this deal’. She deduced that the reference was to
the arms program. For present purposes it
does not matter if it was
not. It illustrates Shaik’s easy and immediate access to Zuma to
which he resorted without hesitation
in order to secure some
commercial advantage.
[107] Coming now to the Point
development, the documentary evidence (excluding the Wilson
affidavits) shows that the Malaysian development
company (Renong)
which sought to implement this project had included a South African
BEE partner in the venture. It had, during 1995,
chosen a company
subsequently named Vulindlela Investments which it was contemplated
would have a 49% share. In mid-1996, however,
Shaik met with Renong’s
Executive Chairman in Malaysia to try to convince him that Nkobi
should be included in the venture as well.
He followed this up with a
letter dated 10 June 1996. In it he said:
‘
Firstly, I wish to
confirm to you in writing, as agreed, my group’s interest and
willingness to acquire 49% equity in the Point
Development, and that
this equity to include [Vulindlela] and other meaningful black
business in the region.
.
. .
In
conclusion, I wish to remind you of your letter to be sent to
Minister Jacob Zuma. I trust that given your written confirmation
and
our combined commitment hereof, I would be in a position thereafter
to influence and accelerate the much awaited Point Development.’
[108] Nothing
in the evidence suggests that a letter from the Chairman to Zuma was
anything but Shaik’s idea. Such a letter was
duly written. (It was
actually dated two days before Shaik’s above-mentioned letter.) In
it the Exectuive Chairman, having referred
to Renong’s choice of
Vulindlela, and Shaik’s request for a 49% shareholding, asked Zuma
to decide ‘the party with whom Renong
should form the partnership
with’.
[109] A
letter from Zuma in response was drafted. An unsigned version was
found at Nkobi’s offices in pre-trial investigations.
The latter
requested a meeting in Durban between Zuma and the Executive Chairman
or a ‘very senior and
trusted
member’ of Renong and included the following:
‘
I
believe the matters raised by yourself require both careful
consideration and deliberation to ensure its eventual success . . .
During
this meeting I shall certainly endeavour to provide to you the
assistance required to ensure the successful development of
the Point
. . .’
The letter must have been sent because
a meeting between Zuma and the Renong representative, David Wilson,
subsequently took place,
as appears from the verbatim record of the
minutes of a yet later meeting (on 3 February 1997) at Nkobi’s
offices between Shaik,
Wilson and Nkobi personnel.
[110] Those minutes form part of the
evidence. They reveal that Zuma had told Wilson (at their own meeting
whenever that was) that
he was concerned about the make-up of the
49%. The minutes go on to indicate that Renong did not know which
empowerment partner to
pick and wanted Zuma to decide; but that Shaik
rather wanted Renong to broker a relationship with Nkobi. Wilson is
recorded as saying
that Zuma wanted others to be involved in the
development, specifically Nkobi ‘and the IFP’ (the Inkatha
Freedom Party). At a
later moment in the meeting Shaik said:
‘
My instruction from
Minister Zuma is to put forward to you a value or percentage and that
you are to broker that value and take it
to your Chairman. I was
hoping to reach such a value out of this meeting so that I would be
able to ask Minister Zuma how much goes
to the company from the North
and how much does Nkobi take on.’
(The identity of ‘the company from
the North’ is not apparent.) The minutes conclude with the wish of
both Shaik and Wilson for
a meeting with Zuma to resolve the
participation percentage.
[111] Renong eventually abandoned the
Point development so Nkobi could not become involved after all. The
conclusion is inescapable,
however, that in pursuit of such
involvement Shaik intended Zuma to use his influence to persuade
Renong to include Nkobi in the
scheme, to Nkobi’s obviously
anticipated economic advantage. In the light of that conclusion it is
unnecessary to decide whether
the Wilson affidavits were rightly
admitted. It follows that the trial court nevertheless found
correctly, in our view, that the
Point aspect provided proof of
Shaik’s having acted with the intention alleged in the indictment.
[112] To avoid the consequences of
that finding the appellants argued that the events concerning the
Point occurred before the payments
to Zuma really began in earnest
and it could not be found, therefore, that they were made to achieve
what Zuma did in regard to the
Point development. There is no
substance in that contention. The indictment clearly charges that the
payments were either meant as
inducement for the future or reward for
the past. In any event the prosecution made it plain that no
particular Shaik payment could
be linked to a particular Zuma
response. In effect, the payments constituted an ongoing retainer. In
any event the Point evidence,
if nothing else, is proof of the
criminal intention alleged in the charge irrespective of whether it
is capable of being specifically
linked to particular payments.
[113] While
events concerning the Point development had been in progress Zuma had
moved in May 1996 to Malington Place. By July 1996
his rental had not
been paid and so Shaik arranged for payment. It was at about this
stage or, on the evidence, conceivably early
in 1997, that Zuma
confided to Shaik that his financial troubles were too dire for him
to stay in politics. He therefore contemplated
entering the private
sector so that he could afford to maintain his family, in particular
so that he could pay for his children’s
educational needs. Shaik’s
evidence was that he regarded Zuma’s absence from politics as such
a set-back for provincial and national
interests that he resolved to
finance him. Hence the payments in issue. Whether this was truly
Shaik’s motivation must be decided
on a consideration of all the
evidence. The alternative inference is that he made the payments to
keep Zuma in politics in order
to ensure that Nkobi’s business had
highly-placed political patronage.
[114] The next Zuma involvement found
by the trial court to have been an intervention sought and offered in
the interests of Nkobi,
was in respect of the ADS shareholding during
1998. The basic facts are not disputed. In August 1995 Thomson CSF
(France) and Shaik
came to an understanding that the French company
would conduct business in South Africa by way of joint ventures with
Nkobi. The
result was the formation and registration of two South
African companies. One was Thomson CSF (Pty) Limited (‘Pty’). The
third
appellant duly acquired 30% of the shareholding in Pty. A major
objective of the French-Nkobi co-operation was the acquisition of
an
interest in ADS which was a South African company in the Altech group
and an existing supplier to the South African Navy. A substantial
shareholding in ADS would enhance Pty’s chances of being awarded
the contract for the corvette munitions suite (a segment of the
arms
acquisition program). The proposal was that Pty should obtain a 40%
to 50% share in ADS and in September 1997 Shaik was indeed
informed
that agreement in principle had been reached with Altech that Pty
would buy 50% of ADS. It therefore came as a considerable
shock to
him when, in April 1998, Thomson CSF (France) acquired the shares
directly. It meant that Nkobi could derive no financial
benefit from
the arms deal at all. Shaik learnt that the cause of the problem was
a rumour put about by a confidante of then President
Mandela that
Shaik was disliked by Mr Mandela and by the then Deputy President, Mr
Mbeki. The rumour reached Mr J-P Perrier, executive
Vice-President
International Business of Thomson CSF (France), hence the ousting of
Pty.
[115] These
events led Shaik to write to Perrier. The letter was dated 17 March
1998 and written by Shaik in his capacity as Executive
Chairman of
second appellant. It reads:
‘
Dear Mr Perrier
In
my recent discussion with the Honourable Minister Jacob Zuma Vice
President of the African National Congress (ANC), he is extremely
concerned with the conduct of Thomsons-CSF group operating in South
Africa, and in particular the allegations made to me by yourself
and
other representatives of your group attributed to our Honourable
President Thabo Mbeki, with regards to our South African business
affairs.
Accordingly,
the Vice President, the Honourable Minister Jacob Zuma requests an
urgent meeting with yourself in Durban, South Africa
to address these
concerns.
Kindly
communicate with the writer, to arrange a mutually convenient date
for this meeting. Your urgent response would be appreciated.’
[116] Due to Perrier’s being in
ill-health no meeting in South Africa was possible. However, while
Zuma was on an official visit
to the United Kingdom in his capacity
as MEC it was arranged that he meet Perrier in London on 2 July 1998.
After they met Shaik
was informed that the ADS shareholding would be
transferred from Thomson CSF (France) to Pty as originally
contemplated. Later still,
on 18 November 1998 and in Durban, Perrier
attended a meeting with Shaik, his attorney and two other Thomson
officials. The attorney’s
notes of that meeting recorded Zuma as
also present. The subject matter of the meeting comprised the ADS
acquisition and attendant
adjustments in the shareholdings of the
relevant Nkobi and Thomson companies. One of the French people
present, Mr P Moynot, testifying
for the defence, said that Zuma only
arrived when the business of the meeting was over but stayed to
socialize. While present he
was told of the restoration of Nkobi’s
interest in ADS and said he was happy with the result. Soon after
that it was announced
that the consortium of which ADS was a member
had been awarded the contract for the corvette munitions suite.
[117] There
can be no other reasonable inference in our view, given the contents
of Shaik’s letter to Perrier and the subsequent
involvement of
Zuma, that Shaik intended that Zuma should use his influence to
persuade the French, through Perrier, that the rumour
about Shaik was
false and that Nkobi was acceptable to the South African government
as an empowerment partner for Thomson to work
with.
[118] The
appellants advanced two submissions to try to overcome the
consequences of that inference. One was that as a provincial
MEC Zuma
had no power or duty relative to the arms procurement process, which
was a national government and, in fact, a Cabinet matter.
The other
was that the trial court found that Zuma’s actions in the present
instance were not performed in his capacity of MEC
but as Deputy
President of the ANC.
[119] It is convenient to answer those
arguments together. The evidence shows that the French unquestionably
saw Zuma as a major force
not only in KwaZulu-Natal but nationally.
Indeed, they shared Shaik’s forecast as to the political heights to
which Zuma would
rise. In short, he was regarded by both Shaik and
the French as someone of considerable political influence as a
result, among other
considerations, of his being an MEC and Deputy
President of the ANC. It was as such a person that Shaik sought his
help and that
the French accepted his assurances. That was so even
although he was not yet a member of the national government. It is
clear that
what Shaik wanted Zuma to do was to act in conflict with
his constitutional duty. He was asked, against the background of the
past
and ongoing payments made to him or on his behalf, to go and
speak to the French to assure them that Nkobi was acceptable to the
ANC government and thereby to regain a vital asset for Nkobi. This
was something no commercial competitor would have been able to
procure. In the language of the constitution Shaik wanted Zuma to
undertake paid work; he wanted Zuma to act in conflict between
his
official responsibilities and his private interests; and he wanted
Zuma to use the opportunities of his position as MEC to enrich
himself, or improperly to benefit Shaik. The appellants’ argument
therefore cannot be accepted. The prosecution accordingly succeeded
in showing that the ADS instance provided proof of Shaik’s having
acted with the intention alleged in the charge.
[120] Turning to the instance
involving Professor Lennon, this has been outlined in [19] above.
Shaik claimed in evidence that it
was Lennon who wanted Nkobi’s
inclusion as the local BEE partner in the proposed eco-tourism
project and he simply passed this
on to Zuma for approval. It is
obvious, however, from the draft letters compiled by Shaik’s
associate in Britain, Deva Ponnoosami,
with Shaik’s additions, that
it was they who formulated the letter of approval which Zuma signed
as KwaZulu-Natal Tourism Minister.
Zuma’s letter, dated 4 February
1999, and faxed to Lennon from Nkobi’s offices, contains the
following:
‘
I
have had discussions with one such company namely Nkobi Holdings,
head-quartered in Durban. They are keen to participate in this
venture as it fits well with their own leisure plans. I suggested to
them to make contact with yourselves directly to speed the process
and hopefully together you will both enhance the KwaZulu Natal
tourism industry through raising the profile and excellence of the
personnel involved in this industry . . . .’
[121] By fax Shaik caused a letter,
also dated 4 February 1999, to be written by Martyn Surman, the
Business Development Manager of
the second appellant to Lennon. The
letter said:
‘
I
refer to the letter to you of today’s date from Minister Zuma, . .
. in which our company . . . was referenced.
I have been asked by Mr
Schabir Shaik, executive Chairman & CEO, to affirm our company’s
interest in participating with you
as a joint venture partner and
that he would much appreciate it if you will kindly contact him
personally, in order that you can
discuss with him how Nkobi Holdings
can make a positive contribution to this initiative.’
[122] Lennon
responded on 9 February 1999 to Shaik:
‘
Following the fax
dated 4 February 1999, I am most keen that we progress discussions on
these projects and how we may work together.
Please note our local
agent in South Africa is Rupert Lorimer who will liaise directly with
you as my agent. He will contact you
in the next 7 days to progress
this matter’.
[123] Plainly,
Shaik did not simply direct relevant correspondence to the
appropriate quarters as a sort of go-between. He obtained
Zuma’s
intervention in order to advance Nkobi’s business. In addition to
the correspondence quoted above, if anything emphasises
that it was
his intention to exploit the Zuma influence for his own advantage it
was his remarkable reaction to Lennon. (Again he
wrote via Surman.)
The letter, dated 15 February 1998 contains the following:
‘
I have to advise you
that he [Shaik] finds your response insulting to say the least and
that he considers that it lacks the business
ethics which it
deserves.
.
. .
Having
once obtained the support letters for you he now finds himself
marginalised to deal with your so-called agents in South Africa
...
Indeed he enquires why [they] were not able to assist you in the
first place?
What
we would have expected from you in your reply is the following:
* a
detailed proposal on the objectives of the proposed study.
* proposed
work share allocations between Nkobi Holdings and yourselves.
* a
business plan attached thereto.
Mr Shaik has asked me to
advise you that he is prepared to give you three days in order to
come back to him, sketching out the issues
referred to above, failing
which he will go back to Minister Zuma.’
[124] Discussion
of the correspondence in the Lennon matter may be concluded with
reference to a letter from Shaik to Ponnoosami on
24 February 1999.
He said:
‘
I
shall be meeting with Minister Zuma tomorrow and if I do not receive
the information as requested in my letter dated 15 February
1999, I
shall move to inform Minister Zuma and seek to do whatever is
necessary to stop Professor Lennon’s process.’
[125] The
attitude exhibited by Shaik in the correspondence reviewed above is
completely destructive of his counsel’s contention
that the
Shaik-Zuma interaction was reasonably possibly prompted by nothing
more than mutual assistance of close friends.
[126] The fourth and final instance
of Zuma’s involvement was when, in October 2000, Shaik asked him to
arrange a meeting between
the then Minister of Safety and Security,
the late Mr Steve Tshwete and Mr G Scriven, Chief Executive of an
English company, Venson
(Plc), which was contracted to the British
Government to manage the London police vehicle fleet. The request was
made in a letter
on a Nkobi Holdings letterhead, the relevant
portions of which letter read as follows:
‘
Re:
Privatisation, PPP - Motor Vehicle Fleet Management
South African Police
Services (SAPS)
In line with our
Government’s Guidelines on Public Private Partnership (PPP) I wish
to introduce to the Department of SAPS a functional
PPP Model and
concept to its national motor vehicle fleet.
. . .
Through
our International Finance & Technology partners, based out of the
UK, Venson (Plc) we are indeed confident that our proposal
is worth
considering in terms of and in line with the PPP benefit accruals.
As
the Chairman of Venson, Grant Scriven will be in South Africa next
week, I would appreciate you communicating to the Minister of
Safety
& Security on our behalf to secure a meeting with the intention
to fully appraise him accordingly of the Venson PPP UK
Model.’
The meeting was arranged and
successfully held but nothing materialised as a result.
[127] The
appellants argued that it was not out of the ordinary to ask for a
meeting between a Cabinet Minister and a foreign businessman
and that
Zuma’s role was minimal. The question, of course, is not what
Zuma’s contribution was but what Shaik’s intention was
in making
the request. His letter indicates clearly enough that this was not
merely a case of putting a foreign businessman in touch
with the
appropriate Cabinet member. The proposal was one which would involve
business advantage not only for Venson but for Nkobi
as well and Zuma
was asked to communicate on behalf of both of them. We agree with the
trial court’s view that the requested communication
was not one
which just any businessman could have expected to procure.
[128] The
matter, however, goes further. When Shaik realised that the meeting
had been fruitless he wrote Tshwete a letter of stern
rebuke. Read in
the light of all the other evidence it reveals what confidence Shaik
drew from his relationship with Zuma. Effectively,
it shows the
authority with which Shaik could speak knowing he had Zuma’s
backing. He said, among other things:
‘
Despite numerous
telephone calls to your offices, by both Mr Scriven from the United
Kingdom and myself, as a follow-up to the above
meeting, to this date
not a single response has been forthcoming from your office.
I would presume that some
basic office courtesy should apply at the least. A simple letter of
thanks for having met with the Honourable
Minister having taken the
time to enlighten him of the global changes taking place in the
management of large scale police force
moving infrastructure would
have been an acknowledgment. Even a simple “no thank you”
response would be better than no response
surely. Not to respond at
all despite our several attempts, is both rude and inefficient. . . .
It has been most
embarrassing for me, as an emerging black entrepreneur to try to
cover up the inefficiencies of our public offices
and its failure to
communicate when indeed our country seeks to attract foreign
investments, capital and state of the art technologies.
Honourable Minister
Tshwete, please do not take the above factual comments personally,
but rather as constructive criticism of a small
transaction in your
department going both unnoticed and unrecognised. . . .
.
. . How do we as the previously disadvantaged business sector build
our capacities when our attempts to attract foreign and new
technology partners are not even . . . recognised by our own
Ministers, surely we are doomed from the start, surely our cries
cannot
go unheard, surely you have a role to play to ensure our
growth and development. . . .’
[129] The
Scriven matter provides additional proof, in our view, that Shaik’s
actions were directed at motivating Zuma to use his
influence in the
promotion of Shaik’s business.
[130] The record contains a variety of
yet further instances when Shaik, in conversation or correspondence,
referred to his relationship
with Zuma and revealed not only the
economic advantage this held for the Nkobi enterprise, but also the
disadvantage it held for
those whose interests ran counter to
Shaik’s. One example will suffice. It relates to a conversation
between Shaik and Sono when
Renong appeared to be dismissive of
Shaik’s attempt to have Nkobi included in the project. Shaik said
words to this effect:
‘
They can play hard
ball but we can play political ball.’
[131] On a conspectus of all the
evidence there is, in our view, only one reasonable inference to be
drawn. It is that, in making
the payments in issue (whether as
inducement or reward), Shaik intended to influence Zuma, in
furtherance of the business interests
of Shaik and his companies, to
act in conflict with the duties imposed upon Zuma by the terms of
sections 96(2) and 136(2) of the
Constitution.
[132] It follows that Shaik was
correctly convicted on count 1 of corruption as charged.
[133] As to the corporate appellants,
all but one played a part at some time or another in effecting the
payments. At all relevant
times Shaik was their guiding mind. The
inference is a necessary one that their respective roles were played
with the intention alleged
in the indictment and that they were also
correctly convicted of corruption on count 1. The one company not
involved in making the
payments was the third appellant. However, in
its case the position was this. Shaik caused the bribes to be paid to
Zuma for the
advantage of all the Nkobi companies so that whichever
company should require the exercise of Zuma’s influence would
receive it.
At all stages prior to and at the time of the ADS
intervention the third appellant was the Nkobi shareholder in Pty. It
was the entity
that stood to gain ─ and did gain ─ directly from
Zuma’s intervention. The only reasonable inference in our view is
that in
procuring that intervention Shaik was acting certainly in his
own interest and the group’s interest generally, but also very
definitely
in the interest and on behalf of the third appellant. It
follows that it, too, was correctly convicted on this count.
[134] In
the result the applications for leave to appeal against conviction on
count 1 are without merit. They must accordingly fail.
COUNT 2:
[135] As has been mentioned, this
count concerns the irregular writing off in the annual financial
statements of the Nkobi group of
companies (specifically the fourth
appellant’s) for the year ending 28 February 1999, of an amount of
R1 282 027.63.
It relates to the first, fourth, seventh,
ninth and tenth appellants only. (The collective term ‘appellants’
must in this section
be read as referring to these five appellants.)
A very brief introduction to the facts pertaining to this charge is
set out in paragraphs
[5], [11], [38] and [39] above. It is not in
dispute that the amounts making up the total of R1 282 027.63 (see
para [5] above)
were treated as debts of Shaik and appellants nine
and ten in the accounting records of the Nkobi group of companies
before the write-off.
[136] It was alleged in the indictment
that the appellants committed fraud in that during the period
February 1999 to early 2000 they
made a misrepresentation to various
persons, such as the shareholders, directors, accountants and
creditors of the Nkobi group of
companies and the Receiver of
Revenue, by giving out that the amount written-off constituted
development costs of Prodiba, and that
they failed to reveal to these
persons and entities, ‘when there was a legal duty so to reveal’,
that the write-off had the nett
effect of extinguishing certain of
the first appellant’s and/or ninth and/or tenth appellant’s
and/or ‘Zuma’s supposed debts
in the books of the Nkobi group’.
To the appellants’ request for particulars to the charge the State
replied that the misrepresentation
was made by Shaik to the
accountants Paul Gering and Ahmed Paruk of the firm David Strachan
and Tayler, which was responsible for
the 1999 audit of the group’s
books, and to a co-director, Mr Phambile Gama, at a meeting held
towards the end of 1999 at which
the audit of fourth appellant’s
books for the 1999 financial year was discussed. It was alleged
further that the misrepresentation
was made to the accounting staff
(of the Nkobi group), by means of instructions by auditors to them to
pass journal entries writing
off the amounts as development costs of
Prodiba.
[137] We should mention that Prodiba,
the driver’s licence project (referred to in para [5] above), is a
joint venture in which
each of three entities, Denel (through a small
company known as Face Technologies), Idmatics, which was part of
Thomson, and the
Nkobi group (through the fifth appellant), held an
interest. In terms of the agreement between the three entities Nkobi
was to provide
the manpower for the project. It is this provision of
manpower, referred to in the court below as ‘a work share right in
Prodiba’,
that was the major source of income for the Nkobi group
at the relevant time. It is not necessary to say more about the
establishment
or incorporation of Prodiba; suffice it to say that it
became common cause at the trial that the amounts written off did not
represent
development costs for Prodiba. The entry (writing off these
amounts as development costs for Prodiba) was corrected as a
‘fundamental
error’ in the 2002 annual financial statements of
fourth appellant, this after Shaik had obtained legal advice that it
was permissible
to do so. He took these steps after the Directorate
of Special Operations had commenced with their investigations and had
interrogated
staff at David Strachan and Tayler about the group’s
1999 financial statements.
[138] The write-off was effected
against a non-distributable reserve of R3 500 000, created
in the group’s books of account
by the sale, from fourth appellant,
of the work share right in Prodiba held by fourth appellant through
fifth appellant, to another
company within the group, namely Kobi-IT
(Pty) Ltd. The creation of the non-distributable reserve is, in
bookkeeping terms, in itself
not objectionable. However, it is
common cause that the write-off was irregular and that it resulted in
a misrepresentation as to
the financial state of the group.
[139] Shaik denied at the trial that
he gave any instruction to the group’s auditors to write off the
loans. He disavowed any knowledge
of an agreement of purchase and
sale that may have been required for the sale of the work share right
in Prodiba to Kobi-IT and professed
a lack of competence in
accounting matters as the reason why he did not know anything about
the creation of a non-distributable reserve
in fourth appellant from
such sale. He asserted that he had heard of the write-off for the
first time when he received a letter
from Cecilia Bester in which the
latter expressed her disagreement ‘with the way Paul [Gering] has
handled your individual income
and the so-called development costs
which he has written off’. The State’s contention, on the other
hand, based on the evidence
it led, was that the instruction for the
write-off originated from Shaik. The issue, then, was formulated by
the trial court as follows:
‘
The falsity of the
representations alleged and the potential prejudice to probable
readers of the financial statements in question
is admitted. The only
issue is whether Shaik knew of it and was party to it.’
[140] The field audit at the Nkobi
group premises was done by Mr Anthony Gibb, who was at that time
serving articles (a requirement
to be met prior to qualifying as a
chartered accountant) with David Strachan and Tayler. His superiors
were Mr Ahmed Paruk and Paul
Gering, but the former was his immediate
supervisor. He testified that where, during a field audit, he could
not resolve an issue
he would refer it to his supervisor for the
latter’s attention. After the field audit he would prepare draft
annual financial statements
which the partners normally discussed
with the client, whereafter he would be instructed, by the partners,
to ‘process the following
journal entries’. Following compliance
with those instructions he would ‘get the financial statements
ready’, which would be
in accordance with the journal entries he
had been instructed to process.
[141] In his testimony Paruk admitted
that the loan accounts eventually written off would have appeared in
the draft accounts and
that the director’s (Shaik’s) loan
account, which was in debit, was a concern that Gibb would have
referred to him for resolution.
Concerns like these were normally
resolved at a meeting held with the client for the purpose of
discussing them. In the present
case, he said, such a meeting was
indeed held towards the end of November 1999, at which Shaik (as sole
director of fourth appellant),
Colin Isaacs (the group’s financial
director), Gering and he were in attendance. The purpose of the
meeting was to ‘look at the
draft financials’ as the loan
accounts needed to be cleared up. The question of their
recoverability was of concern and was thus
raised with Shaik, whose
response as regards his personal loan account was an emphatic denial
that he owed any money to the company.
Shaik asserted, said Paruk,
that the ‘drawings’ were expenses taken by him for the benefit of
the company and that the bulk of
the expenses in fact related to the
tender for the Prodiba contract. As to the loan accounts in the
ninth and tenth appellants,
Shaik informed them (the auditors) that
there had clearly been a misallocation, errors in the accounting
system which he ascribed
to his previous and present accountants.
According to Paruk the non-distributable reserve of R3 500 000 and
the write-off of the
loan accounts were also discussed at the
meeting. It was Shaik, said Paruk, who wanted his investment in
Prodiba to be reflected
at its proper market value of R3 500 000
in the group’s balance sheet and it was he who gave the
instructions for the write-off.
The value of the Prodiba contract
had previously been placed in the footnotes to the annual financial
statements at a figure of
R30 000.
[142] Shaik denied that he attended a
meeting towards the end of November 1999 where the write-off was
allegedly discussed. He stated
that any discussions that may have
resulted in the decision to write-off the loan accounts as
development costs for Prodiba would
have taken place between his
accountants, Isaacs and Vinesh Lechman and Paruk. He conceded,
however, although he could not recall,
that the reduction of his
salary could possibly have been discussed with him. Shaik also
denied that he was at a meeting where the
sale of the Prodiba work
share right was allegedly decided upon. He would have left such an
issue to his project team of Gering and
Isaacs. He said that when he
received Cecilia Bester’s letter in which the latter expressed
disagreement with the write-off he
immediately called a meeting with
Paruk, Isaacs, Gering and Cecilia Bester, where he ‘pleaded’ with
them to address the concerns
raised in the letter. Although he did
not take part in the discussions – he said he merely introduced the
topic whereafter he
went to sit in a back office – he testified
that Isaacs and Gering convinced Bester that her arguments were
incorrect. He accepted
their word, he said, that they (Isaacs and
Gering) had addressed her concerns.
[143] Paruk’s was the only evidence
led by the State on what took place at the meeting. The court
a
quo
found him to be an unimpressive witness. A perusal of his
testimony confirms this finding. During the investigations leading up
to charges being preferred against the appellants, Paruk was
interrogated under
s 28
of the
National Prosecuting Authority
Act 32 of 1998
where he gave a different answer in his explanation
for the write-off. His response in the interrogation was that the
loan account
of R57 668 in the seventh appellant and the director’s
fee of R171 000 were included in Shaik’s loan account because of an
oversight,
and that he was unaware that the second amount came from
Shaik’s director’s fees. But the trial court found corroboration
for
Paruk’s version from an examination of other objective facts
and surrounding circumstances and consequently accepted his version
regarding Shaik’s attendance and participation at the meeting where
the write-off and related issues were discussed.
[144] It was contended on behalf of
the appellants in this court that Paruk’s evidence that Shaik had
informed him and Gering that
the amounts in all three loan accounts
had been expended on behalf of the group and that the write-off
occurred as a result of this
misrepresentation should have been
rejected by the court
a quo
. Counsel submitted that for an
auditor to simply accept a bald statement from Shaik, without any
attempt to verify it, that the full
amount of each loan account was
incorrectly debited was indeed extraordinary. It was argued further,
and correctly so, that Paruk
conceded that Shaik’s director’s fee
for the relevant year was reduced by R171 000; that this amount was
transferred to the latter’s
loan account; that he explained that
this was done ‘on the basis of a taxation angle and that because
the company had incurred
a loss’ he considered it pointless to have
Shaik taxed on that salary. Counsel accordingly submitted that Paruk
clearly knew that
at least the respective amounts of R171 000
and R57 688 did not represent development costs for Prodiba and that
on the probabilities
he also knew that the full total of R1.282m
could not have been incorrectly posted, more so with a competent
bookkeeper (Bester)
in control of the group’s accounts. We agree.
But knowledge of these facts on the part of Paruk does not
necessarily mean that
Shaik himself had no knowledge of the write-off
before it was brought to his attention by Cecilia Bester, nor does it
necessarily
lend support for Shaik’s contention that he never gave
instructions that the write-off be effected.
[145] It
is true that in his evidence-in-chief Paruk testified that one of the
issues discussed at the meeting with Shaik was the
creation of the
non-distributable reserve and that in cross-examination he said the
opposite, ie that it was not discussed. In re-examination,
though, he
testified that the non-distributable reserve was explained to Shaik
by Gering during the meeting. It is also correct
that Paruk
testified that he and Gering decided to phrase the write-off as
‘development costs for Prodiba’. It will be recalled
that Shaik
denied that he told Paruk and others at the meeting that the amounts
in the loan accounts represented ‘development costs
for Prodiba’.
But all this and other criticisms, some justified, levelled at Paruk
does not mean that his entire evidence should
be rejected especially
where there are other objective facts and circumstances which serve
to corroborate essential parts of it.
The crucial question is not
whether Shaik gave instructions as to how the amounts concerned were
to be written off, but rather whether
he gave instructions that they
should be written off on the basis that they were monies expended on
company business.
[146] We accept the argument by
counsel for the appellants that the loan accounts constituted assets
in the group’s books of account
and that writing off assets would
not per se have assisted in producing a better financial picture.
But it helped to get a good
set of financials to erase the
shareholder/director’s debit loan account ─ see paras [153] and
[158]
infra
. We accept too that the problem the auditors were
faced with was one of recoverability of the loans and that they
overcame that problem
by writing off the loan accounts below the line
against the non-distributable reserve, without affecting the income
figures. We also
accept that it is more likely that the method in
terms of which the write-off was effected – except the fact of the
reflection
of the value of the Prodiba project in the annual
financial statement, an aspect we deal with later – was indeed the
auditors’
(Paruk and Gering) invention. As counsel put it, they
engaged in creative accounting. But that still does not answer the
critical
question whether or not Shaik gave the instructions for the
write-off.
[147] In
addition to their submission that the trial court erred in relying on
the evidence of Paruk as proof beyond a reasonable
doubt that Shaik
knew of, and was party to, the write-off, counsel argued that the
court erred in failing to draw an adverse inference
against the State
for the latter’s failure to call Gering and Isaacs, who were the
other two people present during the meeting
where the instructions to
write off were allegedly given. It was not in dispute in this court
that they were available to testify
at the trial. The response from
counsel for the State was that they were made available to the
defence at the end of the State’s
case and that it was thus open to
the defence to call them to testify. For this reason, so the
argument continued, no adverse inference
should be drawn from the
State’s failure to call them.
[148] In
S v Texeira
11
Wessels JA (Joubert JA and Galgut AJA concurring) said:
‘
In
my opinion, therefore, the court
a quo
erred in concluding
that the evidence of the single witness, Sarah, was satisfactory in
every material respect, and that it was safe
to convict appellant of
murder on the strength of her uncorroborated evidence,
notwithstanding the improbability inherent in her
version.’
12
In that case the court agreed with counsel for the appellant
that it was justifiable to draw an adverse inference from the State’s
failure to call an available witness who was clearly in a position to
corroborate the evidence of a single witness that had an inherent
improbability. It is true that in the present case Isaacs and Gering
were present at the meeting according to Paruk and were in
a position
to corroborate his evidence in light of Shaik’s denial that he had
any knowledge of the write-off until his attention
was drawn to it by
Bester’s letter. But the court
a quo
declined to draw an
adverse inference from the State’s failure to call them to testify
precisely because it found corroboration
for Paruk’s evidence
elsewhere. We proceed to examine this aspect presently.
[149] It is common cause that David
Strachan and Tayler were appointed auditors of the Nkobi group of
companies on 29 September 1999
after some unpleasantness had
manifested itself between Shaik and his previous auditors, Desai
Jadwat. Up to that stage (and thereafter)
the group had not shown any
profitability. The trial court observed that the payments made by the
group to Zuma up to December 1998
occurred in a loss-making situation
and that as at 28 February 1998 both the fourth and sixth
appellants were in a technically
insolvent situation. Their
liabilities exceeded their assets. It is not in dispute that when
Bester joined the group in November
1998 as a project accountant –
she later became financial manager – the 1998 financial statements
had not been produced by Desai
Jadwat. In answer to a letter from
Shaik of 5 March 1999 to the senior partner of Desai Jadwat
complaining about outstanding annual
financial statements of the
group, Mr Satish Ramsumer, who was the auditor dealing with the
group’s audit reminded Shaik, in a
letter dated 8 March 1999, that
when the group’s financial statements for the 1998 financial year
were discussed in November of
that year the financial position of the
fourth and seventh appellants, which were then also technically
insolvent, had been brought
to his attention. Shaik was also told
that to avoid an adverse audit report the group’s management
accounts and projection for
the next three years were required.
These management accounts and projection, which were to have been
provided by Isaacs by 30 January
1999, were not yet ready. If it
could be shown that future profitability could make good past losses,
then, according to Ramsumer,
an adverse report would not be
necessary. Minutes of a meeting held consequent to the correspondence
between Shaik and Desai Jadwat,
the correctness of which was not
placed in dispute, reveal that it was made clear by Ramsumer that the
February 1998 financial statements
depended on substantial profits
being shown in fourth appellant, failing which it would be difficult
to certify that the group was
‘a going concern’.
[150] By the time the financial
statements for the 1999 financial year were due, the group’s
financial position had not improved.
It is common cause that during
the field audit Gibb worked with Bester, who provided him with
summary trial balances for the individual
companies. The trial
balance of fourth appellant for the period 1 March 1998 to 28
February 1999 showed an accumulated loss of R1.25m,
carried forward
from the previous year. Gibb also noted the problem of solvency and
‘going concern’ from the previous year: the
company (fourth
appellant) was suffering constant loss.
[151] In
going about his function Gibb used a specimen audit programme. One of
its headings directed him to obtain certificates from
directors or
shareholders for their loans, acknowledging their indebtedness to the
company being audited. In the case of the group’s
field audit he
left this section blank as there was no certificate acknowledging
Shaik’s indebtedness to fourth appellant in the
total amount of
R508 032.73. Gibb was concerned about the size of the loan and its
recoverability. There were also loan debits in
fourth appellant’s
books in the names of ninth and tenth appellants amounting to
R226 576.44 and R347 159.80 respectively.
For these he could
find no explanation and Bester could not assist him either. He noted
the existence of a debit loan account in
Shaik’s name in seventh
appellant for R57 668. According to Gibb these were problems that he
would have left for his superior,
Paruk, to sort out with the client
(Shaik). He testified, however, that if the loans were not
recoverable, then ‘technically we
have an insolvent company’.
[152] It
is common cause that Gibb faxed provisional journal entries for the
1999 audit to Bester for the latter to do the necessary
alterations
to her journal entries. The journal entries, said Gibb, had been
given to him by either Paruk or Gering, but both had
gone through
them with him. He assumed that when he was handed the journal entries
for him to pass, Paruk and Gering would have had
a meeting with Shaik
to discuss the draft annual financial statements that he would have
prepared, as that was normal practice. Gibb
also testified that the
audit report was the responsibility of the partners (Paruk and
Gering). They would normally discuss it with
the client, particularly
the question whether or not they were going to qualify it. He did not
know whether in the instant case such
a meeting took place, but it,
too, was normal practice. The journal entries he was required to pass
showed a transfer of the sum
of R171 000 from Shaik’s director’s
fees in fourth appellant to his loan account, thereby reducing his
director’s fee to R24
000, and a transfer of Shaik’s loan account
of R57 668 from seventh to fourth appellant, where they were
consolidated together
with the debit loans of ninth and tenth
appellants and reflected as Shaik’s loan account in the total sum
of R1 282 027.63. Another
journal entry Gibb was required to pass
showed that Kobi IT (Pty) Ltd, a hitherto dormant company in the
group, had acquired an asset,
viz the work share right in Prodiba,
valued at R3 500 000. It was against this amount, reflected in the
group’s annual financial
statement as a non-distributable reserve,
that the write-off was effected.
[153] The court
a quo
held that
‘the instruction given to Gibb and the journal entries he
thereafter passed and handed to Mrs [Cecilia] Bester to correct
her
own accounts fully support Paruk’s description of the ambit and
nature of the debate that took place’ at the meeting where
Shaik
allegedly gave the instructions for the write-off. Gibb’s
testimony, in our view, lends some support for Paruk’s version
that
a meeting took place in late November 1999 at which the annual
financial statements were discussed. The instructions given to
him by
Paruk and Gering as to the manner in which he was to pass the journal
entries is strong support for Paruk’s evidence that
the
consolidation of the debit loan accounts concerned and their
write-off as development costs for Prodiba formed part of the
discussions
in that meeting. We accept that Shaik may not have been
knowledgeable in accounting matters, and that the manner in which the
write-off
was effected, by establishing a non-distributable reserve,
was creative accounting introduced by the auditors, as counsel for
appellants
contended. But it is highly unlikely that the auditors
would have written-off the debit loan accounts on their own
initiative without
discussing them at all with Shaik. Both Paruk and
Gibb were concerned about the recoverability of Shaik’s loan
account. According
to Gibb the draft financial statements that he
drew up after the field audit were given to Paruk, who, together with
Gering, would
have discussed them with Shaik. This was normal
practice. There was no certificate acknowledging Shaik’s
indebtedness to fourth
appellant and this Gibb had left to Paruk to
sort out with Shaik. Paruk’s testimony is that a meeting did take
place where this
issue was raised with Shaik. It is in our view
highly improbable that Paruk, without raising the question with
Shaik, would have
gone on a frolic of his own and written off Shaik’s
loan account as he did. How could he do so without so much as to
enquire from
Shaik whether or not the loan was recoverable?
[154] We
accept, as counsel for appellants submitted, that Paruk clearly knew
that the R171 000 which was accounted for as director’s
fees and
the R57 668 that formed Shaik’s debit loan account in seventh
appellant were not development costs for Prodiba. But rather
than
these pointing to Shaik’s lack of knowledge of the process, they
point to the auditor’s complicity in the scheme. We accept
too
that Paruk wrote off the loan accounts as he did so as to avoid
having to qualify the accounts. As has been mentioned above,
Gibb’s
testimony was that the question of qualifying an audit report would
be discussed with a client. His evidence in this regard
was not in
dispute. In our view, the probabilities are that that issue would
have been discussed with Shaik. And this brings us to
another
development that points to the fact that Shaik would have wanted to
avoid a qualified audit report.
[155] It
is common cause that earlier in 1999 Bester was concerned about the
financial position of the group. This is clear from an
internal
memorandum to Shaik dated 7 June 1999 in which she expressed the view
that the cash flow of the group was such that in the
next six months
it would ‘not be able to fund itself and its arrear debt’. The
group was constantly on overdraft and continuously
rolling it. By 6
August 1999 she had become so despondent that she sent a letter of
resignation to Shaik. However, she did not leave
at the end of
August. She decided to work until December 1999 as she wished ‘to
do the financials for February 1999’, which were
still outstanding.
In another memorandum to Shaik dated 10 November 1999 she advised
him that the group’s bank (Absa) wanted to
see draft accounts
signed by the auditors by the end of November 1999, together with a
12 months forecast of the group’s income
for purposes of
considering the extension of the date of expiry of its overdraft
facility. (Paruk and Gibb both testified that the
financial
statements were required by the bank. They were thus under pressure
to finalise them before the end of November 1999.)
She also drew
Shaik’s attention to the fact that the consolidated company was
still in an insolvency situation ‘as it was last
year’; that the
finalising of the group’s accounts was important and that many
decisions were to be required from him (Shaik)
and Gering ‘to
ensure that a good set of accounts was drawn up’, since these were
‘critical for the extension of the overdraft’.
[156] It
is so that there is no evidence to suggest that the 1999 financial
statements were given to the bank. The overdraft facility
was
extended by letter also dated 10 November 1999, reviewable on 31
December 1999. No doubt Shaik would have wanted a good set of
financial statements, which, if the bank were to insist on them, he
would be able to produce. He conceded in cross-examination that
sooner or later the financial statements in question would have had
to be shown to the bank. The group, according to Bester’s
uncontested
evidence, depended heavily on overdraft facilities. It is
thus inconceivable that Shaik would not have bothered, in the
circumstances,
to ensure that the auditors produced a good set of
financial statements.
[157] The trial court was ‘markedly
impressed’ by Bester as a witness and held that where she was
contradicted by Shaik it had
‘not the slightest qualm in preferring
her evidence as the truth of the matter’. This finding was not
challenged on appeal.
We can find no reason to differ from it.
[158] Bester testified that as the
in-house accountant she could not account for Shaik’s loan account
which was in debit. In preparing
for the audit for 1999 financial
year she spoke to Shaik on several occasions about it. She asked him
to assist her with it, ie
to explain whether there were valid
expenses that might have been wrongly posted and told him of the
adverse consequences if he had
a debit loan account. She was never
given any reason, she said, to take the loan out and to put the
amount to expenses. She ultimately
handed the books of account to the
auditors without having resolved the issue. It is clear from Bester’s
evidence that Shaik was
the only person who could have given her an
explanation for his debit loan account and he knew that he could not
have a loan account
that was in debit. This, in our view, is a
powerful indicator that Shaik was the person who would have informed
the auditors that
the moneys in his debit loan account were moneys
expended on the group’s business and had been wrongly posted.
[159] We have mentioned that the
group’s interest in Prodiba was held through the fifth appellant.
It is not disputed that while
Prodiba produced the drivers’ licence
cards in the Prodiba project the product which facilitated the
reading of the cards was supplied
by an American-based company,
namely Symbol Technologies (Symbol). Its local branch was Symbol
South Africa. The business link
between Prodiba and Symbol prompted
Mr John Dover, general manager of Symbol South Africa, to seek more
business opportunities with
Prodiba. His idea was to obtain a
lucrative contract to provide 15 000 handheld barcode scanners to the
Department of Transport
for on the spot verification of drivers’
licences. During May 1999 contact was established between Dover and
Shaik. This led
to Shaik making a bid to purchase a stake in Symbol.
When that bid failed due to its rejection by Symbol’s management
in America
agreement was reached between the parties that a joint
venture be formed in South Africa involving the Nkobi group and
Symbol. The
fifth appellant was to be used as a vehicle for the
joint venture and as part of the agreement Symbol was to purchase a
stake in
the fifth appellant. It thus became necessary for the group
to show that fifth appellant had an underlying value, a task which
fell
on Isaacs, who received some advice from Gering in this regard.
(The two together with Shaik formed part of the group’s delegation
in negotiations with Symbol.)
[160] It will be recalled that
according to Paruk, Isaacs attended the meeting where the decision to
write-off the loan accounts was
taken. This much is not in dispute.
At that meeting Isaacs was armed with spreadsheets which he had
prepared to facilitate the sale
to Symbol of a stake in fifth
appellant. These showed, inter alia, a projected gross income from
Prodiba for the 2000 financial year
of a sum in excess of R3m.
Paruk’s undisputed evidence was that at the time of the audit,
which was towards the end of November
1999, the negotiations for the
joint venture had gathered momentum. This, in our view, is one
further development that would have
driven Shaik to require a good
set of financials from the auditors; that his investment in Prodiba
be reflected ‘at its proper
value’ and to make sure that a
qualified audit report was avoided, although the joint venture
eventually did not come to fruition.
[161] We accordingly agree with the
court
a quo
that the circumstantial evidence fortifies Paruk’s
version that Shaik did attend the meeting to which the former
testified. We
agree with the trial court’s rejection of Shaik’s
denial that he attended the meeting as false. As the court
a quo
found, it is not conceivable that Shaik would not have attended,
regard being had ‘for the compelling reasons that required his
presence’. We also agree with the court’s finding that Shaik was
a party to the write-off.
[162] In
view of this conclusion it is unnecessary to deal with the meeting
Shaik called after receipt by him of Bester’s letter
in which she
informed him that she disagreed with the manner in which the auditors
had dealt with the loan accounts. It is also unnecessary
to deal with
counsel’s criticisms on other findings by the trial court, such as,
for example, the reasoning that the write-off
served to conceal
payments made to Zuma, especially in view of the public alarm raised
by Patricia DeLille in Parliament about alleged
corruption in the
‘arms deal’.
[163] We have already mentioned that
the trial court noted in its judgment that the ‘falsity of the
representations alleged and
the potential prejudice to probable
readers of the financial statements in question [were] admitted’,
and that the only issue was
whether Shaik knew of it or was party to
it. In their heads of argument, however, counsel for the appellants
submitted that Van der
Walt could not find any indication that Absa
bank had been presented with the 1999 financial statements; that no
evidence was placed
on record that the financial statements were
presented to the South African Revenue Service, and that there was no
evidence on record
to show that any shareholder or Workers’ College
received them. The argument is therefore that there was no
communication of the
false representation to these entities. In
R
v Heyne
13
it was held that ‘the false statement must be such as to involve
some risk of harm, which need not be financial or proprietary,
but
must not be too remote or fanciful, to some person, not necessarily
the person to whom it is addressed’.
14
Clearly there was communication of the false representation at least
to Bester, the group’s accountant – and to Gibb, who was
not
party to the discussions that led to the write-off – after she had
asked Gibb for the financial statements upon seeing the
provisional
journal entries she received from him for her to ‘correct’ hers.
Communication to Bester is sufficient to cover
the crime of fraud
alleged even though she herself may not have been prejudiced by the
false representation.
[164] The
misrepresentation was reflected in the journals and annual financial
statements of the group – this is common cause. And
once there was
communication of it to the group’s accounting staff, as indeed
happened, there was always a potential danger that
these documents,
particularly the annual financial statements, might be passed on to
the shareholders, the South African Revenue
Service and other
entities that might have had an interest in the group’s business,
such as Absa. There was, however, no evidence
of any communication
beyond the accounting staff. But that does not detract from the fact
that the offence was committed upon communication
of the
misrepresentation to the accounting staff.
[165] The
trial court held that Shaik, in making the false representations,
used fourth, seventh, ninth and tenth appellants and convicted
these
corporate appellants accordingly. It was not suggested on appeal that
this approach was in any way flawed. The appeal against
the
convictions on count 2 must therefore fail.
COUNT 3:
[166] The appeal on
this count involves the first, fourth and fifth appellants. The court
below convicted Shaik on the main charge
and the fourth and fifth
appellants on the first alternative charge under count 3. (In this
section the references to the appellants
should be read as references
to these three appellants.) As stated above the main charge was one
in terms of
s 1(1)(a)
of the CA.
15
The first alternative charge was one in terms of
s 4(a)
and/or (b) of
POCA.
16
The convictions were based, in the main, on the content of the
encrypted fax which reads as follows:
‘
AT
J
de J
C.R.
JP PERRIER
ENCRYPTED FAX
re:
JZ / S. SHAIK
Dear Yan,
Following our interview
held on 30/9/00 with S. SHAIK in Durban and my conversation held on
10/11/1999 with Mr JP PERRIER in Paris,
I have been able (at last) to
meet JZ in Durban on 11
th
of this month, during a private
interview, in the presence of S.S.
I
had asked S.S. to obtain from J.Z. a clear confirmation or, or
failing which an encoded declaration (the code had been defined
by
me), in order to validate the request by S.S at the end of September
1999. Which was done by JZ (in an encoded form).
May
I remind you that the two main objectives of the “effort”
requested of THOMSON are
Protection of THOMSON
CSF during the current investigations (SITRON)
Permanent support of JZ
for the future projects
Amount: 500k ZAR per
annum (until the first payment of dividends by ADS).
Yours
truly,’
It
is common cause that
AT, J de J, JZ and S.S. are the
initials of Alain Thétard, Yan de Jomaron, Jacob Zuma and
Schabir Shaik respectively;
Thétard was the chief
executive officer of Thomson CSF Holding (Southern Africa) (Pty) Ltd
and a director of Thomson-CSF
(Pty) Ltd;
De Jomaron was the chief executive
officer of Thomson (Africa) Ltd;
‘
C.R’ is the French abbreviation
for ‘copy to’;
SITRON refers to the corvette
acquisition program; and
500k ZAR stands for R500 000.
[167] It
is also common cause that Thétard was the author of the fax.
On the face of it he was saying that Shaik had requested
Thomson to
pay an amount of R500 000 per annum until the first payment of
dividends by ADS; that the payment would be in return
for protection
of Thomson during the arms deal investigations and in return for the
permanent support of Zuma in respect of future
projects; that he,
Thétard, had asked Shaik to obtain from Zuma confirmation of
the request; and that Zuma had done so in
encoded form.
[168] The
appellants objected to the admission of the fax in evidence but the
court below ruled that it constituted an executive statement
in
furtherance of a common purpose admissible against other
socii
criminis
. In
R v Miller
1939 AD 106
this court had
occasion to pronounce on the admissibility of such statements. It was
the Crown’s case that the accused, Miller,
acting in concert with
one Roy, committed a fraud on the Union Government by representing to
Customs officials, by means of false
entries in stock books, that
certain material had been manufactured into shirts, collars and
pyjamas, whereas in fact that had not
been done.
17
Watermeyer JA said:
18
‘
When
more than two persons are concerned in the commission of a crime, and
one is being tried alone as a
socius
of the others, then the
independent acts of the others can be proved separately in order to
show their share in the crime and inferences
can be drawn by the jury
from such acts (see
R v Desmond
(11 CCC 146)).’
And
later:
19
‘
In the present case
the writings of Roy on the cutting slips and reconciliation slips
were not tendered as evidence to prove the truth
of what is asserted
by him in them. In fact in these writings he does not make any
assertions. But the writings are circumstantial
evidence from which
the part he was taking in the fraud can be inferred. As such they are
admissible.’
In
R v Mayet
1957 (1) SA 492
(A) Schreiner JA said in regard to such statements:
20
‘
Words that are said as
part of the carrying out of a purpose stand on the same footing as
acts done; they differ from mere narrative.’
[169] In the
present case, unlike the position in
R v Miller
, the State
tendered the encrypted fax as evidence to prove the truth of what is
asserted in the fax and the court below admitted
it as such ie it
allowed the hearsay evidence contained in the fax on the basis of
what it, in terms of the common law, considered
to be an exception to
the rule against hearsay. Whether or not the common law did recognise
such an exception need not be decided
by us as it has been held by
this court that the reception of hearsay evidence is now regulated by
s 3 of the Law of Evidence
Act 45 of 1988.
21
However, Squires J said that had he not admitted the fax on the basis
that it contained an executive statement he might well have
been
disposed to admit it in terms of this section. The section provides
as follows:
‘
3 Hearsay evidence
(1) Subject to the
provisions of any other law, hearsay evidence shall not be admitted
as evidence at criminal or civil proceedings,
unless-
(a) each party against
whom the evidence is to be adduced agrees to the admission thereof as
evidence at such proceedings;
(b) the
person upon whose credibility the probative value of such evidence
depends, himself testifies at such proceedings; or
(c) the court, having
regard to-
(i) the
nature of the proceedings;
(ii) the
nature of the evidence;
(iii) the
purpose for which the evidence is tendered;
(iv) the
probative value of the evidence;
(v) the reason why the
evidence is not given by the person upon whose credibility the
probative value of such evidence depends;
(vi) any
prejudice to a party which the admission of such evidence might
entail; and
(vii) any
other factor which should in the opinion of the court be taken into
account,
is of the opinion that
such evidence should be admitted in the interests of justice.
(2) The provisions of
subsection (1) shall not render admissible any evidence which is
inadmissible on any ground other than that
such evidence is hearsay
evidence.
(3) Hearsay
evidence may be provisionally admitted in terms of subsection (1) (b)
if the court is informed that the person upon whose
credibility the
probative value of such evidence depends, will himself testify in
such proceedings: Provided that if such person
does not later testify
in such proceedings, the hearsay evidence shall be left out of
account unless the hearsay evidence is admitted
in terms of paragraph
(a) of subsection (1) or is admitted by the court in terms of
paragraph (c) of that subsection.
(4) For the purposes of
this section-
'hearsay evidence'
means evidence, whether oral or in writing, the probative value of
which depends upon the credibility of any
person other than the
person giving such evidence;
'party' means the
accused or party against whom hearsay evidence is to be adduced,
including the prosecution.’
During the oral argument before us the
parties only dealt with the admissibility of the fax in terms of this
section. For reasons
that follow we are of the view that the fax
should indeed have been admitted in terms of the section.
[170] Section 3
provides that hearsay evidence is admissible if a court is of the
opinion that it should be admitted in the interests
of justice. In
McDonald’s Corporation v Joburgers Drive-Inn Restaurant (Pty)
Ltd and Another
1997 (1) SA 1
(A)
22
this court held that the admissibility of evidence is, in general,
one of law, not discretion and that there was nothing in s 3
which changed this situation. The section enjoins a court in
determining whether it is in the interests of justice to admit
hearsay
evidence to have regard to every factor that should be taken
into account, more specifically to have regard to the factors
mentioned
in s 3(1)(c). Only if, having regard to all these
factors cumulatively, it would be in the interests of justice to
admit the
hearsay evidence, should it be admitted.
The
nature of the proceedings.
[171] Being
criminal proceedings the onus was on the state to prove the
appellants’ guilt beyond reasonable doubt in a fair trial
which, in
terms of the Constitution, entailed the right to challenge evidence.
23
Although the right to challenge evidence does not always encompass
the right to cross-examine the original declarant,
24
courts do have an ‘intuitive reluctance to permit untested evidence
to be used against an accused in a criminal case’.
25
In
S v Ramavhale
1996 (1) SACR 639
(A)
26
Schutz JA said that ‘a Judge should hesitate long in admitting or
relying on hearsay evidence which plays a decisive or even
significant
part in convicting an accused, unless there are
compelling justifications for doing so’. However, sight should not
be lost of the
true test for the evidence to be admitted and that is
whether the interest of justice demands its reception.
27
The nature of the evidence.
[172] The evidence consists of
Thétard’s advice to his superiors as to his understanding of
what happened at a meeting between
him, Shaik and Zuma on 11 March
2000. It was recorded shortly after the meeting; was of a very
sensitive nature in that it, on the
face of it, incriminated Thétard,
Shaik and Zuma; and it was intended to be acted upon by his
superiors. According to Ms Delique,
Thétard’s secretary at
the time, whose evidence was accepted by the court below, it was on
the instruction of Thétard
conveyed by encrypted fax to Paris.
The appellants contended in their heads of argument that it could not
be found beyond reasonable
doubt that the fax was indeed transmitted
but this contention was, correctly in our view, not pressed in
argument before us.
The
purpose for which the evidence was tendered.
[173] The evidence was tendered by the
state to prove the offence in terms of the main charge under count 3
and was of vital importance
to the State’s case.
The probative value of the
evidence.
[174] The probative
value of the hearsay evidence contained in the fax depended on the
credibility of Thétard, in respect of
what is stated in the
fax, at the time he wrote it.
28
It is common cause between the parties that, on the evidence adduced
in the court below, Thétard, in general, would seem to
be an
unreliable and dishonest person. It does, however, not follow that he
was also unreliable or dishonest in respect of what he
recorded in
the fax. The content of the fax, being incriminating, had it fallen
into the wrong hands, could have had very serious
adverse
consequences for Thétard, Shaik and Zuma. A false intimation
to his superiors could also have had very serious adverse
consequences for them, should they have proceeded to give effect to
the requested bribe, wrongly thinking that Zuma was amenable
to
receiving a bribe. Thétard was alive to these dangers as one
could expect him to be and as is demonstrated by the fact
that he
instructed Delique to transmit the fax in encrypted form. It is for
this reason highly unlikely that he would have exposed
himself,
Shaik, Zuma and his superiors to these dangers had it not been
necessary to do so. It is in fact almost inconceivable that
he would
have advised his superiors that he understood the then Deputy
President to have agreed to receive a bribe if that was not
his
understanding of what had happened at the meeting. Thomson considered
a good relationship with influential politicians in this
country of
importance to them and would not unnecessarily have done something
that could sour that relationship. For these reasons
it is highly
improbable that Thétard would falsely have advised his
superiors that Shaik had requested the payment of a bribe
in return
for the favours mentioned in the fax. No possible motive for doing so
was suggested by the appellants. Being a sensitive
matter with
inherent attendant dangers and a matter that his superiors were
intended to act upon, it is also likely that Thétard
would
have taken great care accurately to reflect his understanding of what
the request by Shaik was. In these circumstances the
fax has a high
probative value notwithstanding the fact that Thétard would in
general appear to be an unreliable person.
[175] The
fax has an even higher probative value if regard is had to the extent
to which confirmation for its contents is to be found
in the other
evidence tendered by the State. Thétard and Shaik did meet on
30 September 1999 at a time when there were calls
for an
investigation into the arms procurement process and shortly after a
special audit review of such procurement had been approved
by the
Minister of Defence; Thétard, Shaik and Zuma did meet in
Durban on 10 or 11 March 1999; and on the face of the evidence
adduced by the state, the request referred to in the fax gave rise to
an agreement in terms of which an amount of R500 000 was payable
to
the fourth appellant, and to payment of an amount of R249 925 to the
fifth appellant, for services which had to be rendered but
had in
fact not been rendered during the term of the agreement.
The
reason why the evidence was not given by the person upon whose
credibility the probative value of the evidence depended.
[176] The evidence was not given by
Thétard because he refused to come to South Africa to testify
and because it was clear
that he would deny that the fax correctly
reflected his understanding of what happened at the meeting which,
according to the fax,
took place on 11 March 1999. The appellants
submitted that Thétard or Thomson could have been charged with
them or that Thétard’s
evidence could have been obtained on
commission or in some other way. In our view it is highly unlikely
that the evidence of Thétard
or his presence as a co-accused
would have strengthened the appellants’ case. As stated above the
appellants themselves submitted
in respect of the admissibility of
the fax, albeit in the context of the probative value of the fax,
that Thétard had been
shown to be a dishonest person. One
illustration of such dishonesty is contained in a letter by him to
Perrier dated 26 June 2003.
In the letter he confirmed that he had
met Zuma in Durban during the first quarter of 2000 at his official
residence together with
Shaik and stated that they only dealt with
general matters regarding Thomson’s Durban establishment. He added
that he could not
recall having written the fax. Subsequently, in an
affidavit, he admitted that he was the author of the fax but stated
that a bribe
had not been discussed with Shaik and Zuma; that the
document was merely a rough draft of a document in which he intended
to record
his thoughts on separate issues in a manner which was not
only disjointed but also lacked circumspection; that he crumpled it
up
after he had written it and threw it in the waste paper basket;
that he never gave instructions that the document be typed; and that
the amount of R500 000 related to a request for funds by Shaik
unrelated to any bribe to Shaik or Zuma. Although he said that he
did
not agree with the construction placed on the fax he did not suggest
any other than the obvious one. The appellants were likewise
unable
to suggest an interpretation inconsistent with a bribe; Delique
testified that Thétard instructed her to type the document
and
to fax it in encrypted form; and the appellants admitted that the
creases which appear on the original document were not caused
by the
document having been crumpled up in a ball as alleged by Thétard.
In the circumstances, quite apart from the fact that
Thétard
indicated that he was not prepared to come to South Africa to
testify, the State could not have been expected to call
him as a
witness or to apply for his evidence to be taken on commission. It
was open to the appellants to do so if they thought that
his evidence
would advance their case.
Any prejudice to appellants which
the admission of the evidence could entail.
[177] The fact that the admission of
the fax could lead to the conviction of the appellants was clearly
not intended to constitute
prejudice to be taken into account in
deciding whether the evidence should be admitted or not. It is for
this very purpose that hearsay
evidence is, in the interests of
justice, admitted in criminal cases. The appellants, however,
contended that they were prejudiced
by the admission of the fax
because they had not had an opportunity to cross-examine Thétard.
However, it could only be found
that the appellants would be
prejudiced in this respect if there appeared to be a reasonable
possibility that cross-examination of
Thétard would strengthen
the appellants’ case. In the light of what has been said in the
preceding paragraph it is highly
unlikely that cross-examination of
Thétard would have rendered positive results for the
appellants. All the indications were
that cross-examination of
Thétard would have served no other purpose than to reinforce
the impression that he is dishonest
and unreliable. In the
circumstances the risk that the appellants would be prejudiced by not
being given an opportunity to cross-examine
Thétard was very
slim.
Any other factor
[178] Another factor that should in
our view have been taken into account is that this is not a case in
which the appellants were
faced with evidence of which they had no
knowledge and which could for that reason not be contradicted by
them. Shaik was present
at the meeting referred to in the fax and
knew exactly what had been said. No other relevant factor to be taken
into account in terms
of s 3 was suggested by the appellants and we
are not aware of any such factor.
Conclusion
in respect of the admissibility of the evidence
[179] Having regard to the high
probative value of the evidence and the fact that the risk that the
appellants would be prejudiced
by its admission was slim, the
admission of the fax in evidence was in the interest of justice
notwithstanding the fact that its
admission was sought in criminal
proceedings and the fact that such evidence is of vital importance to
the state’s case.
[180] In terms of s
3(1) the section is subject to the provisions of any other law.
Section 8 of the same Act repealed
sections 216
and
223
of the
Criminal Procedure Act 51 of 1977
but not
s 222
of that Act. Section
222 provides that the provisions of sections 33 to 38 inclusive of
the Civil Proceedings Evidence Act 25 of
1965 shall
mutatis
mutandis
apply with reference to criminal proceedings. Relying on
these provisions the state submitted, in its heads of argument, that
the
fax should also have been admitted in terms of s 34 of the Civil
Proceedings Evidence Act.
29
[181] The court below made no mention
of this section in relation to the admissibility of the fax; the
appellants did not in their
heads of argument or in their oral
argument address the question whether the fax should have been
admitted in evidence in terms of
this section; and although the
respondent submitted in its heads of argument that the fax should in
any event have been admitted
in terms of this section it did not, in
oral argument before us, by reference to this section, counter the
appellants’ argument
that the fax should not have been admitted.
Prima facie
it seems to us that all the requirements of the
section were satisfied and that the court below was obliged in terms
of the section
to admit it in evidence. However, in the light of the
fact that the matter was not canvassed in argument before us and the
fact that
we do not know for what reason the court below and the
appellants did not consider the fax to be admissible in terms of the
section,
we deem it inadvisable to decide the matter on this basis.
[182] Substantial
corroboration for the evidence contained in the fax is to be found in
the other evidence adduced by the State and
in Shaik’s own
evidence. We shall now deal with such corroborative evidence.
[183] It is common cause that Shaik
and Thétard met in Durban on 30 September 1999.
Shortly before the meeting, namely
on 21 September 1999, a
motion by De Lille, a member of parliament, had been tabled in
parliament, calling for the establishment
of a full judicial
commission of enquiry into the arms acquisition and offset process,
to determine whether certain officials and
public representatives
were guilty of criminal conduct in their dealings in regard to the
arms procurement process. In addition,
only two days before the
meeting, the Minister of Defence approved a special audit review of
the procurement of the strategic defence
packages.
[184] On
9 February 2000, a newspaper, City Press, reported under the heading
‘Senior defence official in arms corruption scandal’:
‘
Claims under scrutiny
include that:
a senior politician
intervened to reopen negotiations for the contract to provide the
corvette defence suite, after which French
outfit Thomson, together
with a local empowerment group, African Defence Systems, were
declared the preferred bidders.
this was after a
different local company received indications it was the preferred
bidder.’
As was stated by the court below the
report ‘clearly identified Thomson as one of the culprits in the
allegations of corruption
and left the identity of the senior
politician to guesswork and rumour’. On the same day the Presidency
issued a statement rejecting
‘any insinuation that Deputy President
Jacob Zuma is implicated in shady arms deals’.
[185] Two
days later Shaik wrote to Thétard:
‘
I refer to our
understanding Re: Deputy President Jacob Zuma and issues raised.
I
will appreciate it if you can communicate to me your availability to
meet.’
It is common cause that pursuant to
Shaik’s letter Shaik, Thétard and Zuma met in Durban on 10
or 11 March 2000.
[186] It is furthermore common cause
that Shaik on these occasions ie on 30 September 1999 and
again on 10 or 11 March 2000
requested that an amount be paid by
Thomson. However, according to Shaik his request for the payment of
an amount had nothing to
do with an enquiry into the arms procurement
process. He testified that he, at both meetings, asked for a donation
to be made to
the Jacob Zuma Education Trust but this evidence was
rejected by the court below and was so clearly false that the court’s
finding
was in no way called into question before us.
[187] The
ADS dividends were irrelevant in so far as the Jacob Zuma Education
Trust was concerned but not in so far as Nkobi was concerned.
Nkobi
had cash flow problems at the time, due in part to the fact that it
was assisting Zuma financially. It was probably foreseen,
correctly
as it turned out, that once it started receiving dividends from ADS
its problems would be at an end. This explains why
the payments of
R500 000 per annum were in terms of the fax to come to an end
when ADS started to pay dividends.
[188] Subsequent
to the meeting on 10 or 11 March 2000, on 22 May 2000, Shaik met with
Perrier in Paris. Thereafter, on 31 August
2000, he wrote to Thétard:
‘
I have also raised a
very important matter with Mr Jean Paul Perrier which he had
sanctioned, for implementation by yourself. This
was done during our
last meeting in Paris several months ago, and despite my several
attempts to raise this issue with you in order
to resolve the
undertaking, you have continually ignored this concern.
You
leave me no choice but to seek alternative remedy to this matter, and
therefore I wish to put the above matter on record with
you.’
Shaik testified that he was referring
to ‘the donation’ ie he confirmed that he was referring to the
matter that was discussed
at the meetings with Thétard on
30 September 1999 and on 10 or 11 March 2000. He also, in
his evidence in chief,
confirmed the statement that Perrier had
sanctioned ‘the donation’ for implementation by Thétard.
Later, under cross-examination,
he backtracked by saying that Perrier
still had to get authority from his own board and still later that
Perrier said that he had
to take the matter up with his senior
management.
[189] On
6 October 2000 Shaik wrote to Thétard:
‘
The
subject matter agreed by ourselves in Pretoria during the Dexsa show
over breakfast. My party is now saying that we are reneging
on
an
agreed understanding, this request already having been agreed upon by
Mr Perrier
. I since then communicated this understanding to my
party. Several months later no real action. I share the sentiment
with my party
that he feels let down, this is particularly unpleasing
given the positive response from Mr Perrier, consequently as my party
proceeded
to an advanced stage on a certain sensitive matter which
was required to be resolved. This delay is obviously proving to be
extremely
detrimental and embarrassing for all of us. I therefore
urge you to respond timeously on this extremely delicate matter.’
(Emphasis added.)
Once
again Shaik confirmed in evidence that he was referring to ‘the
donation’.
[190] Shortly
before this letter
Shaik had learnt of Zuma’s Nkandla
project, the estimated cost of which was more than R2m.
a special review by the
Auditor-General of the selection process of strategic defence
packages for the acquisition of armaments
had been referred to
parliament’s Standing Committee on Public Accounts (‘Scopa’).
[191] The
terms of the letters referred to are consistent with the terms of the
fax and inconsistent with Shaik’s explanation that
his request was
that a donation be made to the Jacob Zuma Education Trust. If the
request was for a donation there would have been
no need to refer to
it in such guarded terms as ‘a very important matter’, ‘this
issue’, this understanding’, ‘a certain
sensitive matter which
was required to be resolved’ and ‘this extremely delicate
matter’. It would likewise not have been necessary
to refer to Zuma
or the Jacob Zuma Education Trust as ‘my party’. Had the request
been for a bribe as the fax indicates, the
use of these expressions
is understandable.
[192] On 2 November 2000 a report by
Scopa recommending a joint investigation by the Public Protector, the
Auditor-General, the National
Prosecuting Authority and the Heath
Special Investigation Unit into the arms procurement process was
adopted by parliament. Shortly
thereafter on 7 November 2000
Bianca Singh, Shaik’s personal assistant at the time, accompanied
him on a trip to Mauritius.
Her function was to keep minutes of a
meeting that was to be held with representatives of Thomson. Shaik
instructed her to take along
a file containing newspaper articles
relating to the arms deal investigation. The meeting took place on 8
November and was attended
by Shaik, Thétard and De Jomaron.
According to Singh, Shaik said during the course of the meeting that
they had to discuss
‘damage control’. Thétard made copies
of the newspaper articles and Shaik then said that if the Heath
Investigating Unit
continued and a certain ANC member opened his
mouth there would be big trouble. He looked at Singh and said that he
hoped that she
was not minuting what was being said. Shortly
thereafter she was asked to leave. Her evidence about the newspaper
articles; that
Shaik said that they had to discuss damage control;
that it was said that if a certain member of the ANC were to open his
mouth there
would be trouble; that she was told not to minute the
discussion; and that she was subsequently asked to leave, were not
challenged.
It was merely put to her that Shaik and others had their
suspicions about other contractors and that one of those contractors
could
be in trouble if certain investigations were done. Singh denied
what was put to her and testified that she had a clear recollection
of what had been said.
[193] In
yet another letter to Thétard, dated 8 December 2000, Shaik
wrote:
‘
Kindly
expedite our
arrangement
as soon as possible, as
matters are becoming extremely urgent with my client.’
(Again the emphasis is ours.)
This letter incorporated an
application for a ‘service provider agreement’ dated
1 November 2000 and signed by Shaik.
On the same day that
the letter was written Scopa called on the President to issue a
proclamation authorising the Special Investigative
Unit to take part
in the investigation of the arms procurement process.
[194] According
to the draft ‘service provider agreement’ signed by Shaik on
behalf of the fourth appellant, Thomson CSF International
Africa Ltd
undertook to pay the service provider, being the fourth appellant,
R500 000 in two instalments of R250 000 each. The
first payment was
payable before the end of December 2000 and the second on 28 February
2001. The agreement was to be for an initial
period of six months and
was by agreement renewable for successive one-year periods.
[195] Shaik
again wrote to Thétard on 11 December 2000:
‘
I
assume the first service arrangement payment to occur before the 15
th
December 2000 so that I could give effect to its intended purpose
before we close.’
[196] Acting
on behalf of the fourth appellant Shaik concluded a service provider
agreement dated 1 January 2001 with Thomson-CSF
International Africa
Ltd (‘Thomson Africa’) represented by De Jomaron. The agreement
differs in some respects from the draft
service provider agreement.
One difference is that the first instalment of R250 000 was payable
before the end of January 2001. In
terms of this agreement the fourth
appellant undertook to identify new investment projects and to
present them to Thomson Africa
together with a business plan. In this
regard the fourth appellant undertook to submit monthly activity
reports to Thomson Africa.
[197] Thomson
Africa made a payment of R249 925 in terms of the service
provider agreement to the fifth appellant on 16 February
2001. On 28
February 2001 the fifth appellant paid R250 000 to Development
Africa. The court below found that there was no sign
that Development
Africa was anything other than the alter ego of a Mr Reddy who
eventually arranged for the payment of the bulk of
the costs of the
home that had been erected for Zuma at Nkandla.
[198] The
fourth appellant failed to submit the monthly activity reports
required in terms of the service provider agreement and on
1 March
2001 Thomson Africa requested Shaik to ‘submit a monthly activity
report on a regular basis’ and to also do so in respect
of the
previous months. The second payment in terms of the service provider
agreement was not made and the agreement was not renewed
when it
expired at the end of May 2001. Shaik nevertheless wrote two letters
dated 15 April 2001 and 16 July 2001 respectively to
Thales Africa
(Thomson had by that time changed its name to Thales) in which he
mentioned projects which he considered worthy of
consideration by
Thales. He admitted in evidence that these letters were written in
August and backdated. According to him it was
done at the request of
De Jomaron of Thales in order to comply with Thales’ own financial
and administrative guidelines.
[199] Shaik testified that, unlike the
letters preceding the letter dated 8 December 2001, the
letters dated 8 December
2001 and 11 December 2001 had nothing to do
with ‘the donation’. A cheque in an amount of R2m and endorsed by
Mr Mandela in favour
of Zuma, had on 17 October 2000 been deposited
into Zuma’s current account. On the same day Zuma paid R1m of that
amount to the
Jacob Zuma Education Trust. According to Shaik he
became aware that there was a substantial credit in Zuma’s account,
whereupon
he arranged for an amount of R900 000 to be transferred to
a call account of the tenth appellant so as to attract a higher rate
of
interest. He said that the arrangement between him and Zuma was
that he could move funds in and out of the account in his discretion.
Subsequently, on 6 December 2000, he learnt that R1m of the amount of
R2m was intended for Development Africa. The R900 000
that he
had deposited into the tenth appellant’s call account was by then
no longer available with the result that he needed the
service
provider agreement to restore the money he had taken from Zuma’s
account. That, according to Shaik, was the intended purpose
referred
to in his letter of 11 December 2000 and that was the matter that was
becoming ‘extremely urgent with his client’. Asked
what had
happened to the request for a donation Shaik said that it had become
evident that the donation was not forthcoming and,
‘as the funds
from Mandela arrived in December’, he and Zuma simply lost interest
in pursuing a matter that was leading them
nowhere.
[200] There are
various problems with this evidence of Shaik. First, on his own
evidence in chief he had not told Thétard that
he needed the
money payable in terms of the service provider agreement to repay the
amount that he had withdrawn from Zuma’s account.
30
In the circumstances it is somewhat unlikely that he would, in his
letter of 11 December 2000, have referred to an intended purpose,
meaning the restoration of the amount he had taken from Zuma’s
account. Thétard would have understood the intended purpose
to
be the one discussed at the meeting on 10 or 11 March 2000 and
subsequently agreed to by Perrier. Second, if the intended purpose
was to repay a debt and not to give effect to the aforesaid
agreement, one would not have expected Shaik, in his letter dated 8
December
2000, to refer to Zuma as his client. Third, the ostensible
purpose of the service provider agreement is to earn a fee for
services
rendered and not to repay a debt. Had it been a genuine
transaction Shaik would not have described his professed intention to
use
the fee to pay a debt as the intended purpose of the agreement.
Fourth, the service provider agreement was apparently conceived in
November at a time when it was not known to Shaik that the R900 000
he had withdrawn from Zuma’s account was destined for
Development
Africa. The service provider agreement would therefore, at its
inception, not have been intended to restore the money
Shaik had
taken from Zuma’s account. On the other hand, if the intended
purpose was still ‘the donation’, the references to
an ‘intended
purpose’ and to ‘my client’ are quite understandable.
[201] The
court below rejected Shaik’s evidence that he was, after he had
learnt of the donation of R1m from Mandela to the Jacob
Zuma
Education Trust, no longer concerned about ‘the donation’ and
that he was thereafter in his letters of 8 and 11 December
2000
referring to an arrangement unrelated to ‘the donation’ earlier
agreed to. The finding was clearly correct and the appellants
did not
suggest any basis for interfering with it.
[202] The
court below concluded that there was no doubt that the encrypted fax
reported ‘the conclusion of an agreement reached
by Shaik and
Thétard that Thomson would pay Jacob Zuma R500 000 until the
ADS dividends became available, in order to secure
the two benefits
for Thomson, namely that he would provide a present protection from
the corvette acquisition investigation and hereafter
help in securing
Government contracts in future’. We do not agree that the fax
reflects an agreement between Shaik and Thétard.
According to
the fax Thétard was merely conveying a request by Shaik. The
agreement was only reached when, on Shaik’s own
evidence, Perrier
subsequently approved his request. Shaik’s later evidence that
Perrier still had to get approval from his senior
management and
board can safely be rejected in the light of the two letters in which
he categorically stated that Perrier had approved
the request and the
fact that he did not qualify these statements in his evidence in
chief.
[203] The
fax, the correspondence, Shaik’s false evidence, the service
provider agreement and the payment in terms thereof cumulatively,
in
our view, fully justified the finding of the court below that it had
been proved beyond reasonable doubt that what Shaik described
as a
request for a donation to the Jacob Zuma Education Trust was in fact
a request for the payment of a bribe to Zuma. As was found
by the
court below the service provider agreement was in reality nothing
more than a vehicle to give effect to the request recorded
in the
encrypted fax and to disguise the fact that the amount of R249 925,
paid in terms of the service provider agreement,
was intended to be a
bribe.
[204] In
terms of the fax Zuma confirmed Shaik’s request in a code devised
by Thétard and evidently explained to Zuma by
Shaik. The
appellants submitted in the court below that Shaik could have
misrepresented the meaning of the code to Zuma; that there
is
consequently a reasonable possibility that Zuma did not know of the
bribe and did not agree to the bribe; and that in order to
succeed
the state had to prove that Zuma knew of the request and agreed to
accept the bribe. The court below rejected this argument
on the
ground that Shaik testified that Zuma knew what was being discussed;
that Shaik would not have misrepresented the position
as there was a
risk that his deception would subsequently be revealed; and that it
was unlikely that a dishonest broker would arrange
a meeting between
the two parties that he was deceiving.
[205] In
their heads of argument the appellants repeated these submissions but
during the oral argument before us they made it clear
that they were
no longer relying on them. In our view they were correct in doing so.
It was for the reasons that follow not necessary
for the state to
prove that Zuma was aware of the request by Shaik and that he agreed
to accept the bribe.
[206] The
State proved that Thomson corruptly offered (the offer having been
communicated to Shaik)
to give a benefit
which was not legally due
to a person, being Zuma,
who had been charged with duties,
being the duties set out in s 96(2) of the Constitution
by virtue of the holding of the
office of Deputy President of the RSA
with the intention to influence him
to commit or to do an act in relation
to such duty.
The State, therefore, proved that
Thomson committed an offence in terms of s 1(1)(a)(i) of the CA.
The section does not expressly
require communication of the offer to
the person who is sought to be influenced and there is no reason to
read such a requirement
into the section. An offer to pay a bribe to
an official may for example be made to his secretary and be withdrawn
immediately because
of the secretary’s reaction. In these
circumstances an offer, within the natural meaning of the word, was
made and there is no
reason to think that the intention was to
exclude such an offer from the offence of corruption in terms of the
section.
[207] The
State also proved that it was Shaik who persuaded Thomson to make the
offer. Shaik is, therefore, himself guilty of an offence
in terms of
s (1)(1)(a)(i) of the CA. It follows that it is unnecessary to
decide whether Zuma was aware of the offer.
[208] In
terms of s 4 of POCA any person who knows or ought reasonably to have
known that property is or forms part of the proceeds
of unlawful
activities and who enters into any agreement or engages in any
arrangement or transaction with anyone in connection with
that
property or performs any other act in connection with such property,
which is or is likely to have the effect of enabling or
assisting any
person who has committed or commits an offence, to avoid prosecution,
shall be guilty of an offence. It is clear that
fourth appellant by
entering into the service provider agreement and the fifth appellant
by receiving the payment made in terms of
the service provider
agreement assisted Shaik and Thales to avoid prosecution and that
they therefore committed an offence in terms
of the section.
[209] In
the result the appeal of the first appellant against his conviction
in respect of the main charge under count 3 and the appeal
of the
fourth and fifth appellants against their convictions under the first
alternative charge under count 3 should be dismissed.
SENTENCE
[210] Dealing first with the corporate
appellants, this court granted the second, third, fourth, fifth and
eighth appellants leave
to appeal against the sentences imposed by
the court below in respect of count 1. Leave was refused in respect
of the sentences imposed
on the sixth, seventh, ninth, tenth and
eleventh appellants.
31
Having regard to the conclusions reached earlier in this judgment the
sentences imposed on the last-mentioned appellants on this
count thus
remain extant.
[211] The basis for the appeal against
sentence on count 1 imposed on the appellants referred to above is
that the fines set out in
para [57] above are shockingly
inappropriate, especially in view of the fact that the use of their
accounts was fortuitous and
that they did not gain any advantage as a
result of the payments made.
32
[212] Squires J took care to ensure
that he imposed fines only on those corporate appellants who could
afford to pay. Each of the
corporate appellants is a separate legal
personality. The fortunes of each are linked to the prosperity of the
group and of Shaik.
Section 332 of the CPA provides for the
prosecution of corporations in circumstances such as those of the
present case. See in this
regard
S v Joseph Mtshumayeli (PVT)
Ltd
1971 (1) SA 33 (RA) at 34B-35E. In our view, the
fines imposed are not shockingly inappropriate and achieve the
correct balance
between societal interests and the circumstances of
the corporate appellants. We also detect no misdirection or
irregularity in this
regard.
[213] Leave was not granted to any of
the affected appellants (in this instance Shaik included) to appeal
against the sentences imposed
in respect of count 2. Following on our
conclusion in relation to the convictions on this count the sentences
imposed by the court
below on this count remain extant.
[214] Leave was not granted to
appellants 4 and 5 to appeal against the fine of R500 000
imposed on each in respect of count
3. Having regard to our
conclusion in relation to the convictions on this count their
sentences thus remain extant.
[215] Shaik’s application for leave
to appeal against the sentences imposed on counts 1 and 3, as appears
from the order of this
court set out in para [61] above, was referred
by this court for oral argument. We turn to consider the material
factors in relation
to the sentences imposed on him on these counts.
[216] Shaik is a 48 year-old married
man with no previous convictions. From humble beginnings he is now a
businessman heading a corporate
empire. As a result of his
convictions he is disqualified from holding directorships in
companies. In a judgment delivered by this
court in a related asset
forfeiture case Shaik has effectively been stripped of his fortune.
His criminal activities have reduced
him to a position without money
and power, the two things he most sought and strove towards.
[217] It was submitted on behalf of
Shaik in relation to count 1 that this was not a case where a
low-ranking official who might be
able to bring influence to bear to
benefit someone who intended bribing him was deliberately targeted
and thereafter relentlessly
‘stalked’ in order to effect the
desired result. It was contended that it should be considered in
favour of Shaik that his relationship
with Zuma had mutated over time
and had slipped into the situation leading up to his conviction. We
are not persuaded by this argument.
[218] The payments to Zuma, a powerful
politician, over a period of more than five years were made
calculatingly. Shaik subverted
his friendship with Zuma into a
relationship of patronage designed to achieve power and wealth. He
was brazen and often behaved aggressively
and threateningly, using
Zuma’s name to intimidate people, and particularly potential
business partners, into submitting to his
will. He sought out people
eager to exploit Zuma’s power and influence and colluded with them
to achieve mutually beneficial results.
[219] In our view, the sustained
corrupt relationship over the years had the effect that Shaik could
use one of the most powerful
politicians in the country when it
suited him. In our view this is an aggravating factor. As stated
earlier in this judgment it is
clear that very soon after the advent
of our democracy Shaik saw economic opportunities beckon and realised
early on that he could
use political influence to his financial
advantage.
[220] In
S v Kelly
1980 (3) SA
301
(A) the following appears at 313F:
‘
Bribing has been
described by this Court as a corrupt and ugly offence. . .In the
business world it undermines integrity for the temptations
offered
are often, as in this case, great. It is an insidious crime difficult
to detect and more difficult to eradicate. It can,
if unchecked or
inadequately punished by the courts, have a demoralising effect on
business standards and fair trading.’
Bribery as pointed out earlier in this
judgment is encompassed within the meaning of corruption as that term
appears in the provisions
of s 1 of the CA.
[221] In
R v Sole
2004 (2) SACR
696
(LesHC) the Lesotho High Court considered appropriate sentences
for a series of bribery convictions. At 699b-700b the court referred
to the abhorrence of bribery in Roman-Dutch law and the expressions
of strong reproval that have multiplied with the years.
[222] The Constitutional Court in
South African Association of Personal Injury Lawyers v Heath and
others
[2000] ZACC 22
;
2001 (1) BCLR 77
(CC) at 80E-F said the following:
‘
Corruption and
maladministration are inconsistent with the rule of law and the
fundamental values of our Constitution. They undermine
the
constitutional commitment to human dignity, the achievement of
equality and the advancement of human rights and freedoms. They
are
the antithesis of the open, accountable, democratic government
required by the Constitution. If allowed to go unchecked and
unpunished
they will pose a serious threat to our democratic State.’
[223] The seriousness of the offence
of corruption cannot be overemphasised. It offends against the rule
of law and the principles
of good governance. It lowers the moral
tone of a nation and negatively affects development and the promotion
of human rights. As
a country we have travelled a long and tortuous
road to achieve democracy. Corruption threatens our constitutional
order. We must
make every effort to ensure that corruption with its
putrefying effects is halted. Courts must send out an unequivocal
message that
corruption will not be tolerated and that punishment
will be appropriately severe. In our view, the trial judge was
correct not only
in viewing the offence of corruption as serious, but
also in describing it as follows:
‘
It is plainly a
pervasive and insidious evil, and the interests of a democratic
people and their government require at least its rigorous
suppression, even if total eradication is something of a dream.’
It is thus not an exaggeration to say
that corruption of the kind in question eats away at the very fabric
of our society and is the
scourge of modern democracies. However,
each case depends on its own facts and the personal circumstances and
interests of the accused
must always be balanced against the
seriousness of the offence and societal interests in accordance with
well-established sentencing
principles.
[224] Counts 1 and 3 are offences that
fall within the ambit of Part II of the second schedule to the
Criminal Law Amendment Act 105 of 1997
. The statute prescribes
minimum sentences of 15 years imprisonment for these offences, unless
there are substantial and compelling
reasons which justify a lesser
penalty.
[225] In
S v Malgas
2001 (1)
SACR 469
(SCA) at 476g-477b, this court, in
dealing with statutorily prescribed
minimum sentences, stated the following:
‘
In
what respects was it no longer to be business as usual? First, a
court was not to be given a clean slate on which to inscribe whatever
sentence it thought fit. Instead, it was required to approach that
question conscious of the fact that the legislature has ordained
life
imprisonment or the particular prescribed period of imprisonment as
the sentence which should
ordinarily
be imposed for the listed
crimes in the specified circumstances. In short, the Legislature
aimed at ensuring a severe, standardised,
and consistent response
from the courts to the commission of such crimes unless there were,
and could be seen to be, truly convincing
reasons for a different
response. When considering sentence the emphasis was to be shifted to
the objective gravity of the type of
crime and the public’s need
for effective sanctions against it. But that did not mean that all
other considerations were to be
ignored. The residual discretion to
decline to pass the sentence which the commission of such an offence
would ordinarily attract
plainly was given to the courts in
recognition of the easily foreseeable injustices which could result
from obliging them to pass
the specified sentences come what may.’
[226] In the present case Squires J
took into account all relevant factors including Shaik’s ‘struggle
credentials’. He considered
that far from achieving the objects to
which the struggle for liberation was directed the situation that
Shaik developed and exploited
was the very same that the ‘struggle’
had intended to replace and that this whole saga was a subversion of
struggle ideals. The
court below concluded that it was left with no
alternative but to impose the minimum prescribed sentence.
[227] We can see no fault with the
reasoning of Squires J in respect of the sentence imposed on Shaik on
count 1 or with the conclusion
that there were no substantial and
compelling circumstances justifying a sentence other than the
prescribed minimum of 15 years imprisonment.
[228] On Shaik’s conviction on count
3 the court considered the submission on his behalf that he had only
acted as a facilitator
and concluded that even if this were so the
arrangement plainly suited his purpose. Squires J found that Shaik’s
first object was
to undermine the law and to thwart the investigation
which would reveal his corrupt activities and to further ‘intensify
corrupt
activity and at the highest level in the confident
anticipation that Jacob Zuma may one day be President.’
[229] Squires J did not consider the
fact that Shaik received only one payment of R250 000 pursuant to the
bribe arrangement to be
a mitigating factor. Weighing all the
evidence in respect of count 3 the learned judge arrived at the same
conclusion as with count
1, namely, that there were no substantial
and compelling circumstances to justify the imposition of a sentence
other than the prescribed
minimum of 15 years imprisonment. Once
again, on this aspect, we can see no flaw in his reasoning nor can we
fault his conclusion.
[230] The appeal by the second,
fourth, fifth and eighth appellants against the sentences imposed on
count 1 and the application for
leave to appeal by the first
appellant against the sentences imposed on him in relation to counts
1 and 3 therefore cannot succeed.
In the result all of the sentences
imposed by the court below must stand.
ORDER
[231] The order of the court is
accordingly as follows:
1. All
the applications for leave to appeal that were referred for argument
are dismissed.
2. All the appeals are dismissed.
_________________
C T HOWIE P
_________________
L MPATI DP
_________________
P
E STREICHER JA
_________________
M
S NAVSA JA
_________________
J
A HEHER JA
1
See
paras [60] and [61]
infra
.
2
Members
of the Executive Council of Provinces are generally referred to as
provincial Ministers.
3
Section
1(1)(a)(ii) and (ii) of the Corruption Act reads as follows:
‘
1. Prohibition
on offer or acceptance of benefit for commission of act in relation
to certain powers or duties ─
(1) Any person ─
(a) who
corruptly gives or offers or agrees to give any benefit of whatever
nature which is not legally due, to any person upon
whom ─
(i) any
power has been conferred or who has been charged with any duty
by virtue of any employment or the holding of any office
or any
relationship of agency or any law, or to anyone else, with the
intention to influence the person upon whom such
power has been
conferred or who has been charged with such duty to commit or
omit to do any act in relation to such power
or duty; or
(ii) any
power has been conferred or who has been charged with any duty
by virtue of any employment or the holding of any
office or any
relationship of agency or any law and who committed or omitted
to do any act constituting any excess of
such power or any
neglect of such duty, with the intention to reward the person
upon whom such power has been conferred
or who has been charged
with such duty because he so acted; or
(b) .
. .
shall
be guilty of an offence.’
4
The
charge in terms of these subsections was that the corporate accused
involved in receiving and further transferring the money
for the
bribe knew that it was proceeds of unlawful activities.
5
Section
91(1) of the Constitution.
6
See
the sixth edition at 1150 to 1151.
7
At
492.
8
At
496.
9
At
496.
10
At
496.
11
1980
(3) SA 755 (A).
12
At
764B-C.
13
1956
(3) SA 604
(A).
14
At
622.
15
See
footnote 3.
16
The
section reads as follows:
‘
4. Any
person who knows or ought reasonably to have known that property is
or forms part of the proceeds of unlawful activities
and –
enters
into any agreement or engages in any arrangement or transaction
with anyone in connection with that property, whether such
agreement, arrangement or transaction is legally enforceable or
not; or
performs
any other act in connection with such property, whether it is
performed independently or in concert with any other person,
which
has or is likely to have the effect –
of
concealing or disguising the nature, source, location, disposition
or movement of the said property or the ownership thereof
or any
interest which anyone may have in respect thereof; or
[Para. (i) substituted
by s 6 of Act 24 of 1999.]
of
enabling or assisting any person who has committed or commits an
offence, whether in the Republic or elsewhere –
to
avoid prosecution; or
to
remove or diminish any property acquired directly, or indirectly,
as a result of the commission of an offence,
shall
be guilty of an offence.’
17
At
111.
18
At
118.
19
At
119.
20
At
494F-G.
21
S
v Ramavhale
1996 (1) SACR
639(A)
at 647d-e;
Makhatini v Road Accident Fund
2002 (1) SA
511
(SCA) para [21]-[22]; and
S v Ndhlovu and Others
2002 (2)
SACR 325
(SCA) para [14]-[15]. See also Zeffert, Paizes and Skeen
The South African Law of Evidence
p362 and Schmidt en
Rademeyer
Schmidt
Bewysreg
4 ed p474.
22
At
27D-E.
23
Section
35(3) of the Constitution.
24
S
v Ndhlovu and Others
2002 (2)
SACR 325
(SCA) para 24.
25
S
v Ramavhale
1996 (1) SACR 639
(A) at 647j;
S v Ndhlovu supra
.
26
At
649d-e.
27
See
Makhatini v Road Accident Fund
2002 (1) SA 511
(SCA) par 24.
28
S
v Ndhlovu supra
para 33.
29
The
section provides as follows:
’
34
(1) In any civil proceedings where direct oral evidence of a fact
would be admissible, any statement made by a person in a document
and tending to establish that fact shall on production of the
original document be admissible as evidence of that fact, provided
–
(a) the
person who made the statement either –
(i) had
personal knowledge of the matters dealt with in the statement; or
(ii) where
the document in question is or forms part of a record purporting to
be a continuous record, made the statement (in
so far as the matters
dealt with therein are not within his personal knowledge) in the
performance of a duty to record information
supplied to him by a
person who had or might reasonably have been supposed to have
personal knowledge of those matters; and
(b) the
person who made the statement is called as a witness in the
proceedings unless he is dead or unfit by reason of his bodily
or
mental condition to attend as a witness or is outside the Republic,
and it is not reasonably practicable to secure his attendance
or all
reasonable efforts to find him have been made without success.
(2) The
person presiding at the proceedings may, if having regard to all the
circumstances of the case he is satisfied that undue
delay or
expense would otherwise be caused, admit such a statement as is
referred to in subsection (1) as evidence in those proceedings
–
notwithstanding
that the person who made the statement is available but is not
called as a witness;
notwithstanding
that the original document is not produced, if in lieu thereof
there is produced a copy of the original document
or of the
material part thereof proved to be a true copy.
(3) Nothing
in this section shall render admissible as evidence any statement
made by a person interested at a time when proceedings
were pending
or anticipated involving a dispute as to any fact which the
statement might tend to establish.
(4) A
statement in a document shall not for the purposes of this section
be deemed to have been made by a person unless the document
or the
material part thereof was written, made or produced by him with his
own hand, or was signed or initialled by him or otherwise
recognized
by him in writing as one for the accuracy of which he is
responsible.
(5) For
the purpose of deciding whether or not a statement is admissible as
evidence by virtue of the provisions of this section,
any reasonable
inference may be drawn from the form or contents of the document in
which the statement is contained or from any
other circumstances,
and a certificate of a registered medical practitioner may be acted
upon in deciding whether or not a person
is fit to attend as a
witness.’
30
Under
cross-examination he retracted this evidence and said that he had
told Thétard why he needed the money.
31
See
para [61] above.
32
This
appears from the notice of appeal. The heads of argument contained
no submissions on this aspect nor did counsel for the appellants
address it before us.