Schabir Shaik -- R4 072 500
Schabir Shaik is one of the band of brothers that included ANC underground operatives Moe and Yunis -- who served under Jacob Zuma in ANC intelligence -- and younger sibling Chippy, who occupied the pivotal position of chief of defence acquisitions during the arms deal.
Prior to democracy, Shaik had been involved in the covert management of ANC funds, which gave him an introduction to the party’s then-treasurer, Thomas Nkobi.
After 1994, both Nkobi and Shaik were proponents of the Malaysian Bumiputera model, a concept that entailed the establishment of businesses aligned with a political party.
When Nkobi died in September 1994, Shaik found himself shut out by the ANC hierarchy.
In May 1995 Nkobi’s successor, Makhenkesi Stofile, wrote to Shaik telling him that, after a meeting with ANC officials, he was considered to “have no position within the ANC” and Stofile had been instructed to cut off communication.
The KPMG report notes: “It is during this time when the name of Zuma started surfacing in documents at our disposal … Shaik ceased to act on behalf of the ANC (in an official capacity) but continued his business dealings under the name of the Nkobi group, involving Zuma in various instances.”
It was then that Shaik also began to style himself variously as Zuma’s “financial adviser” and “economic adviser”. Zuma, fresh from exile and with a large and growing collection of dependants, was open to Shaik’s assistance.
The first payment to Zuma took place on October 25 1995 -- and the KPMG report traces how a pattern of mutual favours developed.
KPMG notes: “It is evident that Zuma … at various points, and especially with regard to the relationship of the Nkobi group with the Thomson group of companies, attended meetings and visits with representatives of the Nkobi group on issues that were of interest to the Nkobi group.”
With his brother Chippy heading defence acquisition, Shaik was well placed to benefit from the decision in the 1990s to re-equip the navy. Early on, he sought an alliance with the French defence conglomerate Thomson-CSF.
Thomson was also seeking access to and business from the new ANC elite.
The KPMG report sketches how cynically the French calculated their success, which they believed would be dependent on pleasing the politicians and choosing the “right” local partners.
And the abrasive Shaik was vulnerable. Parallel to its relationship with him, Thomson was wooing Reuel Khoza’s CNI group, perceived to be more favoured by Thabo Mbeki, then the deputy president.
Zuma was Shaik’s trump card and, as the report makes clear, he shamelessly used his proximity to Zuma to cajole or bully his way into deals.
Zuma’s key interventions came in July 1998 when he accompanied Shaik to a meeting in London with one of Thomson’s top executives to reassure the French of Shaik’s suitability -- and later in Durban, where he was present when the formal allocation to Nkobi of a shareholding in Thomson was confirmed.
In turn, Zuma was not shy about taking advantage of the financial resources Shaik provided (sometimes grudgingly, given his own precarious cash position).
By way of illustration: Zuma’s reliance on funding from Shaik grew from one payment of R3 500 in 1995 to 176 payments totalling R534 858 in 2004 and, finally, 61 payments totalling R819 333 in the first six months of 2005, ending just after Shaik’s conviction for bribery. The total over 10 years: R4 072 500.
By then, the real ambivalence of the Zuma-Shaik relationship had been captured in a way not even KPMG’s figures can match.
Shaik’s secretary testified that her boss had complained about “politicians”, exclaiming one day that he “has to carry a jar of Vaseline because he gets fucked all the time, but that’s okay because he gets what he wants and they get want they want”.
Nelson Mandela -- R1-million-plus
Jacob Zuma seems to have been identified fairly early on as a financial “problem child” by Nelson Mandela.
The KPMG report quotes from a 1998 internal Absa memo when the bank was considering taking on Zuma, then the ANC deputy president, as a client.
The memo referred to the supposed fact that Zuma had been disciplined by Mandela and then-ANC treasurer Mendi Msimang over the conduct of his financial affairs. It also stated that Mandela had apparently agreed to settle Zuma’s debts -- “this info to be handled strictly confidential”.
“The source of the payment could not be disclosed to us at this stage. The amount to be paid will be R1.5-million,” the Absa memo said.
However, no funding appears to have been received from Mandela until October 2000, when the then retired president endorsed a R2-million cheque to Zuma.
R1-million of that was destined as a donation to the charitable education trust Zuma had founded and was duly paid over by Zuma.
Whether the other R1-million was intended for Zuma’s personal benefit is unclear.
Zuma issued a cheque for R1-million to an account in the name of the Development Africa Trust that had been opened by Durban businessperson Vivian Reddy.
As the Shaik trial revealed, around this time Reddy became involved in funding Zuma’s Nkandla estate development.
But Shaik, who controlled Zuma’s accounts, stopped the payment to Development Africa, instead using Mandela’s money to plug holes in his own company accounts.
Shaik eventually repaid R900 000 to Development Africa -- partly using R250 000 that was found to have been paid in terms of the “bribe agreement” allegedly reached between Shaik, French arms company Thomson-CSF and Zuma. (See “Of battleships and Nkandla”
Shaik completed the repayment with a R400 000 cheque to Development Africa on June 23 2005.
It was striking for two reasons:
- There was an outflow only days later of the same amount of R400 000 from Development Africa to the International Convention Centre in Durban, where it was accepted as payment on behalf of Zulu King Goodwill Zwelithini for his daughter’s wedding -- tending to confirm allegations that Development Africa was used at least in part as a slush fund to buy the king’s favour for the ANC; and
- On the same day, June 23 2005, a new R1-million cheque from Mandela was deposited into Zuma’s Absa cheque account, wiping out his known overdrafts, which stood at more than R400 000 at the end of the previous year. At least from this Mandela million, it appears, Zuma could benefit personally.
The new R1-million from Mandela came only nine days after then-president Mbeki had dismissed Zuma as his deputy following Shaik’s corruption conviction.
Jurgen Kögl -- R1 075 091
An enigmatic broker and investor originally from Namibia, Jurgen Kögl has counted a number of politicians as close friends.
They included Mbeki, who stayed in his Hillbrow flat after returning from exile, and Frederik van Zyl Slabbert, the former opposition leader.
Like Shaik, Kögl has been described as a “financial adviser” to Zuma.
In a 2003 interview with the Mail & Guardian
, he justified sponsoring politicians, saying: “There is nothing sinister about these relationships. What happens is that you provide support and find ways of making sure these guys are able to get on with negotiations or with governing the country.”
The KPMG report identifies Kögl’s investment management company, Cay Nominees, as the source of about a dozen payments totalling R1 075 091 to, or on behalf of, Zuma.
The single biggest payment -- R600 000 into the bond account of a Killarney, Johannesburg, flat owned by Zuma -- raised much interest from KPMG and Scorpions investigators, who appear to have suspected it was disguised bribe money from French arms company Thomson-CSF.
The Kögl payments include:
- May 5 1995: R40 000 deposit for Zuma’s R426 500 purchase of the Killarney flat (which appears to have been subsequently occupied by his wife Kate, who committed suicide in December 2000, and their children);
- February 22 and March 5 1999: Two payments of R20 000 each to a Zuma account with Mercedes-Benz Finance for a Mercedes-Benz E-Class 230. Zuma had been in arrears since buying the vehicle the year before and Mercedes had issued a summons;
- June 9 1999: R40 000 to a Zuma cheque account;
- June 17 1999: R50 000 to Zuma’s bond account for the Killarney flat. This is the day after Zuma was inaugurated as deputy president. The bond account had been habitually in arrears since at least 1997, towards the end of which Standard Bank obtained a debt judgment and nearly sold the flat in execution;
- August 15 2001: R183 000 to Zuma’s account for the Mercedes E230. This was to settle the account in full after it had again fallen into serious arrears following Kögl’s February and March 1999 bailouts; and
- August 23 2001: R600 000 to Zuma’s bond account for the Killarney flat. This was to pay the bulk of the outstanding amount after Zuma had made no further payments since Kögl’s June 1999 bailout.
KPMG presents a trail appearing to show that the payments of R183 000 and R600 000 flowed from a R1.19-million transfer to Kögl’s Cay Nominees from a client account at a British law firm.
The audit firm speculates that the payment might have been “another structure for transferring funds” from Thomson-CSF after only the first R250 000 tranche of the R500 000-a-year French bribe had reached Shaik through a sham “service provider” contract six months earlier.
The Scorpions appear to have abandoned attempts to force disclosure of the money’s source in London when Kögl and Zuma went to court to stop them in 2007.
When the parliamentary ethics committee investigated Zuma in 2003 for allegedly not declaring benefits, Kögl and Zuma claimed to the committee that the R656 000 known by then to have passed from the former to the latter was an interest-bearing loan repayable after 10 years.
KPMG states: “We could not identify any loan agreement between Zuma and Cay Nominees.”
Julie Mahomed -- R431 000
Julekha “Julie” Mahomed was Zuma’s lawyer. It was she who testified in Shaik’s trial about his payments to Zuma being covered by an interest-bearing “revolving loan agreement”.
The KPMG report reveals that among the documents the Scorpions had seized was one that suggested someone was considering using Mahomed’s trust account to transfer money from France.
A hand-drawn diagram on the back of an unrelated October 2000 account from the University of Zululand reflected the following plan: “R1m from Paris to Mauritius. From Mauritius to A Moodley Trust a/c and then to Juli’s Trust a/c.”
Anand Moodley was Shaik’s attorney and, KPMG says, it is possible that “Juli” referred to Mahomed.
On July 12 2004 Zuma issued a cheque in favour of his Nkandla builder, Eric Malengret, for R120 000.
KPMG reveals that a credit transfer of R120 000 was made into Zuma’s account the same day. The funds originated from the J Mahomed Attorneys trust account. The source of the funds is unknown.
On August 12 2004 Zuma issued a cheque in favour of Malengret for R30 000.
Two credits, totalling R30 000, were transferred into Zuma’s account the same day, R20 000 from Mahomed’s firm’s trust account and R10 000 from its business account.
The sources of the funds are unknown, says KPMG.
It appears that Zuma may also have benefited -- through Mahomed’s trust account -- from another arms deal company, Ferrostaal, which led the consortium that won the submarine contract.
On July 6 2005, a R281 000 cheque, drawn on her trust account, was deposited into a Wesbank account to make up Zuma’s arrear payments on a Mitsubishi Pajero 4x4.
According to KPMG, it appears the funds came to Mahomed through three similar deposits into another of her accounts, two of which bore the reference “Ferroman”.
Ferroman was a local Ferrostaal subsidiary with a black economic empowerment component.
Mahomed herself was a director of Ferroman, which was intended to be a vehicle for pursuing Ferrostaal’s offset obligations arising out of the submarine deal.
Vivian Reddy -- R324 110
Durban businessperson Vivian Reddy appears to have become involved in funding Zuma’s Nkandla development when financial pressures made it difficult for Shaik’s companies to pay.
On November 3 2000, Reddy lent R50 000 to Zuma’s builder, Eric Malengret.
KPMG notes: “We understand that Reddy indicated that the funds had been advanced to Malengret as a result of cashflow problems Malengret experienced due to the development for Zuma and due to Zuma’s tardiness in reimbursing him for work completed.”
Reddy later also stepped in to assist Zuma with arranging a home loan from First National Bank.
According to KPMG, Zuma applied to FNB for a home loan on June 7 2002 in the amount of R650 000. “V Reddy” was indicated as having accepted responsibility to pay the monthly instalments.
A fortnight later, Reddy also signed a suretyship, binding himself for up to R400 000 should Zuma default.
FNB confirmed to Reddy on December 12 that the bond over the property had been registered in the amount of R900 000.
The loan was repayable over 20 years at R12 117 a month -- and it was noted that the debit order would be raised against Reddy’s cheque account.
KPMG found Reddy serviced the bond account until May 25 2005, when Zuma took over the payments. The value of the payments until then was R274 110.
On April 8 2006, the outstanding balance on the bond was R854 229.
Zuma did attempt to begin to repay Reddy in 2004 -- but he needed help (See Khulubuse Zuma below).
Reddy has said publicly that he has been repaid in full.
In response to the Nkandla public works scandal, Zuma recently told Parliament: “I engaged the banks and I am still paying a bond on the first phase of my home.”
It seems likely that the president was referring to the loan from FNB.
Khulubuse Zuma — R180 000
On October 30 2004, Jacob Zuma issued a cheque in favour of Reddy for R164 500 to repay the latter for servicing Zuma’s bond repayments on the Nkandla development.
The bank returned the cheque as unpaid, because Zuma’s account was already R163 170 in the red.
In February 2005, KPMG’s report says, Zuma’s now controversial businessperson nephew came to his aid.
Zuma’s cheque account revealed a R180 000 deposit on February 26 2005 with the reference “Khulubuse”.
“Before this deposit,” KPMG says, “Zuma’s account indicated an overdraft balance of R91 704. The deposit slip indicates that a cheque in the name of KC Zuma was deposited. We understand that the cheque was drawn on the account of Khulubuse Clive Zuma.”
Thereafter, Zuma issued seven post-dated cheques to Reddy, totalling R180 000.
Khulubuse’s ventures into big business -- especially his involvement in Aurora Empowerment Systems’ disastrous takeover of gold mines on the Rand -- have been controversial.
His early support for Zuma begs the question whether this past financial relationship generated any degree of presidential access or protection.
Nora Fakude-Nkuna --
When Parliament’s ethics committee investigated Zuma’s alleged non-declaration of interests in 2003, it was presented with evidence that Bohlabela Wheels, the company of Nelspruit businessperson Nora Fakude-Nkuna, a longtime friend of Zuma, had paid the architects’ fees for the then deputy president’s Nkandla estate.
The invoice for R34 200 was dated March 2000.
In reply, Zuma and his nephew Kusa Raymond Zuma, who worked for Bohlabelo Wheels, said Kusa was responsible for the payment and had organised it with Fakude-Nkuna without Zuma’s knowledge.
KPMG shows further payments:
- August 14 2000: “KR Zuma” deposits R100 000 into the account of Zuma’s Nkandla builder, Malengret. But the deposit comprises two cheques drawn on Bohlabela Wheels and one from Fakude-Nkuna.
- October 4 2000: “KR Zuma” makes another cheque deposit of R40 000 and the details reflected in the deposit slip indicate that the drawer’s name was Bohlabela Wheels.
Replying to questions on these payments in the 2003 Parliamentary investigation, Zuma “indicated that there was a verbal agreement between him and Fukude and that it was not an interest-free loan”, says KPMG.* Got a tip-off for us about this story? Email [email protected]
The M&G Centre for Investigative Journalism, a non-profit initiative to develop investigative journalism in the public interest, produced this story. All views are ours. See www.amabhungane.co.za for all our stories, activities and sources of funding.