German arms firm paid Zuma

2012-12-09 10:00

Leaked audit report links president to further payments – from another big arms deal beneficiary

A leaked forensic report has for the first time linked President Jacob Zuma to another arms deal beneficiary: German industrial conglomerate MAN Ferrostaal (now called Ferrostaal).

The company was the leading partner in the German consortium that South Africa awarded an R8 billion contract to build three submarines.

A forensic audit report by KPMG into the president’s financial affairs reveals that MAN Ferrostaal paid at least R230 000 for Zuma’s benefit.

This raises new questions about Zuma’s role and influence in the controversial R70 billion arms transaction.

He had previously been linked to a R500 000 per year bribe from French arms company Thales, which was awarded the R1.3 billion tender to provide technology to the navy’s four new corvette ships.

Judge Hilary Squires found that part of the Thales money paid for the initial construction of Zuma’s Nkandla compound.

On Friday, the Mail & Guardian published the full, previously unreleased KPMG report, dated 2006, on its website.

The report is broadly based on the case that sunk Schabir Shaik, Zuma’s former financial adviser, but contains updated details about Zuma’s income and expenditure.

The most controversial revelations in the report are the MAN Ferrostaal payments and a R1 million deposit former president Nelson Mandela made into Zuma’s account shortly after Zuma was fired as deputy president in 2005.

The audit, done for the shelved corruption charges against him, details the chaotic state of Zuma’s personal finances and includes revelations about R230 280 paid by Ferrostaal, ostensibly to finance a Mitsubishi

Pajero 4x4 for Zuma’s children’s trust.

At the time, the lease account for the 4x4 was hopelessly in arrears.

The audit details two payments of R115 140 each, made on May 4 2005 and July 5 2005, respectively, to a company called South to South (Pty) Ltd, of which Zuma’s attorney at the time, Julie Mahomed, was the sole director.

The payment references for the deposits were “DEP Ferroman”.

Another payment of R115 140 was made by an “F Patel” in June of that year.

Then, on July 6 2005, Mahomed paid R281 000 from her law firm’s trust account into the Wesbank loan account for the Pajero.

Six days before, R300 000 had been transferred from South to South into her trust account.

The forensic auditors established a link between MAN Ferrostaal and South to South on the basis of another payment of almost R17 000 in May 2005.

The payment was made by South to South, for which the bank reference was “Rental Cradock Heights” in Rosebank, Joburg, the location of Man Ferrostaal’s offices at the time.

The forensic auditors note that debt for the Pajero had only been sporadically furnished since the vehicle was purchased in 2002, with one payment of R47 259 by Shaik’s company Kobitech in 2001 and R110 000 by Zuma between 2003 and 2004 under an agreement with Wesbank.

The auditors further noted that Wesbank had entered into the lease for the Pajero despite the bank indicating that Zuma’s conduct on a previous loan agreement with the bank – concluded shortly before – had been “bad”.

Mahomed commented that the report was “confidential” and the use thereof “highly questionable”.

She added: “As noted, the transactions date back to 2005 and it is impossible for me to comment in any detail

at such short notice.

“However, I am able to state that every transaction referred to was legitimate.”

City Press also sent detailed questions to Ferrostaal and Zuma’s spokesperson Mac Maharaj, but neither responded with comment.

Last year, Ferrostaal’s new management commissioned international law firm Debevoise & Plimpton (D&P) to conduct an investigation into allegations of bribery by the company to win international weapons deals.

The Mail & Guardian reported that D&P found more than $40 million was paid to agents in South Africa to influence the submarine deal.

Ferrostaal’s main agents in South Africa were Tony Georgiadis, an associate of former presidents FW de Klerk and Thabo Mbeki (De Klerk married Georgiadis’ ex-wife), and defence industry executive Tony Ellingford.

They paid for Zumaville:

» Nora Fakude-Nkuna

Mpumalanga transport tycoon Fakude-Nkuna commissioned construction drawings to be made of the original Nkandla development in 2000. She paid an architect R34 200.

She and her Bohlabela Wheels company contributed a further R140 000 to the construction of the project.

» Unknown cash contribution

The KPMG forensic audits into President Jacob Zuma and his former financial adviser Schabir Shaik identified a R50 000 cash deposit to pay for the initial phase of the Nkandla development.

» Vivian Reddy

The KwaZulu-Natal electricity and casino mogul played a key role in funding the first phase of Zuma’s homestead.

When First National Bank approved a home loan of R900 000 for the building, they called Reddy “a wealthy businessman (who) handles the financial affairs of Zuma”.

Reddy made repayments worth R274 110 before Zuma started servicing the loan.

» Schabir Shaik

The Durban High Court accepted that part of the bribe Shaik negotiated for Zuma from French arms firm Thales was used to repay Reddy.

R250 000 was transferred from the arms company to Kobitech, one of Shaik’s companies, and from him to Development Africa, a trust linked to Reddy.

» Khulubuse Zuma

KPMG found that Zuma received R180 000 from his controversial nephew (whose father is Zuma’s brother Michael) to repay Reddy.

» Public Works

According to official documents in the possession of City Press, the public works department has spent R248 million on so-called security upgrades at Zuma’s Nxamalala compound.

Public Works Minister Thulas Nxesi has asked for time to complete an investigation into the spending, while adding that the department was overcharged. The Auditor-General and Public Protector are also probing the expenditure.

Nxesi’s claim that it was only for security upgrades is undermined by proof that the state also paid for a clinic, a tuckshop for guards, a cattle culvert and electrical equipment for Zuma’s brothers’ houses.

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