By Charles Phahlane & Veven Bisetty
Vivian Reddy, one of Durban's wealthiest businessmen and a friend of several top politicians, has been drawn into the net of investigations by the Scorpions into the Jacob Zuma affair.
The investigation involves the alleged use of part of a R1-million bribe from the French arms company Thales to pay for the deputy president's home at Nkandla in KwaZulu-Natal.
This emerged from a charge sheet in relation to the state's case against Zuma's personal financial adviser, Schabir Shaik. The state says part of the bribe was laundered through the use of simulated transactions between Shaik, Thales (formerly Thompson CSF), the Nkobi group of companies, Development Africa through its controller Vathasallum (Vivian) Reddy, and Eric Malengret and his construction company.
From the court papers it is alleged Reddy stood surety for Zuma when the deputy president was unable to meet the debts incurred by building his traditional village at Nkandla.
Reddy said on Monday that he was "appalled and shocked" to be linked to the Scorpions innuendoes of "sinister business transactions". He said his business dealings with Zuma, whom he described as "a very close family friend", were strictly formal.
"The R100 000 loan on behalf of Zuma was a formal agreement between two very close friends. Zuma even signed an acknowledgement of debt. The Scorpions have a copy of this agreement. I find it very strange that they now feel fit to link this to something sinister," said Reddy.
Asked whether he was the subject of an investigation by the Scorpions, Reddy said this was not so but he had had meetings with them recently revolving around Zuma.
"The deputy president is a family friend, his family stays over at my place; we meet for birthday functions - surely there is nothing wrong with this?" he said.
"I am surprised that what transpired between friends is now put in the public eye by the Scorpions; they are behaving like the apartheid security forces. This concerns me greatly," Reddy said.
The state says Zuma, Shaik and Thales director Alain Thétard agreed on March 11, 2000 that in terms of the bribe of R500 000 per annum, Zuma was now owed R1-million. Shaik's company, Nkobi Holdings, entered into a "service provider agreement" with Thales in Mauritius. Nkobi's annual fee charged to Thales for this agreement was R500 000. Two further handwritten figures of R250 000 were added, bringing the total to R1-million - an amount similar to the bribe. Nkobi did little "service provision" to justify the R1-million fee.
The amounts did not arrive as promised at the end of 2000 and Shaik wrote to Thétard saying he should expedite their arrangement as soon as possible "as matters are becoming extremely urgent with my client".
This was at the time that Zuma was experiencing difficulties paying for the construction of his residence at Nkandla. The development cost R1,3-million and Malengret's construction company was the developer. Development started in July 2000 and was completed in April 2001.
On October 19, 2000 Shaik, as Zuma's financial adviser, instructed Malengret to stop construction. But Zuma requested Malengret not to stop the development as he was arranging a bond. At the time, the actual costs incurred amounted to about R200 000. About R700 000 in expenses were incurred subsequently without any payments being made.
On October 31 and November 3 of 2000, Reddy made two payments of R50 000 to Malengret's company. The one payment was from one of his companies, Edison Health (Pty) Ltd, and the other from his personal account.
Malengret's company reflects the payments as "Receipt JZ" and they are treated as a long-term loan account. The bulk of the outstanding amount of R900 000 was settled by means of a bank loan from FNB.
Reddy facilitated the bank loan by signing surety of R400 000.
Reddy signed a debit order where he paid instalments of R12 117,11 from an account in his own name. He has thus far paid an amount of R100 000 and has been servicing the bond since January this year.
From February this year, Zuma still owed Malengret R250 000. In an acknowledgement of indebtedness to Malengret, Zuma had to pay monthly instalments of R10 000 starting from March 2003.
On November 7, 2000 Reddy opened a bank account for his Development Africa Trust. The trust was not registered as a fundraising institution, and was not registered for tax purposes. Reddy is the founder and sole trustee of the trust.
On December 4, 2000 Zuma drew a cheque of R1-million to pay Development Africa but the cheque bounced. This was at the time that Shaik wrote the letter to Thétard saying matters were "extremely urgent".
On February 16, 2001 R250 000 was transferred from Thales International Africa-Mauritius to Kobitech.
Within eight days, Nkobi issued a cheque for R250 000 in favour of Development Africa. Nkobi also issued three post-dated cheques for R250 000, made payable to Development Africa.
"This indicates that Nkobi intended to pay Development Africa R1-million, which is an amount equivalent to the R1-million cheque that Zuma issued to Development Africa, and which bounced. It is also an amount equivalent to the bribe agreed to between Zuma, Thomson and (Shaik)," the charge sheet says.
But the Nkobi financial accountant sent a letter to ABSA requesting them to stop payments on the three postdated cheques. Subsequently in September Shaik received a R175 000 cheque from Kobitech. He then made two separate payments of R125 000 to Development Africa.
In his reaction to the Scorpions' claims that the Trust was not registered, Reddy said this was not true. "We have five trustees. Everything is above board. I do not know where they get this from. The Scorpions have copies of bank statements and of how the trust operated," he said.