Reckless spending and spiralling debt
“DOES he think money grows on trees?” exclaimed an irate Schabir Shaik.
Jacob Zuma’s reckless relationship with money led to this outburst of indignation almost 14 years ago in a conversation between his “financial adviser” and a contractor hired to upgrade the then deputy president’s modest homestead at Nkandla.
It is a question that refuses to go away.
Zuma’s financial history is illuminating. It could be a movie script about a rising political star whose living expenses were bankrolled by a businessman in exchange for political influence.
Shaik paid the bills for a decade — everything from a R10 car wash, school fees, overseas travel and traffic fines to outstanding party levies, rent and even the children’s pocket money.
Zuma said two days before this week’s elections that there was nothing untoward about a R246-million taxpayerfunded security upgrade at Nkandla.
“My homes were burnt in Nkandla. Criminals broke in and raped my wife. I was an MEC at the time. Those who say I don’t need security — it’s not like we were dealing with a normal situation . . . I don’t think there is anything abnormal,” he said.
A rare and eye-opening look at Zuma’s personal finances was contained in a draft KPMG forensic audit report, previously published by the Mail & Guardian and Sunday Times. The document, part of a detailed financial probe in 2006 after Shaik was convicted of fraud and corruption, laid bare details of how Zuma lived beyond his means, spending recklessly as his debts spiralled out of control.
“Zuma, in his personal capacity, did not have access to sufficient funds solely from his position as an official employed by the South African government to fund his lifestyle and, as a consequence, had to rely on funds from external sources,” said the 490-page report.
Zuma became MEC for economic affairs and tourism in KwaZulu-Natal in 1994. Since then, various people have funded his lifestyle. According to the report, until 2005 this amounted to R7-million. One of these payments was a R1-million cheque from Nelson Mandela after Thabo Mbeki removed Zuma as deputy president on June 14 2005 under a cloud of arms deal corruption.
Zuma was commander of an underground unit during the struggle that included Shaik’s brothers, Yunis and Moe. On his return from exile, he became close to Schabir, who set up Nkobi Holdings.
Shaik effectively “owned” Zuma for the best part of a decade through 783 separate payments totalling more than R4-million. There was scant evidence of loan agreements. Bank statements and records showed that the payments ranged from R18 000 for designer clothing one month at Casanova boutique in Durban to settling a R150 traffic fine.
Zuma’s financial woes started with a letter of demand from Standard Bank on January 31 1995 as he fell into arrears on a R1 570 monthly bond payment for a flat in Berea, Durban. Several letters and summonses followed as the R80 000 bond gathered interest. It was eventually settled with three lump-sum payments from donors — one of them untraceable — in 2000.
Yet bank records indicate that a general spiral of debt continued. KPMG noted that Zuma’s known bank accounts were in overdraft totalling R421 247 on December 31 2004. A few months later, Standard Bank wrote off R200 000 in debt related to a bond on another property.
Nkandla also caused financial strain for Zuma. Building contractor Eric Malengret — who was later to witness the outburst by Shaik — was instructed to give the property a makeover worth R1.3-million in 2000.
The KPMG report revealed that this first phase was funded by R14 000 from donors, a mysterious R50 000 cash deposit, R250 000 from a company involved in the arms deal and a R900 000 bond that Zuma raised with help from Durban business mogul Vivian Reddy.
Despite prosecutors claiming to have a strong case against Zuma — who was paid in exchange for promoting Shaik’s business empire — the National Prosecuting Authority eventually abandoned his prosecution in 2009, citing political interference in the form of the so-called spy tapes.
Shaik was sentenced to an effective 15 years for fraud and corruption — related to bankrolling Zuma and for soliciting a bribe from a French arms company — by Judge Hilary Squires in 2005. He was jailed after unsuccessful appeals and released on medical parole on March 3 2009 following doctors claims that he had a life-threatening illness.
Zuma was elected president a few weeks after the NPA abandoned his prosecution.
Despite side-stepping the financial controversy and allegations of an arms deal bribe, Zuma is still under pressure to disclose details of the bond he obtained for Nkandla. He told parliament in November 2012: “I engaged the banks and am still paying a bond on the first phase of my home.”
Yet, he refused to give public protector Thuli Madonsela a copy of the document and denied claims that he may have misled parliament.
Although maintaining that he did not ask for the expensive security upgrades at Nkandla, it appears that others, such as his architect, Minenhle Makhanya, and government officials will shoulder the blame.
Zuma’s annual salary is R2.6-million.