Deputy president's adviser guilty of fraud and corruption

The man known as the African National Congress banker during the struggle against apartheid was convicted today in a corruption scandal likely to affect the political future of his close friend Deputy President Jacob Zuma, who had his eyes set on the top job in 2009.

His voice frequently faltering under the strain of reading a 165-page verdict over three days, Judge Hillary Squires found Schabir Shaik guilty of two counts of corruption and one count of fraud. His verdict portrayed Zuma, who had not been charged, as an active participant in the shady dealings. In an unprecedented move, the verdict was broadcast live on national television.

The National Prosecuting Authority indicated it was considering opening a new probe against Zuma on the basis of the verdict, which found “overwhelming” evidence of a corrupt relationship between Zuma and Shaik.

“I walk in the light of my Lord. I am innocent,” said a defiant but stunned Shaik as he was released on bail pending sentencing due to start tomorrow in the High Court in the coastal city of Durban.

The government issued a cautious statement noting that Zuma had not been on trial and saying the process proved ”the maturity of our democracy.” But there were immediate demands for Zuma’s resignation from opposition parties.

“This verdict will undoubtedly hang like a dark cloud over the deputy president, and, sadly, will damage South Africa’s standing in the international community,” said Mangosuthu Buthelezi, whose Inkatha Freedom Party has vied with the ANC.

“One is mindful that the shadow of corruption looms over public life in South Africa, and that this verdict will serve to reinforce that perception,” said Buthelezi, a political veteran who hails from the same province as Zuma.

The case was one in a series of corruption scandals dogging South Africa’s government.

The main opposition party, the Democratic Alliance, tabled a motion of no-confidence, demanding the resignation of the beleaguered deputy president, who was on official business in Zambia. Other parties also demanded that he quit.

Zuma’s office issued a terse statement: “Deputy President Jacob Zuma has noted the judgment .... He will study the contents before making any detailed comments.”

Zuma has long been groomed by the ANC as successor to Thabo Mbeki, who completes his second and final term in office in 2009. The 63-year-old retains huge popularity among voters and the trade union movement. But he is now likely to be regarded as a political embarrassment by pragmatists within the government who want to protect South Africa’s image as a safe and reliable haven for foreign investment.

Squires ruled that payments amounting to some 1.2 million rand (£95,000) to Zuma over a number of years violated corruption laws and were not loans – as Shaik had claimed – to help Zuma and his extended family meet their high housing, education, transport and clothing expenses after they returned from political exile to South Africa in the early 1990s. He described Shaik as Zuma’s “long-time friend, former comrade-in-arms and present benefactor.”

The judge said Zuma was aware of Shaik’s efforts to facilitate a 500,000 rand (£39,000) a year payment to the deputy president from French arms trading company Thint Holdings – formerly Thomson CSF – to deflect corruption investigations related to a massive 1999 arms deal to buy ships, submarines, helicopters, jets and other arms from European and South African firms.

Squires said that Thomson made at least one payment – at a time when Zuma was struggling with the cost of building himself a luxury home. He dismissed claims by Shaik, who initially said that the money was destined for an educational trust for deprived children run by Zuma, and subsequently tried to argue that the payment from Thomson was made without the knowledge of Zuma. Squires said that on at least one occasion Zuma met with the Thomson’s head of South African operations, Alain Thetard.

“The evidence made it clear that all the parties knew what was discussed and concluded,” said Squires, who was brought out of retirement to handle the case.

The judgment was much harder on Zuma than most people had expected.

“It’s explosive for the Deputy President,” said constitutional law expert Pierre de Vos. He said there would be strong pressure on the NPA to prosecute Zuma, at least on the count of corruption involving Thomson.

“On the evidence of the findings, the facts are there to convict him,” said de Vos, who sat on a panel on e.tv, the television company that had forced the court to allow cameras inside for live coverage.

The former director of public prosecutions Bulelani Ngcuka tried to launch a probe against Zuma after the corruption allegations emerged. In August 2003 he announced there was evidence against Zuma, but he would not be prosecuted as the case was not considered winnable. In a mud-slinging contest, Ngcuka was accused - and later cleared – of being an apartheid-era spy. He resigned last July.