16 December 2007

Biosis Shmiosis

The judgement of the Supreme Court of Appeal (SCA) in the matter of the conviction of Schabir Shaik was delivered on 6 November 2007.

Judge Hilary Squires (pictured, right, with Schabir Shaik, inset) had delivered his verdict 17 months earlier, at the end of May, 2005.

The “central finding” of Squires’ judgement, upheld by the SCA, was that Shaik made payments to Jacob Zuma with the intention of influencing Zuma to perform his duties "in a way that would be of advantage to Shaik's commercial interests".

The Supreme Court of Appeal wrote in its judgement:

“Between 1996 and 2002 Shaik and Mr Jacob Zuma engaged in what the trial court appropriately called ‘a generally corrupt relationship’ which involved frequent payments by Shaik to or on behalf of Zuma and a reciprocation by Zuma in the form of the bringing to bear of political influence on behalf of Shaik’s business interests when requested to do so.”

On 11 November 2007, after the SCA had delivered its verdict, the Business Day “Weekender” newspaper
published a letter from the original court judge, Hilary Squires. It was posted to the web on 13 November 2007. Part of Squires’ letter reads as follows:

“The only question in that trial was Shaik’s own state of mind when he made the admitted payments to, or on behalf of, Jacob Zuma, namely, whether by doing so, he intended to influence the recipient in the exercise of his official duties. Jacob Zuma’s state of mind when he received these benefits was never an issue, nor was any finding made about it. There was no need for any conclusion regarding the state of affairs between them, nor was one made.

”To the best of my recollection the phrase in question [“a generally corrupt relationship”] was used by the prosecutor in one of his pictorial presentations as part of his argument at the end of the trial. It was put into quotation marks by some sub-editor in a report covering the State’s case, and has been mindlessly parroted ever since as a finding by the Court by many of the journalists who have felt the need to write about the ongoing saga.

”Unless you can indicate to the contrary, please note that I did not make the statement and it should therefore not be attributed to me. I have long since advised your Editor of this but he has clearly not disseminated the correction to his staff.”

In a subsequent statement posted on the Business Day web site on 14 November 2007, the SCA stated (in part):

"(iii) The trial court found in the context of the corruption charges that the evidence established a 'mutually beneficial symbiosis' between Mr Shaik and Mr Zuma.

"The trial court stated the following: 'It would be flying in the face of common sense and ordinary human nature to think that he (Shaik) did not realise the advantages to him of continuing to enjoy Zuma’s goodwill to an even greater extent than before 1997; and even if nothing was ever said between them to establish the mutually beneficial symbiosis that the evidence shows existed, the circumstances of the commencement and the sustained continuation thereafter of these payments, can only have generated a sense of obligation in the recipient.

‘If Zuma could not repay money, how else could he do so than by providing the help of his name and political office as and when it was asked, particularly in the field of government contracted work, which is what Shaik was hoping to benefit from. And Shaik must have foreseen and, by inference, did foresee that if he made these payments, Zuma would respond in that way. The conclusion that he realised this, even if only after he started the dependency of Zuma upon his contributions, seems to us to be irresistible.' — See judgment of the court, trial transcript, page 6556.

"(iv) The SCA considered these findings to be central to the conclusion of the trial court on count 1 — see paragraph (33) of the SCA judgment. The quoted words, incorrectly and regrettably ascribed to the trial judge, are consistent with the passage quoted above and appropriately summarise what the SCA found.

"(v) The trial court’s view of the “symbiosis” between Mr Zuma and Mr Shaik was confirmed by the SCA in various parts of its judgment, which ultimately conveyed that on the evidence in this case an overall corrupt relationship existed."

What is at stake?

What is the problem here? Why are these judges playing mind-games and word-games with and against each other?

First, let us not forget that a middle-aged married father, Schabir Shaik, is incarcerated under a 15-year sentence and has had approximately R33 million confiscated from him.

But further than that, the whole basis upon which a distinction is made between what is normal and what is criminal in a capitalist society is being argued here, although argued in code, as it seems.

More particularly, the basis upon which legitimate business interests are allowed to further those interests through representative politics is being delimited, and more narrowly still, the basis upon which donations to politicians may be made, or otherwise held to be corrupt and penalised.

Perhaps above all, state agencies are intervening in a way that is timed and calculated to affect the electoral prospects of one individual, Jacob Zuma, and therefore to affect the outcome of political processes involving huge numbers of South Africans, currently culminating in the largest festival of democracy that the country has ever seen, in Polokwane, Limpopo Province, at the 52nd National Conference of the ANC.

We could place even more emphasis on all of this and say that the country’s freedom is at issue once again. The courts, the state’s investigative agencies, the political process and the constitution itself are all being corrupted in the attempt to construct a bogus “corruption” framework around Jacob Zuma.

There are other aspects to the original Shaik case which are of interest in other ways, but here we are considering what has been referred to as the “central finding” of the case, only.

Announcement on 14 December 2007

On Friday, 14 December 2007 on the last working day prior to the 52nd ANC National Conference, at which Jacob Zuma is to contest the Presidency of that organisation, in a vote commencing on Sunday, 16 November, documents from the National Prosecutions Authority (NPA) Directorate of Special Operations (DSO, or Scorpions; see the picture on the right of their chief, Leonard McCarthy) were “lodged” with the Constitutional Court. This “lodging” was announced to the mass media and played as the first item on the state broadcaster’s (SABC) television News, and widely splashed in the print media the following morning. The
report in the Weekender is here.

The essence of these “papers” as announced on these newspaper reports, is to reiterate the “central finding” of the Shaik judgement. It spite of the headlines that speak of “damning new evidence”, there is no qualitatively new matter at issue here, but only an extrapolation of the same scheme of argument with marginally more, allegedly new evidence of the same general kind. This point will be examined in more detail below.

The implication is clear that there is an intention to charge and try Jacob Zuma for corruption on the same basis that the convicted person, Shaik, was tried, in the “central finding” of that trial. (The new allegations of tax evasion would only arise in the wake of a successful finding on the facts of the case. These tax allegations are secondary and derivative of, and irrelevant to the “central finding”).

The shape of the Shaik prosecution argument and judicial conviction

The way that the Shaik case was constructed by the prosecution under Downer and judged upon by Squires is so surprising and contrary to popular understandings of justice that it encourages people, consciously or unconsciously, to supply reasons for what has happened, reasons that do not exist.

The understanding that people have of corruption, or more particularly of bribery, is that the corrupter pays the corruptee for an illegitimate favour. An example would be handing one’s ID to a police officer at a roadblock with a R100 note tucked into it, in the expectation that the officer will take the R100 and let you off from a speeding fine or whatever it may be. As in a contract, it would be have to be demonstrated that the money was given in exchange for the favour, or as it is put in contract law, for “consideration”.

In the Shaik case there was no attempt to link any particular payment with any particular favour. This is unique. It is therefore new law, made by Squires.

It is not unusual for judges to make new law. That is what books of “precedents” are all about. Each precedent is a new piece of law made by a judge in a court, which other judges afterwards follow.

What is unusual, or even outrageous, in this case is the enormous leap that the judgement makes, the vast change in the law that it creates, and that Judge Squires at the same time made no attempt to underline or point out the new law that he had made. The coy way that he approached the Business Day, so many months later, with his sideways acknowledgement of what he had done, is a clear indication that he intended to “smuggle” this new law in, under cover of the ballyhoo around Jacob Zuma.

The matter of the phrase “generally corrupt relationship” is not an example of a mistake or of bad journalism, as the judge encourages us to think. The phrase goes to the heart of the matter, and whatever Squires may say or not say, it did arise within his court and he watched while it ran its course for nearly 17 months. Not for nothing did the cartoonist Zapiro compare him to Rip van Winkle, waking up to find devastation all around him. But Zapiro was wrong, because Squires was awake all that time.

Squires’ denial is disingenuous, anyway. The term “symbiosis” that he used is even more contentious. It is borrowed from science and has no standing in law at all. Yet it is intended to mean exactly what “generally corrupt relationship” means. The Judge is playing a shell game, switching words, and hoping we will lose sight of the meaning. This judge is a legal hooligan, cynically and wickedly wrecking and smashing the law, and keeping silent as people get hurt as a consequence of his actions. Squires has done far worse than Schabir Shaik ever did.

However, it was the miserable prosecutor Downer (pictured, right) who set the whole thing up. How did he do it?

Downer took everything that the huge resources of the NPA/Scorpions could find for him about things that Schabir Shaik had done for his friend Jacob Zuma over an approximately eight-year period (or perhaps even longer than that) up to 2003. These were said to number approximately 229 items over the period. The admitted total payments of R888 thousand made in the period to or on behalf of Zuma included school and university fees for Zuma’s children, travel costs, motor vehicle repair costs, new tyres for a motor vehicle, bond arrears, instalment sale arrears for a number of motor vehicles, R15 000 Christmas spending in 1997, clothing costs and telephone accounts, and rental on a flat in a building called Malington Place, where Jacob Zuma stayed for a while as Shaik’s guest.

These amounts were listed on one side of an imaginary ledger account and totalled up to a bottom-line figure of R1.2 million (in the prosecution’s slightly higher calculation than the common-cause figure of R888 thousand).

On the other side of the ledger there was another list, this time consisting of favours that Zuma was supposed to have done for Shaik. They were only four in number. Three of them were instances where Zuma was supposed to have taken part in business discussions that produced no outcome in terms of business for Shaik. Zuma was MEC for Economic Affairs and Tourism for KwaZulu Natal from April 1994 to June 1999. The fourth item, the only one where Shaik was effectively helped, was when Zuma intervened at Shaik’s request, in Zuma’s capacity as MEC, to scotch rumours that Shaik was unpopular with Nelson Mandela and/or Thabo Mbeki, which rumour was affecting Shaik’s business relations. This was part of Zuma's duties at the time as Economic Affairs MEC.

The document "lodged" on Friday with the Constitutional Court does not change the above "ledger" scheme, but only adds more time and therefore more items to the list. To call it "damning" or "new" is a gross distortion. It is only more of the same, again hoping to achieve with sheer bulk what cannot be argued in detail.

Downer made no attempt to connect any particular payment on the one side of the imaginary ledger account with any particular one of the alleged favours that Zuma is supposed to have done. Instead, the notional bottom line on the one side was held to correspond with the notional bottom line on the other side. The connection was not made particular, it was left as general. Downer and Squires agreed that:

“It would be flying in the face of common sense and ordinary human nature to think that he (Shaik) did not realise the advantages to him of continuing to enjoy Zuma’s goodwill to an even greater extent than before 1997; and even if nothing was ever said between them to establish the mutually beneficial symbiosis that the evidence shows existed, the circumstances of the commencement and the sustained continuation thereafter of these payments, can only have generated a sense of obligation in the recipient.”

Of course, common sense about bribery is different and opposite from what Squires and subsequently the SCA have laid down in this way. Common sense is that you pay a particular amount, as a bribe, to get a particular favour. Common sense says that bribery has all the characteristics of a commercial transaction at the invoice stage, and not at the statement stage without any invoice stage.

Bribery by symbiosis is nothing like common sense. Bribery by symbiosis is a new invention, never heard of before, brought in by Squires.

The attribution of this new law to common sense is a deception. It is not common sense that decided what was in the mind of Shaik. There was nothing common about that determination. It was a pure guess by the judge, based on nothing at all. This precedent means that if you give money to somebody, a judge can call it what he likes, including corruption. And if he so decides, he can send you to prison for it for at least 15 years and take at least R33 million from you, only because he says you are corrupt.

The scientific, and not legal, word “symbiosis” is Ancient Greek. It is not surprising, and in fact in spite of Squires sarcasm, it is laudable, that the journalists (and at first, the SCA) preferred to run with the more familiarly English phrase “generally corrupt relationship”. This phrase of Downer’s is accurate as a description of the “ledger” scheme of argument that he used, where he did not, and was not required by the judge to, attribute any particular favour to be a consequence of any particular payment.

General is the opposite of particular. The non-legal word “symbiosis”, on the other hand, which is the one preferred by Judge Squires, tends to obscure the legal leap from particular to general. It obscures the escape that the judge allowed Downer to make from the common-sense and common-law obligation to show evidence of an exchange of a particular amount of money for a particular consideration, or favour.

Why does it matter?

It matters a lot that the law should be reasonable. If the law is not amenable to reason, but is merely the product of the unaccountable individual feelings of a judge, then we have reverted to a condition more primitive than trial by ordeal.

Further than that, it is clear and was clear to the SCA, that this new concept of broad “symbiosis” would have to be distinguished in some way from the general run of transactions and exchanges, as well as from unilateral gifts of money and good works done for the benefit of others, whether individuals or for broader society.

Otherwise, such a symbiosis could be construed or constructed from records, provided one had the resources and the power to discover them (as the NPA has). In that case the commerce of the country would be in danger of being inhibited by the unpredictable harassments of both petty tyrants and of large-scale manipulators. The survival of free-market capitalism is in theory at stake.

The SCA showed some degree of awareness of the necessity of limiting the effects of the new, Squires-made law of “symbiosis” so that it would not eat into the fabric of the business economy, like acid.

As a result they found themselves being propelled back to the time of the Regents of the first bourgeois republic, the United Netherlands, who in 1651, following the case of Jan van Riebeeck’s trading “on his own account” in Vietnam, issued a “Placaat” or declaration of what was going to be regarded as corrupt from then on. van Riebeeck himself was let off and sent to the Cape, where he planted a hedge, and the rest is history. Part of that history is that we have inherited the Netherlands’ legal precedents, and this one was explicitly relied upon by the SCA in the Shaik case.

The United Netherlands “Placaat” of 1651 (and its subsidiary Placaats of later date) is not a precedent for certainty, but instead is one for arbitrariness, or more precisely for the appearance of certainty combined with the practice of expediency. In citing that Placaat the SCA failed monumentally in its primary responsibility, which is to bring certainty and finality to South Africa’s legal practice.

South Africans must now hope that the Constitutional Court will rise to the occasion of Schabir Shaik’s appeal, unequivocally reject the Squires-made law of “symbiosis”, release Shabir and restore his millions, and remove the menace of prosecution from Jacob Zuma.


State reveals damning new evidence on Zuma, Ernest Mabuza, Weekender

South Africa in turmoil as Mbeki heads for defeat, McGreal, Guardian

COSATU on Schabir Shaik appeal court decision


  1. Where does your idea that charges of new allegations of tax evasion would only arise in the wake of a successful finding on the central corruption charge? I'm not trying to be argumentative, I am genuinely surprised that so little has been made of the tax issue in the charges that are likely to be made against Zuma.

    I can understand that corruption is hard to prove and that judges
    taking a more strict definition of corruption than what Squires did
    may require that prosecution proves that a specific action was taken in response to a certain payment and that the specific action would not have taken place without the payment. Zuma might well manage to get a not guilty verdict in regards to corruption.

    However tax evasion is surely simpler to prove. If JZ got the money and spent it (which should be clear from his banking records) and if he didn't declare it for tax (his SARS tax returns will show this) then he is guilty. No clever tricks by prosecution are required and I cannot imagine anything that clever defence lawyers can do to get around this.

    Am I missing something?

  2. Hi Robert.

    I think you have expressed very well the attraction for the prosecutors of the "tax evasion" gambit, so famously used in the case of Al Capone.

    But indeed, I do think you are missing something very important. But then again, maybe you know the tax law better than I do. I have been assuming that gifts are not taxable. Am I correct? In what circumstances are gifts taxable, or even declarable? Bear in mind that a high proportion of the residents of this country are living on such gifts, because only a minority of the people is earning. Not to mention the important matter of funding of political parties.

    Are you saying that it was immaterial (from the tax point of view) whether these amounts of money were given as consideration for favours, or not?

    I would be very interested in your reply to that question.

    But even if it is in the affirmative, there is still a catch for the prosecutors, and it is this:

    In the Shaik trial, the amounts of money were small. Common cause was about R0.9 million over seven years, with the lion’s share of it being the value of the flat of Schabir’s that JZ was allowed to occupy for a spell. It would be hard to mount a very substantial tax case on these facts.

    That may be why the Scorps are trying, in relation to Zuma, to extend the period of time under examination for another couple of years, and raising the bar of their allegations to R4 million instead of R1.2 million. I would say that it is still going to be a stretch for them. Each item will be disputed, over the entire period.

    And then, the Scorps will still have to decide which to put first: the corruption chicken, or the tax-evasion egg. Remember, this time they are up against Kemp J Kemp and Hulley.

    I believe the Zuma investigation is a vexatious action by the state. It is only useful for “Hollywood” purposes, and that is why the charges have not yet been laid. It is also a hostage to fortune, because at some point its true nature is going to be exposed. The likes of McCarthy and Mpshe are riding a tiger, and some time soon they are going to have to get off its back, at which point the tiger will most likely have them for breakfast.

  3. Something's happening at the moment. It is not very clear what. The TV news said that an "indictment" had been served at Msholozi's Forest Town house requiring him to appear in court in August only, on charges of "racketeering", fraud and corruption (but not tax evasion).

    The report said, incorrectly, that the charges had been thrown out "last September". In fact it was September 2006. So it will have been nearly two years by the time they have another go, if it does happen, which I strongly doubt.

    It is typical "Hollywood".

    This is part of the war-dancing by Thabo Mbeki's crowd, in an attempt to make space for themselves. It is dangerous brinkmanship.

  4. Surely if gifts were to become tax free then salaries and sales would go out of the window and our economy would be based entirely on gratuities and mutually beneficial favours.

  5. Salaries and sales are clearly part of contract law, in which an exchange is made, usually of cash on the one side in exchange for goods or services (called "consideration") on the other. That is the basic and original law, which everybody understands to a degree, and it provides a rational basis for taxation.

    In the case of a gift, there is no "consideration". The net trade effect of gifts is zero. If there is taxation on gifts, it has to be circumscribed with special definitions, otherwise it would get out of hand and everything that moved would have to stop at a tax roadblock, so to speak. Gifting has to be allowed. Christmas, for example, is allowed and not taxed. You give your girlfriend a diamond necklace or a car, and it is not taxed (other than VAT etc.).

    That is why I am asking you about the basis for taxing gifts. Gifts are not trade.

    It seems you don't have an answer.

  6. I'm not a tax expert, but …

    * Gifts below a certain threshold are tax free.
    * Gifts between couples married in community of property (and dependent children) are tax free.
    * Gifts to approved Public Benefit Organisations are tax free.
    * Anything else attracts tax.
    * All income, even if tax free, (ie local dividends) should have been declared on JZ's income tax returns.

    So do be careful with those Christmas gifts: If you gave your girlfriend a very valuable diamond, tax would be payable!

  7. O.k., that's very helpful. I find it both threatening and comforting at the same time. Threatening because it could catch anybody, and especially a single-minded politico like me or JZ. Comforting becasue it brings the whole matter into a commonplace realm which a lot of (even white) people will tend to understand and to sympathise with. Who among us could cast the first stone? Plus I would be surprised if very much of what Schabir did for JZ would rank for tax, even in these terms.


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