Former KwaZulu-Natal treasurer Sipho Shabalala has failed in his bid to overturn his conviction and his effective 15-year sentence for his role in the so-called “Amigos case”.
In June 2022, Durban High Court judge Dhaya Pillay found Shabalala, then 56, guilty of corruption, fraud, money laundering and contravening the Public Finance Management Act in connection with the award of a R44m contract to Cape Town businessman Gaston Savoi’s company Intaka, in return for a R1m “sweetener” to the ANC.
Savoi was paid with money from the Poverty Alleviation Fund.
Pillay handed down sentences amounting to 45 years, but ordered that they run concurrently with the 15 years she imposed for corruption.
She refused to grant him bail pending an application for leave to appeal then refused to grant leave to appeal. However, he was later released on bail after he successfully petitioned the Supreme Court of Appeal. His appeal came before judge Vusi Nkosi (sitting with two acting judges) in October.
Judgment was handed down on Friday, denying Shabalala’s appeal.
Nkosi said central to the appeal was the contention that Pillay had not taken into consideration the evidence of erstwhile MEC for local government Mike Mabuyakhulu, who at the time was also the treasurer of the ANC in KwaZulu-Natal.
But, Nkosi pointed out, that Mabuyakhulu (who was also once an accused in the so-called Amigos trial’) had not given evidence in Shabalala’s trial, but had only put up an affidavit which was “devoid of any independent or authoritative evidence”.
His affidavit was “generally characterised by non-committal statements”. These, Nkosi said, had been considered by Pillay. He noted that Shabalala had elected not to testify when admissions he made at the start of the trial “clearly called for an answer from him”.
“The appellant (Shabalala) must live with the consequence of that decision.”
At no stage had he disclosed that he stood to acquire benefits for both himself and the ANC if the project came to fruition, and that he and his wife had developed a personal relationship with Savoi.
— Judge Vusi Nkosi
Another gripe was that Pillay had handed down “two judgments” in the matter. But Nkosi said Pillay had initially handed down an ex-tempore judgment then a final written judgment.
This written judgment contained some additions but were largely explanations of her findings aimed at enhancing the readability of it. There was nothing to indicate that this had affected Shabalala’s rights.
Shabalala also claimed that none of the witnesses who testified for the state had implicated him in the crimes. Nkosi, however, said this was not so.
TimesLIVE reported previously that the charges related to the provision of water purification units (Watakas) and self-generating oxygen units (Oxyntakas) which were provided by Savoi's company Intaka Holdings at inflated prices to the department of health in the Northern Cape and the department of local government, housing and traditional affairs in KZN. This cost the government more than R100m.
The evidence was that Shabalala had been invited to Brazil by Savoi to observe the Watakas in action.
Instead of engaging with the department of local government and traditional affairs to advocate for a competitive tender process to evaluate the benefit of the Watakas against alternative solutions, he had deliberately circumvented the legal requirements. He addressed memos to both the MEC of finance and economic development Zweli Mkhize and Mabuyakhulu, “in essence setting the ball rolling by applying his influence at the highest level of political formation in the province at the time”.
“Thereafter, all he had to do was monitor further developments from the sidelines while he applied further pressure on subordinate officials,” Nkosi said. At no stage had he disclosed that he stood to acquire benefits for both himself and the ANC if the project came to fruition, and that he and his wife had developed a personal relationship with Savoi.
He said Shabalala had become so determined that the project would succeed, even though the cost of the 22 Watakas had ballooned from R22m to R43.2m. Mkhize, he said, should have insisted on compliance with the procurement process, but did not. And Pillay was “justified” in finding that while he was a state witness, he had been favourably disposed towards Shabalala in the trial.
Nkosi said while Shabalala was only one of 11 members of the Central Procurement Committee which signed off on the deal with Intaka, he was the chairperson and he had failed to disclose his friendship with Savoi or the benefit he stood to acquire for himself and the ANC.
“The same applies to the cabinet resolution to accept the recommendation and authorise the allocation of R43m from the Poverty Alleviation Fund. In my view, it is immaterial that the appellant (Shabalala) was not a member of cabinet. It was precisely for that reason that he decided to first approach MEC Mkhize to improperly influence him about the purported urgency and benefits of the Watakas so that Mkhize would, in turn, convince his cabinet colleagues to accept the relevant recommendations.”
Nkosi said the evidence showed that Savoi had paid just more than R1m into the account of Kuboni Shezi Attorneys and it remained “inexplicable” how this money was allegedly paid by Shabalala to Mabuyakhulu in cash (as Mabuyakhulu had claimed in his affidavit).
Evidence showed that a sizeable portion of the money was used to pay Shabalala’s personal creditors. “This was in direct contradiction of his fiduciary duties as head of treasury ... the appellant abused his office to enrich himself at the expense of the poor.”
Nkosi dismissed each and every ground raised by Shabalala in his appeal. Turning to the sentence, he said Pillay had said she had considered imposing a higher sentence but had “exercised restraint” because of Shabalala’s age and his state of health.
“I do not believe there is any basis for this court to interfere with her discretion,” he said.
Shabalala is likely to lodge an appeal against this ruling and apply for extension of his bail.
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