The outcome of the probe into South Africa's arms deal could prompt a large lawsuit against the state, a private defence contractor said on Wednesday.

Richard Young confirmed that he had considered suing the state for between R100-million and R200-million over alleged irregularities in the procurement of the defence package.

Asked on Wednesday at the Pretoria hearings into the arms deal whether he still intended going to court, Young said: "That will depend on the outcome of this investigation".

On Tuesday he refused to reply to a similar question.

Young is the managing director of Communications Computer Intelligence Integration Systems (CCII), a Cape Town-based information technology company.

He contends there were irregularities in the awarding of a R40-million tender for information management systems (IMS) used in the four corvettes South Africa bought under the arms package.

CCII was named the preferred supplier of these systems, Young claims. The tender was, however, awarded to French company Detexis.

Detexis is the sister company of African Defence Systems (ADS), of which arms acquisition head Chippy Shaik's brother, Schabir, is a director.

Young on Wednesday confirmed he told a newspaper in January he would seek legal remedy for his alleged loss if the matter was not probed by the Special Investigating Unit, at the time headed by Judge Willem Heath.

During cross-examination Martin Kriegler, for ADS, said: "Eight months have gone by and you still haven't gone to court".

Young replied he had postponed the matter old when the probe was referred to three state investigating agencies.

On his public complaint about the loss of the contract, Young denied he had been mischievous by saying in a television interview that the Detexis product was old technology.

"You planted the idea in the public mind that taxpayers' money had been spent on a dud," Kriegler said.

Young responded: "I was not mischievous, but was reacting to questions."

Kriegler said he would demonstrate that the Detexis system was actually cutting-edge technology, adding it was also acquired by the British navy.

Young maintained that the Detexis technology was "extremely retrogressive", and had been used since the 1950s.

Terry Mahon, for Shaik, grilled Young on his assertion that Shaik had not recused himself from all meetings where his conflict of interest was relevant.

Mahon quoted from minutes of meetings where Shaik had indeed withdrawn from the discussions. These included minutes of a meeting on August 24, 1999, which was cited by Young in his testimony.

Young, however, said Shaik only recused himself after the data systems had been discussed.

On Tuesday, Young claimed that Armscor official Kevin Hanafey had told him that explanations about Shaik's recusal were "a farce, or words to that effect".

Mahon said his understanding was that Hanafey "vehemently" denied ever saying that. Young insisted these words were uttered in a face-to-face meeting between himself and Hanafey.

Kriegler earlier suggested that Young started developing the IMS technology while working for the company UEC Projects under an Armscor contract in 1991.

"Now you say this is your own technology," Kriegler said.

Young replied that the work done at UEC on the IMS only related to basic technology, but conceded that this was what he described as "the embryo stage" of his product.

Individuals implicated by Young in the morning asked for an opportunity to give evidence in rebuttal.

They included retired navy chief Rear-Admiral Robert Simpson-Anderson and Rear-Admiral Johnny Kamerman, currently stationed in Germany. He was project officer for the corvette programme when the arms package was procured.

The chairman of the panel, Public Protector Selby Baqwa, agreed that those implicated had a right to testify again.

Simpson-Anderson's integrity had, for example, been challenged, Baqwa said.

The two men are to give evidence on Thursday.

The hearing continues.

With acknowledgements to Sapa.