The state alleges that businessman Schabir Shaik paid Deputy President Jacob Zuma nearly R1.2 million between 1995 and last year and took elaborate steps to hide the origin of most of the payments.

It is also alleged that most payments can be traced back to arms deal beneficiaries.

The allegations are contained in the charge sheet against Shaik, handed to him in the Durban Regional Court yesterday. Shaik was released on bail of R1 000 and the case postponed to October 3.

The 45-page charge sheet and accompanying schedules of money transactions give detailed accounts of payments allegedly made through third and fourth parties to Zuma and traceable through Shaik's Nkobi companies to Thomson/Thales, an arms company that has an interest in the contract to supply four corvettes to the SA Navy.

It was this company's southern Africa head, Alain Thetard, who wrote the memo referring to "JZ" and "SS" and payments of R500 000 a year.

The charges against Shaik include: four counts of corruption; fraud, alternatively crime and theft; "cooking the books", alternatively money laundering or possessing the proceeds of crime; and evading taxation.

The deputy president is named in the details of nearly all charges against Shaik, his personal financial adviser.

Zuma is also implicated as a "secret shareholder" of Shaik's Nkobi group of companies and a go-between in ensuring Nkobi benefits from the arms deal.

The charge sheet says that in 2000, at a meeting allegedly set up by Zuma, the late minister of safety and security Steve Tshwete rebuffed efforts by Shaik and his partner in the United Kingdom, Grant Shriver, to involve him in a fleet management system for the SA Police Service.

It says that R1.2m, which it alleges relates to three amounts attributable to Zuma, was written off in the Nkobi books. The write-off is described as "false and irregular" and is the basis for the tax evasion charge.

Details are given of Zuma's financial difficulties from October 1997. These relate to his home loan, personal overdrafts and other commitments.

The charge sheet, drawn up by the Scorpions, says "Zuma had a monthly over-expenditure of some R37 000 (1999) and R29 000 (2000)".

The Scorpions allege: "The payments to Zuma by (Shaik) and/or the other corporate accused (Nkobi companies) make no business sense, in that the Nkobi group was ostensibly not in the business of making loans to politicians and, moreover, it could not afford the payments, being at all times in a cash-starved position relying on bank overdrafts.

"It was effectively borrowing money from banks at the relevant interest rates to 'loan' it to Zuma or Shaik interest-free."

There was a "general corrupt relationship" between the two, the charge sheet alleges.  

In a section on Thomson and Nkobi's strategies in relation to the bid for the corvettes contract, the state alleges that at a meeting on November 18, 1998, the day the cabinet selected the German Frigate Consortium as the preferred supplier of the corvettes, a meeting was held at the Nkobi offices between Nkobi and Thomson-CSF France.

"The subject of the meeting was the sale of 10% of Thomson's share in (African Defence Systems) to Nkobi," the charge sheet says. It notes that the minutes recorded the attendance of "minister JZ" and Shaik.

"Zuma was there as a mediator to resolve the dispute between Thomson and Nkobi and to facilitate Nkobi obtaining effective shareholding in ADS. The result of this would be effectively ... Nkobi's entry into the corvette bid."

The charge sheet also alleges: "In terms of the agreement between Zuma, Shaik and Thetard R500 000 a year until the first ADS dividends were paid. ADS dividends were paid in September 2001 ... almost exactly two years since the bribe was requested. The bribe due was thus R1 million."

Zuma is alleged to have met Thomson's executives again in Paris in 2000 and in Cape Town in 2001.

Some money was allegedly paid through a false "back-dated service provider agreement" for R1m between Nkobi and Thales in Mauritius.

Further payments were allegedly made to Zuma in 2000 through an elaborate arrangement involving a businessman, Vathasallum Reddy and his company, Development Africa, Eric's Industrial Plumbing and Building cc, involved in a building project at Nkandla, Zuma's "traditional residential village estate", in KwaZulu-Natal. The payments could allegedly be traced to an Nkobi company and ultimately to Thomson/Thales.

In the section on general fraud and corruption, the charge sheet analyses business deals in which it alleges Zuma was a go-between. The deals include Shaik's involvement in the Durban Point Development and the KwaZulu-Natal eco-tourism project.

The main and more specific corruption charges relate to "alleged irregularities in the arms deal" and go into the detail of the history of the arms inquiry, Nkobi and Thomson's reactions to the investigation, and the alleged attempt to arrange payment to Zuma in return for "protection" for Thomson during the investigation into the arms deal.

It records that in his first reaction to the probe, Zuma wrote, as leader of government business, to Gavin Woods, then-chairman of the standing committee on public accounts, that there was no need for the Heath investigating unit to be involved and he, Zuma, hoped the inquiry was not aimed at finding "the executive guilty at all costs".

With acknowledgements to Christelle Terreblanche and the Cape Times.