Jacob Zuma allegedly used part of the R1-million bribe he secured from Thales to pay for the construction of his palatial home at Nkandla in rural northern KwaZulu Natal.

This emerged from a charge sheet in relation to the state's case against the deputy president's personal adviser, Schabir Shaik.

The state alleges that part of the bribe was laundered through the use of simulated transactions between Shaik, Thales (formerly Thomson CSF), the Nkobi group of companies, Development Africa through its controller Vathasallum Reddy, and Eric Malengret and his construction company.

The state says Zuma, Shaik and Thales director Alain Thetard agreed on March 11 2000 that in terms of the bribe of R500 000 a year, Zuma was now owed R1-million.

Shaik's company, Nkobi Holdings, entered into a "service-provider agreement" with Thales in Mauritius. Nkobi's annual fee charged to Thales for this agreement was R500 000. Two further handwritten figures of R250 000 were added, bringing the total to R1-million - an amount similar to the bribe. Nkobi did little service provision to justify the R1-million fee.

The amounts did not arrive as promised at the end of 2000 and Shaik wrote to Thetard saying he should expedite their arrangement as soon as possible "as matters are becoming extremely urgent with my client".

This was at the time that Zuma was experiencing difficulties paying for the construction of his residence in Nkandla. The development cost R1,3-million and Malengret's company was the construction developer. Development commenced in July 2000 and was completed in April 2001.

On October 19 2000, Shaik, as Zuma's financial adviser, instructed Malengret to stop construction. But Zuma requested Malengret not to stop the development as he was arranging a bond. At the time, the actual costs incurred amounted to about R200 000. About R700 000 of expenses were subsequently incurred without any payments made.

On October 31 and November 3 2000, Reddy made two payments of R50 000 to Malengret's company. The one payment was from one of his companies, Edison Health (Pty) Ltd, and the other from his personal account.   

Malengret's company reflects the payments as "Receipt JZ" and are treated as a long-term loan account. The bulk of the outstanding amount of R900 000 was settled through a bank loan from FNB. Reddy facilitated the bank loan by signing surety of R400 000. Without this surety, the bank would not have given Zuma the loan due to his financial profile and that the property was on tribal land.

Reddy signed a debit order where he payed instalments of R12 117,11 from an account in his own name; Reddy would pay the monthly instalments for the first year, after which Zuma would take over. Reddy has so far paid R100 000 and has been servicing the bond since January this year.

As of February this year, Zuma still owes Malengret R250 000. In an acknowledgement of indebtedness to Malengret, Zuma has to pay monthly instalments of R10 000 starting from March 2003.

But the prosecuting authorities say Zuma did not appear to be able to make such payments.

On November 7 2000, Reddy opened a bank account for his Development Africa Trust. The trust has not been registered as a fundraising institution, and has not been registered for tax purposes. Reddy is the founder and sole trustee of the trust.

On December 4 2000, Zuma drew a cheque of R1-million to pay Development Africa, but the cheque bounced. This was at the time that Shaik wrote the letter to Thetard, saying matters were "extremely urgent".

On February 16 2001, R250 000 was transferred from Thales International Africa to Kobitech. This was paid in terms of the bogus "service-provider agreement".

Within eight days, Nkobi issued a cheque for R250 000 in favour of Development Africa. Nkobi also issued three postdated cheques for R250 000 payable to Development Africa.

"This indicates that Nkobi intended to pay Development Africa R1-million, which is an amount equivalent to the R1-million cheque that Zuma issued to Development Africa, and which bounced.

"It is also an amount equivalent to the bribe agreed to between Zuma, Thomson and (Shaik)," the charge sheet says.

With acknowledgements to Charles Phalane and The Star.