Durban businessman Schabir Shaik's Nkobi group of companies was regarded as a "controversial client" at the auditing firm where a clerk was asked to make R1,2 million in loans disappear from the books.

This was the evidence in the Durban High Court of Anthony Gibb, a former clerk at David Strachan & Taylor.

Shaik has pleaded not guilty to two charges of corruption and one of fraud. The State alleges that he had a general corrupt relationship with Deputy President Jacob Zuma, and tried to solicit a R1 million bribe for Zuma from French arms company Thomson.

The State alleges that Shaik is responsible for the writing off of R1,2m in loans, including some money paid to Zuma, in the books of the Nkobi group of companies for the 1999 financial year.

The entries which effected this were done by Gibb, who had audited the company's books that year.

The write-off wiped out the loan accounts for Shaik, Floryn Investments, which Shaik has admitted was a vehicle to donate money to the ANC, and Clegton Investments, through which payments were made for a flat occupied by Zuma.

Shaik said in his plea explanation that when he realised that this write-off was a mistake, he ordered that it be rectified.

Gibb told the court that the Nkobi group was regarded as a "controversial client" by clerks at David Strachan & Taylor.

After he had audited Nkobi's books in 1999, one of the two partners at the auditing firm ordered him to make a number of journal entries which caused the R1,2m in loans to be written off.

He said he remembered that the instruction was issued at a meeting between him and partners Paul Gering and Ahmed Paruk.

In re-examination by advocate Billy Downer SC, who is leading the prosecution, Gibb said Shaik had signed the financial statements, reflecting the write-off, in February, 2000.

With acknowledgements toEstelle Ellis and the Cape Argus.