Businessman Schabir Shaik told the Durban High Court this morning of his anger when he found out that President Thabo Mbeki did not consider his company an acceptable black economic empowerment group.

This morning's proceedings started about 10 minutes late with Shaik and his counsel, Francois van Zyl SC, having a heated conversation at the witness box.

Shaik, who is charged with two counts of corruption and one of fraud, then dabbed at his face with a wet towel before glaring at the state's legal team and his counsel respectively.

Shaik continued his evidence, telling the court that in mid-1998 he became aware of a statement attributed to Mbeki expressing the sentiment that he considered the Nkobi Group of companies to be unacceptable as a black economic empowerment group.

Shaik said he considered the statement, which was repeated by Jean-Paul Perrier of French arms company Thompsons (sic - Thomson-CSF), to be both slanderous and based on a misunderstanding of what black economic empowerment was.

At the time Thompsons and Shaik's Nkobi group were in negotiations to formalise a working relationship between them, especially in the arms industry in South Africa.

According to papers before court, these doubts led to Thompsons investing directly in African Defence Systems and cutting Nkobi out of the deal.

"I was concerned about these reports and I discussed it with Zuma. I was fairly upset. The remarks were unfair to me. I was angered. When I told Zuma, Zuma was distressed as well about the remarks attributed to Mbeki. He said Perrier did not understand about black economic empowerment and the situation had to be corrected."

Van Zyl referred the court to a letter written by Shaik where he said Zuma, in his capacity as deputy president of the ANC, had requested a meeting with Perrier.

"I appealed to Zuma to address the issue and he was prepared to do so," Shaik said. *1

He told the court a meeting had been arranged, but cancelled after Perrier fell ill. He also said he knew nothing about a French letter stating that they were trying to organise a meeting between Perrier and Zuma through Shaik "who definitely seemed to have the sulks" at the time.

According to papers before court, Thompsons agreed to bring Nkobi back into the fold of African Defence Systems after intervention by Zuma *1.

Yesterday, Shaik told the court that because of the Scorpions probe into his relationship with Zuma, the deputy president was so sensitive about renewing a revolving credit agreement between them that he did not want it in writing.

Despite the investigation, Shaik said he had not stopped helping Zuma financially.

It was what comrades did for each other, he explained.

Giving evidence in his defence, Shaik said he had discovered that three other business people - Jurgen Kogl, Nora Fakude and Durban businessman Vivien Reddy - were also helping Zuma financially.

With acknowledgements to Estelle Ellis and the Cape Argus.

*1 Da golden quid pro quo of corruption - QED.