Deputy president Jacob Zuma continuously ran up huge debts while knowing he could not afford to pay for his lifestyle, the Durban High Court heard on Thursday.

Although Zuma is not on trial most of the day was devoted to his financial affairs and the role therein of fraud and corruption accused Schabir Shaik.

A forensic report before the court also detailed how Zuma allegedly ran up huge debts with several banking institutions including Permanent Bank, Standard, Nedbank, Wesbank, ABSA as well as Southern Life, and how Shaik repeatedly bailed him out of trouble.

In one instance he bought a car and was unable to pay his first instalment.

Shaik has pleaded not guilty to the charges which relate to him allegedly soliciting a R500 000 per annum bribe for Zuma in return for protection during a probe into arms deal irregularities.

On Thursday KPMG forensic auditor Johan van der Walt said it was evident from the conduct of Zuma's accounts and the way in which debt was incurred that he believed those debts would be settled by another party.

He said it was evident that Shaik acted as "financial adviser" to Zuma and had full access to Zuma's personal financial records.

Despite this time Zuma's financial situation did not improve. van der Walt said the state was able to piece together Zuma's financial situation from various documents discovered on the premises of Shaik and the Nkobi group, and which he referred to as the 'Zuma files'.

He said Zuma used various bank accounts to fund his lifestyle and that he mainly used current account and credit card facilities. He also obtained finance from other sources not known to the auditors.

He said Zumas' salary which was R20 000 in 1996 would not even have covered the interest on all his debts.

After a week in the witness box van der Walt finally completed testimony on his audit report commissioned by the Scorpions last year.

It deals with documents over a seven year period from 1996 to 2003.

van der Walt said payments made to and on behalf of Zuma by Schabir Shaik's Nkobi Holdings had a "fundamental impact" on the cash flow of his business and at times threatened its very existence due to cashflow constraints.

When discussing the cashflow management of the Nkobi group, van der Walt said it was evident the group relied mainly on the overdraft facilities of Kobitech, a Nkobi subsidiary, during the period covered by his report.

He said Kobitech was regarded as the main source of operating funds for the entire group, loans made to the directors, other loans and ad hoc payments.

In June 2001, Kobitech was in overdraft to the sum of about R600 000 when payments totalling R903 000 had been made for and on behalf of Zuma.

At the end of August 2001 Kobitech reflected an overdraft of R540 000 when at least R982 000 had been paid to Zuma.

Between 1996 and 2003 the deputy president had a cashflow of R3,86 million into his personal account.

At the same time he had a cash outflow of R4,29 million from the same account.

van der Walt said Zuma's main source of income was his government salary which was about R20 000 a month in 1996 when he was the MEC for Economic Affairs and Tourism in the kwaZulu-Natal cabinet.

A sum of R625 000 which went into his account over this time was from unidentified sources.

A portion of this income could have come from a travel and subsistence allowance paid by government, van der Walt said.

An amount of R45 000 came from the Nkobi group, which van der Walt said formed part of the payments which KPMG identified as having been made to and on behalf of Zuma.

van der Walt said from the R3,8 million which flowed into Zuma's account, KPMG could only identify the source and purpose of R2,8 million, leaving R988 000 still unexplained at the time the audit report was compiled.

The court also heard that most of the payments totalling R4,2 million from Zuma were of a personal nature. However, there were payments totalling R1,3 million for which van der Walt could not determine the beneficiaries or reasons.

He said cash payments of R277 000 were also made and due to the nature of these payments they could not determine the source.

He said two payments -- R10 000 each -- were made to Shaik in September 1998 and January 1999.

van der Walt said it was evident from analyses performed on Zuma's cash outflows that he relied on an increased overdraft to fund the shortfall.

Apart from this, KPMG identified payments amounting to R1,2 million which were paid to him on behalf of the Nkobi group of companies, or Shaik.

Returned and unpaid items on Zuma's account for the same period amounted to R447 000.

Zuma's liabilities consisted of overdraft facilities and liabilities of a longer term nature such as loans provided against bonds.

In November 1994 Permanent Bank registered a bond in the name of Zuma and his former wife, Nkosazana Dlamini Zuma. About two-and-a-half months the bank issued its first letter of demand.

At one stage 20 instalments had not been paid. van der Walt said "the bond was eventually settled by a number of lump sum payments " but the source thereof was unknown.

While struggling to pay his bond with Permanent Bank Zuma had already secured a R400 000 bond with Standard Bank.

Here he also battled to keep up with payments and Shaik stepped in, transferring money from his Nedbank account which was in overdraft at the time of the payments.

Following a series of events Standard Bank took judgement against Zuma for the amount of R118 842.

Van der Walt said Shaik then intervened with Zuma applying for a bond with New Republic Bank in order to settle the amount with Standard.

In April 1998 Zuma purchased a Mercedes-Benz E230 for a sum of R243 856. The first debit order went through on June 4 and was returned by the bank as unpaid the next day.

Van der Walt said in January 1999 Zuma was in a car crash.

He was subsequently told by the insurance company that his claim would not be paid as his policy had already been cancelled the previous year due to unpaid premiums.

The car was taken for repairs and the account of R20 520 was settled by Shaik in a series of four cheque payments.

van der Walt told the court that Shaik was accepted as an ABSA bank client in May 2001 but was initially refused despite having reflecting a net asset position of R9 million. The refusal was based on a high risk rating and 15 unauthorised excesses of the limit in 12 months.

However, notes in ABSA's files show that the decision to accept him as a client was "a strategic decision because Shaik was the financial advisor of Zuma."

The court was also told of Zumas' Nkandla traditional village project which was developed in a rural area in kwaZulu-Natal by an entity trading as Eric early in 2000.

The sole member of the entity was E Malengret and the development took place at a final cost of R1 340 000.

van der Walt told the court Zuma did not have the money to "finally settle what was due on the development " and therefore had to rely on the registration of a bond on the property to fund a substantial part of the development.

On Thursday "A relieved-looking van der Walt smiled as he left the court and said "my throat's much better than it was. I've been sucking throat tablets."

He will now be cross-examined on his report.

The trial continues.

With acknowledgement to Sapa.