An accountant told the Durban High Court on Monday he was instructed to make allegedly fraudulent entries *1 in the books of Schabir Shaik's company Kobifin.

Anthony Gibb told the court -- where Shaik is on trial for fraud and corruption -- his seniors at the auditing firm David Strachan Taylor *2 told him to make certain entries.

Gibb said without the write-off of R1,2 million as development costs of Prodiba -- another Shaik firm -- the selling of the work share agreement of Kobifin to KobiIT would have suffered a substantial loss. As shown on the books, the sale resulted in a profit of R3,5 million and the creation of a non-distributable reserve.

He said the company would otherwise have become technically insolvent taking into account the accumulated loss of R1,4 million and the recoverability of loan accounts.

Gibb said although he followed instruction of the audit partners and made the entries, he "did not understand the rationale behind it".

He said all steps in the auditing process are usually discussed with the client but he could only recall attending one meeting where the auditors and Shaik were present. He did not remember what was discussed.

Gibb said at the end of an audit, the audit documents are signed off and sent to the company for the directors or accountants to countersign.

The defence previously said that Shaik had left the books of his company in the hands of his accountants and auditors who had advised him and that they were responsible for all entries *3.

Shaik and his Nkobi group of companies have pleaded not guilty to two counts of corruption and one of fraud.

Proceeding.

With acknowledgement to Sapa.

*1 Big Trouble I.

*2 Big Trouble II.

*3 Big Trouble III.