Durban - Forensic auditor Greg Johnson punched holes in his own evidence in the Durban High Court yesterday when he said payments made by Schabir Shaik's company to Deputy President Jacob Zuma put it at risk.

Johnson, called to give evidence in Shaik's defence, said that during a company's start-up phase, cash flow was critical and expenses had to be carefully watched.

Asked by the prosecution chief Billy Downer whether the payments Shaik made to Zuma were in Nkobi's best interest, Johnson said : "I'm afraid not."

The state alleges the local businessman paid more than R1,2m to or on behalf of Jacob Zuma, effectively sending his Nkobi Holdings group towards the brink of bankruptcy.

Shaik, who has pleaded not guilty to two counts of corruption and one of fraud, has acknowledged funding Zuma's lifestyle and paying various bills, but claims this prevented the deputy president from quitting politics.

"The funds paid to Zuma could have been put to other projects," said Johnson, who operates a private auditing and accounting firm. "I recognise there were some opportunity costs involved in paying Zuma," he said.

Judge Hillary Squires referred to evidence by former Nkobi financial manager Celia Bester that Nkobi's only income source was work share gained from associate company Prodiba. Borrowing from the bank to cover expenses demanded that the group incur interest.

Bester also said that Nkobi had "more creditors than cash", and that the auditors warned Shaik about deteriorating cash flow.

Earlier in the day Johnson said his investigations placed the Zuma payments at R888 517 against the R1,2m calculated by the state's key witness, KPMG auditor Johan van der Walt. Johnson believed the payments had "little effect" on the Nkobi books, as the amounts were charged against Shaik's personal loan account.

Downer said had Zuma repaid the loan entirely, the Nkobi overdraft would have been eliminated. Johnson countered that start-up companies consistently used their overdrafts to fund expansion.

The case resumes tomorrow.

With acknowledgements to Nicola Jenvey and the Business Day.