Durban : If Deputy President Jacob Zuma intended using his pension to repay the R1,2m interest-bearing loan he received from fraud and corruption-accused Schabir Shaik, then there would not be much left to fund his retirement, the Durban High Court heard yesterday.

The startling new revelation about the scale of Zuma's indebtedness to Shaik came as the state began to dissect Shaik's claim that the R1,2m was not a bribe but an interest-bearing loan.

During a marathon cross-examination of the state's main witness, KPMG forensic auditor Johan van der Walt, Shaik's defence team had introduced what appeared to be a "golden nugget" a loan agreement signed between Shaik and Zuma on May 16 1999, in terms of which Zuma would repay the money at the prevailing prime lending rate plus 2%.

This appeared to undermine the state's allegation that the money constituted a bribe aimed at securing Shaik's Nkobi Holdings network a slice of the state's multi-billion rand arms deal.

Re-examining his witness yesterday, prosecutor Billy Downer disputed the authenticity of the agreement, while Van der Walt pointed out that even if it was valid, Zuma still benefited from interest savings before the agreement was signed.

Zuma had received R512710 from Shaik before the agreement came into effect, which would have attracted R186450 in interest. If interest was to be paid on the whole amount, with interest accruing up until the present, Zuma would owe R1,249m in interest on top of the original amount.

The interest exceeded the capital payment from June this year.

If it was true, as suggested earlier in the trial by Shaik's legal team, that Shaik regarded Zuma's pension as a potential source for the repayment of the debt, the deputy president's lump-sum payout would be reduced from R3,2m to less than R1m.

However, defence counsel Francois van Zyl challenged Van der Walt for using "the worst-case scenario". The forensic auditor had compounded the interest daily, while van Zyl said "even the banks calculated interest daily, but compounded monthly".

Questioned on a possible bias in favour of the state by Downer, Van der Walt confirmed he would bill the state at an hourly rate and would be surprised if any auditors called as witnesses by the defence operated on a different basis, especially if their payment was contingent on an acquittal.

Downer also returned to a claim by Van Zyl during cross-examination that correspondence between Shaik and Alain Thetard, a director of French arms company Thomson-CSF, was not aimed at securing a R500000-a-year bribe for Zuma, but was merely an attempt to solicit a donation for the Jacob Zuma Education Trust.

Van der Walt testified that in all the documents seized by the Scorpions in raids on the offices of Shaik's companies, including a file dedicated to the trust, no reference could be found to attempts to solicit any donations.

Van der Walt questioned Shaik's claim that he found out about the Nkandla (Zuma's traditional village project) debt only at a late stage, saying he would find it "strange" that someone who considered himself to be Zuma's financial adviser could not be aware that his client was "committed to a material amount of potential liability".

The court also heard how Shaik had paid school fees on Zuma's behalf and requested the receipts to be made out to the Nkobi Charitable Trust Fund to enable him to claim them as donations for tax purposes.

"I'm aware of the fact that there were attempts to set up the trust but, to the best of my knowledge, it never came into being," Van der Walt said.

With acknowledgements to Kevin O'Grady, Nicola Jenvey and the Business Day.