Despite two acknowledgement of debt letters, there was no indication that the R1,2 million fraud and corruption accused Schabir Shaik gave Jacob Zuma were loans, the Durban High Court heard on Friday.

KPMG forensic auditor Johan van der Walt said it was not evident from the accounting records of Shaik's Nkobi Holdings that there was an amount owing by Zuma.

He said it was possible that there was a revolving loan agreement between Zuma and Shaik and "one would not expect to see that in the books of Nkobi."

He said two balance sheets presented to banks at different times did not reflect the outstanding amounts from Zuma.

van der Walt said some of the money given to Zuma were called "company expense", which meant there was no debt, others were reflected as "rent account", "donation", "loan account other", "travelling expenses" and "VAT" *1.

He said the vat would have been recovered from the South African Revenue Services as VAT returns.

By December 31, 2003, Zuma's debts amounted to R3,7 million rand. This included the R1,2 million rand Zuma received from Shaik as well as other sources, said van der Walt.

He said in September 2002 Zuma had a net salary of R30 000. van der Walt said without liquidating any assets in Zuma's possession at that time and without receiving any benefit from any other person and based on Zuma's monthly expenses he believed the repayment of the money owed to Shaik would be impossible with Zuma's available means.

He said there would be a "number of banking failures in South Africa" if banks did not ask for security, failed to do client evaluation and did not set down a period for paying back loans.

Shaik is accused of soliciting a bribe of half a million rands per year for Zuma in exchange for protection in investigations into arms deal irregularities.

van der Walt, who was commissioned by the Scorpions, said the first payment by Shaik's Nkobi group was on October 25 1995. He said this took place only a month after the share capital in Nkobi Holdings was issued to the first shareholder, namely Shaik.

"The frequency of and aggregated amounts of the payments made to and on behalf of Zuma had a direct correlation to the increase in the overdraft of the Nkobi group and as a consequence placed the Nkobi group and Shaik under pressure in terms of funding," van der Walt's report says.

He said a total of 238 payments were identified and the bulk of these payments were from bank accounts in the name of companies forming part of the Nkobi group.

Some of the payments included R68 000 to Casanova, an upmarket men's clothing boutique in Durban frequented by celebrities and politicians, approximately R189 500 to St Catherine's which the state says is a school Zuma's children attended and about R22 000 to N Zuma.

van der Walt finished his report on Thursday and most of Friday was spent on verifying documents admitted as exhibits and clarifying parts of the report. At one stage a tired-looking Judge Hillary Squires asked prosecutor Billy Downer what the point of it all was.

When told it was to prove how accounting principles were not adhered to in the Nkobi group, Squires quipped "smoke and mirrors."

On Monday the court will hear applications by SABC radio and e.tv for the right to broadcast live from the courtroom.

At the start of the trial e.tv unsuccessfully lodged an application to broadcast the proceedings and this time it will apply to do audio broadcasts without any visuals.

Squires basically gave the defence the day off on Monday, telling Shaik's advocate Francois van Zyl, SC, "I think Mr van der Walt needs time to rest and you need [time] to absorb. *2"

The trial continues.

With aknowledgement to Wendy Jasson da Costa and Sapa.

*1 Simplistic Accounting III

Dis not GAAP

General Accepted Accounting Practice (GAAP)

as stipulated, inter alia, by :

1. The Companies Act;
2. The South African Institute of Chartered Accountant (SAICA); and
3. The Public Accountants and Auditors Board (PAAB).

*2 Brackets by Sapa - Squires J said "you need to absorb".