Schabir Shaik's auditors and accountants have been blamed for the allegedly irregular entries in the financial statements of his Nkobi group of companies that are at the centre of the fraud charge against him.

This is the first indication of how Shaik's legal team intends fighting the fraud charge against their client.

The charge relates to R1,2 million allegedly falsely written off by Shaik in the books of Nkobi subsidiary Kobi IT to conceal payments to Deputy President Jacob Zuma.

Shaik is also being tried for corruption for his alleged role in securing a bribe for Zuma from French arms group Thomson-CSF for protection in arms-deal investigations.

In wrapping up his cross-examination of KPMG forensic auditor Johan van der Walt in the Durban High Court yesterday, defence counsel Francois van Zyl offered Shaik's explanations for the payments. He said Shaik's testimony would be that the businessman never bribed Zuma, but rather that the money paid to or on behalf of the deputy president was in the course of friendship.

Given Nkobi's turnover of R23 million by last December, Shaik did not consider the payments as reckless trading, and had not intended defrauding investors in writing off the R1,2 million. He had also employed professional auditors and tax consultants to handle the Nkobi accounts.

Van der Walt said that viewing a company's financial well being by its sales was flawed, as it did not reflect cash available in the bank.

As the marathon cross-examination climaxed, it became clear Shaik's defence would shift responsibility to his accountants for what Van der Walt termed "a cover-up".

Van Zyl said Shaik would testify the auditors were "fully responsible for the accounts and the annual financial statements" and that he had relied on the advice of Nkobi financial director Colin Isaacs and the David Strachan & Taylor partners.

In a day characterised by intense verbal sparring between Van Zyl and Van der Walt, the two men differed strongly on whether the accounting treatment of an Nkobi subsidiary should be considered irregular.

Van der Walt said regardless of Shaik's own view of his culpability, the Companies Act, Generally Accepted Accounting Practice and the King code of conduct dictated that company directors took responsibility for financial statements.

The R1,2 million was written off as development costs for Prodiba, from a nondistributable reserve created in Kobi IT's books, after what Shaik says was the sale of "workshare rights" by another subsidiary, Kobifin.

However, Van der Walt insisted that if the sale was "real" it should have been treated as such and not as a below-the-line non-distributable reserve.

The witness and the defence lawyer also sparred on whether Nkobi could revalue its Prodiba stake from R1000 to R3 million based on negotiations with US multinational Symbol Technology for it to acquire 25% of Kobitech. Such a sale, Van der Walt said to counter proposals from Van Zyl, would have affected the value of Kobitech and not its Prodiba stake.

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