It was a rainy October morning when the trial of Durban businessman Schabir Shaik started in the Durban High Court.

After handshakes and smiles for his supporters, a defiant Shaik, flanked by brothers Mo, Chippy and Yunis, pleaded not guilty to charges of corruption and fraud in front of a packed court and Judge Hilary Squires.

Eight weeks later, as the trial broke for the seasonal recess, there were only a few journalists and one member of the public there to watch it.

Shaik's plea explanation on October 10 was comprehensive

In short, he asserted that the state had the wrong end of the stick. Yes, there was a financial relationship between him and Deputy President Jacob Zuma, he said, but it was not a corrupt one.

The payments he had made to Zuma were loans made in friendship. He had not asked for interest because that offended his religious convictions. It was all set out in a revolving-credit agreement.

Shaik also denied allegations of fraud, saying money had been mistakenly written off in his company's books, but this had been fixed later.

To allegations that he was involved in soliciting a bribe for Zuma from French arms company Thomson, he replied he knew nothing.

But in his opening address, lead prosecutor Billy Downer said his case would be based on facts and patterns.

"We will principally be talking of the arms deal," he said.

The first charge against Shaik is one of general corruption. In their efforts to prove this charge, the state led a number of witnesses to show, as explained by Downer, that Zuma was "on retainer for Shaik".

Charge 1: Corruption

The state says that Shaik paid Zuma R1,2-million to further a "general corrupt relationship between them".

Shaik's former secretary, Bianca Singh, told the court: "Zuma was quite close to Shaik. They would speak on the telephone and he would come to visit."

She said Shaik had arranged Zuma's financial affairs, had managed his accounts and had discussed his financial situation with him. She knew that Shaik had used Zuma's name often because she had heard him talking on the phone.

In his marathon testimony, KPMG forensic auditor Johan van der Walt said these "payments made for or on behalf of Zuma sometimes threatened the financial existence of the whole group".

He explained that it made no business sense. The court heard that Nkobi, Shaik's firm, was in financial trouble in its infant years, but now seemed to have turned a corner.

Shaik retorted that a schedule compiled by his forensic auditor showed payments to Zuma had been only a small percentage of group turnover.

But Van der Walt replied that "one can have a billion rand turnover and still have an overdraft. If you don't have the money, you can't operate".

The court also heard that Zuma was also in financial trouble at the time that the Nkobi companies and Shaik made these payments to him. The deputy president had a litany of unpaid debt and money problems. Van der Walt said Zuma had lived way beyond his means - but had seemed to accept that other people would pay his debts.

But Shaik's counsel, Francois van Zyl SC, said Shaik would testify that as far as he knew, Zuma had by now paid all his creditors and should have no problem paying him back.

Van der Walt replied that whether the money paid to Zuma had been a loan or a donation, Zuma had reaped the benefits.

"My review indicated that Zuma had no access to major funds to repay his debts. The repayments must have taken place outside the period of review," he said.

Van Zyl further said it was his instructions that Shaik never paid Zuma as a bribe, or intended to do so.

He produced a written revolving-credit agreement between Shaik and Zuma, of which, he said, parliament had been informed.

The state said it would dispute the agreement's authenticity.

Van Zyl also accused Van der Walt of not taking into account that Zuma had repaid some money to Shaik.

Ian McLeod, a credit manager from Absa, said that neither Shaik nor Zuma had mentioned the agreement when they had been asked to make a list of their assets and liabilities. From what he had seen, he had doubted very much if Zuma could have repaid Shaik.

Tracy O'Brian told the court that she had sublet a flat to Shaik. Shaik had told her that it was for his financial director. She had later discovered, when there had been complaints about bodyguards with guns, that Zuma lived there, she said.

Shaik or one of his companies had paid the rent, but it had always been late. She terminated the lease.

Abdool Qadir Mangerah said he was a close friend of Zuma. He had lent the deputy president R154 000. When Zuma had been unable to pay him back, Shaik had done so, he said.

A balance of R4 000 was still outstanding. He said he had helped Zuma out of friendship, and had given him interest-free loans, just as Shaik claimed he had done.

All Mangerah expected in return were "prayers for his good health".

What the state alleges was done in return:

A former business associate of Shaik's, Professor Themba Sono, told the court that Shaik had told business partners that Nkobi could bring "political connectivity" to the table.

Shaik said what he had meant by political connectivity was black economic empowerment.

Professor John Lennon of Caledonian University in Glasgow told the court that Zuma had advised him to use Nkobi as the South African partner for a proposed eco-tourism school. When he had seemed hesitant - it was "early days" - Shaik had threatened to derail the proposal and tell Zuma.

Shaik denied he had had anything to do with the sudden decline of the project. He said his "unfortunate" correspondence with Lennon had been prompted by his reaction to being "sidelined".

Zuma intervened when French arms company Thomson was hesitant to take Nkobi on as a black economic empowerment partner because Thabo Mbeki allegedly told them he had reservations about Shaik and his business ventures.

Van der Walt said Zuma had intervened in sorting out Nkobi's shareholding in ADS - a company strategically placed to get a multimillion-rand contract in the arms deal.

Van Zyl countered that both Mbeki and former president Nelson Mandela had also been involved in attempts to negotiate a black economic empowerment settlement for ADS.

When the Renong group from Malaysia wanted local partners for a Durban development, Zuma proposed Shaik's involvement.

Several Absa officials testified that Shaik and Zuma were considered a "package deal" when the bank invited Zuma to become a private bank client.

But technically, Downer pointed out, they did not need to prove that Zuma had done anything out of the ordinary to help Shaik:

"You can corrupt a politician by paying him to do something he is paid to do every day," he said.

Charge 2: Fraud

The state says that Shaik wrote off more than R1-million. This money was owed by Shaik to companies in the Nkobi group, and included payments made to Zuma. The write-off meant that it disappeared from Nkobi's books.

Shaik said it had been a mistake and his auditors had fixed it in subsequent financial years.

Van der Walt said it did not matter that it had been fixed, it was still a crime. "You can fix the amounts, but not the irregularity," the forensic auditor said.

He said Shaik had stood to benefit most from the write-off. The fact that an auditor had been advising him did not reduce his liability as director.

Van Zyl said Shaik would tell the court that the company's auditors and Financial Director Colin Isaacs took full responsibility for the financial side of operations. They had had to advise him. He was sure that that was what had been done and that the company's books were in order.

When Shaik had became aware of the problem, he had it corrected. He would say that he had had no intention to commit fraud.

Auditing clerk Anthony Reed said he had been instructed by Ahmed Paruk to effect the write-off. Paruk said he had been instructed by Shaik to do it. He said Shaik had told him that there was no way he owed that type of money to his companies.

Former Nkobi accountant Celia Bester said that the money written off had been cash bribes paid to "various ministers" by Shaik. The writing off, she said, had been the main trigger for her final resignation.

"I saw it purely as bribe money," she told Squires.

Charge 3: Corruption

The state says Shaik solicited a bribe from French arms company Thomson for Zuma. Zuma agreed to protect Thomson in return.

Van der Walt said there were clear signs that an "informal corrupt" process had been followed, apart from the formal process when South Africa's multibillion-rand arms deal had been concluded.

Government auditor James Edward van Heerden, who did a special review of the arms acquisition process, also concluded that there had been deviations from the accepted arms acquisition practices, with no plausible explanation.

He told the court that there should be a special investigation or forensic audit focusing on the involvement of the deal's contractors and subcontractors.

The most controversial document produced by the state was a fax that ostensibly sets out a bribe agreement between Shaik, Zuma and a former director of Thomson's South African operations, Alain Thetard.

The agreement was allegedly reached at a March 2000 meeting, and involved the payment of R1-million to Zuma in exchange for his protection and support.

Both the handwritten fax and a disk with a typed copy were handed to the Scorpions by Thetard's former secretary, Sue Delique.

Her evidence was backed up by forensic computer expert Bennie Labuschagne and handwriting expert Marius Rehder.

Delique told the court that she had been asked to type the note and fax it in encrypted form to Paris. After she had resigned, she had told Thomson's auditors at the time, Gary Parker and David Read, about it. She had refused to give them the documents.

She told the court that she had not faxed the agreement to Shaik. Van Zyl said Shaik would testify he "had nothing to do with Thomson in 2000".

Parker and Read had concluded at the end that she was a disgruntled employee. They had found no proof of what she had told them in Thomson's financial statements, and had then dropped the matter.

Shaik said there had been a meeting between him, Thetard and Zuma. But it had been about a donation to the Jacob Zuma Education Trust.

Singh told the court that an audibly agitated Shaik had phoned her from the golf course to tell her to tape hearings by the parliamentary standing committee on public accounts when Chippy was being questioned about the arms deal.

She said he had told her next that that they were "focusing on the wrong person".

Singh also said she had overheard Shaik calling Zuma the next day.

According to her, he said: "Hello my brother, hello JZ. Chippy is under pressure. We really need your help to land this deal."

He had asked her later to come to Mauritius with him to meet Thetard.

Singh testified that at that meeting Shaik had said they had to discuss "damage control". And he had said that if the Heath Unit continued to probe the deal and if a certain African National Congress member opened his mouth "they would be in big trouble".

Soon afterwards the alleged bribe agreement had been concluded.

Van der Walt said he had found a great deal of correspondence about the payment of the money.

Only one payment had been made of R250 000, but nothing had been done to enforce the so-called "service provider agreement", he said.

Van Zyl said Shaik would deny an attempt to bribe Zuma for protection, and would tell the court that he had not known why Thetard had written the note setting out the bribe.

He was also expected to testify that what the state thought was correspondence about the bribe was really about the donation to the education trust.

Shaik said that the trust had been in financial difficulty in 2000 and the donation had been required urgently for them to be in a position to give bursaries for the next year.

Gerhardus Pretorius, who managed the trust at the time, told the court that he had never been told of a significant donation from Thomson.

Theunis Benemere, who was involved in the day-to-day administration of the trust, said: "There was always enough money."

Former judge Willem Heath told the court his unit had been confident it would be included in the multi-agency probe into the arms deal.

His unit had been the most dangerous by far if there was evidence of corruption because it had had the power to have the deal cancelled on "public interest" grounds.

Heath said he had been baffled when Mbeki had refused to allow them to investigate.

The leader of the Independent Democrats, Patricia de Lille, told the court she had been handed information by people whose identity she did not want to disclose.

She had first asked for a commission of inquiry into the arms deal. When that had been refused, she had asked Mbeki to issue a proclamation to allow the Heath Unit to investigate.

She was accused by Van Zyl of using the arms deal to attack the ANC.

"My attack was on corruption," she said.

Van Zyl said Shaik would say he had known nothing about the so-called "De Lille dossier".

Gavin Woods, who headed the parliamentary committee on public accounts, told the court that it had wanted a thorough investigation of the arms deal.

He had received a letter from Zuma, written in his capacity as the leader of government business, saying that the government saw no need for the Heath Unit to be involved.

At the time, Woods said, there had been no clarity on what it was that the "leader of government business" was supposed to do.

Under cross-examination he conceded that the director of public prosecutions, the auditor-general and the public protector had also wanted Heath excluded.

Alain Thetard said nothing.

The trial resumes on January 31.

With acknowledgements to Estelle Ellis and The Mercury.