Durban - They do not need a smoking gun to prove their corruption case against Durban businessman Schabir Shaik.

Leader of the prosecution, advocate Billy Downer SC, said all the prosecution need do is prove a mindset - and that will secure a conviction.

But Durban businessman Schabir Shaik said the prosecution must prove the allegations.

He yesterday pleaded not guilty to two charges of corruption and one of fraud as well as alternative charges relating to reckless trading, failing to keep proper records, theft, tax evasion, falsifying records, money laundering and acquiring unlawful proceeds of crime.

"I plead not guilty to all such counts presented to me," Shaik said to Justice Hilary Squires.

Downer started his presentation by quoting the first line of the epic poem, the Aeneid, by Virgil: "I talk of arms and a man."

Judge Squires, who has previously remarked on the estimated duration of the trial, continued this poetic theme by telling Downer: "Mao Tse Tung is said to have said that a journey of a thousand miles starts with a first step. You can take that first step after tea time."

Shaik, supported by his family at court, stood huddled with his legal team in the courtyard during tea breaks.

The state's case, as presented by Downer in his opening address:

"Our case deals with power exercised in informal ways. You can corrupt a politician by paying him to do something that he is paid to do every day."

This case is firstly about a general corrupt relationship between Shaik and Deputy President Jacob Zuma and secondly about a bribe of two annual payments of R500 000 in exchange for Zuma's protection against investigations of South Africa's multi-billion rand arms deal.

It does not matter what role Zuma played in the conclusion of the arms deal. Corruption can exist where people do things they are paid to do anyway.

The state only needs to prove that a corrupt intention existed to get a conviction. "Corruption is paying to gain an advantage somebody who is not paying will not have."

The state intends to prove corruption. "We intend to prove that, apart from the formal bidding process, there was an informal (back-door) process followed where money may or may not change hands but where influence is more important than tender documents.

"This informal process is often a perception. Bidders think it is necessary. Those in power may be involved in the informal process and it may involve an exchange of money.

"This is how it was done in the present case. I must stress that we deal with a perception," Downer said.

Nkobi was in financial trouble and could hardly afford payments.

"The payments are not typical of clean loans," Downer said, adding that they made no business sense.

Zuma's financial position was difficult as well.

The state intends to put together a puzzle of facts of money changing hands, investigations into the arms deal and Zuma's money troubles to prove that all was not above board.

One of the state's allegations would be that R2 million paid by former president Nelson Mandela to the Jacob Zuma Education Trust was used by Shaik to disguise the payment of bribe money to Zuma.

Downer said Mandela endorsed a R2m cheque which was paid into Zuma's personal account.

The money was meant to be split evenly between the Jacob Zuma Education Trust and Development Africa, which Downer said was ostensibly a charitable trust.

A sum of R1m was paid into the education fund, but the rest went through a complex routine of being shuttled between Nkobi group accounts.

When Zuma did pay Development Africa R1m, Shaik stopped the cheque.

Shaik later paid R250 000 to Development Africa in partial settlement of Zuma's debt.

Downer said they will also prove the case by relying on the law that allows the prosecution to use statements made by persons involved in an alleged conspiracy even though all of them are not before court.

"Hey, why are there only white people in the presentation?" Shaik's brother Mo Shaik asked when the court adjourned, referring to Downer's Powerpoint presentation that accompanied his opening remarks.

Schabir Shaik's defence as summarised from his plea explanation:

His relationship with Zuma was a friendship and nothing else.

As a friend, he tried to help Zuma out of financial trouble and keep him in politics. The payments were for, among other things, school fees, legal costs, car repairs and designer clothing.

As Shaik's counsel Francois van Zyl read out the numbers of payments Shaik admitted to have made to Zuma or on his behalf, somebody in the public gallery whispered: "He sounds just like an auctioneer."

Nothing about the payments was unlawful or corrupt.

No money was paid with the intention of involving Zuma in any corrupt act or to reward Zuma for doing something wrong.

He denied alternative charges of reckless trading and failing to keep proper accounting records.

He admitted that R1.2m was "written off" in the accounting records of one company, Kobifin, but said this was a mistake and he was told it would have no tax implications. He said it was later agreed to allow auditors to rectify the error.

He denied alternative charges of theft, tax evasion and falsifying accounting records.

With specific reference to corruption in the arms deal, Shaik denied any wrongdoing or soliciting a bribe for Zuma.

He also denied being party to a phantom agreement the state claims was used to hide the bribe payment.

He also denied the alternative charges relating to organised crime legislation against him.

Judge Squires said at the outset he wanted to make it clear that the trial is not a commission of inquiry into allegations of arms deal corruption. He also said that Zuma was not on trial and that any evidence not relating to Shaik will be irrelevant.

By the end of proceedings yesterday the packed courtroom also developed a "no-go" zone in its middle after the roof started leaking foul-smelling water.

The first witness will be called today. There are 105 witnesses on the list - but Downer said he might not have to call them all.

With acknowledgements to Estelle Ellis, Jeremy Gordin and the Cape Times.