When Jacob Zuma cashes in his pension, Schabir Shaik will be first in line to be repaid the R1,2 million that he claims he loaned to the deputy president.

This is according to defence advocate Francois Van Zyl, who told the Durban High Court Shaik believes he will be repaid when Zuma receives his "lump sum pension".

Shaik claims he has no reason to believe that Zuma cannot repay him from future funds.

However, the state rejects this claim, on the grounds that there was never a loan but instead a bribe.

According to the state, Shaik solicited an annual R500 000 bribe from French arms manufacturer Thomson-CSF to Zuma for protection from investigations into the country's arms deal, in which Thomson and Shaik's company had a slice.

The state also claims that Shaik paid Zuma for his political influence to secure projects for Nkobi Holdings.

During cross-examination of the state's key witness, KPMG forensic auditor Johan van der Walt, Van Zyl told the court that Shaik will say that:

at no stage did he have the intention to pay Zuma the money as a bribe. According to Shaik, the payments were a loan.

He denies that he fraudulently conducted business at Nkobi Holdings, specifically with reference to transactions regarding Zuma. Shaik claims the payments were not "reckless trading". The state claims payments made to Zuma were not reflected accurately in Nkobi Holdings books.

He denies that Nkobi Holdings made loans to him without the consent of other members in the group. The state claims Shaik illegally borrowed money from the group to pay Zuma.

He denies that he had any intention to defraud anyone with regard to the R1,2 million write-off. According to Shaik, he obtained outside financial and legal advice on the write-off.

According to the state, in February 1999 an amount of R1 282 027,63 was irregularly written off in the Nkobi accounting records under the description of development costs for Prodiba, a company Shaik formed to bid for the driver's licence conversion tender. This amount included money paid to Zuma. The state claims the write-off was "false, irregular and does not comply with Generally Accepted Accounting Practice (GAAP)".

He denies making payments to Zuma to protect Thomson-CSF.

He denies having knowledge of a letter written by Thomson-CSF South African boss Alain Thetard, which allegedly outlines the bribe agreement. Shaik claims he never saw the letter and does not know why Thetard drafted such a letter.

The R250 000 paid to Shaik by Thomson-CSF was in respect of a service provider agreement that stated that Nkobi Holdings would be paid R1 million to identify offset projects for ADS. Shaik claims it had nothing to do with an alleged bribe to Zuma.

Van Zyl told the court that although he has dealt with many of the state's accusations in the KPMG report, he will continue cross-examining Van der Walt on Monday.

Judge Hillary Squires adjourned proceedings to Monday to allow several Hindu participants in the trial to celebrate Diwali on Friday.

With acknowledgements to Nivashni Nair and The Natal Witness.

* Diwali is a fesitval of great fireworks. Let the fireworks begin.