Schabir Shaik's R21 million stake in African Defence Systems had been secured through his "stick-and-carrot" corrupt relationship with former Deputy President Jacob Zuma.

And this benefit, including a further R12.7 million he had earned in dividends so far from his shares in the arms company, must be confiscated in a clear message to South Africans that "crime does not pay". This in essence was the submission yesterday on behalf of the state by top Johannesburg senior advocate Wim Trengove in an application before Durban High Court Judge Hilary Squires for a confiscation order against Shaik of more than R34 million. If Shaik loses the case, he loses with it a large chunk of his fortune.

The courtroom was packed with journalists, Asset Forfeiture Unit employees - including its head Willie Hofmeyr - and experts the state used during the trial and in the forfeiture. The only person missing was Shaik himself. His brother Mo, who is now running his Nkobi group of companies, arrived just before lunch. Hofmeyr said the case was important, not only because of its obvious high-profile nature, but because it was an important test of SA's forfeiture laws.

"This is the first big case to be argued in the High Court, and it is important to the development of our laws on confiscation.

"Our argument is that he (Shaik) is liable to pay the full amount of the proceeds of his crime although the court does have some discretion."

He did not want to comment on how the case was going so far, but said the state had brought the application because it was confident its argument was right. The state contends that Shaik and some of his Nkobi group of companies had received four benefits from his "generally corrupt" relationship with Zuma. These were the ADS shares, the dividends from them plus R500 000 it was paid by Thomsons and the R250 000 that was paid into one of his companies by Thomsons, disguised as a service provider agreement, but in reality a bribe destined for Zuma.

This comes to R34.5 million. So far the state, through a court-appointed curator, has "preserved" assets of R28 million pending the outcome of this application. But Shaik will not necessarily have to hand over to the state the shares or the actual proceeds of the crime. It was explained yesterday that Squires simply had to determine a monetary amount of this, hand down a civil judgment and Shaik could pay it however he chose. Shaik's lawyers are expected to argue today that R34.5 million is out of proportion to the crime.

They will also argue that the R12.7 million earned in dividends was used to pay for the ADS shares, and a confiscation order against the dividends as well as the shares would be a "double payment". The state says the fact that the shares were financed by the dividends was "just a coincidence" and the state was entitled to the "gross benefit" - not just the profit. Another sticking point is the "cap" Zuma was wearing at the time that he assisted Shaik to secure a partnership with Thomsons, which resulted in the ADS deal.

Shaik's lawyers say he was acting in his capacity as deputy president of the ANC and not as MEC for economic affairs in KwaZulu-Natal. But Trengrove argued yesterday that Zuma could not "don a different cap and distance himself from his official duties". He said by the time Zuma had met Thomsons to intervene on Nkobi's behalf, he had already been paid more than R333 000 by Shaik. Advocate Francois van Zyl, for Shaik, is expected to begin his argument this morning.

With acknowledgements to Tania Broughton and The Mercury.