Durban: Businessman Schabir Shaik will deny evidence that he had Deputy President Jacob Zuma's pension ceded to him for repayment of loans, the high court here has heard.

Advocate Francois van Zyl, SC, for Shaik, said yesterday his client would tell the court he neither told auditor Ahmed Paruk that he had done this, nor did he ask that R1.2 million in loans be written off as "development costs" in his company's books.

Paruk is a chartered accountant and partner at the auditing firm David Strachan & Tayler (sic Taylor). He was giving evidence against Shaik, who has pleaded not guilty to charges of corruption and fraud.

Paruk's evidence in the Durban High Court dealt with the fraud charge. The state says Shaik asked for loans amounting to R1.2m to be written off in his company's annual financial statements for 1999.

This amount allegedly included money paid to Zuma, as well as the loan accounts of Floryn Investments, which Shaik said was a vehicle for paying donations to the ANC, and Clegton Investments, through which payments for a flat occupied by Zuma were made.

Paruk was the partner overseeing the auditing of Nkobi's books for the 1999 financial year. He said Shaik told them at the meeting that there was "no way" in which he owed all that money (reflected in his loan account) to the company and that it was expenses he incurred to obtain contracts.

Paruk said he knew Shaik was Zuma's financial adviser. Subsequent to the 1999 audit he found out that Shaik had made certain payments to Zuma. He also said he recalled a conversation in which Shaik had told him he had obtained cession of Zuma's pension.

"You are not allowed to cede a pension," Paruk said, responding to a question by Judge Hilary Squires.

During cross-examination by Van Zyl, Paruk said he accepted Shaik's explanation that the amounts were wrongly allocated to his loan accounts.

"It is not unreasonable that errors will occur. Mr Shaik was a substantial shareholder in the company. I had no reason to believe he will tell me something that is not correct," Paruk said.

"In hindsight it is clear that we should have checked."

Van Zyl said Shaik would tell the court he was assured the write-off was in order and had no tax implications. He also said Shaik would deny asking for the amounts to be written off.

Van Zyl said: "Mr Shaik will say that he did not have a cession of Zuma's pension ... He did, however, always look at Zuma's lump sum pension payout for repayment of his debt."

The trial continues.

With acknowledgements to Estelle Ellis and the Cape Times.