Prosecutors dropped charges of money laundering, corruption and fraud against Jacob Zuma. (AFP: Alexander Joe)

A decision by South African prosecutors to drop corruption charges against African National Congress (ANC) leader Jacob Zuma has divided the country. Andrew Fowler from the ABC's investigative unit looks into the case:

When you first hear about it, it's the size of the bribe that Jacob Zuma was charged with receiving that's most disturbing.

How much does it take to get your own way with one of the nation's highest flyers, the man in waiting to be president? $20 million, $30 million, $50 million?

In fact, according to the prosecution, the price of winning the favours of the man most likely to be the next president of South Africa, came in at just 500,000 rand per annum. That's about $100,000.

It's a miserly amount, even taking into account the fact that Zuma was desperately short of cash.

And, according to the case against him, what did Zuma offer up in exchange for this piddling amount? A $400 million contract for South Africa's new warships.

But it is, of course, much worse than that.

For while Zuma has been effectively found guilty of taking the bribe during a related court case, he will now never stand trial.

The National Prosecuting Authority (NPA) appears to have caved in to extraordinary pressure.

Late last night Australian time, they dropped the charges of money laundering, corruption and fraud.

Significantly though, the NPA said withdrawing the charges did not indicate that Zuma was innocent.

Even so, the decision sent a powerful message to the people of South Africa: those at the top can get away with just about anything. The rule of law is now the rule of the political fix.

For the people of South Africa, the implications of the Zuma decision raise painful possibilities.

Many, both black and white, have an eye on the horror that is Zimbabwe just across the border, where the rule of law is as dead as the thousands who have been killed as a result of Robert Mugabe's policies.

Foreign Correspondent spoke to Pelesa Morudu, a young woman who had been a loyal African National Congress (ANC) officer.

She, like many others, was appalled at the prospect of Zuma leading the country.

"After 15 years of democracy, after 15 years of liberation, the party that led us to independence, is this, how is it possible they can present someone who's a criminal suspect as a president for the republic?" she said.

Courageous politician Patricia De Lille told the program called for the Zuma case to go to court.

"Jacob Zuma must go and answer in court, because there's some evidence, some prima facie evidence that could nail Zuma," she said.

Throughout our period in South Africa my colleague Wayne Harley and I were both heartened at the great strides the country had taken since the end of apartheid.

Schools and hospitals had been built. There were new homes in place of many shanty towns. There was access to electricity and clean water.

People complained to us that things hadn't changed quickly enough, but change they had.

The biggest nagging problem which confronted us, and not just for our personal safety, involved the rate of violent crime. Every year nearly 20,000 South African are murdered.

It is, of course, the police whose job it is to combat these crimes. It should be noted that the National Police commissioner Jackie Selebi received payments from underworld characters and was stood down last year.

Under a Zuma regime it is now a distinct possibility that Selebi will get his old job back. They will make a formidable double act as two of the most powerful men in South Africa.

No doubt Zuma and Selebi will also be able to share the delights of Paris together.

It was there that Selebi spent the money hosting a dinner while lobbying to become the head of Interpol, a job he finally landed.

It's also the city where the French arms manufacturer Thales is based. It was Thales which arranged for the money to be paid to Zuma, according to the case against him.

If it hadn't been for Dr Richard Young, who runs an innovative defence software company in Cape Town, we may never have known the truth about Thales.

Dr Young's company was the frontrunner to win a $400 million defence contract.

The Zuma deal shut out Dr Young's company. He began investigating and asking questions.

He didn't have to look far. Thales, it would seem, has form.

In 1991, the company sold six La Fayette frigates to Taiwan. The deal contained a "sweetener" as the ships did not strictly meet Taiwan's requirements.

In 2003 Taiwan's navy sued Thales to recover $590 million in kickbacks - money deposited in Swiss banks.

Swiss authorities froze approximately $US730 million in over 60 accounts. In June 2007 the Swiss authority returned $34 million from those frozen accounts to Taiwan.

Eight people involved in the Taiwan ships contract have died in unusual or suspicious circumstances. The Thales representative at the time, Andrew Wang, is wanted for the murder of a naval officer involved in the deal. Late last year he was still on the run.

The man reportedly linked to the secret payments in Taiwan was Thales manager Alain Thetard.

His next port of call after Taiwan, South Africa. It was Thetard who organised the payments to Zuma through a web of companies linked to Thales.

An encrypted fax in our possession, written by Thetard, copied to the head of Thales International, Jean-Paul Perrier, reveals arrangements for Zuma to be paid R500,000 a year to protect Thales from any investigation into the ships deal.

Zuma would also provide his permanent support for Thales' future projects.

In the late 1990s, while Thetard was busy in South Africa, the Australian Government was busy selling off its prized defence asset, the Australian Defence Industries business - based at Sydney's Garden Island - to none other than Thales.

Concerns expressed about the history of Thales in Taiwan, and the potential danger to Australian security, were brushed aside by the then Treasurer Peter Costello.

While there is no evidence that Thales has operated corruptly in Australia, at least one of the executives who received the encrypted fax, Jean Paul Perrier, holds a senior position in Thales' Paris headquarters.

Much of the evidence against Zuma stems from a court case involving his financial partner, Schabir Shaik.

In Shaik's trial in 2005, Judge Hiliary Squires found that Zuma "agreed to receive R500,000 annually in exchange for protecting [Thales] against an investigation into the arms deal, and to advance the company's interests in South Africa".

Shaik was found guilty of "facilitating Thales's bribery of Zuma". He was jailed for 15 years on charges of fraud and bribery relating to Zuma involving nearly $1 million between 1995 and 2005.

Meanwhile two of the central characters in the case, Alain Thetard and Jean-Paul Perrier, are living life as usual in France.

The French police who raided the Thales headquarters in Paris and the homes of Thetard and Perrier went cold on the case after then-South African president Tabo Mbeki visited the then-French president.

For its part, Thales has told the ABC that it denies any wrongdoing.

Thetard is still wanted in South Africa to answer perjury charges relating to the Zuma bribery case. Perrier recently took up an appointment as deputy chair of the company.

Only Jacob Zuma and the supposedly uninvolved representatives of Thales in South Africa were left behind to face the music. And now it seems they too are off the hook.

-Watch the full story on tonight's Foreign Correspondent at 9.30pm AEST on ABC 1.

With acknowledgements to Andrew Fowler and ABC Television.