The former chief whip of South Africa's ruling party has pleaded guilty to fraud at the start of his trial in connection with a multi-billion dollar arms deal.

However, more serious charges of corruption against Tony Yengeni will be dropped after a deal was made with prosecutors.

Mr Yengeni resigned his post as chief whip in the African National Congress (ANC) after being arrested in October 2001.

He was charged with corruption, fraud and perjury on allegations that he received a cut-price luxury car in return for ensuring a multi-billion-dollar arms deal went ahead in 1999.

Luxury vehicles

The $5bn arms deal to buy new fighter jets, helicopters, submarines and warships has been a controversial one in a country where millions live in poverty.

The government says the military needs modernising

The European Aeronautical Defence Space Company (EADS) has admitted that it had "rendered assistance" to some 30 senior officials to obtain luxury vehicles.These included defence force chief General Siphiwe Nyanda.

When the deal was being negotiated, Mr Yengeni was chairman of parliament's defence committee.

Court documents allege that he received a 48% discount on his vehicle and media reports say that a total of 33 luxury cars were sold at a reduced price to senior government officials.