The National Prosecution Authority will respond on Thursday afternoon to media reports that it has made a "secret deal" with convicted fraudster Schabir Shaik.

NPA spokesman Tlali Tlali said a statement would be released in the afternoon. He declined to give any further comment.

The Democratic Alliance has called on the NPA to explain why it would make a deal with Shaik, the former financial adviser of African National Congress leader Jacob Zuma.

The Star newspaper reported on Thursday that Shaik would receive R5 million from the state in an agreement on interest earned from seized assets.

The payment settled a dispute over who was entitled to the interest earned on R34 million the state seized from Shaik, said the newspaper, quoting from papers filed with the Durban High Court.

There was R14 million interest at stake and the state settled the dispute by agreeing to pay him half the money -- R5 million in cash while the remaining money was used to settle legal fees, the Star said.

This left the state with R41 million that would be paid into the criminal asset recovery account.

The deal was signed late in 2008 between Shaik's lawyer and the National Director of Public Prosecutions, the newspaper reported.

One of the terms of the agreement was that it be kept secret with "no public announcements" without written approval from either party, reported The Star.

The money had gained interest since January 2006 as Shaik failed in bids to both the Supreme Court of Appeal and the Constitutional Court to overturn the forfeiture order.

Meanwhile, The Star reported that Shaik had applied to President Kgalema Motlanthe for a "reprieve and remission of the confiscated amounts", in an attempt to get back the R34 million confiscated from him.

Shaik is currently in jail on a 15-year-sentence resulting from his conviction of fraud and corruption, including a charge that he made corrupt payments to Zuma.

The DA called on the NPA to explain the thinking behind the deal.

"We believe that the agreement, if these reports are accurate, is outrageous and makes a mockery out of our justice system. It seems patently obvious that if an initial sum is forfeited, then any subsequent earnings on that amount ought to be forfeited too," the DA said.

"The DA believes that the NPA needs to make it expressly clear why such a deal was concluded, how it serves the interests of justice, why it was conducted in secrecy, and upon what basis the NPA decided to conclude a negotiated settlement rather than allow the matter to be determined in court."