The office of South African President Thabo Mbeki has denied a newspaper report claiming that a German firm paid him millions to approve an arms deal.

Mr Mbeki's office said he had never received money from the firm.

It called the report in South Africa's Sunday Times a "hotch-potch recycling of allegations that have from time to time been peddled" over the arms deal.

The paper said MAN Ferrostaal paid Mr Mbeki 30m rand (£2.1m at current rates) to guarantee a submarine contract.

The Sunday Times said its story was based on a secret report by an unnamed UK risk consultancy, commissioned by a central European manufacturer that faced a hostile bid from MAN Ferrostaal.

Steel plant

The report cites a former South African official as saying the firm paid Mr Mbeki to secure a 6bn rand contract to sell three submarines to the South African navy, the paper said.

It said the company promised to build a 6bn rand stainless steel plant in the Eastern Cape province as part of the deal.

The paper reported that Mr Mbeki had told investigators that the 30m rand payment had been split between former deputy president, Jacob Zuma, who received 2m rand, and the governing African National Congress (ANC) party, which received the rest.

MAN Ferrostaal has dismissed the allegations as a "fishing expedition" intended to damage its reputation and that of the South African government, the Sunday Times reported.

Mr Mbeki's office said the report was part of the Sunday Times' "enthusiastic voyage to re-writing the fundamentals of journalism".

"The presidency would like to place it on record that President Thabo Mbeki has never at any stage received any amount of money from MAN Ferrostaal," it said in a statement.

It noted a joint investigation into the South African government's Strategic Defence Procurement Package, which it said found no evidence of "any improper or unlawful conduct by the government".

It also challenged the paper to explain why it had not named the UK risk consultancy, and asked it to explain the allegation that Mr Zuma had acted as a front-man for Mr Mbeki during arms deal negotiations - "particularly in the context of the court process currently under way".

Mr Zuma is currently seeking to have corruption charges linked to a separate arms deal dismissed.

He defeated Mr Mbeki in the ANC's leadership contest in December and is the favourite to become South Africa's next president.

Source: BBC