Former Crime Intelligence boss Richard Mdluli allegedly pocketed up to R7,000 a month by renting out his Western Cape home as a safe house to the division which he headed.

Mdluli also had exclusive access to a posh "safe house" in the Clearwater Estate, Boksburg, which came fully furnished at the expense of Crime Intelligence's secret service account.

This is according to Crime Intelligence officer Col Dhanajaya Naidoo, who told the state capture inquiry that he had personal knowledge of how safe houses were "abused" by Mdluli during his tenure in 2010.

Information obtained from Naidoo, who is in a witness protection programme, in 2011 resulted in the Hawks launching 11 investigations into Mdluli and other senior officials. The investigations were in relation to a host of alleged crimes committed during their tenures at the intelligence division of the police.

Naidoo previously described himself as a "lackey" to Mdluli and Solomon Lazarus, the former finance officer in charge of the secret service account.

Naidoo on Tuesday described an elaborate scheme involving Mdluli and business owner John Appalsamy. He said Appalsamy ran a company which acted as "broker" and appeared as the owner of properties that actually belonged to Mdluli. Appalsamy's company would then lease Mdluli's properties to Crime Intelligence as safe houses.

"I was informed by Lazarus that Mdluli wants us (Crime Intelligence) to rent his flat as a safe house. I was instructed by Lazarus to fly to Cape Town with Appalsamy, who was his personal friend," Naidoo said.

A lease agreement for three years was signed between Appalsamy's company and Crime Intelligence for Mdluli's Gordons Bay two-bedroom apartment. The lease took effect in February 2010 and the rent was R8,500 a month.

Naidoo said Appalsamy would invoice Crime Intelligence for R8,500 at the end of each month. Thereafter, Naidoo would collect R7,000 in cash from Appalsamy generated from that rent and hand it over to Mdluli. The remaining funds, according to Naidoo, was Appalsamy's fee.

Naidoo also admitted that he purchased about R50,000 worth of furniture using funds from the secret service account for the flat.

He said another house in the exclusive Clearwater Estate in Boksburg was leased through Appalsamy's company as a safe house. However, this was used by Mdluli only.

Naidoo said he used about R100,000 from the secret service account to purchase furniture and appliances for the house.

His testimony is continuing.