By Joe Brock

PRETORIA (Reuters) - South Africa's anti-graft watchdog has deferred release of a report into allegations of political interference by wealthy friends of Jacob Zuma in a move critics of the president fear could lead to a watering down of its conclusions.

A court application by Zuma had obliged Thuli Madonsela, head of the agency that has spearheaded investigation of alleged involvement of an Indian-born family into political affairs, to delay release of the report that had been due on Friday - her last day in office.

The court will now hear Zuma's case before the report can be released. Zuma applied for that order on Thursday on the grounds that he had not had the chance to question witnesses and review any evidence that implicated him.

Madonsela said the report had been submitted to parliament for safekeeping until the court ruled it can be released.

"It is not an interim report, that is my final report. We have given it to the Speaker of parliament for safekeeping," Madonsela told reporters in the capital. "I am not at liberty to discuss any aspect of that report."

Madonsela said in June she would investigate whether or not Zuma unlawfully allowed the Gupta family to choose ministers and other occupants of high office.

Both the family, which has wide-ranging business interests in South Africa, and the president have denied any wrongdoing.

Opposition parties have called for Zuma's resignation over his links with the Guptas and top members of the ruling African National Congress (ANC) have condemned what they call "state capture" by private interests, without naming the president.

The row over the report comes at a time when Zuma's government is reeling after prosecutors this week ordered Finance Minister Pravin Gordhan to appear in court on Nov. 2 to hear fraud charges against him. Gordhan on Friday dismissed the charges as "frivolous".

The opposition and analysts say Gordhan's woes are a witch-hunt by a faction allied to the president, recalling that the minister has vowed to fight patronage in government.


Madonsela had already interviewed Gordhan, former finance minister Nhlanhla Nene and deputy finance minister Jonas as part of the probe on Zuma's links with the Guptas, local media said.

The Guptas became a household name in March this year after Jonas said the Guptas had offered him Nene's job, an allegation that led to calls for Zuma to resign.

On Friday, Co-operative Governance and Traditional Affairs Minister Des van Rooyen also filed a court application to block the release of the report.

Van Rooyen was named finance minister after Zuma sacked Nene, but his stint was short-lived and he was replaced within with Gordhan days after a market sell-off.

In court papers on Friday, Madonsela said Van Rooyen visited the Guptas home the day before his appointment by Zuma, a charge the minister denied.

Critics fear the delay in releasing the Gupta report could be further extended and its content diminished with the end of Madonsela's tenure.

Anton du Plessis, director at Institute for Security Studies said the president's credibility was already in shreds.

"The mere fact that the president's reacting the way he has just raises more suspicion," he said.

Madonsela won public support for taking Zuma to task over the $16 million of state money spent upgrading his private home.

In March, the Constitutional Court upheld her report and ordered that Zuma repay some of the funds spent on non-security upgrades. The president has since paid back some of the money.

Zizi Kodwa, spokesman for Zuma's ruling ANC party, told eNCA television news the party was in favor of Madonsela releasing her findings, including information on the Guptas.

(Additional reporting by Mfuneko Toyana; Writing by James Macharia)