Former Transnet chief financial officer Anoj Singh. (Photo by Papi Morake/Gallo Images via Getty Images)
The Zondo state capture commission has recommended law enforcement investigate telecommunications company Neotel for its alleged role in funnelling money from Transnet to a Gupta shell company.
Recommendations in the commission’s third report — which was handed to the presidency on Tuesday and details how state logistics company Transnet captured and allegedly used to launder money for the Guptas — may result in former Neotel executives facing charges of corruption and racketeering.
Between January 2007 and December 2014, the Zondo report notes, Transnet concluded three key contracts with Neotel.
“The evidence in relation to the Neotel transactions reveal irregular conduct and a motive other than a business rationale for the decisions made in relation to the tender awarded to Neotel, which sought to extract money from Transnet for the benefit of the Gupta enterprise, in particular Homix …” it said.
In 2015, amaBhungane reported on Neotel’s arrangement with Transnet in an article for the Mail & Guardian. Homix, amaBhungane discovered, was a letterbox firm: “virtually unknowable, its directors untraceable, or unwilling to comment.”
In 2007, Transnet disposed of its own data centre and network service provider after surmising that both were not core to its business. It procured the services of T-Systems — a company, the report notes, linked to the Gupta enterprise — and Neotel.
The 2007 agreement with Neotel, the report states, exposed Transnet to significant risk. “Neotel as owner of the network assets had it in its power to switch off Transnet’s network preventing it from using its network infrastructure, rendering it a ‘captive client’.”
It also meant that it was impossible for any other service provider to provide services to Transnet unless it leased or bought from Neotel. Transnet later worked with Neotel to purchase or lease network-related equipment.
Shortly after, Transnet’s then chief financial officer Anoj Singh approved the transaction, Homix, a company associated with Gupta lieutenant Salim Essa, entered the fray, offering to facilitate the contract.
Despite the value of Homix’s part in the transaction being in doubt, Neotel paid the firm a R30.3-million fee. A later investigation by the South African Reserve Bank found that Homix was paid R75.5-million by Neotel in 2015.
The R30.3-million was paid to Homix chief financial officer Taufique Khan. The payment, the Zondo report states, was a gratification paid by Neotel for Homiz’s part in influencing people at Transnet to award the tender.
Homix, Khan, Neotel and then Neotel manager Francois van der Merwe “by virtue of their involvement with this transaction, were associated with and participated in the affairs of the Gupta racketeering enterprise”.
In late 2014, Transnet was attempting to strike a deal with Neotel to buy back its ICT network but discussions had reached an impasse.
A day after a meeting with Singh and Neotel chief executive Sunil Joshi on 11 December 2014, Van der Merve received a letter by Khan proposing a fee be paid to Homix for enabling Neotel to close the deal.
The proposal by Homix envisaged that Neotel would pay the company two amounts totalling R61-million. According to the Zondo report, the letter was sent by Homix shortly after Van der Merwe shared confidential Neotel documents with Homix.
The deals were closed the next day, on 13 December 2014. “It seems improbable that services of Homix to the value of R61-million were either necessary or rendered in the 24 hours from Homix’s proposal”.
Joshi later signed two business consultancy agreements with Homix — paying the firm R41-million of its R61-million fee — two months after the asset buy-back was concluded.
Singh told the commission he had no idea why Neotel paid the R41-million and testified that he had no interaction with Homix.
“The supposed ‘value add’ by the intervention of Homix in the last hours of the negotiations,” the Zondo report states, “is wholly improbable and a likely ex post facto false justification of a corrupt payment made to the Gupta enterprise as part of a racketeering activity.”