Homix – the letterbox company used by the politically connected Gupta family and business associates as a conduit to siphon millions from state and private entities – was paid tens of millions of rands in commission fees by fixed-line telecommunications giant Neotel between 2014 and 2015.
The payments were for assisting in closing deals with state-owned rail logistics enterprise Transnet, the Commission of Inquiry into State Capture, chaired by Deputy Chief Justice Raymond Zondo, has been told.
The untraceable Homix – a shell company nominated by Gupta business associate Salim Essa and previously mentioned in several money laundering allegations – surfaced again yesterday during the testimony of auditing firm Deloitte partner Chetan Vaghela.
He told the commission how the entity earned millions of rands for assisting Neotel secure contracts with Transnet.
Contracts awarded included:
- The telecommunications deal closed in December 2014 worth R1.8 billion that saw Neotel paying Homix R36 million – calculated at a 2% success fee rate for “persuading parties to return to a negotiating table” after talks between Transnet and Neotel stalled – an intervention that led to Neotel bagging the contract;
- The R35 million Neotel paid Homix in April 2014 for facilitating a R300-million information technology equipment contract; and
- Commission for the R329 million confinement closed-circuit TV contract awarded to Neotel in May 2014.
In his testimony, Vaghela, whose company was enlisted to offer auditing services to Neotel, told of his frustration in trying to establish the business credentials of Homix and why it deserved to be paid millions for doing nothing.
Said Vaghela: “Deloitte audited the Homix transaction on March 31, 2015 and found significant accounting and auditing issues.
“By February 2015, we found a credit balance of R41 million relating to commission fees, something which made us sceptical.
“Here was a vendor, not known to us and whose existence was not disclosed to us by management, being paid so much. Our forensic department had to do background checks on Homix, part of due diligence.
“We also asked for vendor onboarding information from Neotel management. When the information was incomplete, we started to see red flags.
“We spoke to various people within the company, who included then chief executive officer Sunil Joshi, chief financial officer Steven Whiley and general manager for strategic projects Francois van der Merwe to establish the commerciality around the fee paid and understand the Homix mandate in the transaction.
“None of them could tell us who Homix was, except to be told the company helped Neotel secure the previous Cisco equipment purchase deal and that there were no red flags to be concerned about.”
Zondo asked: “Was it not strange that, looking at the amount paid out, the CEO and CFO did not know much about Homix?”
Background checks conducted by Deloitte on Homix revealed the:
- Company was registered as a charity;
- Website address did not return a valid webpage; and
- Listed telephone numbers went unanswered.
Van der Merwe, Joshi and Whiley resigned from Neotel in 2015 amid the Homix scandal which, according to Vaghela, pointed to non-adherence to fiduciary duty.
Former national director of public prosecutions, advocate Mxolisi Nxasana, appears today.