Gupta-linked Homix earned over R36m from Neotel-Transnet deal

Gupta-linked advisory firm Homix earned R36m for virtually no work done in facilitating a deal between Neotel and Transnet, the state capture inquiry has heard.

Testifying before the inquiry on Monday, former Transnet employee Gerhard van der Westhuizen, who was involved in negotiating the contract with Neotel, said that he could not understand the value Homix could bring in finalising the deal.

The commission is chaired by Deputy Chief Justice Raymond Zondo. It has been hearing evidence on fraud and corruption at several state entities since August 2018.

Van der Westhuizen told the commission that the R1.8bn contract between Transnet and Neotel was finalised on December 12, 2014. But Neotel had then commenced acquiring the services of Homix, to oversee negotiations to finalise the deal. Based on evidence van der Westhuizen presented, the Neotel-Homix contract was signed on February 19, 2015, just under two months after Neotel and Transnet’s agreement.

“I fail to understand what value Homix would have had [to the Transnet-Neotel agreement],” van der Westhuizen commented.

Previous evidence before the inquiry revealed that Homix is a shell company nominated by Gupta business associate Salim Essa to receive facilitation fees from contracts to Transnet by various other companies.

Van der Westhuizen also revealed that Homix had never engaged with Transnet. Zondo concluded that Homix was paid by Neotel for work it did not do, van der Westhuizen agreed.

“I fail to understand what value Homix could have added, nor whom they engaged with at Transnet and how they earned R36m for a day’s work,” Van der Westhuizen said.

When asked if there was a stalemate or deadlock between Transnet and Neotel that had to be facilitated, van der Westhuizen said this was not the case. The parties may have disagreed on certain terms, but not to the extent that they would leave the agreement.

“Neotel was reliant on Transnet for revenue and Transnet was reliant on Neotel because they owned our assets,” Van der Westhuizen said.

Earlier, Fin24 reported that Transnet was forced to procure services from Neotel. The state rail and freight entity in 2007 had sold off network assets to Neotel and was now reliant on the telecommunications company to provide network services.

Misrepresentation

Given that there was an existing agreement between Transnet and Neotel, the only role of Homix would be to negotiate with Transnet to pay Neotel more. But this never happened, and essentially Homix was paid R36m on the misrepresentation of facts, Zondo said. “If Homix knew there was no facilitation and still entered into an agreement saying there was facilitation and would be paid R36m plus VAT, then this is misrepresenting the situation,” he said. 

When Zondo asked if it were possible that Neotel was reliant on income from Transnet to pay off Homix, Van der Westhuizen said it appeared to be so.

Zondo further probed if Neotel had inflated the price it charged to Transnet to account for its agreement with Homix. “We were in a position where if Neotel charged R200m or R250m we would have still paid it. But I cannot comment if Neotel inflated the price to pay Homix,” Van der Westhuizen replied. 

The inquiry resumes on Tuesday at 10:00, with evidence from MNS Attorneys.