The commission of inquiry into state capture on Tuesday sought to understand why Gupta-linked advisory firm Homix was paid R41m by Neotel after the telecommunications company won a contract with Transnet.
The commission of inquiry, chaired by Deputy Chief Justice Raymond Zondo, has been investigating allegations of state capture, corruption and fraud at various entities including Transnet.
An auditor from Deloitte who worked on Neotel’s books, Chetan Vaghela, on Tuesday testified that there seemed to be something “very unusual” about Homix, as they did not know of the firm.
Vaghela said inquiries were made to Neotel’s chief financial officer and chief executive. Both executives, according to Vaghela, replied they did not know anything about the company, except that it helped “break an impasse” between the firm and Transnet.
“They could not tell us what they specifically did other than resolving the impasse.”
In 2015, Neotel was awarded a R1.8bn network services contract with Transnet. An invoice of R36m, excluding VAT for a “success fee” dated January 2, 2015, was received from Homix, according to Vaghela. Ultimately a fee of R41m was paid by Neotel to Homix on February 27, 2015.
“Management could not tell what had been done to warrant the fee,” Vaghela said, after Zondo asked what services the company provided to Neotel.
“To us, Homix was an unknown entity. We couldn’t understand what they had done. There were a lot of red flags. The entity appeared to have no substance,” he said.
Vaghela said that, in an effort to get more information about the company and the payment, the auditors had made inquiries with Neotel’s CFO, who revealed that Homix was a Dubai-based group with offices in South Africa and that “they play at board level”.
When Zondo asked what this meant Vaghela responded that it alluded to operating at a high level of management.
He added that their investigation revealed Homix was a shelf company.
‘Flurry of activity’
On Monday, the head of the financial surveillance department at the Reserve Bank, Shiwa Mazibuko, referred to a sudden “flurry of activity” in a Homix account held by Standard Bank which had been largely dormant. The activity took place between March 28, 2014 to June 20, 2015.
According to the Companies and Intellectual Property Commission Homix is currently in the process of being deregistered. It has not filed an annual return since 2015. The commission lists Yakub Bhikhu as its sole director.
In late December 2016, meanwhile, the SA Reserve Bank issued a notice and order of forfeiture against the company to recoup R14.47m from its bank account held with Mercantile Bank.