17 June 2024 | 11:58 AM

‘Kickback’ scandal engulfs Transnet

Key Takeaways

On Friday, Neotel confirmed to amaBhungane that its chief executive and chief financial officers were on special leave pending an investigation into the payment of “commissions” to clinch Transnet contracts. Read chief corporate services officer Tracy Cohen’s full statement here.

Telecoms firm Neotel paid tens of millions of rands in “commissions” to the letterbox company Homix to clinch deals worth R2-billion plus from Transnet. Now Neotel’s board has reported the payments to the police as possible bribery. The unfolding scandal has possible implications for Vodacom’s proposed takeover of Neotel. Embroiled in the transactions is Transnet finance boss Anoj Singh, who has also been tasked to save Eskom’s, and a former “Gupta man”, Ashok Naryan. AmaBhungane’s Stefaans Bramber, Sam Sole, Tabelo Timse and Lionel Faull went in search of Homix and answers from Transnet, Neotel, Singh and Narayan.

Twenty minutes north of Neotel’s capacious headquarters in Midrand lies downtown Wierda Park, an unkempt precinct of discount shops and squat office blocks.

On the first floor of one block, a plain blue door is in a corner abutting a toilet entrance. A notice on the door identifies the occupant as Homix (Pty) Ltd, but informs those in search of its services – identified only as “applying thought” – that it has moved on, “relocating to Midrand”.

The two firms could not be more unlike. Neotel is a national telecoms provider boasting R3.9-billion turn­over. Homix, amaBhungane discovered in recent weeks, is virtually unknowable, its directors untraceable, or unwilling to comment.

But Neotel’s top managers approved paying Homix tens of millions for no apparent work.

Auditors’ alarm
Neotel’s auditors, Deloitte, first blew the whistle to Neotel’s board of directors in April.

Deloitte correspondence seen by amaBhungane questions the “commerciality” of R91-million in fees – more than R100-million including VAT – payable to Homix.

Neotel, Deloitte says, remitted R30-million to Homix in April last year and R36-million in February this year. Another R25-million was agreed but not yet paid. Each was in respect of contracts being secured with Transnet, a key Neotel customer.

Deloitte also reported the matter to the Independent Regulatory Board of Auditors (IRBA), as required by legislation regulating the auditing profession when an unlawful act or omission is suspected.

Neotel’s board was duty-bound to commission a law firm to investigate it. It also self-reported the payments to the police as required under the Prevention and Combating of Corrupt Activities Act when bribery is suspected.

IRBA chief executive Bernard Agulhas this week said Deloitte stood by their suspicion in a second report, after the Neotel board had provided feedback on its investigation, and believed that the irregularity was “continuing – that it hasn’t been addressed [by Neotel]”.

This may complicate Vodacom’s R7-billion planned takeover of Neotel, which hinges on Competition Tribunal hearings at the end of the year. Competitors Telkom, MTN and Cell C oppose the tie-up, fearing Vodacom will gain an unfair advantage in the mobile spectrum wars.

Vodacom’s British parent, Vodafone, is subject to foreign anti-bribery laws and may find it difficult to absorb a company with a serious, unresolved compliance problem.

Transnet this week denied any involvement in the Homix payments, and said the telecoms contract it awarded to Neotel “met all our stringent governance requirements” and was reviewed by its independent auditors. “There is therefore no basis for suggesting impropriety or breach of our governance procedures.”

Neotel said that, to the best of their knowledge, the investigation commissioned by the board made “no finding of corruption or illegal activities undertaken by any current employees of Neotel”.

“However, the investigation has identified some control gaps, and plans have been put in place to tighten the processes and controls to ensure such gaps do not re-occur. Compliance with the company’s policies, procedures, internal controls and corporate governance is presently the subject of investigation and possible action, if required, by the board.”

Trail to nowhere
The Deloitte correspondence suggests Neotel management approved the Homix payments despite not knowing “who this entity is”.

AmaBhungane’s attempts to learn more about Homix were rewarded with little success. Conclusion: the company appears to be a letterbox – a front for persons undeclared.

The trail starts at Homix’s registered address in Mayfair West, Johannesburg. Property records show that the boxy little home was owned by Yakub Bhikhu and his wife until 2012, the year Homix was registered. A neighbour said Bhikhu moved out perhaps a year ago.

Company records list Bhikhu as Homix’s only active director. But he appears not to have made any initial success of it. Court records show Standard Bank obtained a R108 000 debt judgment against him in September 2013, a year after the company was formed.

A second director, Taufique Hasware, is listed as having resigned, effective in September last year. Many calls to numbers associated with him went unanswered. At one, a resident said he had rented a room but “shifted from here – he said he would go overseas”.

Another belonged to a carpet dealer who said Hasware had left his employ perhaps six months ago, and would we like to buy a carpet?

A third person listed as a former director of Homix claimed not to know the company. He said he suspected he was added as a director when he needed a loan, despite being blacklisted. He went to a Wierda Park office where he was told he might be helped “if I register a company”. He filled in forms but got no loan.

Which brings us back to the blue door on the first floor in Wierda Park. Letting records show Hasware and Bhikhu signed Homix’s lease last September. A year’s rent – about R45 000 – was paid upfront. The company’s business was given as “administration”.

Not much appears to have happened behind that door, though. Neighbouring office workers said they knew nothing about the company. One said after Homix moved in, the door generally remained shut. An “Indian gentleman” came in perhaps twice a week after hours, “two months at a stretch”. The “relocating to Midrand” sign went up months ago. “Strange,” she said.

After trying for the better part of a week, amaBhungane finally reached a man who identified himself as Bhikhu on a cellphone number provided on the “relocating” sign. On being told that we were looking at possible corruption involving Homix, he said: “We’re reserving our right not to issue any comment at the moment.”

He agreed to accept emailed questions, but did not respond.

Transnet billions
The prize that caused all the trouble is a master service agreement to provide Transnet with a suite of telecom services worth hundreds of millions a year. Neotel got the contract for an initial five years when it bought Transnet’s in-house provider, Transtel, in 2008.

At the end of 2013, Transnet put the master agreement out to tender. It was provisionally awarded to a competitor, T-Systems, but the latter withdrew by agreement some months later, an insider said, when it became apparent its solutions were inappropriate.

In April 2014, during this hiatus, Neotel paid its first R30-million to Homix. The Deloitte correspondence identifies the payment as relating to routers and other equipment that Neotel sold to Transnet.

Transnet is understood to have paid Neotel about R300-million for the equipment. Neotel’s payment to Homix equals a 10% “commission”.

In August 2014, Transnet notified Neotel that it was the new preferred bidder for the master agreement and that negotiations should be concluded before Christmas.

By early December, individuals close to the negotiations have claimed, Transnet became intransigent without clear reason. To protect sources, they cannot be identified.

A week later, they said, Neotel’s chief executive, Sunil Joshi, met Transnet’s chief financial officer, Anoj Singh, to whom the state-owned entity’s procurement structures reported. After the meeting, Joshi allegedly asked his staff to approach Homix again.

A “success fee” was agreed with Homix – 2% of the R1.8-billion value of the master agreement with Transnet, equating to R36-million, plus R25-million in respect of a related agreement to sell assets to Transnet. Within hours, Transnet was ready to resume negotiations.

The next day, a Saturday, representatives from both sides met and resolved remaining issues – without any overt assistance from Homix. The master agreement was signed before Christmas.

Ex-Gupta man shows his hand

When Neotel’s board commissioned a law firm in April to investigate tens of millions in fees – apparent “kickbacks” – to letterbox firm Homix, one Ashok Narayan emerged from the woodwork.

Narayan claimed he was Homix’s chief executive and, it is said, attempted to convince investigators that it had provided Neotel with services commensurate with the fees.

Narayan appears to be a man of some dexterity. His LinkedIn profile identifies him as the managing director of a Dubai company, the Marketing Quotient, since April 2014 – a clear overlap with his stated position at Homix.

He is also a man of some connectivity. A 2013 LinkedIn profile, which went offline in recent days, identified him as the then managing director of Sahara Systems, a business owned by the influential Gupta family. Before that, he held the same position at Sahara Computers in Botswana.

In June 2013, when amaBhungane visited the controversial Vrede Dairy in the Free State, also linked to the Gupta family, Narayan was known to farmers in the area as someone associated with the dairy and who had bought cows for it.

Linkway Trading, a Gupta company in which Narayan was a director, had been a “project consultant” for the dairy in its early stages, the family confirmed at the time.

Overseas ‘at the moment’
Now the Guptas have distanced themselves from their association with Narayan – and from Homix.

Family spokesperson Gary Naidoo said: “We can confirm that Mr Narayan was employed by Sahara Systems, but left our employ three years ago. He also resigned any directorships within our group of companies three years ago. We can also state categorically that no executive within our company has any relationship with Homix.”

When amaBhungane visited the Sahara offices this week, a security guard was familiar with Narayan’s name but said he had not seen him for some months.

A Sahara executive accepted an envelope on Narayan’s behalf, promising to scan and email the contents. He said Narayan was overseas “at the moment”.

AmaBhungane also visited the Dubai offices of the Marketing Quotient, the company Narayan’s LinkedIn profile says he manages. It appears to do sales for Etisalat, one of two mobile phone providers in the United Arab Emirates.

Aman Berlashker, whose business card describes him as “vice-president – sales”, did not appear to know his managing director very well. He said Narayan was in South Africa the previous week and was currently in India.

Narayan did not respond to requests for comment through the company. – Additional reporting by Louise Redvers in Dubai

What role did Eskom’s new Mr Fix-it play?

Anoj Singh, Transnet’s chief financial officer, is celebrated for raising billions towards the state-owned entity’s infrastructure programme, which includes the acquisition of 1 064 new locomotives.

Now he is expected to perform greater miracles at Eskom, to which he has been seconded for six months. The utility is struggling to raise debt for new power stations to get the lights back on.

Singh’s alleged role when Neotel closed a R1.8?billion deal to provide Transnet with five years’ telecom services may give pause for thought. Neotel, its auditors said in correspondence seen by amaBhungane, paid a 2% “success fee” to a letterbox company, Homix, to secure the deal – or R36?million.

A further R25-million, apparently not yet paid, was promised to Homix to secure the related sale of Neotel assets to Transnet.

The auditors questioned whether Homix had brought actual value to Neotel’s negotiations with Transnet – code, perhaps, for a suspicion that the fees were kickbacks.

Individuals close to the negotiations between Neotel and Transnet have claimed that Transnet became inexplicably intransigent last December, when a pre-Christmas deadline for the conclusion of the R1.8?billion contract loomed.

During the stalled negotiations, they alleged, Singh met personally at least twice with Neotel representatives. After he had a one-on-one with Neotel chief executive Sunil Joshi, the latter allegedly asked his staff to make contact with Homix.

Once the “success fee” had been agreed with Homix, Singh allegedly signalled Transnet’s readiness to resume negotiations, which were swiftly concluded.

The individuals also allege that, in late February this year, Transnet had not yet paid Neotel for its January and February services. Neotel was told that Singh had blocked the payment. By that time, Neotel had not yet paid Homix its R36?million fee.

The issue was resolved when Transnet paid Neotel, which paid Homix.

Transnet, replying to questions sent to it and Singh this week, denied Singh was “party to Neotel’s actions relating to Homix” or that there was any factual basis for the allegations against him.

It said: “The issues you raise are normal operational decisions that [chief financial officers] deal with on a daily basis in the execution of their duties. In this case, however, we would like to point out that the delay you may have been referring to had nothing to do with Neotel’s suppliers [Homix], but was as a result of our normal operational issues and processes.”

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Before joining the amaBhungane team in 2017, Micah was the national coordinator for media freedom and diversity at the Right2Know Campaign. He holds a Masters in African Studies from Oxford University and a BA Honours in History from Wits University.

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