Deloitte audit partner Chetan Vaghelatestifies before the commission of inquiry into state capture.
Deloitte audit partner Chetan Vaghelatestifies before the commission of inquiry into state capture.

#StateCaptureInquiry: No commercial reasons for Transnet paying Gupta firm R36m

By LOYISO SIDIMBA Time of article published Jun 11, 2019

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Johannesburg -  An auditor has told the state capture inquiry that the commercial reasons for giving a Gupta-linked letterbox company a 2% share of the R1.8 billion contract awarded to Neotel by Transnet remain unclear. 

Homix, whose representative was Ashok Narayan - a former  director of the Gupta-owned Sahara Group of Companies, received R36 million excluding value-added tax from fixed line telecommunications network operator Neotel after it resolved an impasse it (Neotel) had with state-owned freight and rail transport company.

Deloitte audit partner Chetan Vaghela told the commission of inquiry into state capture, which is headed by Deputy Chief Justice Raymond Zondo, that an investigation commissioned by Neotel’s board found that its former general manager: strategic partnerships, Francois van der Merwe, had a clandestine relationship with Homix and persons linked to it.

According to Vaghela, Van der Merwe provided Homix with confidential Neotel e-mails.

He said former Neotel chief executive Sunil Joshi did not have the power to approve the payment of R36m, despite the company’s board telling auditors that he had the authority to do so.

As a result, Vaghela said Deloitte had no choice but give Neotel a disclaimer as an audit opinion as information on the payments had been kept  from auditors.

He said Neotel refused to provide Deloitte with details on how Homix got involved in the deal; including the selection criteria, other service providers considered, the company’s credentials, and whether they enquired from Transnet what exactly Homix would do toward the completion of the master service agreement between the two.

For these reasons, Vaghela said, the reasons for Neotel paying Homix the R36 million still remain unclear.

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