Telecommunications provider Neotel, which now operates as Liquid Intelligent Technologies South Africa, and several of its former employees should be investigated by law enforcement for suspected bribes of over R75 million to a Gupta front company. These were among the recommendations in part two of the Zondo Commission of Inquiry’s State Capture Report, which was handed over to President Cyril Ramaphosa and released to the public on Tuesday, 1 February 2022.
The testimonies of several witnesses at the commission corroborated earlier media reports and an investigation by Deloitte regarding the payments. The payments in question were made in 2014 and 2015 to Homix, which was confirmed to be a front through which associates of the infamous Gupta family funnelled money overseas. Their irregular nature first came into the public spotlight following a report by amaBhungane in The Mail Guardian on an investigation by Neotel’s auditors, Deloitte, who had queried the transactions.
Deloitte reported the irregularities to the Independent Regulatory Board for Auditors (IRBA). The firm’s investigations determined that the payments made no business or lawful sense and that Neotel’s directors and prescribed officers failed to report them to the Financial Intelligence Centre (FIC) within 15 business days. In addition, Deloitte found that the board’s directors and prescribed officers failed to report corruption in terms of the Prevention and Combating of Corrupt Activities Act (PCCA).
Between 2007 and 2014, Transnet concluded three major contracts with Neotel. The payments were allegedly facilitated by three people at Neotel — CEO Sunil Joshi, CFO Steven Whiley, and the executive responsible for Neotel’s Transnet account at the time, Francois van der Merwe. While there was no record of the transactions on Neotel’s systems, an investigation by the South African Reserve Bank (SARB) confirmed that Neotel had paid Homix a total of R75.57 million. Deloitte’s probing into the transactions revealed that Joshi had concluded the contract with Homix without board approval, something which fell outside the scope of his authority.
They also found that Van der Merwe made the payments, and Whiley approved them. R34.5 million was paid as a fee for Homix supposedly facilitating the procurement of switches and routers for Transnet from Cisco. These services were reportedly never rendered. Neotel paid a further R41.04 million, which the implicated executives claimed was for a single day of work by Homix for its assistance in solving an impasse in negotiations on the Master Network Services and Asset Buyback agreement (MSA 2014). This was also allegedly a sham. Neotel only reported the payments to the police after repeatedly being urged to do so. It had tried to pin the blame for the payments only on Van der Merwe, based on a report commissioned with Werksmans Attorneys. Van der Merwe resigned from his position in May 2015, avoiding disciplinary action.
Joshi and Whiley were placed on special leave on 31 July 2015, and they resigned on 30 November 2015 during disciplinary proceedings against them. It is interesting to note that, according to his Linkedin page, Whiley was appointed as a “Transaction Specialist” for Liquid Telecom during its purchase of Neotel between March and August 2016.
The commission found that the evidence presented before it provided reasonable grounds to believe that — concerning the payment of the R41.04 million to Homix — there was planned participation by Joshi and Van der Merwe in the offences of corruption, money laundering, and fraud, as well as contraventions of the exchange control legislation “for the benefit of the Guptas enterprise”. “The authorisation and facilitation by Mr Joshi, Mr Whiley, and Mr Van der Merwe of the illegal payments to Homix whilst associated with the racketeering enterprise, in particular, give rise to reasonable grounds to believe that they participated in the conduct of the enterprise’s affairs through a pattern of racketeering and thus contravened section 2(1)(e) of the Prevention of Organised Crime Act,” it added.
In response to questions from MyBroadband, Liquid pointed out that the incident in question happened before it acquired Neotel in 2017. “Liquid was advised prior to the acquisition of Neotel that the recommendations emanating from the investigations had been implemented,” the company said. “None of the executives who were involved in the transactions are still with the company therefore, we are unable to comment further.”
“However, Liquid has co-operated fully with the Commission and provided information and assistance to the best of its ability,” said Deon Geyser, CEO of Liquid Intelligent Technologies SA. It added it had a “well-established” Anti-Bribery and Anti-Corruption (ABAC) programme which has been implemented across the organisation in accordance with the group approach to governance and ethical conduct.
