Inquiry hears Homix paid R36 million despite no involvement in Transnet, Neotel deal

The Zondo commission has heard how a consultancy firm was paid R36 million for brokering fee yet it did not do any work.

Transnet former employee Gerhard van der Westhuizen took the stand on Monday and told the commission that a consultancy company called Homix was paid millions for brokering a deal between Neotel and Transnet yet it was never involved. Van der Westhuizen had earlier explained that Transnet had sold its IT network system to Neotel years prior.

Transnet executives had begun to grow concerned about not owning its networks and made the decision to buy back the assets. He explained that Neotel had the upper hand during negotiations as Transnet needed the systems for its operations. Transnet had also awarded a contract for management of its IT systems to a different company and this would have placed it at a vulnerable position since the network ownership was under Neotel.

Van der Westhuizen had described the negotiations between the two companies as “tough”, but an agreement was reached with Transnet paying over R300 million. He admitted that Neotel may have inflated the prices, but Transnet had to procure the assets back. When he was asked about Homix and whether it was involved in the brokering the negotiation process between Neotel and Transnet, Van der Westhuizen said he did not know the company and found it strange that it was paid for its alleged services.

Homix billed Neotel R36 million of the payment it received from Transnet a day after an agreement was signed between Neotel and Transnet. The company has reportedly been linked to the Gupta family. Earlier, Van der Westhuizen told the commission how former Transnet CEO Brian Molefe had irregularly rescinded the awarding of a contract to Neotel. He told the commission that in 2013 Transnet's contract with Neotel to provide and manage its IT network was coming to an end and the company had to advertise a tender to find a supplier.

Transnet had at the time relied heavily on Neotel. The telecommunications company managed its IT networks and owned its infrastructure following Transnet selling its network assets to Neotel years prior. Van der Westhuizen explained that once bidders were received and were assessed it was concluded that Neotel was best placed to continue providing network management and services to Transnet. The board overseeing the appoint had agreed that Neotel should be awarded the contract.

Last week, Sharla Chetty from Transnet had confirmed to the commission that she had signed off on Neotel’s appointment and letters were drafted for the winning company and the companies that were rejected. Chetty explained that at the time Molefe was not in the country and when he was briefed he instructed that the process of appointing a winning bidder to be halted until he returns. When Molefe returned, van der Westhuizen explained that there was a meeting held in Molefe’s office with other stakeholders. He said Molefe immediately made it clear that the tender should not be awarded to Neotel because of market concentration.

“When we arrived at the meeting we were told to leave our cellphones before we entered. He (Molefe) said we cannot give this thing to Neotel there is too much concentration risk. Mr Molefe was of the view that the R240 million should be included in the process which would have implied that T-Systems was the second best bidder and due to the concentration risk associated with Neotel then it should go to the second bidder which was T-Systems,” Van der Westhuizen said.

Van der Westhuizen said he told Molefe that his reasoning was not in line as Neotel was best placed to continue providing the service. He explained that Molefe did not take kindly to his objections and insisted on considering the discount that was being offered by T-Systems.