12 June 2019

South Africa: Homix, a Neotel Kickback, and the Relentless Auditors

analysis

Neither the Neotel board nor the company's lawyers, Norton Rose, neither its chief financial officer nor its chief executive, were able to explain to auditors Deloitte South Africa what exactly the Gupta-linked letterbox company, Homix, had done to rake in a R36-million 'success fee' on the back of a Transnet deal.

The payment was flagged by a group of Deloitte SA trainees during a routine audit of the trade creditors of telecoms firm Neotel. An amount of R36-million excluding VAT had been earmarked for payment to Homix, then an unknown new vendor, and the invoice was not yet in hand.

Deloitte was sceptical and over the course of several months, its auditing team had extensive one-on-one meetings with Neotel's former CEO, Sunil Joshi; then CFO, Steven Whiley; and the board's audit committee.

Homix, it eventually became known, is a Gupta-linked letterbox company.

Testifying at the State Capture Commission on Tuesday, 11 June 2019, Chetan Vaghela, a Deloitte audit partner and previously the senior manager responsible for the Neotel audit, detailed how, throughout the firm's engagement with Neotel, nobody could explain what service Homix had provided to the company to have justified the payment.

At every turn, efforts were seemingly being...

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