Neotel and T-Systems fingered in Transnet graft in state capture report
Telecoms and technology companies Neotel and T-Systems have been fingered as being involved in corrupt dealings at state-owned enterprise Transnet during Brian Molefe’s time as CEO of the rail, port and pipeline company.
While much attention has been given to multibillion-rand deals to replenish Transnet’s aged locomotives that were tainted with corruption, the state capture report highlighted irregularities with the contracting of network services at the company involving both Neotel and T-Systems.
According to the report: “There was also corruption in relation to key contracts for IT network and data services outsourced by Transnet.”
In 2013, Transnet issued a large tender for network services. During that process, bids were submitted for the work by Neotel, Telkom, Dimension Data, T-Systems and Vodacom.
In evaluating the bids, Neotel was ultimately ranked first, based on price and preference. It had a price of R1.363bn, with 90 preference points. Dimension Data ranked second with a price of R1.585bn and 75.37 preference points. T-Systems was ranked third with a price of R1.737bn and preference points of 65.35.
Despite Neotel having been identified as the preferred bidder, Molefe, who was Transnet’s CEO at the time, is said to have reversed the award, giving the contract instead to T-Systems. The state capture report states that T-Systems had links with the Gupta family.
Molefe later revoked this decision and the contract was again awarded to Neotel.
“Various irregularities attended the award of this tender — most significantly, substantial improper payments were made by Neotel to Homix (Pty) Ltd, a company linked to the Gupta enterprise,” the report says.
T-Systems, which has been providing ICT networks, applications and systems in SA for about 20 years, sold its SA business to Gijima for an undisclosed amount in October.
Founded by Robert Gumede, who built his IT empire largely through government tenders, Gijima distanced itself from T-Systems’ involvement with Transnet, telling Business Day in a statement: “Gijima does not have a comment as we were not involved in the tender in question.”
Neotel, SA’s second-largest fixed-line operator after Telkom, was taken over by Liquid in 2017 after India’s Tata Communications sold its stake in the business.
Liquid did not respond to requests for comment.
The Zondo report says there were further attempts to favour T-Systems in February 2017.
Transnet awarded an IT data services tender to T-Systems. At the time, ironically, Gijima had been the highest scoring bidder. T-Systems was second. Transnet made the choice “on the spurious basis that there were objective criteria justifying such an award”, the report said. The matter was taken to court and the decision was ultimately reversed, the award being made to Gijima.