Doubts have been cast over Vodacom's proposed R7-billion bid for South Africa's second network operator, Neotel, because of allegations of bribery and corruption involving officials at the company. Last week, the Mail & Guardian reported that Neotel paid R66-million - allegedly in kickbacks - between April last year and February to a company called Homix to secure a R1.8-billion contract to provide network-related services to Transnet.A further R25-million was reportedly promised, but not paid, to secure the sale of Neotel assets to the state-owned ports and rail authority.Richard Boorman, Vodacom's spokesman, said: "The due diligence was completed prior to this issue coming up."story_article_left1Boorman did not comment on the allegations, saying only: "This is a matter for Neotel, its board and shareholders. We are monitoring developments and at this stage have nothing to add to the statements made by the relevant parties."UK-based Vodafone, which is subject to that country's anti-bribery laws, has adopted a hard-hitting "zero-tolerance approach to bribery" and expects its suppliers and business partners to follow a similar programme.A commentator on corruption matters in South Africa said the development could halt the acquisition process temporarily.David Lewis, who was founding chairman of the Competition Tribunal and is executive director of Corruption Watch, said: "You can take it as read that they would not proceed until this is settled. I'm sure they would have sought assurances from Neotel that there were no unresolved corruption allegations or issues whatsoever. It would be part of a normal due diligence process."Lewis said that if there was information that had not been disclosed, "I would imagine they [Vodacom] would have had the capacity to withdraw from that".Neotel's board said it was investigating a potential breach of procurement and payment processes and would strengthen policies and controls, but "as the board subcommittee's investigation is ongoing, any further comment would be prejudicial to its outcome".Neotel CEO Sunil Joshi and chief financial officer Steven Whiley have taken special leave pending an investigation into the allegations.story_article_right2Transnet's chief financial officer, Anoj Singh, who has been seconded to Eskom, is alleged to have met twice with Neotel representatives after negotiations stalled, and again with Joshi.Brian Molefe, Transnet's CEO, who has been seconded to Eskom with Singh, said he was aware of the contract with Neotel but there were no irregularities.He said he had no knowledge of Homix. "I don't know anything about that company. [ Singh] says he doesn't know anything."I fail to see what the cloud is. Mr Singh had a meeting with the CEO of Neotel. Nobody knows what was discussed."Asked if Singh would step down temporarily, Molefe said: "I fail to see on what reasons Mr Singh must step down."Transnet's board said it awarded the five-year contract to Neotel last year following an open and competitive procurement process, and denied wrongdoing by its executives or Singh. "Transnet or any of its executives cannot be held responsible for decisions taken by its suppliers or contractors," it said.Neotel's parent company, Mumbai-based Tata Communications, said in a July 28 statement that only one employee had been found guilty of misconduct, and had left Neotel.Attempts to contact Singh and Joshi via Transnet and Eskom were unsuccessful...