Over the past two months, two former Cell C executives have been arrested for their involvement in a tender scam that cost Cell C around R130 million.
The Hawks’ Serious Commercial Crime Investigation team have arrested Adriaan Pillay and Mohamed Adamjee for alleged fraud and corruption during their tenure at Cell C.
“They allegedly colluded with a director of a contracted entity responsible for IT and network service provider and falsely inflated invoices which resulted in an actual loss of over R130 million from 2012 to 2019,” the South African Police Service (SAPS) said.
The SAPS added that the Hawks’ investigation began last year following an internal audit that was done at the mobile operator which resulted in the arrest of Mohamed last month.
The nature of the tender scam is further detailed in a High Court judgement handed down on 16 October 2020.
This judgement referred to Cell C’s leave to access the evidence of misconduct without delay, as there were concerns that both Adamjee and Pillay would delete personal data related to the alleged collusion.
The former Cell C executives
Adamjee was employed by Cell C from January 2002 until 7 May 2020, and since September 2011 he held the position of Business Operations Support Executive at the company.
In this position, Adamjee was involved in IT-related procurement.
Pillay served under Adamjee at Cell C until July 2014, when he resigned after disciplinary proceedings were pending against him.
Cell C told the court it discovered collusion between Adamjee and Pillay in March 2020, via the procurement of IT goods and services through two entities – Cornastone and Techno Genius.
Cornastone is one of Cell C’s vendors, from which the operator had been procuring goods and services since 2012.
Inflated invoices and kickbacks
Cell C said it discovered in March 2020 that whenever it had paid Cornastone for goods or services, the vendor would pay a portion of this payment to Techno Genius and Pillay.
It added that the portion paid to these entities by Cornastone reflected the amount by which the invoice to Cell C had been significantly inflated.
Cell C further argued that Adamjee was tasked with considering quotes from vendors for IT procurement and that he used his position to ensure Cornastone’s quotes were regularly chosen.
“Through Adamjee’s influence, Cell C would contract with Cornastone as its ‘preferred supplier’ for the required IT goods and/ or services not knowing that Cornastone’s quotes are exaggerated,” the judgement said.
Throughout this period, Pillay was the sole director of Techno Genius, and himself and Adamjee each also held a co-50% beneficial ownership of a company called house and Home Refurbishments.
Cell C believes that Adamjee received part of the inflated amounts that were paid to Techno Genius and Pillay over this eight-year period.
At this point, it was believed that the alleged fraud cost Cell C around R64 million, but the most recent statement by the SAPS reflects an estimated cost of R130 million.
Securing evidence and legal action
At the time of the judgement, Cell C was concerned about Adamjee and Pillay destroying evidence related to the alleged procurement fraud.
In May 2020, Cell C discovered an email sent from Adamjee’s Gmail account to Cornastone related to the Techno Genius payments, which led the company to unearth the alleged fraud and believe that Adamjee’s personal mail and other accounts were used to correspond with Pillay and Techno Genius over these activities.
Due to its concern over the deletion of WhatsApp and email messages, Cell C sought and obtained a ruling to place the evidence in the custody of the police and for their bank accounts to be frozen.
The judgement noted that Pillay is alleged to have interfered with this order by deleting 3GB of data from his email account, prompting Cell C to seek an extension of the order. This was granted with a punitive cost order against Pillay.
Since this judgement was handed down, legal action has been pursued against the pair of former Cell C executives, with both Pillay and Adamjee being arrested and subsequently released on R50,000 bail.
The case will be heard on 14 April 2021, where both of the suspects will appear before the court.
Others may also be held accountable in this matter, with the SAPS stating that more arrests are expected as the investigation continues.
More former employees were involved – Cell C
Cell C confirmed to MyBroadband that the case includes multiple vendors, and the amount is R130 million.
“The fraudulent activity does extend to other former employees,” Cell C added.
“Cell C has a zero-tolerance policy towards illegal or unethical activity and will not hesitate to act on evidence and take the appropriate action.”
Cell C said it has acted on the matter of employees being involved in an incident of collusion and is fully supporting the authorities in the case and will allow the law to take its course.