Former Bosasa chief operations officer Angelo Agrizzi on Friday explained the intricate system used by the company to allegedly launder money and pay bribes using a web of fictitious companies, cash cheques and fake invoices in order to win government tenders.

Agrizzi told the Zondo Commission of Inquiry into State capture that Bosasa and its chief accountant were involved in forming small "arms-length companies" with a short lifespan and using them to generate fake invoices.

The invoices paid out by Bosasa would later return to the company's secret vaults as hard cash used to pay bribes.  

Bosasa changed to a new system of drawing up dummy employees and issuing cash cheques after the Special Investigation Unit had picked this up. All this was done, Agrizzi said, in order to cheat the tax authorities.

"There would be companies that we eventually had to start up, register them, do the payments and then liquidate them when the everything had been paid," he said in his testimony, referring to the second batch of his three thick affidavits. 

"Basically the purpose of starting these companies was to facilitate these corrupt payments, there were a number of these companies but I think I remember five of them."

"The method of concealing cash was issuing a cash cheque and fake invoices and cashing it at the bank, using companies that were near liquidation. They would issue fake invoices that had no VAT numbers. These were small companies, like Kgetlo Events, that had no VAT exposure and when I queried I was told that it was because they would not be queried by tax authorities."

"Because these expenses were recorded as operational expenses, they would dilute profit margins and would affect any tax that you would have to pay to the revenue service. I have counted more than R120-million of tax evaded over nine years."

Agrizzi detailed how a middleman had worked out a system in which Bosasa would pay Jumbo Liquor Wholesalers a large sum of money for an order of alcohol. At least a week later the middleman would deliver the exact amount of money Bosasa paid for liquor, taking a five percent to 7.5 percent cut for himself.

Bosasa would also exploit the deaths of employees' relatives by writing two cheques, one for the actual benefit and another to pay bribes.  

When Bosasa employees suffered bereavements, the company would pay out an advance instead of waiting for the death benefit policy, recover the cash from the insurance company and use that money to pay bribes.

"If a family member died, they would get two cheques. A Metropolitan cheque and a cash cheque, the second cash cheque would be issued from Bosasa but the employee would not get it. The cheque was a means of writing off cash Bosasa used for bribes," Agrizzi said.

Earlier, Agrizzi said Bosasa had done a lot of favours for individuals helping it win contracts in government companies, including an official from the Airports Company of South Africa (ACSA).

"There was a lot of vehicle repairs that would invoice one or another Bosasa companies and people would take their cars into a garage near our offices and we would pay," Agrizzi said. 

"This included a security liaison officer at ACSA, Reuben Pillay, among others. It was early days when Bosasa got a contract to guard the multi-storey parking parkade at OR Tambo. Pillay was employed by ACSA and was involved with the Bosasa contract."