ENSafrica report reveals 'irregularities' at EOH

EOH's chief executive Stephen Van Coller.

EOH's chief executive Stephen Van Coller.

An internal investigation, by IT service management company EOH has revealed serious governance failings, tender irregularities, unsubstantiated payments, and other unethical business dealings at the company, it announced on Tuesday morning.

The probe by ENSafrica — which identified R1.2-billion in suspicious contracts — was initiated by the board and the company’s chief executive Stephen van Coller in February this year,  to look into the company’s historical licensing contracts with the government.

Speaking to the Mail and Guardian, van Coller revealed that there were eight people implicated in the transactions between 2014 and 2017 two of which were directors and six who worked under them at the group’s subsidiary company EOH Muthombo.

Their employment relationship with EOH has since been terminated.
According to Van Coller, the eight people paid 84% of those payments to about 20 suppliers.

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The report found a range of maladministration issues including, among others, EOH employees conspiring with two preferred suppliers to facilitate inflated software licence sales; systemic use of connected middle-men recognised and used as introducers and sales agents; enterprise development (“ED”) subcontractors used on projects and payments made to such suppliers, where it is “questionable whether bona fide work was done by the said suppliers”, and inappropriate gifting, sponsorships and donations.

Prior to the release of the report, the company announced the resignation of three long serving directors Zunaid Mayet, Rob Godlonton and Pumeza Bam.

Mayet was the executive director and CEO of EOH subsidiary Nextec, Godlonton was executive director and CEO of EOH’s ICT business, and Bam a non-executive director stepped down from the board and various other EOH subsidiary boards and trusts.

Van Coller says the three are not implicated in the report, but because it found irregularities, “they felt that the best thing for EOH was to have a clean start given that these things happened on their watch. Van Coller added that it was the best thing for the business, dubbing it “a brave leadership decision”.

Although the report does not implicate the three executive members it however says “the employment relationship with EOH has been terminated with individuals who have been directly implicated in the identified wrongdoing”.

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The company said it has reported “the concerns and the details of the parties implicated in the irregularities to the Directorate for Priority Crimes Investigation — the Hawks —  in terms of Section 34 of the Prevention and Combating of Corrupt Activities Act (PreCCA).

The company has been marred with negative news from as far back as 2016. Earlier this year Microsoft terminated its licensing agreement with EOH, after a tip-off to the United States Securities and Exchange Commission about alleged wrongdoing regarding a software procurement deal between EOH and the South African National Defence Force, TechCentral reported.

According to the company,  ENSafrica will provide it with bi-monthly updates which will in turn inform areas for further investigation and remedial work. The firm said it will continue to assess the financial impact of the findings.

But van Coller says the report is “worse” than he thought but its “sortable.”

“Its one area- and we have dealt with the people - and now you feel like you do not have a business where that every single person is corrupt. It’s one place, I can get there and sort it out [which] makes it a lot easier.”

This article has been amended to include comment from Stephen van Coller. 

Tshegofatso Mathe

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