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.
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.
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”.
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.