Transform RSA wants EOH bank accounts closed on graft allegations

Pressure group Transform RSA is demanding the bank accounts of JSE-listed EOH be closed due to corruption, after the company agreed to pay back more than R40 million it overcharged government.

Transform RSA is demanding the urgent withdrawal of EOH banking facilities, and has since opened a corruption and money-laundering case against First National Bank (FNB), accusing it of enabling the alleged graft by allowing the JSE-listed technology group to continue holding bank accounts.

The pressure group says EOH “admitted” to corruption and should not be treated differently from other similarly accused companies.

According to the group, banks closed technology company AYO’s bank accounts following reports of alleged impropriety but EOH, which agreed to pay back R40 million to government for over-charging, still holds banking facilities.

Transform RSA says AYO has not been found guilty of any crime and this includes money-laundering, therefore there is no reason for FNB to take such a stance.

AYO, which faces allegations of impropriety at the Public Investment Corporation, launched an urgent court bid two weeks ago to try to stop FNB from closing its bank accounts.

Absa and FNB both closed the company’s bank accounts, giving AYO until 3 May to find a new bank, after which the company’s transactional banking facilities will be closed.

Transform RSA says despite the findings of the Special Investigating Unit (SIU) demonstrating EOH was involved in corrupt activities, there are still no changes in facilities offered by FNB to EOH and banking accounts remain active.

Last week, the SIU announced plans to charge former EOH and Department of Defence (DoD) employees for alleged corruption.

This, after the SIU’s investigation into the R250 million Microsoft software licences procurement contracts awarded by the DoD to EOH uncovered irregularities relating to the procurement process and also overpricing of Microsoft licences amounting to more than R40 million.

Now, Transform RSA says, in terms of the Code of Banking Practice, a bank is compelled to close a bank account if it has reason to believe that an account is being used for any illegal purposes.

Over and above this, the group says, EOH previously admitted to wrongdoing.

“On or about 23 November 2020, Stephen van Coller, the chief executive officer of EOH, testified at the Zondo Commission of State Capture that the legal firm ENSafrica conducted a forensic investigation into contracts with the City of Johannesburg, the National Prosecuting Authority and the Department of Defence. The forensic investigation revealed over-invoicing and over-charging for more Microsoft licences than were delivered,” says Transform SA.

EOH group CEO Stephen van Coller.

“He admitted corruption within EOH. EOH had made payments from its accounts held with the accused (banks) to various government officials, politicians and politically exposed persons in a corrupt manner. Accordingly, at all relevant times, the bank was aware of, or alternatively, was reasonably expected to be aware of suspicious payments made by EOH from its bank account to several government officials, politicians and politically exposed persons, and as such, had a legal obligation to report the suspicious payments.”

In a statement issued to ITWeb, EOH says it has noted the recent media report that Transform RSA and several other entities have laid criminal charges against FNB and First Rand Bank for corruption and money-laundering due to the bank providing services to EOH.

“EOH wishes to advise that it has been completely transparent with the bank, we have further co-operated with the authorities," says Fatima Newman, EOH chief risk officer. "The wrongdoers are no longer employed by EOH, criminal charges were laid and EOH has been repaying the monies earned under tainted contracts.

“EOH would be surprised if the banks decide to close its accounts based on transgressions from the past. Closing down of EOH accounts would further disrupt the EOH business, where for almost two years, management has worked tirelessly to enhance governance practices, root out corruption, restore its reputation and grow the business.”

Pressure on banks

Meanwhile, trade unions have come out to support AYO in its battle against Absa and FNB.

Zwelinzima Vavi’s South African Federation of Trade Unions (SAFTU) condemned the banks for “selective morality”, saying Absa and FNB seemingly “are abusing their power as banking oligarchs to target political opponents and competitors”.

It states: “The two large banks have without any engagement given AYO Technology Solutions a notice to terminate banking services on the 3rd of May 2021.

“SAFTU is calling on the banks to be consistent. Even if we wished that the banks were truly committed to fighting corruption, the inconsistency by the banking institutions in this case smells of ulterior motives instead of genuinely fighting corruption.”

Similarly, the National Union of Metalworkers of South Africa (NUMSA) says it will be joining AYO’s urgent court application at the South Gauteng High Court, “to apply for an urgent interdict restraining FNB from de-activating or closing its banking facilities”.

NUMSA says: “We must not view the decision taken by both FNB and Absa as guided by morality, principles or ethics.

"We cannot fold our arms and allow FNB to abuse its power to the extent that it results in thousands of unnecessary job losses. If FNB is allowed to arbitrarily close AYO’s bank accounts, without any good reason, this will mean AYO is unable to trade and will therefore have to dismiss all 1 275 employees in its employ. Over 3 825 families will be affected by this cruel and heartless decision and this is why they must be stopped.”

In response, FNB notes the court’s decision to dismiss the application for an interim interdict against its notice to terminate banking services to the client concerned.

“The bank also wishes to condemn and firmly refute the client’s public allegations of discrimination in respect of the decision to terminate the banking relationship.

“FNB has a zero tolerance for discrimination against anyone and on any of the grounds listed in the Constitution of South Africa,” it states.

“Due to the confidential nature of our client relationships, we cannot provide any further details on the matter.”

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