EOH demands R6.4bn in damages from former execs

Samuel Mungadze
By Samuel Mungadze, Africa editor
Johannesburg, 29 Jun 2021
EOH founder and former CEO, Asher Bohbot.
EOH founder and former CEO, Asher Bohbot.

Embattled technology group EOH says it has closed off dodgy legacy public sector contracts that have bedevilled the technology group over the years.

The company made the announcement today, as it confirmed it is suing a number of former EOH executives, including Asher Bohbot, founder and former CEO; John King, former CFO; Jehan Mackay, former head of public sector; and Ebrahim Laher, former head of EOH International, for a total of R6.4 billion in damages.

In a statement issued to ITWeb, EOH says it has lodged a criminal case against the four former executives, in addition to the R6.4 billion claim it has filed in court.

"EOH can confirm it has lodged criminal, civil and delinquency charges against all of them," says the JSE-listed company.

Mackay has featured prominently at the State Capture Commission as having been instrumental in paying politicians to allegedly influence public sector tenders.

Just yesterday, Mackay’s relationship with deputy minister of state security, Zizi Kodwa, made headlines as financial dealings between the two came under scrutiny. Mackay is alleged to have paid Kodwa R2 million.

In March, his name also took centre stage when Johannesburg mayor Geoffrey Makhubo testified at the State Capture Commission, defending “donations” from EOH.

The mayor was grilled over a series of payments made by EOH to Makhubo’s Molelwane Consulting, suggesting they were in exchange for city tenders.

EOH initially announced in March that it was inching closer to tearing down public sector contracts and today CEO Stephen van Coller says the company has closed the troublesome contracts.

“It has been no easy feat getting to this point. The new EOH leadership team is immensely proud of everyone who has been involved in this process of saving the jobs of many people and ensuring EOH’s continuing support for our customers in their critical digitisation journeys,” says Van Coller.

“As a result of these efforts, EOH remains a leader in the ICT sector in South Africa. EOH employees have shown immense loyalty and grit as we have navigated the past two years and the group can now focus on the of building EOH 2.0 – a unique business with innovative solutions driven by incredibly skilled and passionate people.”

EOH had eight sticky public sector contracts that negatively impacted on the company’s financial performance.

The JSE-listed IT services group has been on the mend under Van Coller since an ENSafrica investigation into EOH dealings revealed many instances of governance failings and wrongdoing.

EOH appointed ENSafrica to conduct a proactive, comprehensive investigation into the company’s contracts and identify any wrongdoing or criminal conduct in the acquisition, award or execution of contracts.

The probe found about R1.2 billion worth of suspicious transactions at EOH, which mostly involved transactions within the public sector contracts.

The company then went on to say it was looking to “ring-fence” its problematic contracts into a single entity before blacklisting 50 corruption-tainted entities within the group.

In a statement released today, EOH says: “This effort was critical to saving the jobs of as many EOH people as possible, as the new board sought to avoid blacklisting by EOH’s partners and customers. The incredible support and response we have received from our stakeholders has resulted in the winning of multi-year contracts and is a strong indicator that we have followed the correct strategy.”

Further, it says: “The actual losses incurred as a direct and indirect consequence of the wrongdoings which included revenue lost due to reputational damage, fines, settlements and the ENSafrica investigation were substantial.”