President Ramaphosa orders graft probe into EOH’s R470m IT contracts

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Fatima Newman, chief risk officer at EOH.
Fatima Newman, chief risk officer at EOH.

Beleaguered technology group EOH is back under the microscope after president Cyril Ramaphosa authorised a fresh probe into multimillion-rand contracts awarded to the company by the Department of Water and Sanitation (DWS).

Ramaphosa signed the proclamation last week and the Special Investigating Unit (SIU) announced yesterday it had been authorised to investigate four IT contracts awarded to EOH and its subsidiaries.

The SIU said the contracts, worth R474 million, will be probed as the state seeks to recover any financial losses it suffered.

“The investigation will cover transactions that took place between 1 January 2012 and 30 July 2021, the publication date of the proclamation. Transactions that either took place before January 2012 or after 30 July but relevant to, connected with same persons, entities or contracts being investigated, will also form part of the SIU investigation,” said the SIU.

The latest probe by the state comes on the back of increased efforts by the Stephen van Coller-led management’s efforts to rehabilitate the company, which for years had been linked to impropriety.

Operation restore dignity

Responding to the SIU’s proclamation, Fatima Newman, EOH Group chief risk officer, said the probe is into wrongdoing involving former EOH employees, which was brought to the attention of the SIU by EOH.

“In order for EOH to compensate the DWS (via the SIU) for such wrongdoing, it was necessary for the SIU to be mandated to investigate the contracts. This then gave rise to a Presidential Proclamation, which has now been published. EOH has not only co-operated fully with the SIU to bring this matter to a conclusion, but has proactively sought to reimburse the department for wrongdoing involving former employees identified in the EOH forensic investigation,” Newman said.

“From inception of the ENSafrica forensics investigation in February 2019, EOH has transparently and proactively reported wrongdoing to the authorities. Furthermore, prior to engaging in settlement negotiations with the SIU, on 31 May 2019, EOH reported the wrongdoing to National Treasury and proposed to compensate the state for identified irregularities regarding the Department of Defence (DOD) and DWS contract.”

According to Newman, EOH subsequently entered into an acknowledgement of debt with the SIU at the end of September 2020 with regards to the DOD contract.

She explained: “EOH commenced monthly payments in terms of the acknowledgement of debt from 5 October 2020. The terms of the compensation to the DOD were disclosed at the EOH 2020 year-end results presentation on 2 December 2020. In addition, this disclosure was repeated when EOH released its interim results on 14 April 2021. EOH has taken action to reach a similar agreement with the SIU regarding the DWS contracts.

“In this regard, negotiations with the SIU on the DWS contracts are advanced, and it is anticipated that an agreement on compensation to the DWS will be concluded in the near future.”

Blameless future

Further, Newman says, the new EOH leadership remains committed to doing business ethically as well as being a good corporate citizen.

On Monday, the technology group told shareholdersit is now focusing on quality earnings – this as it restores EOH’s battered image.

EOH has been putting out fires in the past few months as the extent of the flames that have engulfed the company under its previous management became public.

The company’s previous modus operandi on public sector contracts was exposed at the State Capture Commission, when it was revealed that some of EOH’s public sector contracts were tainted by wrongdoing or criminal conduct in the acquisition, award or execution of contracts.

As a result, the State Information Technology Agency took a hard stance on the company, threatening to blacklist it.

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