Embattled technology group EOH says its previous public sector contracting practice has cost the company dearly, as it commits to ethical conduct going forward.
Reacting to condemning allegations of state capture and corruption revelations in Parliament, Stephen van Coller, EOH Group CEO, says almost R900 million has been stolen from the company through the siphoning process.
EOH’s modus operandi has been under scrutiny after an ENSafrica forensic investigation, commissioned by Van Coller, revealed massive corruption between the company and various public sector entities in order to secure contracts.
“This contracting practice has cost EOH significantly, as it has concluded the delivery of services under these problematic contracts,” says Van Coller.
“The new EOH board and management faced enormous challenges and have had to work extra hard to repay R2 billion of the R4 billion legacy debt that was racked up due to poor management and looting.”
He notes EOH has made significant progress and reported its first positive operating profit for the first half the 2021 financial year since the new board and management took over.
“In addition, the process to create a permanent capital structure for EOH is well advanced and should be completed in the next 12 months.”
Commenting on the damning forensic report, tabled in Parliament on Monday, detailing how EOH seemingly manipulated the procurement system to score a R400 million Department of Home Affairs (DHA) biometrics tender, Van Coller says the company embraces the findings.
“As acknowledged in the Nexia SAB&T forensic report, EOH fully cooperated with the investigation on information available to the group at the time, and importantly, EOH further initiated action to recover losses caused by the perpetrators of wrongdoing.”
The report by Nexia SAB&T revealed how EOH and State Information Technology Agency (SITA) senior staffers orchestrated the scheme of making sure EOH landed the lucrative contract.
According to the report, confidential DHA documents, including the proposed budget for the project, were provided to EOH beforehand.
The incriminating report recommends that the department opens a criminal case with the Directorate for Priority Crime Investigation (the Hawks) so that “it can be established whether corruption, theft or fraud” was committed regarding the tender.
Responding to this, Van Coller says accountability remains paramount.
“The EOH independent forensic investigation itself is behind the group, and we have reported suspected fraud and corruption to the authorities and instituted legal proceedings where appropriate. We have also duly engaged the relevant law enforcement agencies to ensure anyone found guilty of wrongdoing will ultimately be held accountable for their actions.”
Notwithstanding the ructions around the contract, Van Coller says his team has delivered on key outcomes.
To date, he says, EOH has successfully delivered 51 of the 60 contracted milestones for phase one of the Automated Biometric Identification System project, which have been signed off and accepted by the DHA.
According to Van Coller, EOH further procured and built two data centres as contracted, and in addition, all contracted interfaces have been built and unit testing has been completed.
“The remaining milestones in phase two were ceded to a sub-contractor by EOH on 1 April 2021, following a proposal submitted by EOH to the DHA in March 2020. This has the required legislated approvals. As part of EOH’s commitment to deal with the past appropriately, EOH ensured the cession remains within the original budgeted expense and that the handover is managed appropriately.
“This has been at EOH’s own cost. The project was, unfortunately, delayed for a number of reasons and in order to resolve the disputed issues, this now forms part of an ongoing arbitration process.”
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