More problems at EOH as Qlik cancels contract

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Troubled IT services company EOH has suffered another huge contract loss.

It has emerged US-based software company Qlik cancelled its contract with the JSE-listed company.

After an insider lifted the lid on the contract termination to ITWeb, an EOH spokesperson responded: “QlikTech, EOH and Deixis (the company through which the QlikTech partnership is executed in Southern Africa) have cancelled their contractual relationship due to commercial differences.”

Headquartered in Radnor, Pennsylvania, Qlik does business in more than 100 countries with over 40 000 customers globally.

According to the spokesperson: “QlikTech and EOH are currently engaged in negotiations to reach a settlement and allow both parties to move forward in an amicable manner while still conducting business with each other.”

In February, US-based software giant Microsoft also terminated its contract with the IT services company after an anonymous whistle-blower filed a complaint with the United States Securities and Exchange Commission about alleged malfeasance to do with a R120 million contract with the SA Department of Defence.

This led EOH to request law firm ENSAfrica to conduct an investigation into EOH contracts to identify any wrongdoing or criminal conduct in the acquisition, award or execution of contracts.

The report found evidence of a number of governance failings and wrongdoing at EOH. It also identified suspicious transactions of R1.2 billion and these are being investigated by ENSafrica.

EOH Mthombo, the subsidiary that was largely implicated in the suspicious payments, will be closed within two years.

As a US-based company, Qlik also complies with the Foreign Corrupt Practices Act, a US federal law known primarily for two of its main provisions – one that addresses accounting transparency requirements under the Securities Exchange Act of 1934 and another concerning bribery of foreign officials.

However, the spokesperson says the QlikTech business within EOH is not included in the current forensic investigation and is not material to the group’s financials.

“EOH believes its over 70 reseller arrangements are an important element of its offering, but it constantly reviews these and is confident it will resolve an outcome with QlikTech in the best interests of all parties,” the spokesperson says.

Qlik (formerly known as QlikTech) is a software company founded in 1993 in Lund, Sweden and now based in Pennsylvania. Its main products are QlikView and QlikSense, both software for business intelligence and data visualisation.

South Africa Qlik Master Reseller (previously known as QlikView SA) has been a member of the EOH group of companies since 1 July 2014, facilitating a partnership that aimed to accelerate growth for Qlik in Southern Africa directly or through its specialised partner channel.

In a press release issued last year, EOH said QlikView was initially implemented in the public sector division of EOH, in 2014, before it was rolled out to managed services, finance and human resources.

“We started using Qlik from a strategy and planning perspective. From there, it just mushroomed in the organisation,” says EOH in the press release.

From a finance perspective, EOH says Qlik was implemented in 2015 and put on top of EOH’s existing enterprise resource planning tool, as well as its payroll system.

Adding to EOH’s problems, last month City Press reported the IT services company had asked forensic investigators to probe allegations from a politically connected middleman that he influenced a R1.2 billion IT tender in favour of one of its subsidiaries.

Responding to the allegation, an EOH spokesperson told ITWeb: “As previously communicated to the market, EOH has engaged ENSafrica to conduct an independent investigation into legacy public sector contracts.

“On 16 July 2019, we released an update to the market which transparently set out details of irregularities that were identified in various public sector contracts by ENS.

“At this stage, as indicated publicly, we are unable to give any further detail with regards to implicated parties and individuals, as the detail is subject to legal privilege and disclosure thereof may compromise the criminal and civil processes that are under way. The investigation is on-going, and we will provide further updates as the investigation progresses.”

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