EOH Holdings said on Tuesday that it has blacklisted 50 “enterprise development” partners and intermediaries and reported suspected criminal behaviour to authorities for investigation and possible prosecution as the JSE-listed technology group continues a clean-up of its operations.

Alongside its annual results to July 2019, published on Tuesday before markets opened in Johannesburg, EOH said law firm ENSafrica has made “significant progress” investigating corruption in the group’s public sector business. ENSafrica was appointed to probe the malfeasance following Microsoft’s decision earlier this year to terminate its relationship with EOH after a whistle-blower lodged a complaint with the US Securities and Exchange Commission over a dodgy tender involving a software licensing agreement with the South African department of defence.

EOH CEO Stephen van Coller contracted the law firm to do a wide-ranging investigation, especially into the group’s government contracts, to determine the scale of the problem.

The group said ENSafrica has completed about 80% of its investigation into R1.2-billion of identified “suspect payments”. This amount, it said, has since been modified to R935-million and includes transactions with no evidence of valid contracts being in place or where no work was done (valued at R665-million) as well as R90-million of loans written off and overbilling valued at about R180-million.

“The ENSafrica investigation team has also been able to confirm the key modus operandi that was utilised by the main perpetrators to commit wrongdoing at EOH, which involved enterprise development (ED) partners and intermediaries,” it said. “EOH has suspended payments to and blacklisted 50 ED business partners implicated in suspect payments. Some of these ED partners have initiated legal challenges against the company. However, EOH is committed to ensuring that all perpetrators of wrongdoing are held accountable for their actions. EOH is accordingly robustly opposing legal challenges brought by such parties.”

Employees fired

It said the ENSafrica probe found that the main perpetrators of wrongdoing remain confined primarily to a small group of individuals in the public sector team. “Apart from this type of wrongdoing, the investigation has also identified various opportunistic incidents of fraud and theft to the prejudice of EOH. This has resulted in the company initiating disciplinary measures, which has led to the termination of employment relationships with a number of individuals.

“Based on further information identified from ongoing whistle-blower reports and the ongoing investigation, the ENSafrica team has assisted EOH in making further reports to the authorities in line with our statutory reporting obligations,” it said.

“We have provided extensive information to the Hawks and the FIC (Financial Intelligence Centre) and we are supporting and cooperating with the authorities.

“It is important to emphasise that EOH is actively pursuing criminal charges as a complainant against various individuals implicated in wrongdoing. The investigation team is working closely with the authorities to ensure that they are able to identify illicit money flows. EOH has initiated legal processes to recover losses caused by the perpetrators of wrongdoing.” — © 2019 NewsCentral Media