EOH Holdings CEO Stephen van Coller said late on Friday that he is confident that the IT services group will not be blacklisted by government over a department of home affairs IT contract or over previous malfeasance uncovered in its public sector dealings.
Van Coller’s remarks come after EOH on Friday published an update to shareholders in which the group said it is “confident that the matter will be positively resolved”.
Reports began emerging on Tuesday that EOH could face being blacklisted from doing business with government by the State IT Agency (Sita), sending the shares tumbling more than 10% in intraday trading on the JSE, before recovering some composure.
Sita — the agency responsible for IT procurement and services in government — had reportedly been wanting to blacklist EOH from doing business with the public sector. Public-sector contracts make up as much as 20% of EOH’s annual sales.
In a statement issued via the JSE shortly before markets closed on Friday, EOH said Sita had informed it earlier on Friday that the agency had received correspondence from national treasury on the matter. “Based on the above, Sita has referred the matter to the department of national treasury and the department of home affairs for further processing,” EOH said. (National treasury had told TechCentral late on Thursday that it was aware of the matter, but that “no request in respect of blacklisting EOH has been received by national treasury from Sita”.)
Kept abreast
“EOH remains confident that the matter will be positively resolved and will provide shareholders with an update once engagements with national treasury and home affairs have concluded,” EOH said.
In an earlier statement to shareholders, issued on Tuesday, EOH said it had kept Sita abreast of all developments in its investigations into past dodgy contracts with the public sector.
In March 2019, for example, law firm ENSafrica, working for EOH to uncover the malfeasance, updated Sita on the investigations into dodgy deals at the department of defence and the department of water & sanitation. Then, in July 2019, ENSafrica mailed Sita a copy of an interim update report, which was also published on the EOH website. On 23 September the following year, ENSafrica provided Sita with a general update and warned it that EOH was subpoenaed to give evidence at the Zondo inquiry into state capture.
“EOH anticipated this action two years ago when the scandal broke and it was the very reason why EOH approached Sita with the information just weeks after the start of the ENSafrica investigation in March 2019, and we have continued to keep them updated,” it said.
“EOH was therefore surprised to receive the letter from Sita on 21 June 2021 (although dated 4 June 2021), which intimated that it would consider restricting EOH from doing business with the public sector based on Nexia SAB&T’s forensic audit report to parliament on the department of home affairs’ Abis project.”
Jurisdiction
EOH said it gave its full co-operation to home affairs and the forensic investigators. Through ENSafrica, it also wrote a “compelling, “independent” letter to Sita outlining why EOH’s new leadership team, under Van Coller, should not be sanctioned for a previous management team’s faults. This letter “outlined EOH’s remedial actions, which included the exiting of, and institution of criminal and civil proceedings against, the previous EOH management and alleged perpetrators of wrongdoing”.
Van Coller told TechCentral on Friday that EOH received legal advice that Sita cannot block EOH from doing business with government over the home affairs tender as it is the jurisdiction of national treasury.
“Should Sita recommend restrictions to national treasury, EOH has the right to representation as well as taking the matter on appeal,” EOH told shareholders in Tuesday’s statement. “Given what EOH has achieved in the past two years, our legal counsel believes that we have a very strong case against any blacklisting.” — (c) 2021 NewsCentral Media