EOH Holdings will publish the findings of a wide-ranging independent investigation into alleged corruption involving public sector contracts, the JSE-listed IT services group told shareholders on Wednesday.
“Relevant findings and associated actions” flowing from the report, by law firm ENSafrica, will be published on 16 July.
This follows the publication of a series of investigative articles by TechCentral into alleged malfeasance surrounding a department of defence contract involving the sale of Microsoft software licences. A whistle-blower reported the matter to the US Securities and Exchange Commission (SEC) under the US Foreign Corrupt Practices Act last year.
TechCentral reported in February that Microsoft terminated longstanding partner agreements with EOH after the SEC complaint was filed. The whistle-blower lodged the complaint with the SEC at the end of November 2018 under the tough anti-graft legislation.
The allegations centre on a contract, worth R120-million, awarded by the department of defence in 2016 to the EOH subsidiary, EOH Mthombo.
“ENSafrica has concluded the investigation commissioned by EOH into public sector contracts and has submitted a forensic report and its recommendations to the board of directors of EOH,” the group said in a statement on the JSE’s stock exchange news service on Wednesday. “The board has assessed the findings of the ENSafrica report and is engaging with the stakeholders concerned where appropriate. Relevant findings and associated actions will be made public on or about 16 July 2019, or as required.”
EOH advised shareholders “to continue to exercise caution when dealing in the company’s securities until a further announcement is made”.
The whistle-blower in the department of defence case claimed the department overpaid EOH Mthombo to the tune of millions of dollars for Microsoft software licences.
The whistle-blower alleged that Microsoft was “complicit” in allowing EOH Mthombo to engage in a “corrupt” licensing transaction with the department.
EOH CEO Stephen van Coller, who joined the group last year from MTN Group, contracted ENSafrica in February to review all licensing contracts in the past five years with all public sector entities. It was instructed to start with the Microsoft licensing contracts, Van Coller told TechCentral at the time.
The group has since moved to improve corporate governance, including appointing new directors to its board.
The consequences for Microsoft are potentially severe: US-traded companies can face “significant penalties” — in some cases up to hundreds of millions of dollars — for violating the Foreign Corrupt Practices Act. There’s little doubt that Microsoft will be paying close attention to the findings contained in the ENSafrica report. — © 2019 NewsCentral Media