EOH investigation finds evidence of tender irregularities and other unethical practices

Technology services company EOH is set to hold a press conference on Tuesday where it will publish the findings of an investigation into alleged corrupt practices.

In February, Microsoft terminated longstanding partner agreements with EOH after a contract worth R120 million – awarded to subsidiary EOH Mthombo by the Department of Defence – was questioned.

EOH Group chief executive officer Stephen van Coller penned an open letter in which he promised to clean up the business. The group also appointed law firm ENSafrica to conduct an investigation into a number of public sector contracts, amid allegations of corruption and poor governance and compliance.

That investigation was concluded earlier this month. As a result, EOH said in a statement on Tuesday morning (16 July), that “following submission of a forensic report and its recommendations to the board of directors of EOH, the board has assessed the findings of the ENSafrica report and has prepared an interim update on the forensic investigation”.

“To date, the ENSafrica investigation has found evidence of a number of governance failings and wrongdoing at EOH, including unsubstantiated payments, tender irregularities and other unethical business practices which are primarily limited to the public sector business centralised in EOH Mthombo and to a limited number of EOH employees.

“Suspicious transactions of R1.2 billion have been identified and are being investigated by ENSafrica,” it said.

“The exact nature of each of these transactions has not as yet been verified and may relate to legitimate transactions, theft or bribery and corruption payments,” EOH said.

The group added that ENSafrica will provide it with bi-monthly updates which will, in turn, inform areas for further investigation and remedial work. “EOH will continue to assess the financial impact of the findings.”

Resignations

On Monday, EOH announced that a number of its board members had resigned, including Pumeza Bam, Zunaid Mayet, and Rob Godlonton.

Bam resigned from the EOH Holdings Board and various other EOH subsidiary boards and trusts with effect from 12 July 2019. He served as executive director for seven years and non-executive director for two years.

Executive director and Nextec CEO Zunaid Mayet also resigned from his position as CEO and from the EOH board with effect from the same date. Mayet has been at EOH for 10 years and a member of the board for the last two years.

“To ensure a smooth transition, Zunaid will assist with the handover of Nextec by 31 October 2019,” EOH said. “He thereafter intends embarking on a new entrepreneurial venture.”

Executive director and CEO of EOH’s ICT business, Rob Godlonton, also resigned from the company with effect from 12 July 2019.

“Rob has been at EOH for over 11 years and has been leading the EOH ICT business in South Africa with energy and dedication,” EOH said.

“To ensure a smooth transition, Rob will assist with the handover of the ICT business by 31 October 2019.”

Van Coller and financial director Megan Pydigadu will assume a care-taking leadership role for the ICT and Nextec businesses on an interim basis, the company said.


Read: Top EOH executives resign

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EOH investigation finds evidence of tender irregularities and other unethical practices