Johannesburg: 11 November 2022: The new EOH board and management has, over the last four years since appointed, taken its investigation into allegations of corruption and irregularities concerning it seriously. In this regard the EOH Group has transparently and publicly implemented robust actions to identify wrongdoings and has provided extensive co-operation with law enforcement and regulatory agencies including the Special Investigating Unit (SIU).
Upon learning, in February 2019, of certain transgressions of several previous employees and board members of EOH between 2015 and 2017, the new board and management of EOH instructed independent law firm ENSafrica to significantly extend the scope of the forensic investigation into the suspected wrongdoing covering a period from 2012 to 2018. From inception of the ENSafrica forensics investigation, EOH has transparently and proactively reported wrongdoing to the authorities having submitted eight section 34 reports to the SIU between May 2019 and June 2020 and made detailed submissions to National Treasury and SITA as well as the Financial Intelligence Centre.
On 31 May 2019, EOH reported the wrongdoing to National Treasury and proposed to compensate the State for identified irregularities regarding the Department of Water and Sanitation (DWS) contract. As part of this process, and after having concluded the full detailed analysis, EOH proactively made contact with the SIU in July 2020 to discuss firstly, what the analysis uncovered, secondly what work was done for value and thirdly to discuss compensation for aspects of the contract where no value was derived in respect of the DWS contract.
On the 5 August 2021 there was a Government announcement regarding the SIU’s Proclamation for an investigation focusing on the procurement of, or contracting and implementation of four Information Technology (IT) contracts that were awarded between 2012 and 2017 by the Department of Water and Sanitation (DWS) to EOH Mthombo, (a wholly owned subsidiary of EOH), to the value of R474 million.
EOH and the SIU engaged over several meetings and discussions with a view to unpacking the details of the analysis and as outlined above, to agree a quantum for the portion of the contract where EOH Mthombo received undue benefit for the aforementioned DWS contract.
After further engagements, the SIU, DWS and EOH reached agreement on an amount which all parties believed to be fair and equitable. The terms of the agreement are set out as follows:
- An initial upfront payment of cR65m which relates to duplicated software licenses which will be refunded; and
- The remainder of an amount of cR112m to be paid over a period of 36 months commencing in January 2023.
As disclosed in previous communications, SENS and results announcements, EOH has fully provided for this settlement in its financial accounts and confirms that it will have no impact on the Company’s income statement.
EOH Group Chief Executive Officer Stephen van Coller said “The EOH Board and Executive leadership express their gratitude to the SIU and DWS for their professional engagement and in working with EOH to reach a settlement agreement, and in so doing concluding on the legacy contract issues related to the ENSafrica forensic investigation and the DWS matter in particular.”
The new EOH leadership remains committed to doing business ethically as well as being a good corporate citizen.
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