What I learnt from EOH about preventing corruption

In 2017, digital services company EOH was a market favourite trading at R170 a share. It was then hit by a series of corruption charges and the share price imploded. Current CEO Stephen van Coller reflects here on what he has learnt about corruption during a traumatic two years at the helm.

One of the fundamental issues we need to grapple with as leaders and certainly as a society is that rules, guidelines and codes of ethics are not enough to prevent the staggering levels of corruption and deviation from ethical standards that we are seeing not only in South Africa, but around the world.

The world is very different today and the only way to future-proof your business is if you grow ethically and sustainably, and to be transparent with your customers as well as with your staff and your communities.

We are also seeing exponential change. Sometimes you cannot even see the change coming, and it is coming at us fast. When you lead in an environment like this you cannot solve your current problems using the thinking that created them, with reference to the wisdom handed down by Albert Einstein.

At EOH, we have been through a tough period. But it has provided a necessary burning platform and we are now building a new approach towards understanding, designing and creating the future EOH. We have not let this crisis go to waste. Allow me to share some of the many lessons we have learned.

  • Businesses aren’t corrupt; people are. Corruption is instigated, normalised and practised by individuals who have made the choice to be corrupt. If you don’t have a culture of doing the right things, in the right way, with the right customers, you’re finished. Combating that culture of corruption can revive a business. Culture beats strategy every day!

  • Complex corporate structures are at particular risk of corrupt practices. Complexity is sometimes explicitly implemented to obscure. The solution is accountability and transparency. The separation of crucial roles to avoid conflicts of interest. For example, even though I am the CEO I have ensured I don’t have signing powers on any of our bank accounts. The Finance Director cannot sign cheques and onboard suppliers. We have a separate department running risk and compliance. This is to ensure nobody is both poacher and gamekeeper.

  • Limited governance and compliance are early indicators of possible corruption. The governance structure is also a reflection of executive culture, which is even more important. Checks and balances are vital and should be established in three layers: front-line employees; a compliance and internal audit function, and external audit as second and third lines of defence.

  • Board independence is crucial. We have world-class governance guidelines in the King Code, and its implementation really makes a difference to oversight. Make sure the meetings are happening properly. Quality of minutes and presentation packs are a very quick indicator of how well these guidelines are being adhered to. Investing pensioners money in companies not meeting the King Code standards should not be allowed.

  • Make it easy for whistle-blowers. This is one thing that really saved us. It’s not good enough just to get information from whistle-blowers; it must be actionable. We developed the Expose-it app which allows you to do more than get something off your chest; it allows you to build a case. It is very important for there to be visible action and two-way communication. Make people feel heard, and make sure they know it was worth the effort. It’s a courageous thing they are doing, and they need to feel supported, valued and protected.

  • Do not use middlemen. They are a risk as you cannot control what they are doing but they are representing your brand. Today, if you’re using middlemen, you are using the wrong business model. Furthermore, our legislation refers to this as fronting and is illegal.

  • If you don’t stand for something you stand for nothing. If you compromise once you’re eternally compromised. What has kept us going at EOH is the realisation that 99% of people truly want to do the right thing. People want to subscribe to a moral code that makes them feel good and worthy. Everyone in the business needs to be accountable for the delivery of their bit. Not only is it a best practice for employee satisfaction it also ensures the right culture from the top.

You can never be 100% prepared for the kind of crisis we faced but I do hope our lessons can help you avoid it or, at the very least, be ready to fix it.

Dealing with the effects of corruption is the worst distraction of management time when we should have been focused on building our business. EOH sits at the heart of more than 5,000 businesses and therefore is an important creator of jobs in all our countries given the change the fourth industrial revolution is bringing. We will not let corruption define us at EOH. Our most important story is that we will be a force for innovation and change in the technology sector.

While most of the work around the forensic investigation is now behind us, we can now get down to the real business of leveraging EOH’s entrepreneurial culture, the best technology brains in the industry as well as the unparalleled breadth of IT solutions which allow for the creation of a “one-stop-shop” for many clients. This, coupled with the highly innovative IP businesses, positions us to play a key role in society given our ability to serve almost the full spectrum of client needs in both large private companies and the public sector.

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