South Africa’s state capture report has made some damning findings about JSE-listed technology services firm EOH.
This, after the Presidency yesterday made the first part of the state capture commission’s report public.
The formal handover of the first part of the report of the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector took place nearly four years since the establishment of the commission.
The report reveals how the technology services firm made several donations to the African National Congress (ANC) in order to score lucrative government tenders.
Last year, EOH CEO, Stephen van Coller, appeared before the state capture commission testifying about the company’s dealings with government relating to “suspicious transactions” worth R1.2 billion and evidence of “a number of governance failings and wrongdoings”.
The suspicious transactions were laid bare after EOH, under van Coller, appointed law firm ENSAfrica to investigate corruption at the company.
The investigation was led by ENSAfrica’s Stephen Powell, who also gave evidence at the state capture commission.
EOH has over the past few years hogged the limelight for corrupt practices allegedly perpetrated by the previous management.
However, the Van Coller-led management has been fighting to salvage the company’s battered image after the corrupt allegations were made.
The company has since laid criminal charges against its former top executives and it is suing them for R6.4 billion in damages.
According to the report, Powell told the commission that a small group of people at EOH would get an inside track on tenders with the City of Johannesburg before they were even advertised.
It notes that they would get advance notice and more information than their competitors, or they would get sensitive information on tenders before their competitors did.
The report also reveals that there were some instances where confidential information relating to the tenders was leaked to EOH, and in other situations the EOH employers actually wrote the content of the tender themselves.
“This was to exclude other bidders or to make them more likely to win the tender. Not only was there communication with bidders, the evidence of money flows related to the City of Johannesburg shows that millions of rands worth of donations which were made, before and after certain contracts were awarded,” says the report.
It adds that e-mails show that a month before a certain contract was awarded, the late Geoff Makhubo (then Mayor of Johannesburg) asked EOH for a donation to the ANC.
A week after the contract was awarded, says the report, Makhubo asked for another donation. Of particular note was R50 million donated to the ANC for the 2016 local government elections, it notes.
Powell pointed to the elementary fact that tenderers should not be making any donations to political parties or their proxies in connection with the award of a tender during any adjudication.
According to the report, the evidence shows that there was a pattern of regular solicitation of donations, coupled with the award of tenders.
The extent of this practice showed that “it was almost as if the tenders were being granted in exchange for financial benefit to the party”.
The records show a number of donation requests that coincided with the award of tenders.
It was alleged in hearings before the commission that suspicious payments flowed to a company owned by Makhubo and to the ANC in the months directly before and after the technology company EOH was awarded major contracts with the City of Johannesburg.
Van Coller and Powell told the commission how an apparent front company was used as a vehicle allegedly to channel money for the ANC’s benefit and to Makhubo.
The alleged front company, Mfundi Mobile, was paid by EOH purportedly for work done on City of Johannesburg projects, but ENS’s forensic investigations did not find evidence of work done by Mfundi Mobile in exchange for these payments, says the report.
In total, ENS identified tens of millions in “suspected payments” related to City of Johannesburg contracts “where the evidence suggests no work was done”. Powell told the commission that this applied to several alleged service providers.
“And when they looked at the deliverables clauses in the agreements, these were either in blank or had nebulous content in which consulting services were described in terms which are as broad as they can be”.
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