The Special Investigating Unit (SIU) has rejected EOH’s R52 million offer to settle a long-running graft probe. The investigative unit is instead demanding R236 million.
This, after the JSE-listed technology group voluntarily contacted the SIU to settle a probe into the multimillion-rand contracts flagged as corruptly awarded to the company by the Department of Water and Sanitation (DWS).
In August 2021, the SIU launched an investigation, authorised by president Cyril Ramaphosa, into tenders worth R470 million issued to EOH by the department.
The investigation focused on the procurement, contracting and implementation of four IT contracts awarded by the DWS to the technology group and its subsidiaries.
EOH is the second company to face a hefty penalty from the SIU over tainted public sector contracts with the water affairs department.
Last month, German software firm SAP agreed to settle its long-running dispute with the department, paying a further R82 million to put the matter to bed. SAP was initially ordered to pay the department R263 million, with the remainder of the amount to be determined at a later stage.
In the case of EOH, management led by CEO Stephen van Coller has been co-operating with the SIU, and had targeted November to settle the SIU probe.
The company took a proactive approach, reaching out to the SIU with a settlement.
EOH previously reached a compromise with the SIU regarding irregularities with its Microsoft licence sales contract at the Department of Defence, and it was hoping for the same outcome on the water affairs contracts.
With the defence department contractual challenges, EOH entered into an acknowledgment of debt with the SIU at the end of September 2020. Since then, it has made multiple payments, beginning in October 2020.
According to an SIU Twitter thread, the unit rejected the multimillion-rand settlement offer from EOH. The company offered to settle two of the four contracts, with a written offer of R52 million.
“The SIU did not accept the offer. The SIU quantified the amount payable by EOH, which is R236 million," it said.
The SIU did a four-part Twitter thread that was based on its June 2022 Parliament presentation regarding its Department of Water and Sanitation investigations.
The SIU says it has now appointed counsel with a view of approaching the Special Tribunal and is also conducting lifestyle audits on implicated officials from the department.
The Special Tribunal is mandated to recover public funds syphoned from the fiscus through corruption, fraud and illicit money flows.
The SIU says EOH has been notified of its findings and the company has undertaken to consider the findings and revert to the investigative unit.
Commenting on the matter, Fatima Newman, EOH Group chief risk officer, says: “EOH is aware of the announcement made by the SIU on 10 October 2022, and which appears to be reflective of the presentation made by the SIU on 8 June 2022.
“Subsequent to 8 June 2022, EOH has provided evidence of the substantial work that was done, which has resulted in the negotiation of a lower amount, which is deemed to be just, fair and equitable, to be reimbursed by EOH to the DWS.
“The negotiations initiated by EOH with the SIU in this regard are close to finalisation. Upon finalisation of an agreement with the SIU, EOH will release an announcement in due course.”
EOH has in the past few months been putting out fires, as the extent of the rot that engulfed the company under the previous management became public.
The company’s previous modus operandi on public sector contracts was exposed at the State Capture Commission, when it was revealed that some of EOH’s public sector contracts were tainted by wrongdoing, or criminal conduct in the acquisition, award or execution of contracts.
As a result, the State Information Technology Agency took a hard stance on the company, threatening to blacklist it. A decision on the blacklisting is still pending.
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