EOH boss Stephen van Coller, who has been working to regain the company’s reputation and credibility in the wake of a government corruption scandal, says the technology group is honoured to be acknowledged by the commission of inquiry into state capture for its proactive approach in disclosing its role in underhanded dealings with the public sector.
“EOH is very honoured to be acknowledged for their input and assistance to the Zondo commission and for being used as an example of how a corporate has turned itself around by transparently cleaning up its past,” Van Coller told Business Day.
The commission, headed by chief justice Raymond Zondo, said the technology group was “unique” in disclosing its role in state capture, saying there was “no other company that has been of greater assistance to the commission in relation to the investigation of historical wrongdoing within its ranks.
“It sought to explain what it has already done, and what it proposes to do, to make reparation for such wrongdoing and to prevent similar wrongdoing occurring within its ranks in the future,” Zondo’s latest report said. “EOH’s attitude towards the commission is illustrative of the attitude it has taken to regulatory and law-enforcement authorities more generally.
“Primary credit for the attitude taken by EOH must be accorded to Mr Van Coller. At the time of his appointment in 2018, he was aware of adverse media reports relating to EOH. His response to these reports was not to seek to negate them, but rather to investigate to establish whether they were substantiated.”
The commission recommended that President Cyril Ramaphosa consider the position of Zizi Kodwa as deputy minister of state security after his implication in questionable transactions between himself and Jehan Mackay, a former director at EOH.
From February 2014 to April 2015, EOH-related entities and Mackay are alleged to have made cash payments of about R1.68m to Kodwa and another R30,000 for his benefit.
The investigation also implicates the late former Johannesburg mayor Geoff Makhubo in matters related to EOH.
The report details how from 2008 to 2018, when Makhubo was MMC for finance for Johannesburg and the ANC’s regional treasurer, he allegedly influenced tenders in favour of suppliers including IT company EOH in exchange for millions of rand in kickbacks to the party and his company, Molelwane.
The report says EOH made several donations to the ANC, among them one of R2m in December 2013, allegedly “for development and education services”. Another was a R3m donation on April 16 2014, the day an EOH entity made an unsolicited proposal to the city for a multimillion-rand contract.
The commission also recommended law-enforcement agencies investigate the city’s 2014 award to TSS Managed Services, a company acquired by EOH in 2011, of a contract for the upgrading of the City of Johannesburg network and security infrastructure “with a view to the prosecution of Mr [Patrick] Makhubedu, Mr [Reno] Barrie, Mr Jehan Mackay, Mr Ebrahim Laher and any other suspects identified in the investigation on charges under the Prevention and Combating of Corrupt Activities [Act] if the investigation reveals such prosecution is warranted”.
EOH has been under pressure in recent years after uncovering dubious transactions related to public-sector contracts that forced it to restate previous results. The errors occurred under the previous management and Van Coller was appointed in 2018 in a bid to save the group.
EOH said in 2019 a forensic probe by ENSafrica had found evidence “of a number of governance failings and wrongdoings”. These included unsubstantiated payments, tender irregularities and “other unethical business practices”, including bribery and theft, mainly within the public sector business operated by EOH Mthombo.
EOH, valued at about R1bn on the JSE, still has debt of R1.7bn. Its share has lost 95% of its value over the past five years.
EOH has been pursuing a turnaround effort that includes disposing of noncore assets and closing unprofitable contracts. It has also been engaging the market on fixing its debt problem that could involve a rights issue, but may also see the introduction of a new strategic investor.
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