EOH Holdings has blacklisted 50 enterprise development partners following an investigation into suspicious payments totalling R1.2 billion. Picture: Karen Sandison/African News Agency(ANA)

DURBAN – Troubled information technology group EOH Holdings has blacklisted 50 enterprise development partners following an investigation into suspicious payments totalling R1.2 billion. 

The group said yesterday that it had reported the entities and individuals involved to the Hawks for possible prosecution after law firm ENSafrica completed about 80 percent of the investigation into the suspicious transactions. 

The group appointed ENSafrica in February to probe a number of public sector contracts after allegations of corruption and poor governance and compliance emerged. EOH said the suspicious transactions had since been revised down to R935 million. 

The group said they included payments with no evidence of contracting or work done valued at R665m, written-off loans amounting to R90m and over-billing of about R180m. 

“Some of these partners have initiated legal challenges against the company. However, EOH will robustly oppose legal challenges brought by such parties,” the group said after it released its long-awaited results for the year to the end of July.

Chief executive Stephen van Coller said the past 12 months had been extremely difficult for the group. “We have spent extensive time focusing on cleaning-up the business both from a governance and financial perspective, as well as understanding the group’s strategic capabilities,” Van Coller said. 

“While there is much still to do, the path is much clearer.” Van Coller said the group would in the short term focus on continuing to deleverage its balance sheet while implementing governance changes. He said it would then focus on a more synergised and focused offering that would help it to take advantage of the next wave of change in the ICT industry. EOH said the ENSafrica investigation showed that the perpetrators of wrongdoing were mainly confined to a small group of individuals in the public sector team. 

“Apart from this type of wrongdoing, the investigation has also identified various opportunistic incidents of fraud and theft to the prejudice of EOH. This has resulted in the company initiating disciplinary measures which have led to the termination of employment relationships with a number of individuals,” the group said. 

The group has provided extensive information to the Hawks and the Financial Intelligence Centre, and was co-operating with the authorities. “The investigation team is working closely with the authorities to ensure that they are able to identify illicit money flows. EOH has initiated legal processes to recover losses caused by the perpetrators of wrongdoing,” the group said. Peter Takaendesa, a portfolio manager at Mergence Investment Managers, said the new management and board had clearly started to reset the business’s operating model by putting in place a stronger governance framework and asset disposals to stabilise the balance sheet. 

“However, the legacy issues remain a material headwind to the business for now, as the clean-up is taking longer, problems are deeper than initially thought, and all indications are that they are still in the stabilisation phase. The financial year to July 2020 is likely to remain challenging and further asset disposals are necessary as the balance sheet is not in a sustainable position,” Takaendesa said.

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