EOH corruption back in the spotlight after Zizi Kodwa arrest

EOH Holdings website. Picture: Karen Sandison Independent Newspapers

EOH Holdings website. Picture: Karen Sandison Independent Newspapers

Published Jun 6, 2024


Nicola Mawson

ALLEGATIONS of corruption at IT firm EOH Holdings have been thrown in the spotlight once again after the company’s former executive, Jehan Mackay, was arrested and appeared in court yesterday together with Sports, Arts and Culture Minister Zizi Kodwa.

This comes after a series of Business Report investigations over the years about tender fraud at EOH implicating executives and employees with state organisations such as the SANDF and the Department of Water and Sanitation, which culminated in the Zondo Commission which investigated allegations of state capture.

Mackay, who was former the head of public sector at EOH, gave a questionable R1.7 million “loan” to Kodwa, then the ANC spokesperson, in what could potentially be linked to a conflict of interest between the two parties as it raised the issue of corporate governance and how the directors conduct themselves, which could potentially be to the detriment of the shareholders.

Kodwa yesterday stepped down in disgrace, with the Directorate for Priority Crime Investigation (DPCI), commonly known as the Hawks, saying the money he received was reportedly used to buy a luxury SUV and pay for luxury accommodation.

Both Kodwa and Mackay were granted bail of R30 000 each in the Palm Ridge Specialised Commercial Crime Court after handing themselves over to the SAPS.

In a statement, the Department of Sports, Arts and Culture said Kodwa would resign immediately as he “challenges the charges against him, which he strongly denies”.

The arrests were part of an ongoing Hawks' multi-disciplinary task team investigation into allegations of state capture, and follow recommendations by the Zondo Commission.

The two face charges relating to the Prevention and Combating of Corrupt Activities Act.

Following the Zondo Commission’s release of its fourth report in June 2022, in which several recommendations required law enforcement agencies to institute criminal investigations, the national head of the Directorate for Priority Crime Investigation established a State Capture task team to investigate identified matters.

In 2021, at the Zondo Commission, Kodwa admitted that he was loaned R1m by Mackay.

EOH almost collapsed due to several governance failures that took place between at least 2015 and 2017.

Independent law firm ENSafrica was tasked with doing a forensic investigation covering the years 2012 to 2018.

The IT company also vowed to sue former directors, including former CEO Asher Bohbot and previous CFO John King for billions of rand in damages for governance lapses when they led the company. King died in 2021.

Last Friday, due to pressure from shareholders, EOH announced a board shake-up and the resignation of its interim CEO and chairperson, Andrew Mthembu. Marius de la Rey was appointed as interim CEO.

Mthembu was appointed interim CEO following EOH CEO Stephen van Coller’s resignation on March 31. Van Coller was appointed in 2018 to clean up corruption at the firm after the ENSafrica investigation.

In its 2023 annual report, Van Coller said that EOH had “emerged from the corruption scandal era”. Then outgoing CFO Megan Pydigadu described the corruption as “a very dark time”.

In February, EOH said it had resolved the final legacy issue holding it back from finalising the restructure and getting back to business as usual, which was an agreement with the South African Revenue Service that saw it pay R112m to the revenue service.

For the full year in 2023, EOH reported revenue of R6.2 billion, up from the prior year’s R6bn, and narrowed its net loss from R100 143 to R77 537.