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EOH comes clean and agrees to repay R200m to Department of Water and Sanitation

EOH comes clean and agrees to repay R200m to Department of Water and Sanitation
Vincent Cruywagen
By Vincent Cruywagen
21 Nov 2022
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Technology services company EOH has agreed to repay close to R200m it received from the Department of Water and Sanitation between 2012 and 2017. This does not exempt EOH from repaying further amounts that may be uncovered during the ongoing investigation.

The Special Investigating Unit (SIU) and the Department of Water and Sanitation (DWS) have signed a settlement agreement with IT company EOH. In terms of the agreement, EOH has agreed to pay back R191.8-million, including interest, over 36 months.

The agreement also stipulates that an upfront payment of R65.7-million must be made by EOH by 30 November 2022, with the first instalment of R3.4-million due on 1 January 2023.

The settlement relates to an SIU probe into the procurement, contracting and implementation of information technology in respect of the EOH/DWS contracts under Presidential Proclamation No. R33 of 2021. 

The probe found that EOH had unduly benefited from its contracts with the department. 

EOH Mthombo


On 5 August 2021, the government announced the SIU’s proclamation for an investigation into the procurement of, or contracting and implementation of, four IT contracts that were awarded between 2012 and 2017 by the department to EOH Mthombo (a wholly owned subsidiary of EOH), to the value of R474-million.

Read more in Daily Maverick: “EOH boss says company has done enough to make government ban unlikely”

According to the SIU, it was also contacted by EOH to inform the unit of possible fraud and corruption involving employees of its subsidiary, EOH Mthombo, and third parties who allegedly colluded with Department of Water and Sanitation officials in contracts that EOH had concluded with the department.

EOH has been under scrutiny since 2017, when amaBhungane first raised questions about the company’s political connections.

The SIU has made it clear that this settlement does not exempt EOH from paying any further amounts due to the department that may yet be uncovered by the ongoing investigation.

Neither does the agreement waive the SIU’s rights to bring any action or application before the high court or Special Tribunal to recover any further amounts of money which may be revealed by the SIU or any other organ of the State.

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A joint statement by the SIU and DWS reads: “The agreement is not an exoneration of any person from being held criminally liable for whatever criminal conduct investigation of the SIU into the conduct of EOH Mthombo and/or DWS and/or any other third party.”

The statement also underlined that the settlement agreement was a continuation of the implementation of the SIU investigation outcomes and consequence management to recover assets and financial losses suffered by State institutions and to prevent further losses.

In 2018, EOH’s new leadership, under chief executive Stephen van Coller, promised to clean things up and hired forensic experts at law firm ENSafrica to investigate activities at EOH Mthombo between 2014 and 2017.

A statement by EOH says the new board and management have, over the past four years, taken steps which illustrate how seriously they take the investigation.

“.... the EOH Group has transparently and publicly implemented robust actions to identify wrongdoings and has provided extensive cooperation with law enforcement and regulatory agencies including the SIU.

“Upon learning in February 2019 of certain transgressions of several previous employees and board members of EOH between 2015 and 2017, the new board and management of EOH instructed independent law firm ENSafrica to significantly extend the scope of the forensic investigation into the suspected wrongdoing covering a period from 2012 to 2018.”

Submissions


EOH submitted eight section 34 reports to the SIU between May 2019 and June 2020, and made detailed submissions to the National Treasury and Sita (State Information Technology Agency), as well as the Financial Intelligence Centre.

Read more in Daily Maverick: “A R1.2bn pot of toxic soup at EOH”

On 31 May 2019, EOH reported wrongdoing to the National Treasury and proposed to compensate the State for identified irregularities in the Department of Water and Sanitation contract.

As part of this process, EOH contacted the SIU in July 2020 to discuss what the analysis uncovered, what work was done for value, and to discuss compensation for aspects of the contract where no value was derived in respect of the department’s contract.

The SIU, the department and EOH then reached agreement on an amount that all parties believed to be fair and equitable.

EOH chief Van Coller said the company’s new leadership remained committed to doing business ethically as well as being a good corporate citizen. DM

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