The ENSafrica investigation into EOH has found evidence of a number of governance failings and wrongdoing, including unsubstantiated payments, tender irregularities and other unethical business practices which are primarily limited to the public sector business centralised in EOH Mthombo and to a limited number of EOH employees.
Suspicious transactions of R1,2-billion have been identified and are being investigated by ENSafrica. The exact nature of each of these transactions has not as yet been verified and may relate to legitimate transactions, theft or bribery and corruption payments.
ENAafrica identified a number of key themes during its investigation, including:
* Identification of multiple points of failure in governance and oversight mechanisms, inadequate and ineffective controls and appropriate systems thus creating an enabling environment for wrongdoing.
* Opaque delegation of authority (DOA) with significant responsibilities granted to a few executives.
* EOH employees conspiring with two preferred suppliers/partners to facilitate artificial/inflated software licence sales.
* Tender irregularities.
* Systemic use of connected middle-men recognised and used as introducers and sales agents.
* Enterprise Development (ED) subcontractors used on projects and payments made to such suppliers, where it is questionable whether bona fide work was done by the said suppliers.
* Inappropriate gifting, sponsorships and donations.
* Payments of R1,2-billion (including VAT) to approximately 78 supplier entities are being investigated to determine whether appropriate work was done for services rendered. 84% of the payments were made to 20 entities. These payments were largely related to contracts entered into during 2014 and 2017. The majority of these contracts have been completed.
The employment relationship with EOH has been terminated with individuals who have been directly implicated in the identified wrongdoing.
EOH has reported the concerns and the details of the parties implicated in the irregularities to the Directorate for Priority Crimes Investigation in terms of Section 34 of the Prevention and Combating of Corrupt Activities Act.
The suspicious transactions arising from the investigation have been reported to the Financial Intelligence Centre in terms of Section 29 of the FIC Act.
EOH has instructed ENS to initiate criminal charges and lodge civil claims to recover losses, as appropriate.
In light of these findings, the group is documenting and developing a comprehensive remediation plan. A number of remediation measures have already been implemented and others will follow.
These include a revision of the corporate structure, with robust risk management and mitigation initiatives, the appointment of new leadership and increased transparency, accountability and reporting.
With the assistance of the University of Stellenbosch Centre for Corporate Governance in Africa and PwC, the group has recently drafted and released a Code of Conduct and Corporate Governance Framework, and implemented a policy framework.
PwC is assisting EOH in setting up an internal audit function; and ENS has assisted EOH in implementing its anti-bribery programme which is based upon ISO 37001, the International Standard for Anti Bribery Management Systems.
An EOH wide whistle blower app ‘Expose it’ has been launched to support confidential and anonymous ABC reporting to EOH. The app is also available commercially for use by EOH customers and any third party.
Meanwhile, a bid governance process framework has been implemented ; and a Declaration of Interest Policy has been introduced.