[ad_1]
By Edward West 
12h ago
CAPE TOWN – A NUMBER of dishonest and corrupt former employees and directors of EOH Holdings nearly destroyed an entire group through tender fraud with state organizations such as the South African National Defense Force and the Department of Water and Sanitation.
EOH Executive Director Stephen van Coller told the State Capture Commission, chaired by Supreme Court Vice President Raymond Zondo, yesterday that he learned through a call from a journalist about possible corruption involving the three state organizations after his appointment in 2018. Van Coller said he appointed lawyers from ENSafrica to conduct a forensic investigation into the allegations and EOH’s contracts with the city of Johannesburg and the National Prosecutor’s Office. He said investigations revealed overbilling and underbilling, overcharging and charging for more Microsoft licenses than were delivered.
Van Coller said there were severe deficits in corporate governance and financial and political control in the group that comprised 272 individually operated businesses.
He said there were no policies on anti-corruption and bribery at the time, no policy on stock transactions, even for directors, there were no competition compliance policies, and there were no established independent processes on acquisitions.
“This made it possible for corruption to go unnoticed within the group,” he said. “Since then, a series of new appointments and policies have been put in place to correct these problems in the group.”
Van Coller said he realized that a R3.2 billion bank loan was used as a financial recovery package, and the loan cash was used to pay off interest and debts, which was like using a credit card to pay. Debt.
“There were also no adequate (financial) controls that I expected from a listed group,” he said.
There was no director of risk or risk policies, no internal audit committee, no adequate delegation of authority, the group was being operated from head office by only “a few directors” with too much authority, the board was not structured in terms Under the rules, there were subcontractors who were not part of the tenders who were paid and were often paid for not performing any work or their work was considered to be of a “questionable” nature.
Van Coller said that ENSafrica’s investigation had yielded six key general findings: there were severe governance failures in EOH, there were cases where there was collusion between company employees, buyers and owners of the software EOH was selling, there were irregularities in government tenders. , there were inappropriate promotions and gifts, there were suspicious payments and timing failures, such as work performed and payments.
He said that EOH had made the findings of the investigations available to all relevant authorities, such as the South African Police Service, the National Treasury, the South African State Investigations Unit and Revenue Services, and an agreement had been reached to EOH to reimburse SADF on the two Microsoft contracts. concerned, while EOH also hoped to reach a similar agreement with the Department of Water and Sanitation.
On bogus companies and subcontractor payments, he said they were often “hidden in the accounts” and overlooked as business development initiatives that government tenders specified should be included in procurement tenders.
They also often involved designated “middlemen” to gain political influence in awarding tenders, he said, and these individuals were then paid by false invoices from so-called business development firms. EOH had arranged for some 85 of these business development companies to be blacklisted, to date, from future government acquisitions.
He said that of some R 1.2 billion of suspicious payments found to have been made in EOH during the period of these contracts, about R 700 million were due to no work performed and about R 160 million to “doubtful” work performed. .
BUSINESS REPORT
[ad_2]
