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- The judicial commission on the capture of the state is hearing the testimony of the forensic director of ENSafrica, Steven Powell.
- Powell says EOH employees colluded with government officials to secure the bids on multiple occasions.
- In some cases, contracts worth millions were extended.
Employees of the public sector vertical of ICT company EOH colluded with government officials to secure the tenders, the state capture judicial commission heard Wednesday.
The commission, chaired by Supreme Court Vice President Raymond Zondo, heard testimony from ENSafrica Forensics Managing Director Steven Powell.
ENSafrica Forensics conducted an investigation last year into irregularities in the Microsoft software vendor contract between an EOH subsidiary and the defense department. ENSafrica found that procurement processes were scoffed and software licenses were over-billed. This prompted EOH CEO Stephen van Coller to request a broader review of all public sector contracts with the company.
Since then, the commission has asked ENSafrica to help it provide the information it has on certain individuals and entities that may be involved in the state capture project, including the current Mayor of Johannesburg, Geoff Makhubo, who He will appear before the commission on Friday.
“When we published the interim report, we found a lot of bidding abuse,” Powell said.
“What happened is that the guys would collude with government officials in departments to irregularly extend existing bids,” Powell said. He noted that the National Treasury places limits on the extension of contracts, for example if the value of a tender rises more than 20%, the entity must bid again, he said. Or if work will be delivered for a different project, the entity should re-tender, he added.
A group of people under the leadership of Jehan Mackay, EOH’s director of public sector business, would avoid the bidding process “multiple times.” There would be “multiple contract extensions that should have been put out to tender,” Powell said.
Often these extensions would occur in the perception of “exclusive sourcing”, in which one entity would justify that it is the only one that can provide a particular service, when in fact other service providers could do the same. Without competition, prices would go up, Powell explained.
Commenting on the unique sourcing mechanism, Zondo said he does not understand why a government entity would not go out to tender, especially when there is no emergency at hand. “A government entity would suffer nothing from being open to tender. When there is no emergency, why not advertise to the whole world?”
Getting away with it
Powell explained that the EOH people “would collude with officials and catch up on the bids before they were announced.” Their advance notice would provide them with more information than the competition, giving them an advantageous position in the bidding process.
“These scenarios play out multiple times. When things go wrong for this group of people and they don’t get their way with a public entity, they would use the politically exposed person to influence decision makers to make sure they get out. as they want, “Powell said.
These EOH employees would receive advance notice of confidential information during the bid award process; if they knew they would lose an offer, they would contact a politically exposed known person who would intervene in the process and the offer would change. This happened in contracts with the city of Johannesburg, Powell said. The city had several contracts with EOH group companies, particularly for IT-related services, Powell explained.
He listed some contracts in the millions that were extended between the city and the EOH Mthombo company.
The investigation continues to hear testimonies from ENSafrica.
