A probe carried out by law firm ENSafrica has found evidence of up to ZAR 1.2 Bn in “suspicious transactions” at JSE-listed Information technology group EOH.
The law firm revealed this after completing a forensic probe into the firm.
“To date the ENSafrica investigation has found evidence of a number of governance failings and wrongdoing at EOH, including unsubstantiated payments, tender irregularities and other unethical business practices which are primarily limited to the public sector business centralised in EOH Mthombo (Pty) Ltd and to a limited number of EOH employees,” EOH said in an update to shareholders on Tuesday.
While speaking to stakeholders, EOH CEO Stephen van Coller disclosed that the investigation identified approximately ZAR 1.2 Bn in suspicious payments made at the company between 2014 and 2017.
These suspicious payments as well as tender irregularities were mainly found to be within EOH Mthombo, s subsidiary and public-sector business of EOH. The investigation has identified eight culprits who were involved in processing the unsubstantiated payments.
The report findings also reveal that there were opaque delegation of authority with significant responsibilities granted to a few executives. Also, failure in governance including ineffective controls created an enabling environment for wrongdoing.
EOH employees were involved in a scheme with two preferred suppliers/partners to facilitate artificial/inflated software licence sales. Tender irregularities were also mentioned in the report among other misdeeds.
Reportedly, EOH had provided reports to regulators and would press criminal charges as well as civil claims to recover stolen funds.
“The employment relationship with EOH has been terminated with individuals who have been directly implicated in the identified wrongdoing.”
“EOH is committed to ensuring that all perpetrators of wrongdoing are brought to justice. EOH has instructed ENS to initiate criminal charges and lodge civil claims to recover losses, as appropriate,” EOH said.
EOH’s woes begun after Microsoft terminated its contract with the IT firm following a reported malefaction by a public official. The reports surfaced after an whistle-blower filed a complaint with the United States Securities and Exchange Commission about about alleged corruption in a department of defence software deal.
ENSAfrica was then asked to conduct a rigorous investigation into EOH contracts to identify any wrongdoing or criminal conduct in the acquisition, award or execution of contracts. They were given unfettered access to all information, financial records so as to carry out a comprehensive scrutiny.
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