EOH talks to compensate state over dodgy water tenders at ‘advanced’ stage

EOH Holdings is in “advanced negotiations” with the department of water affairs & sanitation over compensation related to four dodgy contracts awarded to the IT services company worth R474-million.

These legacy contracts are part of the suspicious public sector contracts uncovered by EOH and law firm ENSafrica into corruption in the JSE-listed group’s dealings with government agencies and departments under the former management team led, some of whom are being pursued civilly by the group for billions of rand in damages.

On Thursday, the Special Investigating Unit said it would lodge an investigation into allegations of corruption and maladministration regarding the water & sanitation tenders.

The investigation will also serve to recover potential financial losses suffered by the state, the SIU said. This comes after President Cyril Ramaphosa signed a proclamation authorising the probe last week. The contracts were awarded between 2012 and 2017.

EOH said on Friday that the the SIU actions “are in response to wrongdoing involving former EOH employees, which was brought to the attention of the SIU by EOH”.

Presidential proclamation

“In order for EOH to compensate the department of water & sanitation (via the SIU) for such wrongdoing, it was necessary for the SIU to be mandated to investigate the contracts. This then gave rise to a presidential proclamation, which has now been published. EOH has not only cooperated fully with the SIU to bring this matter to a conclusion but has proactively sought to reimburse the department for wrongdoing involving former employees identified in the EOH forensic investigation,” EOH said.

“From inception of the ENSafrica forensic investigation in February 2019, EOH has transparently and proactively reported wrongdoing to the authorities. Furthermore, prior to engaging in settlement negotiations with the SIU, on 31 May 2019 EOH reported the wrongdoing to national treasury and proposed to compensate the state for identified irregularities regarding the department of defence and water & sanitation contracts,” said EOH chief risk officer Fatima Newman in a statement.

“EOH subsequently entered into an acknowledgement of debt (AoD) with the SIU at the end of September 2020 with regards to the defence contract. EOH commenced monthly payments in terms of the AoD from 5 October 2020,” it said. This information has been disclosed previously to the market.

“EOH has taken action to reach a similar agreement with the SIU regarding the water & sanitation contracts. In this regard, negotiations with the SIU on the water & sanitation contracts are advanced, and it is anticipated that an agreement on compensation will be concluded in the near future.”

Duncan McLeod is Editor of TechCentral, on which this article was first published here.

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