EOH settles with SIU over corrupt water department contract

EOH Holdings will pay R177-million as final settlement related to a corrupt legacy contract the IT services group entered into with the department of water & sanitation.

EOH uncovered a number of corrupt deals involving government entities after the new management team, under CEO Stephen van Coller, took the reins in 2018 and began cleaning up the rot left behind by the previous management.

Many of these deals, including the water & sanitation contract, involved subsidiary EOH Mthombo, and were brought to light in evidence presented by EOH during the hearings of the Zondo commission of inquiry into state capture.

EOH has now reached an agreement with the Special Investigating Unit related the dodgy water affairs deal, the company said on Friday. The SIU had been probing IT contracts awarded by the department  between 2012 and 2017 to EOH Mthombo to the value of R474-million.

“EOH and the SIU engaged over several meetings and discussions with a view to unpacking the details of the analysis and … to agree a quantum for the portion of the contract where EOH Mthombo received undue benefit for the contract,” EOH said in a statement to shareholders.

The terms of the agreement are that:

  • EOH will pay an initial upfront refund amount of R65-million related to duplicated software licences; and
  • The remainder of the amount owing — R112-million — will be paid over 36 months, commencing in January 2023.

“EOH has fully provided for this settlement in its financial accounts and confirms that it will have no impact on the company’s income statement,” it said.

EOH, which had commissioned a detailed forensic audit from ENSafrica into irregularities in its public sector contracts, first reported the wrongdoing to national treasury in 2019 and proposed to compensate the state for identified irregularities regarding the water & sanitation contract.

Read: EOH announces R500-million rights-issue plan

“As part of this process, and after having concluded the full detailed analysis, EOH proactively made contact with the SIU in July 2020 to discuss firstly what the analysis uncovered; secondly what work was done for value; and thirdly to discuss compensation for aspects of the contract where no value was derived in respect of the water & sanitation contract.”  — © 2022 NewsCentral Media

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Source: techcentral.co.za