Water under the bridge after EOH agrees R177m settlement

EOH has agreed to pay R177m in final settlement after a Special Investigating Unit (SIU) investigation into allegations of corrupt dealings between the company and the department of water & sanitation.

In August 2021, the SIU — an independent statutory body with a mandate to investigate allegations of corruption, malpractice and maladministration in government departments, municipalities and state-owned entities

— said it would begin an investigation into the procurement, or contracting and implementation, of four IT contracts worth a total of R474m that were awarded by the department to EOH and its subsidiaries.

EOH’s management team has had to try to salvage the company’s reputation after allegations of malpractice and tender irregularities under the previous leadership. The group has also had to deal with a mountain of debt accumulated during that period, when it focused on acquisitions to expand the business, especially in the public sector.

Law firm ENSafrica was hired to investigate the allegations. The probe found R1.2bn worth of suspicious transactions, mostly involving public sector contracts that ensnared the group in state capture.

On Friday, CEO Stephen van Coller said a settlement had been reached after negotiations with the SIU and department involving “an amount which all parties believed to be fair and equitable”.

According to the agreement, the technology group will make an initial upfront payment of about R65m related to duplicated software licences, which will be refunded. The remainder, an amount of about R112m, is to be repaid over three years, starting in January.

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

Van Coller said in a statement “the EOH board and executive leadership express their gratitude to the SIU and [the department] for their professional engagement and in working with EOH to reach a settlement agreement, and in so doing concluding on the legacy contract issues related to the ENSafrica forensic investigation and the [department of water & sanitation] matter in particular.”

After the ENSafrica probe, EOH reported the wrongdoing to the National Treasury and offered to compensate the government “for identified irregularities regarding the department of defence and [department of water & sanitation] contract”.

The SIU had previously undertaken investigations into Microsoft Software licence procurement contracts worth R250m awarded by the defence department to EOH. As part of the settlement in the wake of that investigation, EOH is to pay R40m, specifically relating to the overpricing of licences, a process that is already under way.

Meanwhile, almost a year after proposing a rights offer to help quash its debt, EOH says the move — if successful — could cut its interest payments by twothirds. The group recently announced it intends launching a rights offer of up to R500m with the goal of halving its debt.

EOH REPORTED THE WRONGDOING TO THE NATIONAL TREASURY AND OFFERED TO COMPENSATE THE GOVERNMENT