FNB, First Rand Bank facing the heat over EOH banking facilities
CIVIC organisation Transform RSA, which is led by Adil Nchabeleng wants the state to act against First Rand Bank and First National Bank (FNB) for allegedly providing banking facilities to JSE-listed EOH despite reports of the company being implicated in alleged acts of corruption.
Nchabeleng lodged a criminal case of money laundering and corruption against the banks at the Johannesburg Central Police Station yesterday.
Nchabeleng was joined by Regional Letswalo, of Sanco, Dumisani Thango, of Umkhonto we Sizwe Military Veterans and Tahir Maepa of the Public Service Commercial Union.
All came to the police station armed with a charge sheet which was presented to the police officers who registered the case.
Nchabeleng said his organisation took the action following media reports that the Special Investigating Unit (SIU) had asked EOH to return R40 million to the state after the company obtained an irregular tender with the Department of Defence.
“An investigation by the SIU (into) the Microsoft licensing agreement between EOH and the Department of Defence amounting R1.2 billion found... its employees had participated in bid-rigging and engaged in over-pricing by unlawfully overcharging the Department of Defence... R40m.
“EOH accepted the SIU findings, signed acknowledgement of debt and undertook to pay back an amount of R41 676 492.92 to the Department of Defence,” Nchabeleng said.
He said in November last year, EOH chief executive Stephen van Coller testified at the Zondo Commission and admitted that legal firm ENSAfrica conducted forensic investigations into EOH’s contract with the City of Joburg, National Prosecuting Authority and Department of Defence.
Nchabeleng said the legal firm investigations revealed over-invoicing and overcharging for Microsoft licences. He said Van Coller admitted corruption within EOH. “EOH had made payments from its accounts held with FNB to various government officials, politicians and politically exposed persons in a corrupt manner.
“Accordingly, at all relevant times, it was aware of, alternatively, was reasonably expected to be aware of the suspicious payments made by EOH from its bank account to several government officials. Politicians and politically exposed persons and as such had a legal obligation to report the suspicious payments in terms of the Prevention and Combating Corrupt Activities Act (Precca),” Nchabeleng said.
He said in terms of Code of Banking Practice “FNB was compelled to close the EOH bank account considering that it had reason to believe that the bank account was being used for illegal purposes”.
FNB was unable to comment, saying it has not received any correspondence regarding the charges.
Nchabeleng said First Rand Bank and FNB are the bankers of EOH and the company has the following facilities with FNB: secured bank loans through security SPV amounting to R2.3 billion; bank overdraft of R115m; unsecured bank loans of R350m; secured bank loan over property of R6m; vendor acquisition of R44m; other noninterest of R49m and un-drawn facilities of R400m, with no overdraft on the balance sheet, therefore an assumed total is R400m.
“Notwithstanding the findings of the forensic investigation and the SIU demonstrating that EOH was involved in corrupt activities, there are still no changes in facilities offered by FNB to EOH and their banking accounts remain active. It is an explicit requirement of the Banks Act and Precca that when there is a case of money laundering, illicit money flows and when a bank is aware of corruption it should act immediately.
“FNB failed to act against EOH and its directors and EOH and its directors continue to bank with FNB and they are the principal ledger of EOH in the amount of R1bn,” Nchabeleng said.
He said these banks were quick to act against black businesses especially AYO, where the banks are threatening to close its accounts.
Nchabeleng said they would stage a strike on Thursday against all banks targeting black-owned businesses.