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Quantity 1 of the most recent part (Half 4) of the Zondo Fee’s report into the state seize years, launched on Friday and partly protecting JSE-listed tech group EOH, showers reward on the corporate and its present CEO Stephen van Coller for proactively participating ENS Forensics to research allegations of corruption on the firm.
Nonetheless, it additionally says that EOH ought to no be allowed to retain the advantages of historic corrupt and irregular procurement practices.
Learn Quantity 1 of Half 4 of the Zondo Report right here
Half 4 of the report, which incorporates 4 volumes, was handed over to the Presidency by Prof Itumeleng Mosala, Secretary of the Zondo Fee.
“Below the management of Mr [Stephen] van Coller and its present Board, EOH … is pro-actively investigating its historic involvement in corrupt and irregular procurement processes, bringing the related information to the eye of the authorities and tendering to make reparation to the organs of state at whose expense it profited from these practices.”
Learn: Half 4 of Zondo report itemises explosive revelations into state seize
Proof submitted by Van Coller to the Fee depicts a company setting through which wrongdoing was capable of thrive at EOH, with excessive concentrations of energy within the fingers of some executives; inflated software program licence gross sales; a succession of tender irregularities; using politically-connected middlemen to herald gross sales; and a system of gifting and fee to subcontractors for which there was no proof of labor.
A recurring theme of the investigation was over-invoicing of public sector purchasers and inflation of costs.
In his proof to the Zondo Fee, Van Coller highlighted two Microsoft licensing offers with the Division of Defence and an SAP licensing settlement with the Division of Water Affairs. EOH was capable of by-pass procurement procedures required by the State Info Know-how Company and charged for extra licences than had been delivered, and at a price per licence increased than could be achieved in a aggressive bidding scenario.
Learn: Can EOH change into the poster youngster for disaster turnaround?
EOH was additionally allowed to border the phrases of tenders to swimsuit itself and shut out competitors. It was additionally placing in bids for tenders at under price with a view to bumping up the price as soon as the tender was awarded to it.
EOH recognized R865 million that it spent on kickbacks and commissions to politically linked intermediaries.
The corporate additionally made funds to the ANC and was engaged in ‘suspicious private and organisational sponsorships and [spent] extreme leisure quantities’ to affect procurement practices in organs of state.
Improper Metropolis of Joburg relationship
The Zondo report delves into what it says was an improper relationship between EOH subsidiary Tactical Software program Options (TSS) Administration Companies and Geoff Makhubo, the late mayor of the Metropolis of Joburg.
TSS was owned by Jehan Mackay and his father Danny Mackay and was acquired by EOH in 2011, after which renamed EOH Afrika.
Patrick Makhubedu was its enterprise growth government and developed an in depth private relationship with Makhubo, to the purpose of partnering up in a number of personal corporations, together with Reno Neil Barry, former group monetary supervisor at Tactical Software program Options, which had not been acquired by EOH.
Makhubedu was in a position to make use of his relationship with Makhubo to win contracts price a number of hundred million rand from the Metropolis of Joburg. Makhubedu resigned from EOH on 11 March 2019, the day earlier than he had been referred to as in for an interview with ENS Forensics.
ANC donations
In one other occasion, EOH submitted an unsolicited proposal for the upgrading of the Joburg’s community and safety infrastructure at a value of R106 million, and on the identical day EOH Managed Companies donated R3 million to the Higher Johannesburg Area of the ANC.
In 2013 and 2014, EOH paid greater than R5 million to the ANC, and Makhubo was reminded of this largesse when the corporate submitted its bill for R109.7 million for the community and safety improve, which was an quantity increased than initially proposed within the unsolicited proposal. That quantity was paid by the Metropolis of Joburg on 12 September 2014.
Just a few days later got here one other request to EOH from the Tshwane regional secretary for the ANC for a donation of R300 000.
The requests for cash saved coming. The following one, from Makhubo to Makhubedu, was for R4.3 million to cowl the prices of a regional ANC convention.
An quantity of R1.5 million was paid by TSS Managed Companies into the checking account of the Higher Johannesburg Area of the ANC on 2 October 2014.
“To his information, as an elected official and MMEC of the Metropolis, Mr Makhubo had no enterprise involving himself in procurement issues, notably not unsolicited proposals from an entity from which he had not too long ago solicited substantial donations for the ANC,” says the report.
Learn: ANC heavyweights fingered in EOH corruption storm
The Zondo Fee says this proof leads inexorably to the conclusion that EOH improperly benefitted from the unsolicited bid to the tune of greater than R100 million.
The report additional particulars funds made by TSS Managed Companies to Makhubo’s firm, Molelwane, after which an quantity of R200 000 into Makhubo’s private account.
On 2 June 2016, EOH Mthombo was awarded a contract by the Metropolis of Joburg for R404 million for varied companies and tools. The Fee heard testimony from ENS Forensics that donations to the ANC had been made by means of an middleman, Mfundi Cellular Networks.
The Zondo report says R15.4 million was spent on municipal election bills incurred by the Higher Johannesburg ANC.
The Fee recommends legislation enforcement companies examine these allegedly corrupt tenders with a view to prosecuting Makhubedu, Jehan Mackay and others concerned within the transactions.
Zizi Kodwa named
Additionally named within the report is Zizi Kodwa, Deputy Minister within the Presidency accountable for state safety, who acquired R1.7 million from Jehan Mackay, allegedly to obtain affect – although Kodwa testified that these quantities had been loans, not a quid professional quo for help in profitable tenders.
Regardless of the subjective intentions of Kodwa, “it’s clear that Mr Jehan Mackay was trying to purchase affect by making the ‘loans’ that he made to Mr Kodwa and by offering Mr Kodwa with luxurious lodging,” says the report.
E mail correspondence between Mackay and Kodwa recommend there was the carrot of additional donations to the ANC in return for the beneficial overview of tenders.
The Fee says it may discover no impropriety on the a part of Kodwa, although time constraints stop a extra thorough investigation.
The phrases of reference of the Fee had been too vast to research wrongdoing and state seize in all metros and municipalities. Even within the case of Metropolis of Joburg, it investigated lower than a handful of irregular tenders.
“Nonetheless, when one realises what EOH and Mr Makhubo had been doing, one realises that there could also be many municipalities through which sure entities do precisely what EOH used to do [in] relation to the Metropolis of Johannesburg,” concludes the report.
As Moneyweb beforehand reported, EOH is suing former CEO Asher Bohbot and several other former executives for a number of billions of rands in damages for governance lapses after they led the corporate.
Learn:
EOH sues founder Asher Bohbot for R1.7bn
Former EOH finance chief John King dies amid R1.7bn damages declare
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