Following further engagements, the Special Investigating Unit (SIU), the Department of Water and Sanitation (DWS) and technology solutions group EOH have reached agreement on a settlement amount, which all parties believe to be fair and equitable, regarding contracts that were awarded by the DWS to EOH’s subsidiary EOH Mthombo between 2012 and 2017.
EOH will make an initial upfront payment of about R65-million, which relates to duplicated software licences which will be refunded. This will be followed by the payment of a further R112-million over a period of 36 months starting in January 2023.
As disclosed previously, 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.
EOH says that, upon learning in February 2019, of certain transgressions of several previous employees and board members of EOH between 2015 and 2017, the new board and management of EOH instructed independent law firm ENSafrica to significantly extend the scope of the forensic investigation into the suspected wrongdoing covering a period from 2012 to 2018.
On May 31, 2019, EOH says it reported the wrongdoing to the National Treasury and proposed to compensate the State for identified irregularities regarding the DWS contract.
As part of this process, and after having concluded the full detailed analysis, EOH notes it proactively made contact with the SIU in July 2020 to discuss what the analysis uncovered; what work was done for value; and to discuss compensation for aspects of the contract where no value was derived in respect of the DWS contract.
On the August 5, 2021, there was a government announcement regarding the SIU’s proclamation for an investigation focusing on the procurement of, or contracting and implementation of, four information technology (IT) contracts that were awarded between 2012 and 2017 by the DWS 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 as outlined above, to agree a quantum for the portion of the contract where EOH Mthombo received undue benefit for the aforementioned DWS contract.
“The EOH board and executive leadership express their gratitude to the SIU and DWS 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 DWS matter in particular,” comments EOH group CEO Stephen van Coller.