EOH slaps ex-CEO Asher Bohbot with R1.7 billion damages claim linked to tender fraud

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  • Under the former CEO's leadership, EOH was implicated in tender fixing and irregular payments.
  • EOH has instituted similar damages claims against several other former executives.
  • The State Capture Commission has heard that one of EOH directors made a payment to former ANC spokesperson Zizi Kodwa.

Technology group EOH has slapped its former CEO Asher Bohbot with a damages claim of R1.7 billion for failing to protect the interests of the business and enabling an environment for corruption, in a suit that lists a litany of governance failures under in the company he co-founded.

In a summons filed in the Gauteng High Court in Johannesburg, EOH claims that under Bohbot, its subsidiaries - EOH Mthombo, EOH Afrika, EOH Managed Service, and EOH Abantu - made unlawful and corrupt payments, in the form of bribes including gifts to persuade unidentified persons to perform illegal acts, in what it says was in breach of his fiduciary duties as a director.

Between 2012 and 2019, EOH Mthombo was implicated in tender fixing and employing the services of a middleman to influence the outcome of a tender process.

EOH further alleges that had Bohbot not acted unlawfully, the company would not have suffered reputational damage and tender irregularities would have been prevented.

Bohbot was chief executive of EOH from August 1998 to June 2017, before he assumed the role of chairperson of the board from March 2018 until his resignation in February 2019, amid a governance overhaul.

In October 2019, EOH, which is one of the largest IT service providers in Africa, reported a large loss as the cost of fraudulent transactions with the public sector piled up. It said the write-offs, in part due to the fraud, contributed to its net asset value falling almost 70%, as Fin24 reported.

The company then tasked law firm ENS to investigate R1.2 billion in suspect transactions in its dealings with the public sector.

During that time, the firm said a small group of individuals in the public sector team were responsible for the fraud and that the investigation had identified various opportunistic incidents of theft from EOH, and a number of individuals have been dismissed.

Delinquent director

In its submission to the court, EOH said Bohbot failed to implement effective anti-bribery and ant-corruption measures including measures to prevent conflict of interest, and the company wants him to be declared a delinquent director and barred from acting as a director of any company for seven years from the date of the court order.

A summons has further been served on former chief financial officer, John King, according to a report by Tech Central.

Former director Ebrahim Laher is also facing a R55 million claim relating to irregular payments, loss of profit and the fine the company paid to the JSE, while Jehan Mackay, a director at EOH Mthombo, is said to have failed to apply his mind on the approval of financial statements and those of its subsidiaries.

It is also stated that during Mackay's tenure as EOH Mthombo director, the entity paid bribes to "persuade somebody" to do something illegal and facilitated unlawful payments.

On Monday, former ANC spokesperson Zizi Kodwa told the Judicial Inquiry into State Capture that Mackay made several payments into his personal bank account when he had financial difficulties.

In his evidence, Kodwa said he asked Mackay to help with groceries for one of the ANC branches and to pay for T-shirts. The head of forensic investigation at ENSafrica, Steven Powell, previously told the commission that Kodwa received money from Mackay. Powell also testified that Mackay sought Kodwa's advice and influence so that EOH could win two multimillion-rand tenders.

He claimed that Kodwa, who is now deputy minister of state security, received a payment of R890 000, which was believed to be for a vehicle. EOH and its consortium was awarded a R217 million contract from the Eastern Cape Department of Education.

In July 2020, the JSE announced that it had fined EOH R5 million for errors in its past financial statements. The censure related to financial information for the periods 2017 to 2018 which was said to be "... incorrect, false and misleading in material aspects". 

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