EOH must pay back R42 million following corrupt Microsoft deal

EOH has acknowledged overcharging the Department of Defence (DoD) in a corrupt Microsoft license deal and will pay back R41.7 million.

This was revealed by the Special Investigating Unit (SIU) following an investigation into the R250 million Microsoft software licences procurement contracts awarded by the DoD.

On 12 July 2019, the SIU was directed to investigate the procurement of Microsoft software licences by the DoD and payments made to EOH for these licenses.

The allegations were that the DoD procured Microsoft software licenses via an intermediary – EOH – without any valid procurement process.

It was also alleged that the DoD paid an inflated price to EOH for the licenses which could have been purchased for one third of the price from Microsoft directly.

Furthermore, the SIU also investigated an allegation that EOH was contractually obligated to provide 20,035 Microsoft licenses, but only provided 15,108.

The SIU said the investigation uncovered irregularities relating to the 2016 and 2017 procurement processes and also overpricing of licenses amounting to more than R40 million.

“We found that the contract entered into was irregular,” the SIU said.

EOH was confronted with the information and acknowledged overcharging the Department of Defence for its Microsoft licenses.

The company has subsequently signed an Acknowledgement of Debt (AoD) with the SIU to the value of R41,676,493.92, which is to be paid back to the DoD.

“The signing or acceptance of the AoD by EOH does not mean that EOH is exonerated from paying further amounts due to the DoD that may be subsequently uncovered by the ongoing investigation of SIU,” the Special Investigating Unit said.

The SIU added that it will institute civil proceedings in the Special Tribunal to cancel the contract and determine any further monies that DoD may have lost.

If it is determined that further money was lost, this money will have to be paid back to EOH.

The DoD officials involved and implicated in the irregularities have been identified and referrals of evidence will be made to DoD to institute disciplinary action.

The investigation has also uncovered evidence pointing to criminal action related to the DoD’s 2016 and 2017 procurement of Microsoft licenses.

This evidence, as required by SIU Act, will be referred to NPA and the Directorate for Priority Crimes Investigation (DPCI) for further attention.

The SIU highlighted that the admission of debt does not exonerate any person or official involved from being disciplined or held criminally liable for conduct uncovered by the investigation.

MyBroadband asked EOH for comment regarding the corrupt Department of Defence deal, but the company did not respond by the time of publication.

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EOH must pay back R42 million following corrupt Microsoft deal