Stephen van Coller, group CEO of scandal-hit listed IT services company EOH, which is suing former top executives for a total of R6.4bn in damages, says the private sector needs to demonstrate it is serious about fighting corruption.
“You have to put your money where your mouth is and prosecute the perpetrators. You can't let them get away with it. You can’t give them a golden handshake and let them ride into the distance.”
There’s been too much of this, he says.
“We haven’t seen enough culprits in the private sector being held accountable this way because this would involve companies admitting to corruption and they’re afraid of the bad publicity.”
Among those being sued for alleged complicity in corruption is EOH co-founder, former CEO and chair Asher Bohbot, who has denied the allegations.
Evidence started emerging about the extent of EOH’s corruption soon after Van Coller, former CEO of corporate and investment banking at Absa and at the time vice-president of digital services, data analytics and business development at MTN, was hired by Bohbot in September 2018 to restructure the group.
A journalist phoned him in February 2019 to say he’d received information from an ex-employee of EOH partner Microsoft about EOH’s involvement in corrupt business deals with the government.
She’d given this information to the US Securities and Exchange Commission, which hadn’t responded fast enough so she went to the press.
When Van Coller investigated and told the journalist the ex-Microsoft employee’s information seemed correct, the story broke.
“It was like someone had thrown a bomb into our back garden before we'd had time to build a bomb shelter,” he says.
— Sitting and saying the government is corrupt — it takes two. Someone is making the payments … largely the corporates.
Microsoft terminated its partnership with EOH, the share price collapsed from a peak of R170 in 2016 to about R2.30 and clients started blacklisting the company.
He appointed law firm ENSafrica to do an in-depth investigation and it found a hole of almost R1bn in the company’s accounts stemming from corrupt dealings with the government.
EOH handed evidence against 46 people, including 12 government officials and 16 former EOH employees, to the authorities more than two years ago. The Special Investigating Unit has told him it has recommended criminal prosecutions to the National Prosecuting Authority.
In addition he asked his customers, OEM (original equipment manufacturers) partners, many of them international, the National Treasury, Business Leadership SA, financial advisers Rothschild SA and top legal advisers what the company could do to avoid more blacklistings.
They said that all the people who were directly involved or knew about the corruption and turned a blind eye had to be “exited”. And then sued.
EOH, led by Van Coller, has done a huge amount to clean up its act and restore the trust of customers, shareholders and partners as seen by the multiyear contracts it is starting to attract again.
“But if you as leadership don’t show that you’re going to have zero tolerance for this type of behaviour then you haven’t really done something.”
Companies involved in corruption “need to do more of making an example”, he says.
“Sitting and saying the government is corrupt — it takes two. Someone is making the payments and that’s largely the corporates.
“We need to — in this digital age — be far more transparent, open and honest about business, otherwise everyone loses, as we’ve seen with state capture.”
He gave evidence at the Zondo commission of inquiry, revealing the extent of EOH’s complicity in state capture.
“Corruption will only stop when public opinion says it’s wrong. This is why it is so important that there are public consequences. People must know that when they get caught they will be named and shamed. Only then will they think twice about doing it,” says Van Coller.
The damages for which EOH is suing former top executives.
— IN NUMBERS: R6.4bn
A well-grounded fear of reputational damage would be a serious disincentive.
“This is what we have to get right with regulation.” For listed companies and those borrowing depositors' money there should be attestations by senior management that they’re doing the right thing, he says.
“When it comes out that there has been stealing or accounts were falsified and the senior management knew about it, it’s important that the regulators have teeth, that they don’t have to wait for a legal judgment, they can very quickly prove that the attestation was false, therefore you’re banned.”
Managers and directors need to know that there are standards that they have to adhere to. They must know that if they don’t there will be “automatic retribution”.
“At the moment, what is the consequence for someone who has fallen foul of the JSE codes — the individual, not the legal entity?”
All too often there are only consequences for the new team trying to root out the corruption committed by management and directors who walk away unscathed.
He was incensed when the JSE fined EOH R7.5m in 2020 for transgressing listing rules in 2017 and 2018 after the new management itself alerted the JSE to these transgressions.
“It feels like someone is bayoneting the wounded after the battle is finished,” he wrote in a letter to Business Day.
He queried if the JSE had “the stomach to take on the individuals who sat on the board in those years, and not just do the easy part by effectively sanctioning new management and thinking its job is done”.
Instead of receiving support for their recovery the new management and board at EOH have to pay a fine which affects shareholders, the current business and the recovery, he says.
Banks charged them more because as a result of their exposure of the company's past corruption they were “now seen as risky”.
“We had no support. We were on our own.”
The regulators need to go after the perpetrators, not the people trying to clean up, he says. He sees little sign of this.
“You’ve got lots of these regulators but we haven’t seen a lot of action from them. If we’re going to have these institutions we need to look at what they can do in a digital age where you have access to much more information.
“I feel some of their regulations haven’t been updated to what you can do today. That would go a long way to making people think twice about doing corruption.”
He says the JSE should have a blacklist of executives and directors who’ve been “errant”.
“I’m sure they do but I’d love to know how many are on it, because we’re not seeing any action publicly.”
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