Clampdown on graft
‘If the board and executive committee are not walking the walk, people will follow them.’
EOH staff who have not done their anti-bribery and corruption attestations will not get bonuses – Stephen van Coller. Image: Moneyweb
EOH CEO Stephen van Coller’s testimony at the Zondo Commission of Inquiry into State Capture inadvertently turned into a lecture on how corruption between the state and the public sector happens.
Over the past few years, the technology group has been implicated in various bribery scandals, leading to Microsoft cancelling its software licencing agreement with EOH, after it emerged that a deal with the Department of Defence did not follow the correct channels and was corrupt.
Since the corruption came to light, Van Coller has instituted several changes within the organisation to not only root it out but also to change the organisation.
Poor governance
Van Coller in his testimony said EOH’s governance failure started with its board. The failure of the board was not only in its oversight role but also in how it was constituted.
He said the King IV codes of governance, for instance, say there should be a cooling-off period before an executive joining the board can be considered for the role of board chair, to ensure they can act as an independent director.
This, however, did not happen with Asher Bohbot, the founder and former CEO who became chair soon after leaving the CEO job. Bohbot was one of four ‘non-independent’ directors on the board as he, along with the other three, had served on it for over 10 years.
Van Coller saw how this attitude to governance affected the organisation. For example, no minutes of executive committee meetings – the next oversight level down from the board – were kept. There was also no centralised legal accounting entity. And the group had 232 separate bank accounts.
These issues were compounded by there being no delegation of authority. Without it, they found instances people of being able to sign up a supplier and be directly responsible for paying that supplier – with little to no oversight.
Under the new structure, Van Coller said even as the CEO, he does not have the power to make a payment, as that now falls under the chief finance director or the chief financial officer.
The lack of oversight can also be seen in there being no share dealing policy in place that required directors to get approval for selling shares.
Such a policy would have prevented a margin call triggering a 35% drop in the share price to R45 in December 2017.
For more news your way, download The Citizen’s app for iOS and Android.
For more news your way
Download our app and read this and other great stories on the move. Available for Android and iOS.
