Trouble with SFTP out bound connection

I have a client trying to setup SFTP Connect with a vendor. We have created keys and provided the private key to the site we are trying to log on to. When we try to connect to from the i5 we get the following. Both keys are in the users/home/.ssh folder.

Any help would be appreciated

Thanks

> sftp -o port=10022 -v yyyy@xxxxxxxxxx Connecting to zzzzzz.com OpenSSH_3.5p1, SSH protocols 1.5/2.0, OpenSSL 0.9.7d 17 Mar 2004 debug1: Reading configuration data /QOpenSys/QIBM/ProdData/SC1/OpenSSH/openssh-3.5p1/etc/ssh_config debug1: Rhosts Authentication disabled, originating port will not be trusted. debug1: ssh_connect: needpriv 0 debug1: Connecting to zzzzzz.com[ x.x.x.x ] port 10022. debug1: Connection established.
debug1: identity file /home/xxxxxx/.ssh/id_rsa type -1 debug1: identity file /home/xxxxxx/.ssh/id_dsa type -1 debug1: Remote protocol version 2.0, remote software version Connect:Enterprise_UNIX_2.4.02 debug1: no match: Connect:Enterprise_UNIX_2.4.02
debug1: Enabling compatibility mode for protocol 2.0 debug1: Local version string SSH-2.0-OpenSSH_3.5p1 debug1: SSH2_MSG_KEXINIT sent
debug1: SSH2_MSG_KEXINIT received
debug1: kex: server->client aes128-cbc hmac-md5 none debug1: kex: client->server aes128-cbc hmac-md5 none debug1: SSH2_MSG_KEX_DH_GEX_REQUEST sent debug1: expecting SSH2_MSG_KEX_DH_GEX_GROUP
debug1: dh_gen_key: priv key bits set: 129/256 debug1: bits set: 1591/3191
debug1: SSH2_MSG_KEX_DH_GEX_INIT sent debug1: expecting SSH2_MSG_KEX_DH_GEX_REPLY
Host key verification failed.
debug1: Calling cleanup 0x20013a74(0x0) Connection closed
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