EOH’s board is in the process of creating a new capital structure for the group, after it had since 2019 repaid R2bn of R4bn legacy debt that had been racked up due to poor management and looting. Photo:Timothy Bernard African News Agency (ANA).
EOH’S filing of civil claims against former executives who were allegedly responsible for governance failures marked a milestone towards closing off legacy issues at the group that included tender irregularities and unethical business practices, the group’s board said in a statement yesterday.
EOH confirmed that it had filed civil claims and was suing a number of former executives, including Asher Bohbot (former chief executive), John King (former chief financial officer), Jehan Mackay (former head of public sector) and Ebrahim Laher (former head of EOH International) for R6.4 billion in damages incurred by EOH.
EOH’s share price increased 4.04 percent to R6.95 yesterday afternoon, a gain far bigger than the 1.37 percent gain in the JSE’s software and computer services index at the time, indicating that investors likely viewed the legal action in a positive light.
“The actual losses incurred as a consequence of the wrongdoings, which included revenue lost due to reputational damage, fines, settlements and the ENSafrica investigation, were substantial,” the board, appointed in 2018 to clean up the group, said yesterday.
Furthermore, “significant man-hours were spent by various internal teams dedicated to the investigation, as well as dealing with the consequences of the wrongdoings. This effort was critical to saving the jobs of as many EOH people as possible as the new board sought to avoid blacklisting by EOH’s partners and customers,” the group said.
Chief executive Stephen van Coller said it had been “no easy feat getting to this point”, and the support they had received from stakeholders had resulted in the winning of multi-year contracts, which he said was an indicator that the correct strategy had been followed.
“When the new EOH board mandated ENSafrica to conduct a comprehensive investigation into the large public sector contracts, they committed to be transparent on the process, the outcomes, co-operate with authorities, prosecute where there was wrongdoing, and implement the correct and appropriate governance frameworks,” said Van Coller.
It was through that process that a number of governance failings, including unsubstantiated payments, tender irregularities and unethical business practices, were uncovered. The new board had throughout co-operated with the relevant authorities, including the Special Investigating Unit, the Hawks and the Commission of Inquiry into State Capture, he said.
EOH’s board was in the process of creating a new capital structure for the group, after it had since 2019 repaid R2bn of R4bn legacy debt that had been racked up due to poor management and looting.
In the six months to January 31, EOH reported R59 million operating profit compared with a R91.5m loss in the prior period. Total headline earnings per share improved 83 percent, with losses narrowing to 60 cents per share from 130c. The cash balance stood at R440 at March 31.
edward.west@inl.co.za
BUSINESS REPORT ONLINE
Related Topics: