EOH shares tumble as it faces blacklisting
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EOH HOLDINGS plummeted more than 15 percent during intra-trade on the JSE yesterday before recovering to close 4.60 percent lower at R6.85 after the technology services provider received information from the State Information Technology Agency (Sita) that it would recommend its blacklisting from doing business with the state.
Sita said on Monday that it would recommend that the National Treasury bars EOH from doing business with the public sector.
The group, however, vowed to fight the blacklisting as it maintained that it had followed all the correct procedures in dealing with the alleged corruption scandal that was uncovered in the company in 2019.
EOH said it was surprised to receive a letter on June 21, although dated June 4, which intimated that the Sita would consider restricting EOH from doing business with the public sector based on Nexia SAB&T's forensic audit report to Parliament on the Department of Home Affairs ABIS project.
“EOH has to date been following the due process as set out by the Sita and is similar to other processes we have successfully completed with other stakeholders,” the company said.
“We have made our representations and followed all the required guidelines in this regard. “Sita must now follow due process and make its recommendations to the National Treasury.”
EOH chief executive Stephen van Coller said the group remained confident that the situation could be resolved correctly.
“Our current management team and board of directors have spent a significant amount of time rebuilding EOH's credibility, driving transparency in the business and ensuring the accuracy and reliability of the financial information disclosed to stakeholders, while continuing to resolve the remaining inherited legacy issues.
“The EOH management team remains committed to transparency and the timeous dissemination of relevant and accurate information to all stakeholders as it seeks to resolve this matter,” Van Coller said.
EOH shares declined to a day-low of R6.02 from Monday's close of R7.18, valuing the company at R1.07 billion, despite the assurances from Van Coller.
The group has already acted on the corruption scandals when it sued its former co-founder and chief executive Asher Bohbot for R1.7bn last week over material and reputational damages the company said that it had suffered from alleged corrupt contracts that he had overseen.
The group also filed for damages against former chief financial officer John King, former head of public sector Jehan Mackay, and former head of EOH International, Ebrahim Laher, for a total of R6.4bn.
EOH, which employs more than 7 000 people, said that when the corruption scandal broke out in early February 2019, its new leadership approached its customers, partners, Business Leadership South Africa, the Treasury and the Department of Public Enterprises on what it needed to do in order not to be blacklisted.
“This was paramount to saving as many of the jobs in EOH as possible.
“The new leadership also employed the services of ENSafrica and Rothschilds to advise them on the best way forward,” the group said.