Amid a crisis that has seen shares in EOH tank after allegations of corruption so serious that the US Securities and Exchange Commission (SEC) may now be investigating, outgoing chairman Asher Bohbot on Wednesday gave an impassioned speech in defence of the troubled company he founded more than two decades ago.
Analysts and investors applauded and offered hearty handshakes at the company’s AGM, where Bohbot appealed for people not to judge 11 495 employees badly just because of a few bad apples. This phenomenon of collective punishment was “totally and utterly irrational”, he said.
The AGM took place on Wednesday afternoon as the company was drowning in a wave of negative publicity — with the shares plunging to an eight-year low.
Yet, instead of the fireworks that might have been expected, the AGM was more like an oasis of calm, with no one present mentioning the herd of elephants trashing the rooms outside. Resolutions were read out and approved. Polite applause greeted the confirmation of Stephen van Coller as the new CEO, a position he took last September. Then Bohbot looked around the room at those present at the AGM at EOH’s Bedfordview, Johannesburg campus and launched into an at times emotional defence of a business facing the most severe crisis in its history.
“This business was created and conceived with love, care and wanting to do good for our society. Our purpose is to be a force for good,” he said.
‘Decent people’
The company’s knowledge, skills and technologies enabled South Africa’s economy, because its solutions are entrenched in more than 90 of the country’s top 100 companies, he said. “Our people get up in the morning and seek ways to add value to our customers. The culture of the business, which was formed over 21 years ago, is strong, it’s healthy and driven by people thinking — decent people.”
But the past 18-24 months have been exceptionally tough for EOH, with allegations of wrongdoing swirling around various government contracts. That all came to a head this week when TechCentral broke the news that a whistle-blower had alerted Microsoft to massively inflated fees allegedly being added to a software deal with South Africa’s department of defence. Microsoft ended its relationship with EOH’s Mthombo subsidiary, and the SEC may now be investigating Microsoft under the US Foreign Corrupt Practices Act. An SEC spokesman declined to comment when contacted by TechCentral this week. EOH shares plunged and law firm ENSafrica is now reviewing all EOH contracts with public-sector entities in the past five years.
Before this latest scandal, the company had already made a move to stronger governance by appointing Van Coller, choosing him for his background in banking, a sector Bohbot described as having the highest levels of governance. “Stephen wants to be more religious than the Pope,” he joked. It also hired Megan Pydigadu as the new financial director for her experience in listed companies.
Now a “foolproof” system of governance has been put in place for doing business, specifically in the public sector. EOH has also begun to dredge through the past. “(This is) not for the market, not for shareholders, not for our customers, but for us, so our people know and understand the meaning of ethical business,” Bohbot said. “We don’t want to have people around that the organisation suspects of anything (unethical). We are therefore going back and looking at major contracts, specifically with government, to ensure that the past is also dealt with so we are a business ready to tackle the world in the most ethical manner.”
He then emphasised that problems were inevitable in a business of EOH’s size, and in a country with “questionable ethics”.
“To expect absolute perfection from humans is just not realistic. If we have five people who haven’t done well in the category of ethics, there are 11 495 people who are decent people, good people. Please judge us by the 11 495 as opposed to what somebody did, or might have done, or we suspect has done, in the past. We are not proud of it, but we will obviously deal with it,” he said.
Bohbot has owned seven million EOH shares for “many years” and hasn’t sold one of them. “If I thought the business was not worth it, when the price was R140, wouldn’t I have sold? If I didn’t believe in the future of the business, would I not have sold?”
Bohbot steps down as chairman later this month and will remain an advisor until the end of July. — © 2019 NewsCentral Media