[dropcap]T[/dropcap]echnology group EOH’s share price tumbled more than 12% at one point on Tuesday as investors took fright at the resurfacing of corruption allegations involving a contract with welfare agency Sassa.
The share regained some composure in the early afternoon after EOH issued a statement to shareholders “strongly repudiating false and unfounded insinuations” published in Business Report, a newspaper owned by Independent Group. It closed down 8.8% at R115.80, its lowest closing price in two-and-a-half years.
The article in question appears to be a largely a rehash of allegations in a story written by amaBhungane and published by the Daily Maverick early this year.
“The Business Report article has relied on the original article for its information, with no new information provided,” EOH said in a strongly worded statement.
“At the time of publication of the original article, EOH publicly responded and repudiated the content, which was based on false and unfounded insinuations. EOH’s repudiation of the original article and full response was published by the media outlet the following day,” it said.
“The Business Report article has ignored EOH’s repudiation response to the original article. As with the original article, this latest article is also based on unfounded insinuations and allegations relating to EOH.”
In the statement, EOH said it has been a service provider to Sassa for eight years and is “proud of its track record and quality, depth of skills and expertise it provides”.
‘Considering all options’
“All services provided to Sassa were awarded on merit, after having undergone open and transparent tender processes, in compliance with the Public Finance Management Act.”
EOH said it is “considering all options available for recourse and corrective action in respect of any harm caused to EOH and its stakeholders”.
EOH’s share price has come under considerable pressure this year, driven lower not only by the weaker economic outlook but always concerns over the recent retirement of founding CEO Asher Bohbot, who left at the end of June.
The counter has lost almost a third of its value since the beginning of the year and was trading on Tuesday afternoon at a trailing price-to-earnings multiple of just 15, well below its historic levels. — (c) 2017 NewsCentral Media