Guide to disaster management from EOH

Listed technology group EOH, whose stock value has almost halved so far in 2019, is in the middle of cleaning up its balance sheet after allegations of corruption related to government tenders.

In an interview with Business Day, CEO Stephen van Coller shares his thoughts about cleaning up the business.

How has your first year on the job been?

I joined on September 3 [2018]. So I’m in my 14th month. It’s been very difficult. I don’t think we are born and bred to deal with bribery and corruption. It’s not in our DNA, you know.

When you’re faced with it, you learn a whole lot of new skills, which is in some ways a good thing, but it’s stressful. But I’ve been lucky enough to get a good team and people who’ve been willing to assist. I still find it amazing that people wanted to come on board to help it’s so easy to run away and yet we found some very competent, capable people to come and get on the board.

Are there things that still keep you up at night?

It’s a complex business and because it’s still a little decentralised it’s not always easy to have an immediate finger on the pulse. So you rely a lot on getting information, analysing it and you’re always thinking about “what have you missed?”.

Sometimes you wake up at 3am, suddenly thinking “but what about that?” then get in the office and ask someone to have a look at it.

EOH announced plans to sell some of its businesses and close down the EOH Mthombo business. How far is the process?

We have another 21 assets that we’re busy with in the sale process at the moment and we’ve got three that we’re looking for partners on.

With regards to EOH Mthombo, which used to be the contracting entity for everything, we are still in the process of closing it.

What informs which businesses you keep and which you sell?

It has to have some own IP [intellectual property], needs to be scalable and “digitisable”. And then you list all the businesses from one to a hundred based on that and whether they’re profitable.

If it’s profitable, it goes through the gate into core. If it’s not profitable but went through the gate we look if we can turn it around. Can’t turn it around: close or sell.

Then you’ve got the businesses that we just think we’re not the best owners of, those we just didn’t see fitted in with who we are as a systems integrator, so they didn’t make it through the gate at all.

How is your relationship with Microsoft?

We will re-engage with them. We’ve now finished with the ENSafrica report, so I can go and tell them this is what we found, this is what we saw.

It’s the same process I’ve had with just about every customer, especially the financial institutions.

With regard to our Microsoft licensing contract ... Altron certainly didn’t get our contract passed on to them. In fact we gave our contract, our licensing business to a BEE group that we were dealing with. They took all 25 staff and they’re running that business.

Which supply partners were implicated in the investigation?

They were enterprise development partners. These are groups of people who have just created a company to bid for work.

The problem is we didn’t do proper vetting, didn’t do proper KYC [know your customer], so we ended up with friends and family probably.

Do you expect to be making any acquisitions going forward?

At least for the next 12-18 months I can’t see us making any acquisitions. I can’t see the banks lending to us until we’ve delivered. But I wouldn’t want to unless it was such an obvious deal to do.

How has the mood been at EOH over the period of investigation?

Some people were happy and excited that we were there and we were sorting it out. Other people were feeling embarrassed, I suppose, that they were part of the whole thing. What was fascinating is I didn’t know how the ENS report was going to be received because it’s a difficult thing to tell to people.

The thing that amazed me most was the reaction from staff and from the corporate world. I think it’s for two reasons. One is: we’re fairly systemic to corporate SA, we’re entrenched in a lot of their businesses. And also the staff genuinely enjoy working at EOH. It’s an interesting, agile, innovative organisation, so they want to be there. It’s difficult when there’ sa bad smell.

The thing that disappoints me is there are still a few people out there who want to taint 11,000 people with what 16 people did.