EOH sets date for taking former executives to court

● Technology group EOH expects its multibillion-rand lawsuit against former executives of the company to go to trial in the next 18 months.

In June last year, EOH announced it is suing its founder and former CEO Asher Bohbot and other executives for R6bn for alleged corruption. Bohbot has denied the allegations.

Group CFO Megan Pydigadu said in an interview this week that the legal teams of all parties involved are still exchanging documents.

“We are in the discovery process. We have been sharing information and documents with the defendants’ legal team. It’ sa long process and we are hoping that within the next 18 months we will go to trial. Having said that, if any of the defendants were to come to us for an out-of-court settlement, it’s something we will consider. But at the moment we are pursuing the legal process,” she said.

The executives are accused of malfeasance, breach of fiduciary duties, negligence and mismanagement.

Investigations by law firm ENS found evidence of governance failings and wrongdoing at EOH, including unsubstantiated payments, tender irregularities and other unethical business practices, primarily limited to the public sector business centralised in EOH Mthombo.

EOH CEO Stephen van Coller has been on a cleanup drive since joining the group three years ago. He said this week during the presentation of the group’s half-year financial results that management had completed a turnaround strategy and the business was positioned for growth.

The group managed to return to the black in the six months to January with headline EPS of 41c from a loss of 36c.

Van Coller said the company’s return to profitability was “ahead of schedule” and the group had gained credibility while being transparent and ethical.

He said the turnaround strategy was focused on “returning the business to sound footing”, with the first phase having focused on credibility, liquidity and transparency.

“The return to bottom-line profit, the normalisation of cost margins as we do the right business with the right customers in the right way, as well as the normalisation of cost base and procedures, now allows us to go get our future,” Van Coller said.

He said the next phase of the group’s strategy “will focus on growth, talent and efficiency”.

EOH sees expansion opportunities in software development, data analytics, cyber security, cloud computing and rolling out its own intellectual property products.

The group is keen on growing its assets outside SA. It has a presence in Egypt, the Middle East, the UK and Switzerland.

Van Coller said the group would follow clients where required. Efforts to grow its footprint in the Middle East, where there is “great potential in the current oil price environment”, are under way, he said.

EOH said it had reduced its debt by about R300m since the end of January to R1.7bn, with plans to cut that by a further R500m through the sale of its information services and network solutions assets.

It might tap shareholders for about R750m through a rights offer or bring in a new equity partner to further cut its debt.

Pydigadu said she did not expect further large disposals of businesses.

The group has begun deregistering its 272 legally registered entities, planning to cut the number to 100 by July and eventually end up with 60. This would reduce costs related to tax, among other things.

EOH has secured a lucrative cloud computing contract with US group Amazon Web Services (AWS). Van Coller said AWS was a significant win and a strategic client.

“The deal gives EOH a multiyear and multicountry possibility if we succeed on phase one. It is a big enterprise customer, trusting us with their core transformational project of moving to the cloud.

“This puts us on the map for other large corporate cloud transformational journeys. [This deal] is just a proof ... that relationships with partners and customers are now normalised.

“We are now very clear on how we drive growth through our business model. We have a solid foundation to drive future growth,” Van Coller said.

We are hoping that within the next 18 months we will go to trial. - EOH Group CFO Megan Pydigadu