EOH fails to recover after claiming it has been cleared of Eskom allegations
Service provider named in a power utility statement about ‘acts of misconduct’
EOH’s shares failed to recover on Wednesday even as the technology group said it has already been cleared of any wrongdoing regarding Eskom’s procurement team.
The group’s shares lost 14.8% on Tuesday after SA’s power utility told bondholders that members of its procurement team, including the team’s former head Jay Pillay, had been “involved in acts of misconduct involving EOH”. It did not provide further details.
Eskom said previously in its interim financial statements that it had “confirmed” a conflict of interest involving Pillay and EOH. Further, a former member of Eskom’s audit and risk committee, George Sebulela, had not declared a conflict of interest and did not “recuse himself on deliberations” involving service provider EOH.
Sebulela, a former Absa Capital executive, resigned from Eskom in October 2018.
On Wednesday, EOH responded by saying that the two allegations mentioned by Eskom “are matters that have been fully investigated and the matters concluded last year ”.
“EOH was found not to be implicated in either allegation,” it said.
The company was in talks with the JSE and Eskom about the power utility’s statement.
EOH’s share price lost 0.2% more to R26.59 on Wednesday, with the stock remaining at levels last seen in late 2011.
The company has previously been a subject of accusations about alleged tender irregularities. It said previously that “fake news stories” adversely affected its business in the first half of its 2018 financial year, when it had to sacrifice margins to keep customers.
EOH’s new CEO, Stephen van Coller, said in December the group is no longer keen to take on large projects for the public sector, which owes the company about R600m.
State entities are often slow to pay for multiyear “complex transformational projects”, mainly due to frequent leadership changes, Van Coller said.
“You end up having three or four bosses while you’re implementing a fairly complex project, and because of all the changes, you also end up with cost overruns.”