End of an era for Asher Bohbot at EOH
Founder Bohbot resigns as chairman of EOH as part of a governance overhaul
Founder Asher Bohbot resigned as chairman of EOH as part of a governance overhaul at the technology group that has seen its share price plummet following graft allegations.
The share price has dropped more than 90% from its highs less than three years ago, a slide that became steeper the past week after reports that Microsoft cut ties with the company due to an allegedly corrupt contract with SA’s department of defence.
On Wednesday the share price jumped almost 13% to close at R16.47 as the markets reacted to Bohbot's resignation. Along with Bohbot, fellow founder Rob Sporen and two other directors — non-executive Tshilidzi Marwala and head of human resources Tebogo Maenetja — will also step down from the board at the end of February.
Bohbot initially stepped down as EOH CEO in June 2017 but returned nine months later as chairman to steady the ship as some investors lost confidence in the leadership due to a succession of bad news, including allegations of corruption related to government tenders.
Zunaid Mayet was appointed as Bohbot's successor as CEO, but relinquished his role in June 2018 to take up a new role within the company.
But after months of struggling to reassure the market, Bohbot decided that the only signal he could send was to appoint former banker Stephen van Coller, who is “from the highest governance industry in the world”, said Bohbot.
The stringent adherence to corporate governance in banking is what attracted him to Van Coller, Bohbot said.
“Stephen wants to be more religious than the pope,” he quipped, but added more somberly that the narrative in the market is "that anything that comes close to unethical gets smacked”.
An acquisitive spree has sprawled EOH into a conglomerate with many moving parts and 270 entities under its control. As an employer of 11,500 people in SA, EOH very likely has a few bad apples in the business, Bohbot said at EOH’s annual general meeting on Thursday .
Bohbot remains a shareholder in EOH, and maintains he has not sold a single share in the company the past decade. “Ten years ago I owned 7-million shares in EOH. Today I own 7-million shares in EOH.”
EOH, which often does business with the public sector, employed law firm ENSafrica to rejig its processes and make sure that bids for government contracts are squeaky clean in future.
Now, the company will also comb through the past of all its subsidiaries, to root out malfeasance, Bohbot said.
“We don’t want to have people around that the organisation is aware of or suspects of anything,” he said.
This week, Van Coller urged "anyone who has evidence" to assist the company in rooting out unethical business practices.
He said the group was putting new governance processes in place, which would be vetted by PwC, to ensure that future contracts were untainted. It aimed to have anti-bribery certifications in place by July and had launched a portal for whistle-blowers, he said.
“We are still doing everything we can to protect your asset,” Bohbot said to shareholders, adding that “collective punishment” of a good business is irrational.