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EOH goes after criminal employees
EOH goes after criminal employees
Published Date: 2019-10-16 | Source: Stephen Gunnion | Author: Stephen Gunnion
The group has blacklisted 50 enterprise development partners and wants implicated employees arrested after reporting a full-year loss.
EOH has blacklisted 50 businesses implicated in close to R1 billion of suspicious transactions at the group and is also going after the employees who facilitated them.
Releasing its annual results yesterday, the technology services group said with an ENSafrica forensic investigation into wrongdoing at the company almost 80% complete, the original R1.2 billion in flagged transactions had been modified to R935 million. These include transactions worth R635 million where there was no evidence of valid contracts being in place or work done; R90 million of written off loans; and overbilling valued at about R180 million.
The ENSafrica investigation team also confirmed the key modus operandi that was utilised by the main perpetrators to commit wrongdoing which involved enterprise development partners and intermediaries. It said it had suspended payments to the companies implicated in suspect payments. While some of them had initiated legal challenges against EOH, it said it was "robustly opposing" the backlash.
The main perpetrators of the wrongdoing were a handful of individuals in its public sector team. It said the investigation had also identified various opportunistic incidents of fraud and theft and it had fired those responsible. It was also actively pursuing criminal charges against various implicated individuals and had initiated legal processes to recover losses.
Governance concerns led to Microsoft cancelling its EOH Channel Partner Agreement with the group's EOH Mthombo unit earlier this year. It said it was now focused on ensuring the right leadership and governance structures were in place.
While the cost of fraud weighed on the group's full-year performance, impairments of R2.26 billion and write-offs also contributed to the losses.
Revenue fell 2.6% to R11.8 billion in the year to end-July. Its loss per share widened by 119% to R29.95 while its headline loss per share grew by 208% to R16.81. Excluding discontinued operations, its loss per share reached R24.64 and its headline loss per share was R13.52.
A dispute over some restatements of the prior period's numbers, which auditors Mazars believed should have been accounted for in this year's results, meant it didn't express an audit opinion on the financial statements.
EOH said while there was still much left to be done, the path was clearer. In the short term, it plans to continue deleveraging its balance sheet while implementing governance changes. It has raised more than half the R1 billion in asset sales it has targeted, helping to repay a R250 million bridge facility and reduce debt to R3 billion from R3.4 billion.
Its shares rose 4.4% to R13.52 yesterday.
EOH: Write-offs total R4.5bn and there's probably more in the kitchen sink as net assets reduce from R8bn to R2bn. Net debt to equity at 99% is not a complete train smash for an asset light biz, provided cash flow can hold up.-- Karin Richards (@Richards_Karin) October 15, 2019
@Richards_Karin incredible was reading EOH financial s , the amount of companies connected to dodgy deals was 50 !!! Would love to see a list of them , these are decent sized companies I presume as eoh only deals with big fish !-- alessandro chelini (@grappa1965) October 15, 2019