‘They will be dealt with’: EOH CEO’s warning over corruption

Corruption will be “dealt with” and anyone at EOH involved in unethical business practices will not get away with it, the IT services group’s CEO, Stephen van Coller, warned on Wednesday at its annual general meeting of shareholders.

“When you have 11 500 people in 273 legal entities and you’re doing business with the state-captured public sector companies, there’s going to be something,” he said in an interview with TechCentral after business of the AGM had been concluded.

“You just have to deal with it, and we are busy dealing with it. I’m absolutely committed to that. There’s no one who is going to get away. If they’re involved, they will be dealt with,” he pledged.

Every company that has carried out large tenders for any of the government entities now branded as state captured has a duty to investigate whether they were above board, Van Coller said.

He said fresh probes into its own past activities had uncovered cases that demanded further scrutiny.

“In some cases, we’re in phase two of an investigation — or phase three — because we can see there may be issues and we’re dealing with it,” he said. “We are busy with a few investigations because we know there is smoke from some of the other investigations going on in other companies.”

Shares in EOH — as well as public confidence –have taken a pounding after Microsoft cancelled its relationship with its subsidiary, EOH Mthombo. Microsoft dumped Mthombo after a whistle-blower alerted the US Securities and Exchange Commission (SEC) to a massive mark-up being added to software licences sold to the department of defence.

Possible corruption

Van Coller says he didn’t know about the impending Microsoft drama when he became CEO in September 2018, but was well aware of other issues of poor governance and possible corruption.

Flyers have now appeared in the EOH headquarters encouraging anyone with information about dodgy dealings to speak up. “I’ve told my staff that they have a chance to come forward and tell me if they know anything. I can’t absolve them, but I can save their jobs if I can see where the fire is,” Van Coller said. He is also visiting customers to reassure them he is tackling the issues, and promising absolute transparency.

Despite market speculation that this latest scandal might trigger dire consequences, EOH will not be delisted or dismantled. “I think we have lanced the issue,” he said, adding that there is too much work to be done to waste time delisting.

Most of the 11 500 employees in South Africa did a great job, and the company provided an important service to 15 000 corporate customers, he added. “There are real people with real lives doing real businesses and there are families and jobs and everything. I don’t know what you achieve by closing that down.”

The task of overhauling the enormous entity that EOH has become will see some of its non-core divisions sold, however. Ten or perhaps 15 of the 273 entities would be shed, and that process had already begun, he said.

Van Coller, formerly a senior executive with MTN Group, was brought in to lead an organisational restructure as part of the effort to improve good governance. The group will be split into distinct businesses with separate governance and separate capital structures under an investment holding company. EOH will handle the IT activities and Nextec will run the industrial technology side.

That is necessary because the structure had grown unwieldy, and many of its large entities were still being run by entrepreneurs, Von Coller said. “It’s a big transition for a company. We will create some independence among the businesses because there’s not a lot of synergy — we just put them all into one pot and you end up with everything being the lowest common denominator rather than letting the different businesses do what they need to do.” — © 2019 NewsCentral Media