A group claiming to be former employees and shareholders going under the name Save EOH, all of whom have chosen to remain anonymous, claims CEO Stephen van Coller gave false testimony to the Zondo Commission of Inquiry into allegations of state capture and orchestrated a crisis that resulted in the group’s market value shrinking by more than half to R6.8 billion from R16.4 billion when he joined three years ago.
Most of this value has been lost to pensioners through pension funds, according to the group.
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The once ‘great powerhouse’ employed 11 500 people but has since whittled that down to 5 500, which has “affected the livelihood of thousands of people, destroyed careers, and caused immeasurable pain and suffering,” says a media release from Save EOH issued last week Thursday.
It calls for Van Coller to step down, claiming he perjured himself at the Zondo Commission and due to his “poor performance” since becoming CEO.
Assets sold at giveaway prices
The group says some 60 businesses have been disposed of, including the so-called crown jewels of the company, for a fraction of their value – causing some of the R6 billion loss of market cap.
Included in this was Construction Computer Software (CCS), an SA-owned company that reportedly ranks among the top in the world in its field, with customers in 50 countries. It was sold to a German company for 25% of its market value, claims Save EOH, which points out that it has presented its evidence to the Zondo Commission.
The grouping bewails the continued slide in the share price of EOH from around R40 when Van Coller arrived to around R7 today.
It also questions why EOH spent R245 million with legal firm ENSafrica, the result of which appears to have been aimed at “simply defaming EOH, purging management and board members, while boosting [Van Coller’s] image as a great leader, great CEO and a ‘corruption fighter’,” says Save EOH.
R500m on consultants
Furthermore, the group questions the fruits of a further R190 million spent on consultants.
“Van Coller artificially created a major crisis in EOH when there was none and then promoted himself as the white knight who saves it,” declares the Save EOH statement.
The CEO is claimed to have promoted himself and in the process defamed EOH.
Read: Can EOH become the poster child for crisis turnaround?
The group says this is apparent in about 1 700 media articles on the company since Van Coller took over the top job.
Earlier this year, EOH brought civil claims against former CEO Asher Bohbot, former (and late) CFO John King and two other executives for a combined R6.4 billion for governance lapses when they led the company.
The charges against King and Bohbot include delinquency, breach of fiduciary duties and breach of contract.
As Moneyweb previously reported, other former directors also face charges following a 2019 ENSafrica investigation that uncovered evidence of widespread wrongdoing at EOH. This came after Microsoft terminated its relationship with the IT group over a suspect Department of Defence contract.
Read: Former EOH finance chief John King dies amid R1.7bn damages claim
Evidence presented to the Zondo Commission, and outlined by ENSafrica’s forensics unit, paints a damning picture of a company involved in corrupt public sector tendering, with suspicious transactions worth about R1.2 billion being discovered in EOH’s public sector subsidiary, EOH Mthombo.
Van Coller was brought in to clean up EOH. The group’s latest results for the financial year to July 2021 show a swing from R1.3 billion operating loss to R147 million operating profit.
A spokesperson for Save EOH, who asked not to be named, said none of the former employees affiliated to Save EOH are being pursued by the company for civil damages, so they are motivated neither by revenge nor financial benefit.
The group has also taken on an attorney, Hein Valentine, who provided no further insight into the identity of the members of the grouping.
“All I can say is that I am representing the group,” he told Moneyweb.
Save EOH has also questioned the need to restate the previous four years’ financial statements, resulting in billions of rands of write-offs, and making it impossible to do a proper analysis of the company’s performance.
Van Coller is also accused by the grouping of using unfair labour practices “to purge management, board members and any other individual” who stood up to him.
Read: A look at how EOH’s turnaround is going
In various presentations, Van Coller has spoken at length of the culture of corruption he discovered at the organisation, and of its various governance lapses.
Asked to respond to the claims of the Save EOH group, EOH issued the following response to Moneyweb.
“In June 2021, EOH filed civil claims against a number of former EOH executives seeking total damages of circa R6.4billion. The EOH board decided to do this after an extensive legal investigation. The charges filed include delinquency, breach of fiduciary duties and breach of contract. Further civil suits against other individuals may follow as the process unfolds.
“The EOH board believes that the recently launched anonymous ‘Save EOH’ smear campaign, which levels malicious and frivolous allegations against EOH CEO Stephen Van Coller, is an attempt to retaliate against these civil actions and Stephen van Coller and his team’s efforts to turnaround the organisation,” reads the statement.
“The EOH board led by its Chair Andrew Mthembu fully support the EOH executive team including CEO Stephen Van Coller and acknowledge their significant achievements over the past three years. The EOH board regards this personal attack as deplorable.”
EOH’s board said it “has no further comment on the matter”.
* Save EOH says its mission is to “prevent the further demise of EOH Holding Limited” and the protection of the rights and continued employment of the remaining 5 500 employees at the company. Asked why the members chose to remain anonymous and in doing so, devalue their claims, the spokesperson says they will remain anonymous for now “due to the fear of targeted harassment and other security issues”.
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