The launch of a whistle-blowing tool for staff by JSE-listed EOH may be a little on the nose after an anonymous complaint by a whistle-blower reportedly caused the cancellation of a major contract with tech powerhouse Microsoft.
The IT services company last week confirmed that Microsoft had given notice of its intention to terminate its channel partner agreement with EOH Mthombo, one of its subsidiaries, with 30 days' notice. It said the termination could potentially result in profit impact of approximately R10 million in the current financial year.
Yesterday, EOH said Microsoft had still not officially provided any confirmation for the reasons for the notice.
However, TechCentral this week reported that Microsoft terminated the contract after an anonymous whistle-blower filed a complaint with the United States Securities and Exchange Commission about alleged malfeasance to do with a R120 million contract with SA's Department of Defence.
In a SENS statement yesterday, EOH CEO Stephen van Coller said he encourages "anyone who has evidence to please come forward so we can root out any historical, unethical business practices both within EOH and the broader country".
This as the company this week launched a mobile app for whistle-blowing, called EXPOSEit. A post on the EOH Forensic Services Web site says EXPOSEit "is a powerful whistle-blowing tool to provide a safe, 100% anonymous and confidential voice to employees who may be victims of, or bear witness to, inappropriate behaviour of any kind that could impact on them directly or on their institution or organisation".
The free mobile app is available to all employees for download to any Android or iOs device.
"It is used as a highly effective tool to anonymously communicate by way of a simple report or a two-way conversation, with a trained, independent control centre operator who will debrief the reporting user and assist them as is appropriate. These reports can be utilised to bring attention to any incidents of unacceptable behaviour," it says.
The app can also be used to upload and send video files, photos, documents or any other form of evidence available to the whistle-blower. The system can be used to send general notifications to the entire user base in real-time using push messaging.
EOH says the app can be used to anonymously report fraud, corruption, dishonesty, abuse of assets, discrimination, and ethics or criminal violations such as corruption, cheating, theft or plagiarism.
"All information collected via the app from users within the organisation is reviewed, categorised, recorded and stored for further analysis at a future date."
Bad week
EOH's share price on the Johannesburg Stock Exchange has been in free fall since reports of the Microsoft cancelation hit the news last week.
EOH's share price fell 10.41% on Monday and on Tuesday took another beating, falling another 16.4% to R14.61 per share. This morning, the stock was still dropping and was down to R12.70 per share at around 11am. In comparison, at a high point in mid-2015, the stock was trading at R178.24 per share.
Just this week, EOH's market cap has fallen from around R3 billion at the end of trade on Monday to R2.58 billion this morning. Over the past year, the company's stock has plummeted over 78%.
On 15 February, the group issued a SENS statement saying it had initiated an internal investigation, supported by law firm ENSafrica, into EOH Mthombo's Channel Partner business unit. ENS is part of "a broadened review of large public sector licencing agreements".
As the stock continues to suffer, EOH yesterday told shareholders to exercise caution when dealing in the company's securities.
"Shareholders are advised that the Microsoft investigation forms part of EOH's larger internally-initiated investigation into all public sector contracts over the last five years, with the support of ENSafrica. This process involves obtaining information from whistle-blowers and the corroboration of internal facts as part of a thorough and detailed forensic investigation of these public sector contracts," it said.
EOH said the media may also have access to these contracts and evidence from whistle-blowers.
"EOH cannot respond each time the media publishes information on the back of their information, but shareholders will be provided with responses to relevant media coverage and advised of developments as appropriate, subject to legal advice."
A Microsoft spokesperson told ITWeb that ending the partnership with EOH "was a difficult decision that we did not take lightly".
"Although we do not comment on the specifics of our partner relationships, we felt it necessary to make the tough decision to end our partnership even after weighing the possible impact," the spokesperson said.
Asher Bohbot to exit
EOH founder, non-executive chairman and former CEO Asher Bohbot will resign from the board effective 28 February. The group confirmed the news in another SENS this morning, saying that in accordance with King IV [Report on Corporate Governance] a former CEO should not serve as chairman of the board until a three-year cooling off period has been observed. Bohbot will, on an advisory basis, assist the group until 31 July.
The market did not react well when Bohbot announced in May 2017 that he was stepping down as CEO after 19 years.
The group says "in order to comply with King IV's stipulation on board member independence" founding member of EOH and non-executive director, Rob Sporen, will also resign from the board after 20 years of service. As will non-executive director, Tshilidzi Marwalaalso, after 11 years' service, both effective 28 February.
Tebogo Maenetja, HR executive director, will resign from the board effective 31 March. Maenetja is leaving EOH at the end of April to take up a senior executive position with a large international business.
"A process to appoint new board members is under way and shareholders will be advised of such appointments in due course," EOH said.
The EOH Group comprises 270 legal entities, employing approximately 12 500 people, of which 11 500 are in South Africa and over 1 000 internationally in majority-held subsidiaries.
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