EOH lost Microsoft partnership over suspect contract with defence department – Report

A report by TechCentral has stated that Microsoft’s recent termination of its licensing agreement with EOH was due to an anonymous report of corruption submitted to the US Securities and Exchange Commission (SEC).

According to the allegations, the corruption revolves around a R120-million contract between EOH and the South African Department of Defence.

After learning of the allegations, Microsoft reportedly hired Seattle law firm Perkins Coie to look into the situation.

It was this law firm that told Microsoft that it should terminate its agreement with EOH, stated the report.

EOH announced on 12 February that it had been given a 30-day-notice by Microsoft regarding the termination of its Channel Partner Agreement with its subsidiary EOH Mthombo.

“At this stage, EOH has not been provided with any reason for the notice of termination,” said EOH at the time in a SENS statement.

“However, Microsoft remains an important part of EOH’s network of the more than 50 technology partners within the EOH Group and resolution of this matter is a priority.”

EOH shares had dropped by 17.95% at the time of writing on Monday in response to the allegations. This follows its share price dropping by nearly 28% on 12 February – following news of the Microsoft agreement being terminated.

“Ending our partnership with EOH was a difficult decision that we did not take lightly,” said a Microsoft spokesperson.

“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 SANDF and EOH were not immediately available to comment.

Now read: EOH speaks out about Microsoft termination following massive share price drop

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EOH lost Microsoft partnership over suspect contract with defence department – Report