R6.4 billion lawsuit against former EOH CEO and three execs

EOH is suing its founder and former CEO, Asher Bohbot and three other executives for a combined R6.4 billion for not dealing effectively with corruption at the company.

TechCentral reported that EOH had filed civil claims against Bohbot, former CFO John King, former EOH Mthombo executive Jehan Mackay, and former EOH International CEO Ebrahim Laher.

These claims relate to damage inflicted on EOH because they failed to deal with corruption at the company.

“EOH is going after Bohbot and King on charges of delinquency, breach of fiduciary duties and breach of contract,” TechCentral said.

The amounts sought by EOH from each of the executives are:

  • EOH founder and former CEO Asher Bohbot — R1.66 billion
  • Former CFO John King — R1.66-billion
  • Former EOH Mthombo executive Jehan Mackay — R1.5 billion
  • Former CEO of EOH International Ebrahim Laher — R1.58 billion

These lawsuits come amidst revelations of widespread corruption, BEE fronting, and tender rigging at EOH.

EOH has been struggling to rid itself of the history of widespread corruption at the company, including kickbacks to win lucrative tenders.

Former EOH CEO Asher Bohbot
Former EOH CEO Asher Bohbot

When media reports of corruption at EOH emerged in 2017, the company downplayed their significance.

In mid-2017, EOH released a statement saying media reports about EOH have been a cause for great concern for the company.

“With the assistance of an independent legal firm, we have conducted a review and are satisfied that the insinuations in these reports are false and untrue, and we have repudiated them in the strongest terms,” former EOH chief executive Zunaid Mayet said at the time.

“We are confident that our overall governance, risk and compliance framework and processes are robust and strong.”

This was not the case and further reports emerged about corruption and tender rigging at the company.

In September 2018, Stephen van Coller was appointed as the new CEO and he started the process to clean up corruption at the company.

He later admitted that he had no idea when how much bribery and corruption he would be faced with when joining the company.

Van Coller is now actively weeding out corrupt elements at EOH to restore the company’s reputation.

His actions include testifying at the Zondo Commission, where he aired the company’s dirty laundry in public.

Van Coller told the commission EOH paid millions to ANC politicians in donations and made irregular payments in exchange for lucrative tenders.

He revealed that EOH paid R865 million to subcontractors where there is no evidence of work done. There was also a lot of inappropriate gifting, sponsorships, and donations.

The lawsuits against former EOH executives are the latest step in Van Coller’s war on corruption and holding those guilty accountable.

While his actions are widely welcomed, and his work at the company is applauded, the company is still struggling to recover from the damage inflicted by corrupt executives.

Once a darling technology stock on the JSE, the EOH share price plummeted from over R170 per share in 2015 to under R3 per share in 2020.

EOH share price

FNB Wealth and Investments portfolio manager, Wayne McCurrie, explained that a lack of trust was to blame for the poor share price.

McCurrie said there are good businesses in EOH with long-term contracts which generate annuity income. This bodes well for the company’s prospects. However, institutional investors were badly burned by EOH.

“Institutional investors have a very long memory, so I can’t see institutions starting to invest in EOH yet,” he said.

The actions from rogue former EOH executives have therefore caused tremendous damage to the company and its investors.

Stephen van Coller
EOH CEO Stephen van Coller

Commenting on the decision to sue EOH’s former leaders, Van Coller said the new board decided to go after the perpetrators to see if they can get back any of the money.

“It is a process me and my management team had to go through as the board feels they have to follow their fiduciary duties to the shareholders,” he said.

He said apart from Bohbot, King, Mackay, and Laher, they are also going after other executives, a few companies, and their directors.

He said the process involved an investigation, after which the findings were provided to Werksmans Attorneys for guidance.

Werksmans responded with a way forward, which EOH acted on.

“It is now over to the lawyers, and they must do their job,” said Van Coller.

Now read: ANC’s Zizi Kodwa received R1 million from EOH

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R6.4 billion lawsuit against former EOH CEO and three execs