EOH share price slammed after report of alleged corruption

Shares in EOH went into a free-fall on Tuesday after an article in the Business Report linked the company to corrupt dealings in its role as SASSA’s IT service provider.

EOH declined the most out of all companies listed on the All-Share index, falling 8.81% to R115.80 a share, after an opinion article accused the company of misconduct in its contracts with South Africa’s welfare agency.

“It’s a very controversial article and paints them in a very negative light, that creates uncertainty and markets don’t like it. Shareholders have had a knee-jerk reaction and there’s been a sell-off,” Independent Securities trader Ryan Woods told Reuters.

The report suggested that father and son Danny and Jehan Mackay, shareholders of EOH, might ‘dethrone’ the Gupta brothers “as South Africa’s most notorious alleged practitioners of state capture”.

EOH, however, dismissed the article, saying that it was based on false and unfounded insinuations and allegations relating to the company.

It said in a statement:

EOH has noted an article carried by Business Report on 17 July 2017 and wishes to place the following on record:

This article is a regurgitation of a previous article published by another media outlet three months ago. The Business Report article has relied on the original article for its information, with no new information provided.

At the time of publication of the original article, EOH publicly responded and repudiated the content of the article, which was based on false and unfounded insinuations. EOH’s repudiation of the original article and full response was published by the media outlet the following day.

The Business Report article has ignored EOH’s repudiation response to the original article. As with the original article, this latest article is also based on false and unfounded insinuations and allegations relating to EOH.

EOH reiterates that it has been a service provider to the South African Social Security Agency (SASSA) for 8 years, and is proud of its track record and quality, depth of skills and expertise it provides. All services provided to SASSA were awarded on merit, after having undergone open and transparent tender processes in compliance with the Public Finance Management Act (PFMA).

EOH is considering all options available to it for recourse and corrective action in respect of any harm caused to EOH and its stakeholders.

Read: EOH CEO steps down in executive restructure

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EOH share price slammed after report of alleged corruption