EOH group CEO Zunaid Mayet has written an open letter to the company’s stakeholders after an opinion piece, which alluded to corruption at the firm, wreaked havoc on its share price.
The listed IT service company took a massive knock on the JSE in mid July, after an opinion article accused the company of misconduct in its contracts with South Africa’s welfare agency.
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”.
Due to the proximity to the Gupta family and heightened sensitivity to corruption between the public and private sector, EOH said that shareholders had a ‘knee-jerk’ reaction to the story, which led to the sell-off.
EOH lost close to 10% of its share price at the time the story was published, which compounded a rocky year on the JSE for the group. It is currently trading at R105.00 per share, down a further 1.0% on Thursday, and far off the group’s R164.00 open to 2017. The company has lost 36% of its share value this year so far.
In the open letter, Mayet said that the media reports “have been a cause for great concern for us all”, and reassured stakeholders that “EOH remains strong, with a great leadership team and strong fundamentals”.
“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,” he said.
“We are confident that our overall governance, risk and compliance (GRC) framework and processes are robust and strong.”
However as an additional measure EOH said that is has brought forward the periodic review of its GRC framework under the leadership of the chairperson of the Audit Committee.
“I am personally committed to ensuring sound corporate governance, and that we at EOH continue to conduct our business based on the highest ethical standards, whilst creating value for all our stakeholders,” he said.