Was dodgy defence contract why Microsoft dumped EOH?

Business

Was dodgy defence contract why Microsoft dumped EOH?

It seems prudent that the company should tell investors why the software giant took such a drastic decision

Nick Hedley


The market is understandably disappointed at EOH’s lack of transparency about why Microsoft decided to end their partnership.
In its stock exchange news announcements last week, EOH said it was not entirely clear why Microsoft had terminated their reseller agreement – even though the companies had met.
But on Monday, TechCentral reported that Microsoft’s decision was related to an anonymous complaint to the US Securities and Exchange Commission about a R120m software deal between EOH and SA’s department of defence.
Cy Jacobs, CEO of 36One Asset Management, tweeted: “I have to wonder when EOH was going to inform the market. Surely at least after the Microsoft meeting the company had the responsibility to inform shareholders.”
EOH said in an update on Tuesday its investigations into past bids for state contracts, in conjunction with ENSafrica, were continuing. The company was obtaining information from whistleblowers and corroborating internal facts as part of “a thorough and detailed forensic investigation”.
“The media may also have access to these contracts and evidence from whistleblowers. 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.”
In the interests of transparency, it seems prudent that the company should tell investors why Microsoft took such a drastic decision.
Investors are understandably now deeply concerned about the technology group’s other state contracts, even though some have been given the all-clear. EOH stock, already battered by governance concerns, has lost about half its value so far this year.

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