Eng Case2

t
os
W25094
EOH HOLDINGS LTD.: FROM BLACKLIST TO MARKET CONFIDENCE
rP
THROUGH CORPORATE STRUCTURE AND GOVERNANCE
Morris Mthombeni, Amy Moore, and Mike Ward wrote this case solely to provide material for class discussion. The authors do not
intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names
and other identifying information to protect confidentiality.
This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the
yo
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com. Our goal is to publish
materials of the highest quality; submit any errata to publishcases@ivey.ca. i1v2e5y5pubs
Copyright © 2021, Ivey Business School Foundation Version: 2021-10-26
Rules, guidelines and codes of ethics are not enough to prevent the staggering levels of corruption and
op
deviation from ethical standards that we are seeing not only in South Africa, but around the world. . . .
The only way to future-proof your business is if you grow ethically and sustainably, and to be transparent
with your customers as well as with your staff and your communities.
Stephen van Coller, Group Chief Executive Officer, EOH Holdings Ltd., January 15, 20201
tC
The share price of EOH Holdings Ltd. (EOH), a company listed on the Johannesburg Stock Exchange (JSE)
and Africa’s largest technology service provider, decreased by over 30 per cent in December 20172
following allegations of fraud in relation to a corporate action within the company. Three months later,
following the outcome of an internal governance and compliance review assisted by leading South African
law firm ENSafrica, EOH’s group chief executive officer (CEO) at the time, Zunaid Mayet, strongly denied
the fraud allegations. Mayet indicated that accusations and insinuations of fraud and lapses of governance
could not have been further from the truth, saying, “We have done a hell of a lot of work to ensure there is
No
no exposure to EOH, and from a governance perspective a robust and resilient set of processes have been
adopted and applied across the business . . . we can put that chapter behind us . . . and move on.” 3 Despite
his assurances, however, the EOH share price continued to fall. By September 2018, Mayet was replaced
as group CEO by Stephen van Coller, a former banker and telecommunications executive.
At the end of June 2020, van Coller and the nucleus of his new management team sat down to prepare for
a meeting with their board of directors to update them on the progress made since van Coller had taken over
as group CEO of the embattled EOH. The board had tasked van Coller and his team with evaluating whether
they had done enough to rebuild trust in EOH among its clients, suppliers, and shareholders. The board
Do
recognized that this was not a typical business turnaround, which usually focused on financial sustainability;
while this was necessary, it would not be sufficient. EOH had to demonstrate that it had transformed its
ethical foundation and set the business on a sustainable path⎯both strategically and operationally. Had van
Coller and the rest of the management team taken sufficient steps to restore the EOH reputation? Had they
earned the right to push the board to approve the next phase of the EOH turnaround?
This document is authorized for educator review use only by Otgonsukh Dorjgotov, Institute of Finance and Economics Mongolia until Sep 2023. Copying or posting is an infringement of
copyright. Permissions@hbsp.harvard.edu or 617.783.7860
Page 2 W25094
t
BACKGROUND
os
Entrepreneurial Flair
EOH was founded in 1995 by Asher Bohbot.4 Bohbot was born in Morocco and grew up in Israel,
graduating with a degree in chemical engineering from Ben-Gurion University.5 He immigrated to South
rP
Africa after an initial visit in 1980 and worked at AECI Limited6 and then PG Bison.7 In 1995, a year after
South Africa became a democracy, Bohbot founded Enterprise Outsourcing Holdings, later known as EOH.
At that time, the business sector was beginning to appreciate the importance of information technology
(IT), but the skills needed to best use it were in short supply. By outsourcing the management of IT to EOH,
companies could leverage the technology without having to hire extra staff.8 Using his network, Bohbot
encouraged PG Bison to become EOH’s first customer.
By 1998, EOH was listed on the JSE and had grown rapidly to become South Africa’s largest information
yo
and communications technology (ICT) services provider. The group attracted interest in 2009 from the
South African investment community once revenue exceeded R1 billion.9 Between 2001 and 2016, EOH
shareholders had experienced returns growing at a compound rate of 32 per cent per year (see Exhibit 1).
EOH’s fundamental DNA was referred to as entrepreneurial, with six key business areas servicing eleven
industries (see Exhibit 2). Within these categories, public sector work was considered “a responsibility and
a business opportunity,”10 and the intention was to have work across all tiers of government ⎯local,
provincial, and national.
op
From 2010, a significant part of EOH’s growth strategy had been through acquisition, targeted at companies
that could enable EOH to achieve an end-to-end IT offering. The acquisition process was formulaic and
template-driven, underpinned by “light-touch” due diligence both pre- and post-acquisition. EOH left
management of the acquired companies to the companies themselves, but it set stringent profit targets. The
top management of EOH were remunerated for this entrepreneurial model both in cash and in shares, to
tC
align with shareholder interests (see Exhibit 3 for details of share-based payments). EOH wanted to
maintain an entrepreneurial flair and did not want to curb this spirit with excessive governance.11 For this
reason, it developed a remuneration philosophy that encouraged this entrepreneurial approach by having a
mix between fixed pay and variable pay, consisting of profit sharing and share-based payments (see Exhibit
4). In 2017, at its largest, EOH employed 12,500 staff members and, operating from 134 different points of
presence in South Africa, offered services to all major industries; it also had a footprint in twenty-nine other
African countries as well as countries in South America, Australasia, Europe, and North America. EOH
No
followed a “consulting, technology, and outsourcing model.”12
Entrepreneurial Failure
Three businesses EOH had acquired during 2015⎯Grid Control Technologies, Forensic Data Analysts, and
Investigative Software Solutions⎯were flagged by the media for corruption. The party from whom EOH had
acquired these businesses was accused of facilitating kickbacks and bribes through the businesses to the then-
head of the South African Police Service, Commissioner Khomotso Phahlane, in return for being allowed to
Do
sell products to the police service ranging from cameras and torches to other forensic equipment.13 This
accusation was one of many national stories of government tender corruption (also referred to as “state
capture”14) amounting to billions of rand being defrauded from state entities.15 In addition, the media reported
that Bohbot and EOH’s former chief financial officer, John King,16 had served as non-executive directors for
the three companies between March 2016 and October 2017.17 EOH reasoned that senior appointments such
Page 3 W25094
t
as those of Bohbot and King were “normal practice for investment companies” at EOH.18 As a result of the
os
exposed misconduct, EOH reversed the transactions related to the implicated companies.
From Entrepreneurial to Professional Leadership
rP
As part of its turnaround efforts, EOH sought to attract fresh capital. A prospective new shareholder,
Lebashe Investment Group,19 offered to invest over R1 billion on the condition that the EOH board appoint
a professional CEO⎯respected by players in the capital markets. On this mandate, van Coller was
headhunted from his senior role at MTN Group, one of the leading mobile telecommunications companies
on the African continent, to be group CEO of EOH. The board was particularly impressed with his
experience in digital services, data analytics, business development, and banking. Van Coller believed there
was enormous potential in leveraging the entrepreneurial culture, skills, and breadth of IT solutions within
EOH’s group of businesses to create a one-stop shop for clients.20 He was attracted to the role of group
yo
CEO by EOH’s range of organizational capabilities, combined with its intellectual property businesses. He
believed this combination of resources and capabilities offered an opportunity for EOH to play a key role
within the society, given the group’s ability to service almost the full spectrum of client technology needs
in both the private and public sector.21
WHAT VAN COLLER FOUND

op
The first of two troubles van Coller had to deal with had emerged early in his tenure. First, within his first
month, he came to the conclusion that EOH lacked a coherent strategy. This lack of strategy was informed
by the entrepreneurial culture established by its founder, who had become chair of the board and who, van
Coller came to realize, retained significant power over the management team. This made it difficult for van
Coller to get a full picture of the organization and to make much needed initial changes to set the company
tC
on a positive recovery path. His own high-level due diligence, informed by trends of basic financial ratios,
revealed there was “a big problem here. Businesses that were not cash positive had been bought with part
equity and part debt and were borrowing from each other with interest rates at 12 per cent.”22 While van
Coller had a limited view of the full financial picture of the group, he came to some early conclusions about
how to set the strategic direction and improve operational efficiency. He set out this direction in his vision
of the company, after 100 days as group CEO (see Exhibit 5).
No
Second, van Coller found himself at the centre of an ethics-based crisis. This was compounded by the fluid
financial crisis at EOH that had started in December 2017. On February 12, 2019, reports emerged that
Microsoft Corporation (Microsoft) had ended its channel partner agreement with EOH Mthombo (Pty) Ltd.,
the EOH subsidiary that resold Microsoft software licences in South Africa and the rest of Africa. While
EOH did not initially give reasons for the termination by Microsoft, EOH did highlight that the Microsoft
cancellation would immediately amount to a R10 million before-tax loss. EOH shares subsequently fell 26
per cent in a single day.23 As more information about the cancellation surfaced, media reports noted
concerns raised by an anonymous whistle-blower who had “filed a complaint with the United States
Securities and Exchange Commission (SEC) about alleged malfeasance to do with a R120 million contract
Do
with the SA [South Africa] Department of Defence.”24 The resulting scandal was an existential threat to
EOH. It demanded a commensurate response to ensure EOH’s survival.
Page 4 W25094
t
WHAT VAN COLLER DID
os
Responding to the Financial Crisis
In response to the initial financial crisis, 100 days after he joined EOH and after having conducted a strategic
review, van Coller communicated that the group would be focused into four distinct operating units: a cloud-
rP
based, digital data, and applications business; Nextec; its own software businesses; and international business.
Van Coller informed the market that the advantage of the new structure was that it enabled cost savings to be
achieved from centralized management and procurement of large items and offered opportunities for better
cross-silo selling and customer value through a focus on holistic solutions over products.25
Also, van Coller appointed Megan Pydigadu, a chartered accountant with eleven years’ experience, as chief
financial officer. Three days into her role, Pydigadu walked into her first group executive committee
meeting. She was concerned with what she saw. The management accounts presented were essentially an
yo
aggregation of revenue and an aggregation of profit before tax (see Exhibit 6). A consolidated view of the
financial position was not shown, which was a problem because revenues and costs between entities could
not simply be aggregated into the group’s profit and loss statement. Pydigadu noted, “For me it was one
tatty piece of paper that was presented as the management accounts and didn’t tell you anything about the
business.”26 She also found that, within the group, there was no internal audit or tax department, no proper
group reporting function, and no financial planning and analysis function. She observed, “There was a lot
going wrong from a finance perspective.”
op
Pydigadu also had concerns with the financial systems at EOH. Despite being a major supplier of financial
consolidation systems to third parties, EOH relied on Microsoft Excel to perform financial consolidations
for its 270 subsidiaries, which further devolved into 900 business. Furthermore, the overall business was
managed on a divisional business unit level as opposed to from a legal entity perspective, so there was little
consideration of the financial position of each legal entity. Pydigadu commented that “it was one big bucket
tC
of mess, and as a result it was difficult to understand which legal entities were making money and which
legal entities were draining EOH of cash. The management team funded the legal entities centrally, and
they would settle the cash positions by passing money into [the] companies”27 (see Exhibits 7–9 for
presentations of EOH’s financial position from 2018).
At her first audit committee meeting, Pydigadu shared that she had raised concerns with the executives
about the previous year’s financial statements. In her opinion, projects that had been making losses had
No
been inappropriately capitalized into intangible assets. Furthermore, as she prepared for the half-year
results, she felt that the provisions for bad debt had not been accounted correctly and that the team had been
hiding behind the new International Financial Reporting Standards (IFRS) 928 statement. The audit
committee suggested that Pydigadu engage with the auditors to resolve her concerns. This proved fruitless,
and so Pydigadu persuaded the audit committee to terminate its relationship with its long-time auditor and
instead appoint PwC (one of the big four audit firms) as an external auditor. PwC was known for its
conservative audit approach, a reputation Pydigadu valued.
Do
Responding to the Ethical Crisis
Van Coller raised the stakes with his board and indicated that either Bohbot, as chairman, had to go or he
himself would resign. Bohbot resigned on February 20, 2019, eight days after the initial Microsoft
termination reports had emerged. Bohbot’s departure was positioned as complying with King IV rules (a
legal requirement for JSE-listed companies providing principles of good governance),29 which stated that a
“former CEO should not head a company’s board for three years after resigning.”30 After the departure of
Page 5 W25094
t
Bohbot, a further six directors resigned. While the board members were not implicated in any wrongdoing,
os
it was positioned that they had resigned because they were in charge when the wrongdoing took place, and
their resignations were an opportunity for new management to take over and help the group move forward,
thus being an example of good leadership.31 These resignations allowed for a fresh team of directors to join
van Coller and newly appointed chair of the board, Xolani Mkhwanazi, who, according to van Coller, “was
brilliant because he came in guns blazing and helped me sort out a big part of the governance, helping to
rP
attract high quality individuals.”
In direct response to the ethical crisis, van Coller engaged with ENSafrica Forensics to prioritize a forensic
investigation. Unlike the 2017 process, which had been described as a desktop review, this engagement was
a comprehensive investigation. The ENSafrica Forensic team was given unfettered access to company
information⎯the email server and tender and financial documents associated with EOH contracts.32 Later,
van Coller found out that, during ENSafrica Forensics’ 2017 review, the team had been given minimal
yo
information, so it was no wonder that, when the initial report came back, it was superficial and therefore
did not reveal any irregularities.33 Van Coller also reached out to Michael Katz, one of South Africa’s
pre-eminent lawyers, and Martin Kingston, former chairman of Rothschild & Co., to craft a way forward
and, in particular ,to avoid being blacklisted by South Africa’s National Treasury and the Department of
Justice and Constitutional Development.
To strengthen his executive team, van Coller appointed Fatima Newman as chief risk officer (CRO). Van
Coller emphasized that the role of CRO was crucial to EOH. As part of the recruitment process, Newman
op
had several conversations with EOH’s financial director, Pydigadu, who also stressed that, to ensure its
sustainability, EOH needed to get its governance framework “right.”34 Working with a CEO she trusted and
a principled chief financial officer to drive an important turnaround influenced Newman’s decision to
accept the offer. Van Coller had complete trust in Newman because he had worked well with her in his
previous banking and telecommunications roles. A formal delineation of responsibilities between the CEO
office, finance, and risk and compliance was established, resulting in a new governance process. Thus, a
tC
“three-way governance process” was established, as van Coller explained:
Me, as the CEO, I can’t sign cheques and I have no access to bank accounts. The FD [financial
director] can’t onboard suppliers⎯that’s what the CRO does. So, between the three of us there is a
proper segregation of duties. There is no poacher/gamekeeper. So even if someone wants to offer me
a bribe, I can’t pay them. It’s not possible. If they do the same to the FD, she can’t onboard a customer
to get them into the system. Ditto for the CRO: she can onboard but can’t approve an invoice and
No
allocate it to a project. So, we created a proper governance structure. We created an independent board
with a risk committee and then we could talk through what do we have to do to save the company.35
Initially, Newman often felt that she was an employee of the ENSafrica Forensic team, since she virtually
lived in its offices during the investigation.36 The whistle-blower had pointed the forensics team to contracts
relating to work with the City of Johannesburg, the South African national government’s Department of
Water and Sanitation, and the Department of Defence. Upon hearing this, van Coller widened the
investigation to all public sector work with which EOH had been associated.37
Do
The process was complicated, and the forensics team was under time pressure to report back to the market.
Newman was told by van Coller that the findings were due to be presented in May 2019, which she thought
was unrealistic given the volume of information that needed to be reviewed. She successfully persuaded
him to move the deadline out to July 2019. Weekly update meetings were held with van Coller and EOH’s
executive committee. On July 16, 2019, after four months of work, the team published a report highlighting
its findings. Serious governance wrongdoings were evident in (1) public sector business run from the EOH
Page 6 W25094
t
Group head office, (2) EOH Mthombo (Pty) Ltd.,38 and (3) a limited number of EOH head office employees.
os
It was estimated that 85 per cent of irregular payments were processed by eight EOH employees to
approximately twenty suppliers.39 Van Coller reported to the market the key themes that had enabled the
misconduct. These included “multiple points of failure in governance and oversight mechanisms,
inadequate and ineffective controls and inappropriate systems.”40
rP
Following receipt of the report, EOH immediately terminated employment contracts of the individuals
directly implicated in wrongdoings. Irregularities and details of the parties implicated were reported to the
relevant South African authorities under terms of Section 34 of the Prevention and Combating of Corrupt
Activities Act. The Financial Intelligence Centre of South Africa was also made aware of the suspicious
transactions.41 Finally, EOH lodged criminal charges and civil claims in order to recover losses.42
As the ENSafrica Forensics investigation progressed, Newman reflected on the history of governance and
risk management at EOH. She identified concerning gaps in EOH’s corporate governance frameworks. She
yo
felt there was a disconnect between what the group had publicized internally and externally about its
“rigorous” policies regarding risk and what was actually in place. Her concerns were confirmed after
lengthy conversations with Pydigadu and other trusted colleagues. An analysis of the corporate governance
process in the group revealed significant gaps in basic policies and procedures ranging from senior
management to the executive committee. In her first executive committee meeting after joining EOH in
April 2019, Newman remembered wondering what she had gotten into by joining the company and asking
herself, “What have you done Fatima?” There had been no detailed processes of reporting and governance,
op
and risk management was not an explicit agenda point.
Newman recruited additional team members to assist her in developing a set of coherent governance
principles and practices. The result was a digitalized platform⎯seven pillars of governance and strength
road map43⎯deemed fit for purpose for the group. From a values and purpose perspective, an overall
framework was important for ensuring the team members were all thinking of the solution holistically and
tC
not just, as Newman would say to others, “putting a plaster [bandage] on it.”44 The seven pillars were:
ethical leadership and culture; strategy governance; governance structure accountabilities; sustainability
and resilience; corporate citizenship; risk compliance framework; and transparency and disclosure.
Mandates were developed that included policies, board charters, and board plans. Additionally, the finance
department had established a new internal audit division from the ground up.
Newman and her team divided the seven pillars into sub-themes, and to highlight findings and progress,
No
Newman created a heat map template using red, yellow, and green to categorize practices that were not in
place, partially in place, or in place, respectively. Following an extensive analysis by Newman and her
team, in May 2019, the “as-is” pillars had forty-four red sub-themes highlighted (see Exhibit 10). Progress
was made quickly and reported on in July 2019. Assisted by ENSafrica Forensics, a new anti-bribery
program was developed based on ISO 37001, the international standard for anti-bribery management
systems. A new bid governance process framework was initiated, which included independent oversight
and enhanced due diligence for suppliers, customers, and EOH employees. Specific to EOH employees,
new guidelines for the acceptance of gifts or invitations45 and a compulsory annual “Declaration of Interest”
policy for business interests, directorships, and shareholdings were established. A requirement for
Do
employees to sign an anti-corruption warranty prior to receiving any monies as a commission, bonus, or
other incentive was implemented.46 Lastly, an EOH-wide anonymous fraud reporting application (app)
called “ExposeIT” was created and made available for use by EOH employees, customers, and third parties.
EOH worked with PwC, its new external auditor, to establish a co-sourced assurance model for the group
based on the concept of “three lines of defence.” Newman articulated this strategy as follows: business was
Page 7 W25094
t
the first line of defence in terms of owning the controls in the specific business; the second line was those
os
who would hold the business accountable, including a new governance and regulatory conformance
function; and the third line was the external audit team.47
Embedding a New Risk Management Culture
rP
Newman knew that policies were the start of a new culture, but also that training needed to be embedded
for employees to understand the “why” behind what they needed to do. She and her team, in conjunction
with other internal functionaries, developed a code of conduct training program with a galactic theme that
had ten missions ranging from fraud and conflicts of interest to whistle-blowing. Each mission explained
certain sections of the new governance framework and, in addition to multiple theatre slots and face-to-face
sessions, ensured there was scalability to the training. Newman’s team was able to track the uptake of
yo
training through artificial intelligence and post-completion assessment. In a short period of time, 90 per
cent of employees had been trained, and the training was well received overall, which was encouraging.48
The training was then linked to an individual’s key performance indicators. No bonus conversation could
happen if training had not been conducted, or if there were transgressions in the teams (see Exhibit 4).
Considering the negative “say-on-pay” by shareholders at the 2019 general meeting, Newman believed the
new focus on key performance indicators and the linkage of the total reward structure to risk- and
compliance-based culture instituted in 2020 was an important step in driving accountability at EOH.
op
Van Coller and the rest of the executives spent additional time devising communication plans, to be
delivered both internally and externally, for sharing what had been uncovered and what steps were being
taken to respond. He relied on the advice of his senior advisors to share information around four areas: what
had gone wrong, what was being done to remedy the situation, new regulatory reporting structures, and
how the executives would handle regulation and compliance moving forward. He and Newman had been
part of 200 risk committee meetings of external stakeholders ranging from the big five banks in South
tC
Africa to other financial services, mining houses, and medical companies.49 If they were not invited to an
important client’s risk committee meeting, van Coller made sure he contacted the relevant CEO to get a
meeting to discuss EOH on the general agenda. Newman knew these client meetings were especially
important for EOH’s large customers, who worked in a structured and regulated environment.
The Turnaround
No
Van Coller hired Natasha Andrykowsky, whom he had worked with at Absa Capital, as head of strategy
and change for the group. Andrykowsky had a passion for problem solving and working with the C-suite
(highest-ranking executives in an organization), primarily around driving growth strategy for turnarounds.
EOH represented to her a great opportunity to work on a large-scale turnaround. On reflection, she said
EOH was one of the “hairiest challenges I could have imagined with complexity at every level: from
financial, management, crises of reputation, [to] crafting a growth story. To me it was going to be one of
those experiences that if you lived through it and turned the business around it would be not just life-
transforming but career-transforming in terms of learning.”50
Do
Her role was to be forward thinking⎯not to be involved in the forensic report but to have a systematic,
data-driven approach focusing on three concerns: (1) tactics (how to help EOH survive the current crises);
(2) bridging (what needed to be done in the near term); and (3) strategy (the overall five-year plan of driving
value with prioritization goals). Andrykowsky spent the first six weeks after joining EOH trying to build a
bottom-up classic portfolio strategy review that informed recommendations to van Coller about the current
Page 8 W25094
t
group situation and ideas around tactical and bridging plans. Working with a team of ten management
os
consultants and liaising with Pydigadu’s finance team, Andrykowsky focused on getting reliable data: “In
data we trust and guard against everything else” was a motto that resonated with her from her days at the
Monitor Group, a global consulting firm. “It was amazing,” she said, “to find the lack of good data in the
group and challenging, therefore, to really understand the current business model.”51 To do so, the team
interviewed everyone senior, read every document, went to every presentation, looked at the financials, and
rP
created the database. They also assessed the employees: What was being told to them? What questions were
they asking, and what questions were they not asking? From there, they triangulated the information to
come up with a set of hypotheses.
Van Coller shared with the team his thoughts on the downsides of the aggressive acquisition strategy that
had been in place prior to his joining EOH. Andrykowsky’s analysis also confirmed that the mix of EOH
businesses was widely diverse and more focused on products than on solutions and services, which led to
the market and stakeholders not knowing the core of EOH’s business strategy. 52 Andrykowsky reflected,
yo
“It was clear what the strategy had been: a roll-up strategy of continually acquiring individual companies,
running them all separately with a ‘divide and conquer’ mentality with only one or two people having a
bird’s-eye view controlling a massive empire.”53 However, non-standard processes and limited
collaboration between businesses had led to there being no centres of excellence and to multidisciplinary
duplications.54 The lack of a segregation of duties and the fact that many companies operated independently
meant that the numerous different organizational bank accounts left EOH exposed to inefficient tax
structures and unwieldy inter-company processes, and vulnerable to accounting fraud.55 The company’s
op
exposure had been compounded by unhealthy cash management practices, which included an investment
of R900 million, funded with debt, into a Zimbabwean project; additionally, over R700 million had been
spent on non-cash generating assets, and inefficient contracting had been evident on complex projects with
overall costs of R750 million.56
Part of van Coller’s new focus was thinking through a more transparent business model, which it was hoped
tC
would allow for growth and for confidence from clients and investors. This involved reorganization into value
groupings and rebranding the ICT services business to iOCO (“inspired by digitally native Internet
organisations”).57 Further anticipated restructuring included integrating the group into a single ICT business
under the iOCO umbrella.58 This was confirmed in EOH’s April interim results in 2020, when five business lines
were established under iOCO (see Exhibit 11). The new structure was positioned internally by van Coller:
I tried to get everyone to understand that they don’t have to run their businesses individually; there
No
might be lots of duplications that we could solve together, being a bigger entity. The analogy I
often used was, we were 272 speed boats with no two-way communication at all. So, once they
were out doing business, it was like the 100-metre race with people who had no sense of direction,
where they were all going in different directions; and obviously there’s lots of overhead, you have
a captain for every boat, an engineer and a navigator⎯272 of them. What we wanted to do was not
build an aircraft carrier that wasn’t agile; we wanted to build perhaps thirty destroyers or frigates
that had the same plan in mind that were in two-way communication but that could run at their own
speeds versus the lowest common denominator.59
Do
The team had also been establishing financial discipline through new staff, systems, and procedures. Pydigadu
believed she had the right people and buy-in for getting momentum throughout the whole business. She set
up weekly meetings with individuals at the financial director level and with the head office team. This helped
to ensure that everyone was on the same page; that discipline around reporting, such as monthly
reconciliations, was happening; and that there was a common understanding around financial norms and
standards. Bottom-up processes were established with respect to internal controls for finance and reports in
Page 9 W25094
t
order to establish holistic analysis, which gave her a much better overall idea of the numbers (see Exhibit 12).
os
“For the first six months it was chaotic,” Pydigadu said, “but we started to get the balance right.”60
A core focus of the restructuring was also the sale of non-core businesses.61 It was clear, as van Coller,
Andrykowsky, Newman, and Pydigadu, had discussed, that companies had at times been purchased for
many times what they were worth. Following her baseline assessment, Andrykowsky helped put together a
rP
strategy for assessing businesses, which put them into two categories: businesses that could be turned
around and remain in the overall EOH Group; or assets that would not be kept, for a variety of reasons (too
capital-intensive, bled cash, or could be sold for a reasonable profit).62 In April 2020, the aim of reducing
the debt burden included steps to sell over forty businesses with a collective value of R1.17 billion,
collecting R400 million in long outstanding debt, and reducing gross operating costs by 31.5 per cent.63 The
resultant sales also reduced the number of legal entities from 272 to 185; conversations among the team
indicated that the total number might be brought down to fifty or sixty.64
yo
Newman appreciated the very public stance that van Coller had taken in terms of sharing the lessons learned
through the forensic audit. Part of this process included posting videos on LinkedIn Learning and public
forum conversations at the Gordon Institute of Business Science, a leading business school in South Africa.
Communication to outside stakeholders was as important as internal communication. Tuesday and Friday
morning “water cooler” sessions were held with all EOH staff via Zoom, informing them of what was going
on, what van Coller was thinking, the problems that existed, and the information he was getting from the
government. For external stakeholders, van Coller grouped his lessons into a number of themes, including
op
“complex corporate structures are at particular risk of corrupt practices”; “limited governance and
compliance are early indicators of possible corruption”; “board independence is crucial”; “businesses are
not corrupt, people are”; and “the lack of structure and governance could create the opportunity for
individual power and greed.”65
tC
WHAT VAN COLLER ACHIEVED
In October 2019, three months after the forensic report was published, van Coller announced to the market
that 80 per cent of the ENSafrica Forensics investigation had been completed and that the initial amount of
suspect payments had been revised from R1.2 billion to R935 million, which included R665 million of
transactions with no evidence of valid contracts having been in place or where no work had been done, R90
million of loans written off, and overbilling valued at approximately R180 million.66 Van Coller said, “The
No
last year has been very difficult for EOH,” and noted that he and his team had spent “extensive time focusing
on cleaning up the business both from a governance and financial perspective as well as understanding the
group’s strategic capabilities.”67 Newman and the team presented a final list of implicated individuals and
entities: sixteen EOH employees, fifty enterprise development entities, eighteen enterprise development
directors, and twelve government employees. Of the implicated individuals, forty-six names had been
reported to the Financial Intelligence Centre of South Africa and to the Hawks (South Africa’s Directorate
for Priority Crime Investigation).68
When the COVID-19 global health pandemic struck in 2020, EOH was in a relatively stronger position.
Do
However, combined with a weak macroeconomic environment, the reputational impact of the investigation
had negatively affected EOH’s bottom line for the period ending March 30, 2020. The overall business
pipeline slowed, and EOH departments saw a change in client behaviour, with the delay or non-allocation
of bids and with some clients holding back on making payments until they were reassured EOH would
remain in business.69 Lebashe Investment Group, which had previously agreed to invest R1 billion in
Page 10 W25094
t
exchange for EOH shares, decided to “not proceed with the third round of investment”; 70 it had invested
os
R750 million to that point.
Newman’s team was excited to see in March 2020 that its governance and risk heat map’s “red” section
now had only nine areas highlighted. The team hoped this work would translate into restoring customer
confidence and lead to the removal of EOH from supplier blacklists. Some clients had recognized the
rP
changes, even approaching EOH for assistance in rolling out governance frameworks in their own
organizations. Newman found this type of partnership affirming.71
There had been times during Newman’s two-year journey at EOH when she worried about her personal
safety and wondered about the need for personal security officers, following security threats associated with
the forensic audit. Civil summonses had also been issued to individuals whose involvement was suspected
in money stolen from EOH businesses, causing further consternation.
yo
WHAT SHOULD VAN COLLER DO NEXT?
In June 2020, IBM, an EOH channel technology partner, informed the broader team at EOH that all blacklist
restrictions had been lifted. While the Microsoft channel technology partner agreement had not been
reactivated, van Coller believed the lifting of restrictions from organizations such as IBM was a sign that
he could now go to market saying he had replaced the executive team, a new board and new management
op
were in place, and there was no toxic history at EOH. He had also met with individuals and advisors of
other organizations that had been in the spotlight in the last few years for governance issues. Van Coller
believed he and his management team had learned from the mistakes that others had made; being transparent
and honest was important, as when EOH did communicate to the market, the information would be trusted.
With the new team and structure in place, had van Coller and his team done enough to restore trust in EOH?
Could the board support the management to drive a growth⎯as opposed to a retrenchment⎯strategy? Had
tC
he restored investor confidence in the company?

No
Do
Page 11 W25094
t
EXHIBIT 1: EOH HOLDINGS LTD. RETURN INDEX VERSUS JSE ALSI, 1998–2020
os
rP
Share price (Index, August 1998=1)
yo
op
Note: JSE ALSI = Johannesburg Stock Exchange All-Share index; TRI = total return indices.
Source: Constructed by the authors using data from Refinitiv Datastream, accessed August 15, 2021.
EXHIBIT 2: EOH HOLDINGS LTD. 2016 OPERATING MODEL

tC
Industry IT Services Software IT Industrial BPO

Consulting Infrastructure Technologies
No further IT managed Enterprise Storage Industrial Human capital
detail services resource automation solutions
provided planning
Application Business Servers Data centres and Claims and
support intelligence connectivity payment solutions
No
IT management Information Network Energy services Customer

analytics equipment services
Software Customer Office Water technology Finance and
development relationship automation administrative
and integration management services
Information EOH niche Transport
services software technology
Network
solutions
IT security
solutions
Do
Cloud solutions
Digital solutions
Note: IT = information technology; BPO = business process outsourcing. The six pillars above serviced ten industries: energy,
financial services, telecommunications, health, local and central government, manufacturing, mining, retail, transport and
logistics, and water.
Source: Created by the authors using EOH Holdings Limited, 2016 Annual Integrated Report, December 2, 2016,
https://www.eoh.co.za/wp-content/uploads/2019/09/annualreport2016.pdf.
Page 12 W25094
t
EXHIBIT 3: SELECTED DIRECTORS’ INTEREST IN THE COMPANY (NUMBER OF SHARES)
os
Executive Directors 2018 2017 2016 2015 2014
1. Asher Bohbot (CEO until 2016) 6,894,625 6,894,625 7,085,336

2. Zunaid Mayet (CEO: 2017−2018) 278,289 278,289
3. Stephen van Coller 250,000
rP
3. John King (Financial Director) 578,307 578,307 636,089 620,826 580,026
Non-Executive Directors
1. Danny Mckay (Non-Independent) 0 0 7,225,116 7,218,866 7,218,866
2. Rob Sporen (Lead Independent) 90,000 85,000 85,000 155,000 210,000
3. Sandile Zungu (Chair) 0 1,200 1,200 1,200 1,200
Asher Bohbot (CEO until 2016) 6,894,625
Notes: All figures in R = ZAR = South African rand; US$1 = R17.2192 on June 30, 2020. This table reflects only shares that
had vested; it does not include awards made but still to vest. For instance, Bohbot was awarded R12 million in shares from
yo
2015 to 2018, and Mayet was awarded R3 million during his tenure as chief executive officer (CEO). In 2020, van Coller was
awarded R6 million in shares. Van Coller was also awarded a R3 million short-term bonus, which he declined to accept in
addition to foregoing R500,000 of guaranteed pay towards the Solidarity Fund established for supporting efforts aimed at
mitigating the effects of the COVID-19 pandemic.
Source: EOH Holdings Ltd., “Integrated Annual Reports,” (2015−2018), EOH, accessed August 19, 2021,
https://www.eoh.co.za/investor-relations/integrated-annual-reports/.
EXHIBIT 4: EOH REMUNERATION PHILOSOPHY AND STRUCTURE, 2020

op
REMUNERATION TYPE DESCRIPTION (2015−2019) DESCRIPTION (2020)
Total Guaranteed Package • Guaranteed fixed pay (with benefits • Guaranteed fixed salary
commensurate with the marketplace) • Qualified allowances
• Qualifying allowances • Employer retirement fund
• Retirement-related contributions contributions
• Medical aid-related contributions • Group risk premium
•
tC
Insurance-related contributions insurance

• Leave enhancement benefits
• Variable pay component including
commission
Short-Term Incentives • Profit share incentive that rewards short- • Achievement of budgeted
term operational performance EBIT (with participation
• Linked to specific performance in relation calculated between 80%
to strategic objectives and 150% of EBIT)
• Discretionary based on operational • Debtor days and cash
No
performance conversion target

(incentives paid on
improvement of debtor
days)
• Transformation of Business
measure (a strategic
qualitative measure
established by the board)
Do
Page 13 W25094
t
EXHIBIT 4 (CONTINUED)
os
REMUNERATION TYPE DESCRIPTION (2015-2019) DESCRIPTION (2020)
Long-Term Incentives • Share option schemes (long-term, share- • Vested over three years
based incentives to align with sustained from year three onwards,
growth for shareholders) that promoted depending on long-term
retention and that drove performance in incentive instrument
rP
alignment with shareholder goals
• Mthombo Trust, vesting 33.33% per year
from year three to year five (restricted to
qualifying previously disadvantaged
directors in terms of South African law)
• EOH Share Trust, vesting 25% per year
from year two to year five (unrestricted
participation but limited to high-performing
individuals)
yo
Governance, Risk, and Not applicable • Ensured full compliance
Compliance (GRC) Modifier with all EOH policies⎯final
sign-off for all employees
by the CEO and CRO, and
by the board for the CEO
and CRO
• All GRC compulsory
training completed on time
on the relevant learner
op
management system
(LMS) portal
• All GRC attestations made
on time on the relevant
LMS portal
Clawback Clause Not applicable • A new malus and clawback
clause included in the
tC
remuneration policy
• It was designed to give the
board the ability to adjust
or clawback any incentives
paid as part of short- or
long-term incentives as a
result of a breach of a
material obligation, such as
a material misstatement of
No
financials or a breach of
the code of conduct giving
rise to reputational damage
or legal action
Note: EBIT = earnings before interest and taxes; CEO = chief executive officer; CRO = chief risk officer.
Source: EOH Holdings Ltd., “Integrated Annual Reports,” (2015−2020), EOH, accessed August 19, 2021,
https://www.eoh.co.za/investor-relations/integrated-annual-reports/.
Do
Page 14 W25094
t
EXHIBIT 5: CEO 100 DAY RESPONSE—“OUR TURNAROUND PROMISE WITH CLEAR PRIORITIES”
os
Credibility Liquidity Transparency
• Deal with the allegation. • Deleverage the balance • Unpack business model for
• Provide transparency in sheet. investors.
outcomes. • Pursue the opportunities to • Provide transparent
•
rP
Rebuild an ethical business. unlock liquidity. reporting.
• Address costs. • Develop a strategy to return
growth.
Note: CEO = chief executive officer (Stephen van Coller).

Source: Adapted by the authors from EOH Holdings Limited, 2019 Annual Integrated Report, November 1, 2019,
https://www.eoh.co.za/eohreports/reports/ir-2019/pdf/full-hi-res.pdf.
yo
op
tC
No
Do
Page 15 W25094
EXHIBIT 6: 2019 QUANTIFIED ADJUSTMENTS

Do
Revenue
Actual Actual Actual Actual Actual
Division 5 Months
Aug Sept Oct Nov Dec Total Budgeted Variance
RO1⎯EOH Shared Services Total −5,572,899 −2,628,180 −5,532,600 −4,214,370 −4,496,445 −22,434,494 −21,985,804 −448,690
P124⎯EOH International Total −5,657,061 −3,138,530 −4,286,220 −4,318,450 −4,529,034 −21,929,195 −21,490,611 −438,584
Q27⎯IP Total −3,864,423 −2,046,882 −5,949,594 −4,073,574 −5,662,536 −21,597,009 −21,165,069 −431,940
R03⎯EPH ICT Total −13,327,776 −8,354,608 −16,239,252 −9,053,614 −17,288,445 −64,263,695 −62,978,421 −1,285274
No
Q11⎯EPH Industrial −3,206,562 −2,770,210 −6,662,031 −4,491,942 −5,925,123 −23,055,868 −22,594,751 −461,117
Technologies Total
Nextec Services −4,035,540 −2,967,930 −4,931,703 −2,515,270 −5,549,304 −19,999,747 −19,599,752 −399,995
S01⎯BPO Total −6,085,674 −2,616,468 −4,645,518 −2,046,402 −5,814,018 −21,208,080 −20,783,918 −424,162
R05⎯Nextec Total −12,661,387 −7.936,878 −15,427,289 −8,600,933 −16,424,023 −61,050,510 −59,829,500 −1,221,010
P163⎯SAP Services – South −7,302,809 −3,139,762 −5,574,622 −2,455,682 −6,976,822 −25,449,696 −24,940,702 −508,994
tC
Africa Total
P170⎯Project Overview Total −5,023,750 −2,660,947 −7,734,472 −5,295,646 −7,361,297 −28,076,112 −27,514,589 −561,522
R06⎯SAP Overview Total −3,490,719 −2,962,360 −6,078,111 −2,541,224 −6,218,532 −21,290,946 −20,865,127 −425,819
EOH⎯EOH Group Total −53,410,105 −29,895,786 −60,744,049 −38,012,170 −62,738,601 −244,800,711 −239,904,697 −4,896,014
Revenue
Actual Actual Actual Actual Actual
op
Division 5 Months
Aug Sept Oct Nov Dec Total Budgeted Variance
RO1⎯EOH Shared Services Total 1,114,580 523,636 1,106,520 842,874 899,289 4,486,899 4,397,161 89,738
P124⎯EOH International Total −1,131,412 −627,796 −857,244 −863,670 −905,807 −4,385,839 −4,298,122 −87,717
Q27⎯IP Total −722,885 −409,376 −1,189,919 −814,715 −1,132,507 −4,319,402 −4,233,014 −86,388
R03⎯EPH ICT Total −2,665,555 −1,670,922 −3,247,850 −1,810,723 −3,457,689 −12,852,739 −12,595,684 −257,055
Q11⎯EPH Industrial −641,312 −554,042 −1,332,406 −898,388 −1,185,025 −4,611,174 −4,518,950 −92,223

yo
Technologies Total
Nextec Services −807,108 −593,586 -986,341 −503,054 −1,109,861 −3,999,949 −3,919,950 −79,999
S01⎯BPO Total −1,217,135 −523,294 −929,104 −409,280 −1,162,804 −4,241,616 −4,156,784 −84,832
R05⎯Nextec Total 2,532,277 1,587,376 3,085,458 1,720,187 3,284,805 12,210,102 11,965,900 244,202
P163⎯SAP Services, South 609,247 526,340 1,265,786 853,469 1,125,773 4,380,615 4,293,003 87,612
Africa Total
P170⎯Project Overview Total 766,753 563,907 937,024 477,901 1,054,368 3,799,952 3,723,953 75,999
rP
R06⎯SAP Overview Total −3,490,719 −2,962,360 −6,078,111 −2,541,224 −6,218,532 −21,290,946 −20,865,127 −425,819
EOH⎯EOH Group Total 453,005 493,254 1,099,774 405,323 868,232 3,319,588 3,253,196 66,392
Note: All figures in R = ZAR = South African rand; US$1 = R17.2192 on June 30, 2020. IP = intellectual property; ICT = information and communication technologies; BPO =
business process outsourcing; SAP = systems applications and products.
Source: Provided by EOH’s finance director.
os
t
Page 16 W25094
t
EXHIBIT 7: CASH AVAILABILITY (AS AT DECEMBER 27, 2018)
os
Cash Type Balance: December 27 December 20 Movement
TOTAL CASH 287,499,731 247,695,765 39,803,966
TOTAL LOCAL 221,374,793 190,725,739 30,649,054
LN 143,893,615 123,971,730 19,921,885
rP
Non-LN 77,481,178 66,754,009 10,727,169
TOTAL FOREIGN 66,124,938 56,970,026 9,154,912
LN 25,788,726 22,218,310 3,570,416
Non-LN 40,336,212 34,751,716 5,584,496
Available Cash 189,749,822

Locked Cash 97,749,909
Foreign 64,026,190
yo
Trapped 33,234,969
Debit Cards 488,750
Immediate Actions Required:

• Action plan with clearly defined deadlines for each debtor over 120 days
• Monthly cash collection targets to be increased and driven harder
• Immediate action to be taken against loss-making businesses
• Margin deterioration projects to be undertaken
• Cash negative transactions projects to be outlawed
op
• Exception payments to be stopped
Note: All figures in R = ZAR = South African rand; US$1 = R17.2192 on June 30, 2020. LN = Group Enterprise Planning
System; Non-LN + Businesses not on the EOH Group Enterprise Resource Planning System.
tC
No
Do
Page 17 W25094
EXHIBIT 8: DEBTOR AGEING, AS AT DECEMBER 31, 2018

Do
Business Level 2 Business Level 3 Total Current 30 Days 60 Days 90 Days 120+ Days
R101⎯EOH Shares Services −65,538,935 −30,147,910 −19,661,681 −9,830,840 −1,572,934 −4,325,570
Q214⎯EOH International 195,833,764 90,083,531 58,750,129 29,375,065 4,700,010 12,925,028
Q27⎯IP 14,100,031 6,486,014 4,230,009 2,115,005 338,401 930,602
R03⎯EOH ICT 285,917,295 131,521,956 85,775,189 42,887,594 6,862,015 18,870,541
R05⎯Nextec Q11⎯EOH Industrial Technologies 247,175,502 113,700,731 74,152,651 37,076,325 5,932,212 15,313,583
R05⎯Nextec R07⎯NEXTEC Services 26,618,900 12,244,695 7,985,670 3,992,835 638,854 1,756,847
R05⎯Nextec S01⎯BPO 106,475,601 48,978,776 31,942,680 15,971,340 2,555,414 7,027,390
No
R05⎯Nextec 380,270,003 174,924,201 114,081,001 57,040,500 9,126,480 25,097,820
R06⎯SAP Overview P163⎯SAP Services, South Africa 49,625,235 22,827,608 14,887,571 7,443,785 1,191,006 3,275.266
R06⎯SAP Overview P170⎯Project Overview 60,653,065 27,900,410 18,195,920 9,097,960 1,455,674 4,033,102
R06⎯SAP Overview 110,278,301 50,728,018 33,083,490 16,541,745 2,646,679 7,278,368
TOTAL 920,860,459 423,595,811 276,258,138 138,129,069 22,100,651 60,776,790
Business Business Total Retention Bad Debt 240+ Days Remaining Assume Not Balance to Forecast per Actual
tC
Level 2 Level 3 and TTCS Provision Balance Collected in Collect Division Collections
Zimbabwe Current (70% December
some)
R101⎯EOH −65,538,935 −2,424,941 −65,538,935 −65,538,935
Shares
Services
Q214⎯EOH 195,833,764 88,125,194 −7,245,849 94,000,207 13,708,363 4,797,927 8,910,436 5,791,784 5,898,921
International
op
Q27⎯IP 14,100,031 −521,701 6,768,015 7,332,016 2,566,206 4,765,810 3,097,777 3,155,086
R03⎯EOH ICT 285,917,295 −10,578,940 137,240,302 148,676,994 52,036,948 96,640,046 62,816,030 63,978,126
R05⎯Nextec Q11⎯EOH 247,175,502 −9,145,494 118,644,241 128,531,261 44,985,941 83,545,320 54,304,458 55,309,090
Industrial
Technologies
R05⎯Nextec R07⎯Nextec 26,628,900 −984,899 12,777,071 13,841,828 4,844,640 8,997,188 5,848,172 5,956,364
Services

yo
R05⎯Nextec S01⎯BPO 106,475,601 −3,939,597 51,108,288 55,367,312 19,378,559 35,988,753 23,392,690 23,825,454
R05⎯Nextec 380,270,003 13,309,450 −14,069,990 182,529,601 184,430,951 64,550,833 119,880,118 77,922,077 79,363,635
R06⎯SAP P163⎯SAP 49,625,235 −1,836,134 23,820,113 25,805,122 9,031,793 16,773,330 10,902,663 11,104,364
Overview Services,
South Africa
R06⎯SAP P170⎯Project 60,653,065 −2.244.163 29,113,471 31,359,594 11,038,858 20,500,736 13,325,478 13,572,000
Overview Overview
rP
R06⎯SAP 110,278,301 −4,080,297 52,933,584 57,344,716 20,070,651 37,274,066 24,228,143 24,676,363
Overview
TOTAL 920,860,459 101,434,644 −34,071,837 442,013,020 377,412,795 132,094,478 245,318,317 −113,223,838 −115,318,479
Note: All figures in R = ZAR = South African rand; US$1 = R17.2192 on June 30, 2020. IP = intellectual property; ICT = information and communication technologies; SAP =
systems applications and products; BPO = business process outsourcing.
os
t
Page 18 W25094
t
EXHIBIT 9: ASSESSMENT OF WORKING CAPITAL ASSETS, AS AT DECEMBER 31, 2018
os
July-18 July-18 July-18 Actual
Division Debtors Revenue WIP Stock

Accrual
rP
R01⎯EOH Shared Services Total −258,773,085 46,579,155 20,701,847 −4,186,742
P124⎯EOH International Total 737,937,229 132,828,701 59,034,978 11,939,234
Q27⎯IP Total 22,012,884 3,962,319 1,761,031 356,151
R03⎯EPH ICT Total 361,754,182 65,115,753 28,940,335 5,852,893
Q11⎯EPH Industrial Technologies Total 312,736,491 56,292,568 25,018,919 5,059,826
Nextec Services 33,679,314 6,062,277 2,694,345 544,904
S01⎯BPO Total 134,717,258 24,249,106 10,777,381 2,179,617
R05⎯Nextec Total 481,133,063 86,603,951 38,490,645 −5,560,249
P163⎯SAP Services, South Africa Total −4,806,835
yo
62,787,865 11,301,816 5,023,029
P107⎯Project Overview Total 76,740,723 13,813,330 6,139,258 −517,659
R06⎯SAP Overview Total 139,528,588 25,115,146 11,162,287 −2,541,224
EOH⎯EOH GROUP TOTAL 1,483,592,861 360,205,026 160,091,123 3,076,794
Jan-18 Jan-18 Jan-18 Jan-18
Division Debtors Revenue WIP Stock

op
Accrual
R01⎯EOH Shared Services Total −204,430,737 36,797,533 16,354,459 20,933,708

P124⎯EOH International Total 582,970,411 104,934,674 46,637,633 59,696,170
Q27⎯IP Total 17,390,179 3,130,232 1,391,214 1,780,754
R03⎯EPH ICT Total 285,785,804 51,441,445 22,862,864 29,264,466
Q11⎯EPH Industrial Technologies Total 247,061,828 44,471,129 19,764,946 25,299,131
tC
Nextec Services 26,606,658 4,789,199 2,128,533 2,724,522

S01⎯BPO Total 106,426,633 19,156,794 8,514,131 10,898,087
R05⎯Nextec Total 380,095,119 68,417,121 30,407,610 38,921,740
P163⎯SAP Services, South Africa 49,602,413 8,928,434 3,968,193 5,079,287
Total: 49,602,413
P107⎯Project Overview Total 60,625,172 10,912,531 4,850,014 6,208,018
R06⎯SAP Overview Total 110,227,585 19,840,965 8,818,207 11,287,305
EOH⎯EOH GROUP TOTAL 1,172,038,360 284,561,970 126,471,987 161,884,143
No
Note: All figures in R = ZAR = South African rand; US$1 = R17.2192 on June 30, 2020. WIP = work in progress; IP =
intellectual property; ICT = information and communication technologies; BPO = business process outsourcing; SAP =
systems applications and products.
Do
Page 19 W25094
EXHIBIT 10: SEVEN PILLARS OF GOVERNANCE STRENGTH ROAD MAP, MAY 2019
Do
Ethical Governance
Strategy Sustainability and Corporate Transparency
Leadership Structures Risk Compliance Framework
Governance Resilience Citizenship and Disclosure
and Culture Accountability
EOH Ltd Internal
Core Reputation, Brand, Internal
MOI Board of CSR Control IFRS
Values Strategy Codes
Directors Frameworks
Operations /
Board
Code of Segment Change External Integrated
EOH Strategy Environment Fiduciary
Conduct Board of Management Codes Report
Duties
No
Directors
Board Human Capital,
Ethics Sustainable CSR Tenement Stakeholders
Members Talent Risk Strategy
Program Transformation Performance Management Regulators
Development Management
Executive and Employee
Ethical Operating ERM Software Financial
Management EOH IT strategy Health /
Recruitment Model Capability Licensing Management
Structures Safety
tC
Material Portfolio /
Anti-Fraud Stakeholder Operational Marketing Go-to-
Risk Culture Non- Project
Corruption Strategy Plans market strategies
Compliance Reporting
DOA
ERM
Effectiveness Escalation Document RemCo
Competition Commercialization Oversight
Review/s Approval Management Disclosures
Structure
Protocol
op
Value
Project R&D
Other Directive Execution Project Drivers
Portfolio IA Strategy King IV
Policies Setting Management Risk
Management
Universe
Revenue, Risk
Goals, Targets CSA Other Risk &
Recognition and Assessment
Setting 2nd/3rd LoD Assurance
Collection Analysis

Risk
Performance Risk-based IP &
yo
CRM Mitigation
Management IA Plan Trademarks
Plans
Risk Protection
Balance Sheet
Monitoring IA forum Info-EOH
Management
Reporting POPI/Client
Knowledge Company
Management Secretarial
rP
BCM Resilience Regulatory
Crisis Framework
Notes: red = not in place; yellow = work progressing; green = in place; MOI = memorandum of incorporation; CSR = corporate social responsibility; IT = information technology; ERM =
enterprise risk management; DOA = delegation of authority; RemCo = remuneration committee; R&D = research and development; IA = internal audit, CSA = control self-assessments;
LoD = lines of defence; CRM = customer relationship management; IP = intellectual property; POPI = Protection of Personal Information Act; BCM = business continuity management.
Source: Adapted by the authors from EOH Holdings Limited, “Interim Results for the Six Months Ended 31 January 2020,” EOH, April 7, 2020, https://www.eoh.co.za/corporate-
os
magazine/interim-results-for-the-six-months-ended-31-january-2020/. t
Page 20 W25094
t
EXHIBIT 11: 2020 COMPANY STRUCTURE
os
iOCO Business Structure
Business Line Description
Advising and Consulting Extensive consulting capability offering industry advisory and
extensive technology advisory services covering CT architecture,
human-centred design, agile, and digital
rP
Management, Operations Outsourced management of information technology infrastructure,
and Connectivity services, and hosted network solutions
Technology Software reselling, enterprise applications implementation and
support, provision of hardware infrastructure, and data centre services
Solutions Application development, data and analytics solutions, and API
management together with Cloud and security
Digital Industries Automation and AI IoT-driven software solutions for heavy industrial
yo
and mining customers; advisory; design; and implementation
Note: CT = communications technology; API = application programming interfaces; AI = artificial intelligence; IoT = Internet of things.
Source: Adapted by the authors from EOH Holdings Limited, “Interim Results for the Six Months Ended 31 January 2020,”
EOH, April 7, 2020, https://www.eoh.co.za/corporate-magazine/interim-results-for-the-six-months-ended-31-january-2020/.
EXHIBIT 12: EXAMPLES OF NEW FINANCIAL REPORTING

op
tC
No
Do
Page 21 W25094
t
os
rP
yo
op
tC
No
Do
Page 22 W25094
t
os
rP
yo
op
tC
No
Do
Page 23 W25094
t
os
rP
yo
op
tC
No
Do
Note: All figures have been disguised to protect financial confidentiality and are in R = ZAR = South African rand; US$1 =
R17.2192 on June 30, 2020. LoB = line of business; m = million; EBITDA = earnings before interest, taxes, depreciation, and
amortization; YTD = year to date; GP = gross profit; LTM = last twelve months; MTD = month-to-date.
Source: Slides provided by EOH’s financial director on August 8, 2020.
Page 24 W25094
t
ENDNOTES
os
1
Stephen van Coller, “What I Learnt from EOH about Preventing Corruption,” Daily Maverick, January 15, 2020,
https://www.dailymaverick.co.za/opinionista/2020-01-15-what-i-learnt-from-eoh-about-preventing-corruption/.
2
Gareth van Zyl, “EOH Mess: CFO John King, Asher Bohbot Were Directors of Dodgy Keating Firms,” BizNews, December
10, https://www.biznews.com/undictated/2017/12/10/eoh-cfo-john-king-asher-bohbot-were-directors-of-keating-firms.
3
“Zunaid Mayet Interview with Duncan McLeod,” TechCentral Audio (podcast), Spotify, March 2018,
https://open.spotify.com/episode/4JIMDppQygtVrXUJLbkTOc.
rP
4
Larry Claasen, “The Making of an SA Tech Giant,” Finweek, February 16, 2016,
https://www.news24.com/fin24/finweek/entrepreneurs/the-making-of-an-sa-tech-giant-20160215.
5
Claasen, “The Making.”
6
AECI Limited was a diversified group of sixteen companies, operating on six continents, offering products and services to a
broad spectrum of customers in the mining, water treatment, plant and animal health, food and beverage, infrastructure, and
general industrial sectors.
7
PG Bison was Africa’s largest manufacturer of particleboard, medium density fiberboard, and decorative wood-based panel products.
8
Classen, “The Making.”
9
R = ZAR = South African rand; US$1 = R17.2192 on June 30, 2020.
yo
10
Paula Gilbert, “EOH Growth Strategy Still Working,” ITWeb, September 14, 2016,
https://www.itweb.co.za/content/Wdgp45Ma9WdMX9l8.
11
Fatima Newman (chief risk officer at EOH), in an email exchange with case author Amy Moore, May 8, 2020.
12
“EOH,” SA Shares, accessed April 8, 2020, https://www.sashares.co.za/eoh-shares/#gs.39ntfx.
13
Van Zyl, “EOH Mess.”
14
The term state capture described a form of systemic corruption in which businesses and politicians knowingly conspired to
influence a country’s decision-making process and systems and advance their own interests; Neil Arun, “State Capture: Zuma,
the Guptas, and the Sale of South Africa,” BBC News, July 15, 2019, https://www.bbc.com/news/world-africa-48980964.
15
Jackie Cameron, “Meet the State Capture Puppeteers: How the Gupta Family Pulled the Strings at Eskom,” BizNews,
op
October 20, 2017, https://www.biznews.com/thought-leaders/2017/10/20/state-capture-gupta-family-eskom.
16
When questioned about the role of the CFO as a non-executive director, EOH said this was “normal practice for investment
holding companies” in the Group; van Zyl, “EOH Mess.”
17
Gareth van Zyl, “Return of Asher Bohbot: EOH Brings Back Ex-CEO as It Battles Putting out Fires,” BizNews, December
13, 2017, https://www.biznews.com/undictated/2017/12/13/return-asher-bohbot-eoh.
18
Van Zyl, “EOH Mess.”
19
Stephen van Coller (chief executive officer of EOH), in an interview with case authors Amy Moore and Morris Mthombeni
on June 25, 2020.
20
tC
EOH Holdings Ltd., 2019 Annual Integrated Report, July 2019, https://www.eoh.co.za/eohreports/reports/ir-2019/chief-
executive-officers-report.php.
21
EOH Holdings Ltd., 2019 Annual Integrated Report.
22
Van Coller, interview.
23
Stephen Gunnion, “Microsoft Severs More Ties with EOH,” InceConnect, March 26, 2019,
http://www.inceconnect.co.za/article/microsoft-severs-more-ties-with-eoh.
24
Admire Moyo, “EOH Assesses Impact of Microsoft Contract Cancellation,” ITWeb, March 25, 2019,
https://www.itweb.co.za/content/lLn14MmyVOPMJ6Aa.
25
Staff Writer, “EOH to Focus Business into Four Distinct Operating Units,” BusinessTech, December 11, 2018,
https://businesstech.co.za/news/it-services/290580/eoh-to-focus-business-into-four-distinct-operating-units/.
No
26
Megan Pydigadu (chief financial officer, EOH), in an interview with Amy Moore and Morris Mthombeni, June 25, 2020.
27
Pydigadu, interview.
28
International Financial Reporting Standards, commonly called IFRS, were accounting standards issued by the IFRS
Foundation and the International Accounting Standards Board. IFRS 9 addressed the accounting for financial instruments;
specifically, it was concerned with the accounting treatment of impairments.
29
“King IV – Steering Point: A Summary of the King IV Report on Corporate Governance™ for South Africa, 2016,” accessed
May 6, 2020, https://www.pwc.co.za/en/publications/king4.html.
30
Robert Laing, “EOH Chair Asher Bohbot Resigns to Comply with King 4,” BusinessDay, February 20, 2019,
https://www.businesslive.co.za/bd/companies/telecoms-and-technology/2019-02-20-eoh-chair-asher-bohbot-resigns-to-
comply-with-king-4/.
31
Staff Writer, “EOH Chief Exec Clears the Air on Corruption Report and Resignations,” BusinessTech, July 16, 2019,
Do
https://businesstech.co.za/news/it-services/329395/eoh-chief-exec-clears-the-air-on-corruption-report-and-resignations/.
32
EOH Holdings Ltd., “Interim Update on the Detailed Forensic Investigation,” EOH, July 16, 2019,
https://www.eoh.co.za/corporate-magazine/interim-update-on-the-detailed-forensic-investigation/.
33
34
Fatima Newman (chief risk officer at EOH), in an interview with case author Amy Moore, March 4, 2020.
35
36
Newman, interview.
37
Newman, interview.
38
EOH Holdings Ltd., “Interim Update.”
Page 25 W25094
t
os
39
Staff Writer, “EOH Chief Exec.”
40
41
As per Section 29 of the Financial Intelligence Centre Act.
42
43
Fatima Newman (chief risk officer at EOH), in an email exchange with Amy Moore and Morris Mthombeni, May 8, 2020.
44
Newman, interview.
45
The new gift policy indicated that employees were no longer able to accept gifts or invitations of more than R1,000 in cash
rP
or kind (or US$100 or 100 euros outside of South Africa). All gifts above R250 and below R1,000 needed to be disclosed and
reported appropriately. Any travel or costs associated with product knowledge sessions or events would now be paid by EOH
from operating budgets; EOH Holdings Ltd., “Interim Update.”
46
47
Newman, interview.
48
Fatima Newman (chief risk officer at EOH), in an interview with case authors Amy Moore and Morris Mthombeni, April 24, 2020.
49
Newman, interview with Moore and Mthombeni.
50
Natasha Andrykowsky (head of strategy and change at EOH), in an interview with case authors Amy Moore and Morris
Mthombeni, July 28, 2020.
yo
51
Andrykowsky, interview.
52
Stephen van Coller, “EOH Survives Annus Horribilis as It Claws Its Way out of a Graft Hole,” BusinessDay, November 3,
2019, https://www.businesslive.co.za/bd/opinion/2019-11-03-stephen-van-coller-eoh-survives-annus-horribilis-as-it-claws-its-
way-out-of-a-graft-hole/.
53
54
55
56
57
Van Coller, “EOH Survives.”
58
EOH, “Interim Results for Six Months Ended January 31, 2020,” ITWeb, April 7, 2020,
op
https://www.itweb.co.za/content/GxwQDM1ZplgqlPVo.
59
60
Pydigadu, interview.
61
62
63
EOH, “Interim Results.”
64
Newman, interview.
65
Van Coller, “What I Learnt.”
tC
66
Staff Writer, “EOH Losses Widen as It Details Method of Corruption,” October 15, 2019, BusinessTech,
https://businesstech.co.za/news/it-services/346374/eoh-losses-widen-as-it-details-method-of-corruption/.
67
Staff Writer, “EOH Losses Widen.”
68
EOH, “FY 2019 Annual Results Presentation,” sourced from Fatima Newman, October 15, 2019. The Hawks were set up in
2008 and investigated corruption, economic crime, and other serious crimes.
69
Van Coller, “EOH Survives.”
70
Mudiwa Gavaza, “EOH Full-Year Losses Widen as Lebashe Pulls out of Funding,” BusinessDay, October 11, 2019,
https://www.businesslive.co.za/bd/companies/telecoms-and-technology/2019-10-11-eoh-full-year-losses-widen-as-lebashe-
pulls-out-of-funding/.
No
71
Newman, interview.
Do

Eng Case2

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Eng Case2

Uploaded by

Copyright:

Available Formats

t

EOH HOLDINGS LTD.: FROM BLACKLIST TO MARKET CONFIDENCE

Copyright © 2021, Ivey Business School Foundation Version: 2021-10-26

followed a “consulting, technology, and outsourcing model.”12

From Entrepreneurial to Professional Leadership

WHAT VAN COLLER FOUND

Responding to the Ethical Crisis

“three-way governance process” was established, as van Coller explained:

Embedding a New Risk Management Culture

WHAT VAN COLLER ACHIEVED

he restored investor confidence in the company?

EXHIBIT 2: EOH HOLDINGS LTD. 2016 OPERATING MODEL

Industry IT Services Software IT Industrial BPO

IT management Information Network Energy services Customer

1. Asher Bohbot (CEO until 2016) 6,894,625 6,894,625 7,085,336

EXHIBIT 4: EOH REMUNERATION PHILOSOPHY AND STRUCTURE, 2020

Insurance-related contributions insurance

performance conversion target

Note: CEO = chief executive officer (Stephen van Coller).

EXHIBIT 6: 2019 QUANTIFIED ADJUSTMENTS

copyright. Permissions@hbsp.harvard.edu or 617.783.7860

Available Cash 189,749,822

Immediate Actions Required:

EXHIBIT 8: DEBTOR AGEING, AS AT DECEMBER 31, 2018

copyright. Permissions@hbsp.harvard.edu or 617.783.7860

Division Debtors Revenue WIP Stock

Jan-18 Jan-18 Jan-18 Jan-18

Division Debtors Revenue WIP Stock

R01⎯EOH Shared Services Total −204,430,737 36,797,533 16,354,459 20,933,708

Nextec Services 26,606,658 4,789,199 2,128,533 2,724,522

copyright. Permissions@hbsp.harvard.edu or 617.783.7860

EXHIBIT 12: EXAMPLES OF NEW FINANCIAL REPORTING

You might also like