Taking Stock - EOH sues founder Asher Bohbot

In todays taking stock, we discuss how EOH sues founder Asher Bohbot for R1.7bn.

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MARKET COMMENTARY

SOUTH AFRICAN MARKET COMMENTARY

Shares on the JSE closed lower yesterday as South Africa went into Level 4 restrictions to help curb the spread of the Covid-19 Delta variant. The JSE All Share index was 0.61% lower to close at 65,809, while the blue-chip Top 40 index posted a 0.53% loss. South Africa’s official death toll from Covid-19 has passed 60 000, the National Institute of Communicable Diseases said. South Africa’s actual number of deaths from the virus could exceed 170 000, according to excess death studies by the South African Medical Research Council, which tracks the number of deaths above the historical norm in weekly reports.

 

 

EUROPEAN MARKET COMMENTARY

European stocks fell on Monday as investors monitored rising Covid-19 cases around the globe. The pan-European Stoxx 600 closed down by 0.6% provisionally, with travel and leisure stocks tanking 4.3% to lead the losses on news that Portugal has imposed a quarantine on unvaccinated arrivals from the UK. New Health Secretary Sajid Javid will update lawmakers on when the UK can expect to ease Covid-19 measures further. Covid restrictions are currently due to end on July 19, the date already having been extended due to the spread of the delta variant.

 

 

US MARKET COMMENTARY

The US stock market set more record highs on Monday, boosted by a court win for Facebook and broad strength in tech stocks. Tech stocks were in the driver’s seat on Monday, with shares of Apple and Salesforce adding more than 1%. Facebook jumped more than 4% after a US federal court dismissed an antitrust case against the company from the Federal Trade Commission and closed with a market cap above $1 trillion. Semiconductor stocks were a bright spot on Monday, with Nvidia rising 5% and Broadcom climbing more than 2%.

 

 

ASIAN MARKET COMMENTARY

Asian shares edged lower this morning on concerns new coronavirus outbreaks in the region could undercut an economic recovery even as robust momentum in the United States prompts the Federal Reserve to contemplate a quicker exit from accommodative policy. Australian and Japanese shares took the brunt of early losses, with the ASX/200 index down 0.76% and the Nikkei falling 0.91%. The South Korean market was 0.39% lower, and Chinese stocks were also down 1.06%.

 

 

CURRENCY MARKET COMMENTARY

The rand weakened early on Monday after the government tightened Covid-19 restrictions to cope with the speed and scale of new coronavirus infections. At the close, the rand was 0.79% weaker as it traded around R14.26 to the dollar. President Cyril Ramaphosa announced tighter Covid-19 restrictions for 14 days saying the current containment measures were insufficient with the country, the worst-hit on the African continent in terms of recorded cases and deaths, in the grip of a “third wave” of infections.

 

 

COMMODITIES MARKET COMMENTARY

Gold prices edged lower this morning to hover near a one-week low hit in the previous session, weighed down by a firm dollar and concerns that the US Federal Reserve will tighten its monetary policy sooner than expected. Oil prices slipped for a second day today on worries about slower fuel demand growth as outbreaks of the highly contagious COVID-19 variant Delta sparked new mobility restrictions around the world. The flare-up in cases of the Delta variant comes as the Organization of the Petroleum Exporting Countries (OPEC), Russia and allies, together known as OPEC+, are set to meet on July 1 to discuss easing their supply curbs.

LOCAL COMPANIES

EOH (EOH) -1.0%

EOH Holdings is suing its co-founder and former CEO, Asher Bohbot, and its former chief financial officer, John King, for R1.7 billion in damages each. It is also pursuing several other former executives. TechCentral has learnt that EOH has filed civil claims against Bohbot and King in the high court in Johannesburg, seeking R1.66 billion from each of them for damages inflicted on the group due to their alleged failure to deal effectively with governance breaches and malfeasance that have decimated the IT services group’s share price and valuation, not to mention its reputation. Specifically, EOH is going after Bohbot and King on charges of delinquency, breach of fiduciary duties and breach of contract. Bohbot and King aren’t the only two former executives EOH is pursuing for damages. It’s also going after its controversial former public sector head Jehan Mackay – for R1.5 billion. EOH is suing Mackay for a breach of fiduciary duties as well as for allegedly making payments to third parties for no work done. Mackay’s name featured prominently in evidence presented by law firm ENSafrica at the Zondo commission of inquiry into state capture. EOH has also issued a summons against Ebrahim Laher, who served as head of EOH International, for an amount R1.58-billion. He faces claims of negligence and mismanagement. Civil suits against other individuals may follow as the process unfolds. EOH is in the process of reporting former employees to professional industry bodies, including the Institute of Directors South Africa, the South African Institute of Chartered Accountants and the Companies and Intellectual Property Commission. This could affect their obligations to their current employers and result in their professional associations being terminated. The civil suits are the next step flowing from the investigative work done by ENSafrica into corruption in the group’s public sector contracts, a spokesman said. The civil litigation has been brought with the mandate of EOH’s board of directors.

INTERNATIONAL COMPANIES

Nissan (7201) --+2.4%

Nissan is to announce a major expansion of battery production in Sunderland creating thousands of new jobs both directly and in the supply chain. The firm, which already makes the Leaf electric car in Sunderland, may also announce the launch of a brand-new electric model. The government is contributing to the overall cost of the project, which is expected to cost hundreds of millions. The size of the government contribution has not been disclosed. As a person familiar with the deal put it, the government announced a ban on the sale of new petrol and diesel cars from 2030, so it was prepared to support the transition. It is hoped the new plant will be producing batteries in time for 2024 when the level of UK-made components in UK-made cars is required to start increasing in line with the terms of the UK's trade deal with the European Union - where most of Nissan's Sunderland-assembled cars are sold. Industry sources expect the scale and size of the new facility may closely match that of a new facility in Douai, France recently announce by Renault - which is a major shareholder in Nissan and a partner in a global manufacturing alliance.

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Media, Sasfin Wealth

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