The relationship between Integrated Technology Holdings (Itech) and the IQ Business Group has soured as a result of a dispute over a joint venture.
The spat centres on IQ Health Tech, a joint venture between Itech and IQ Health.
This week Itech blamed its losses on the performance of the venture and says it may dispose of its interest in IQ Health Tech, but IQ Business Group MD Johan Roets has responded by saying Itech misrepresented the facts when the operation was being put together.
Itech CEO Dirk Odendaal described the performance of the venture as "extremely poor".
"During 2000, we hope to correct the problems we continue to experience with the IQ Health joint venture. This may entail the disposal of our interest in the joint venture, in which event we will revert to shareholders with recommendations for the group," Odendaal said at the release of Itech`s financial results.
Roets says the operation of the joint venture, which is under IQ Health`s management control, "has been struggling to go ahead financially", contrary to forecasts made by Itech at the venture`s formation.
Roets said earlier this year that the operation showed an after-tax profit of more than R4.15 million, which was in excess of profit warranties.
He says things came to a head in December 1999 after the venture was audited by PricewaterhouseCoopers (PwC) as part of the group audit.
"Itech insisted on an audit by a small local firm instead of PwC. We were intrigued by this and couldn`t understand why, as this firm was not Itech`s auditors."
Itech delayed the publication of its own audited results, saying the results of the joint venture had not been finalised.
Roets says the only relationship either company had had with the auditing firm was when it signed a form relating to the venture`s registration.
"Why is the joint venture struggling? We feel that there has been significant misrepresentation," he adds.
He says the venture is only a small part of IQ Health, which last week reported a healthy profit level.
Asked whether IQ would be affected if Itech were to pull out, Roets replied: "Frankly, it would make me very happy. The relationship has been quite unsatisfactory."
Odendaal was not available for comment and has not returned calls.
Related stories:
Itech blames joint venture with IQ Health for loss
Share