Tongaat Hulett’s executives face civil action
Tongaat Hulett has put executives – including its former CEO Peter Staude, who was paid R176m in the decade to 2018 – in the firing line over an accounting scandal that threatened the collapse of the firm.
A Business Day report notes in one of SA’s biggest scandals since Steinhoff disclosed accounting fraud in December 2017, the sugar producer asked the JSE in June to suspend trade in its shares after an investigation flagged accounting practices that undermined its financial statements.
By then, the collapse in the company’s share price for 2019 had reached almost 80%.
A PwC investigation identified 10 executives, including Staude, who were allegedly involved in the ‘undesirable accounting’ and the firm will consider civil claims and criminal charges against them, it said. Tongaat said the PwC investigation identified practices that led to revenue being recognised in earlier reporting periods than it should have been and expenses being inappropriately recognised as assets.
It also identified a ‘culture of deference’ that contributed to ‘undesirable’ accounting practices not being identified or acted on.
‘Key senior people at Tongaat who have left the organisation appear to have been involved in perpetrating these undesirable practices,’ the company said.
Earlier in 2019, Bowmans roped in PwC to conduct a forensic review to uncover whether the misleading financial information was deliberate. At the time, Tongaat said its 2018 financial statements might have been inflated by R3.5bn to R4.5bn.
The company said it will be taking civil action to recover bonuses paid to former executives and will apply for some of the people to be declared delinquent directors.
‘From a criminal law perspective, the board is engaging with the SAPS and the NPA,’ the company said.
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