Criminal case is opened against a former Tongaat executive

TONGAAT Hulett confirmed yesterday that a criminal case has been opened against a former executive in the company and the matter is up for investigation by the South African police.

The group said management was taking appropriate action arising from evidence emerging in the forensic investigation.

“At this point, a criminal case has been opened against one former executive and given that this is now a matter being investigated by the South African Police Service, we are not able to provide any further information,” the group said.

At the beginning of June Tongaat informed the JSE it was suspending its listing on the bourse as it continued with its strategic and financial review of its operations following the revelation of “certain past practices which are of significant concern to the board”.

It said its consolidated financial statements for the year to end March 2018 will need to be restated, with an estimated reduction in the amount reflected in the 2018 financial statements as the company’s equity as at April 1, 2018, anticipated to be between R3.5 billion and R4.5bn.

The group has also said it is anticipated cutting around 5 000 jobs as part of its restructuring process.

“Tongaat Hulett are reviewing and reducing our head count as part of the broader restructuring of the business to ensure the company has the right skills and experience to implement our new operating approach. The exact figure of how many people will be impacted by the head count reduction will only be known once the restructuring process is further progressed,” the group said.

Ron Klipin, a senior analyst at Cratos Asset Management, said he was not necessarily surprised by the latest developments in Tongaat following events such as Steinhoff, EOH, Omnia and Aspen.

“Accounting irregularities due to cover-ups and in some cases fraud have become more regular. This could be due to a major downturn in the economy impacting on the company results,” Klipin said.

He said in addition to this is a lack of accountability by the executives as well as inability of the board members to stand up to or question executives.

“In some instances a strong chief executive has bulldozed his way and the board has not been able to question the strategy nor have the auditors,” he said.

Klipin said Tongaat might look a different company after it has completed its restructuring process.

“Tongaat may not end up with the same structure with property or other entities being hived off,” he said.