Tongaat board takes aim at implicated executives

● Tongaat Hulett’s board says it intends to pursue claims against a number of senior executives for overstating the value of some of its assets.

This comes after a PwC report, released on Friday, found the executives initiated or participated in undesirable accounting practices, leading to the recognition of revenue in prior reporting periods.

It also said there had been a deference culture, a lack of challenge as well as governance failings at the company.

Tongaat had been mired in scandal after confirming its 2018 financials could not be trusted, saying its assets were overstated by R4.5bn and that land sales were concluded when they hadn’t been. Its shares slid more than 75% on the JSE in the year before it delisted in June.

The 10 executives implicated are former CEO Peter Staude, former CFO Murray Munro, John Chibwe, Michael Deighton, Steve Frampton, Shelton Nhari, Sydney Mtsambiwa, Les Munro, Raphael Pfunye and Sean Slabbert. Shareholder activist Dave Woollam, who was instrumental in sounding the alarm about the group’s financial woes, said the report left questions unanswered about how the board and its auditors were blind to the issues at Tongaat.

He added that they were making use of “legal tricks” like those of Steinhoff in deciding not to propagate its full report.

“I think it’s a very bad faith process. For what they’ve put the shareholders through, I don’t think they have any grounds to play legal tricks. It only leaves the question in your mind: ‘What are they covering up?’ ” he said.

Neither Staude nor Murray Munro could be reached for comment.

Chris Logan, chief investment officer at Opportune Investments, said the report was worse than expected given the number of executives named.

Tongaat’s debt sits at R11bn and when the company ceased trading on the JSE it was worth R1.7bn. Its troubles were exacerbated by a combination of factors including selling its prime coastal land, Logan said. Tongaat invested R13bn of capital expenditure in sugar when global sugar prices were depressed.

“They sold off all that land, then went and borrowed money to put even more money into sugar,” he said.