The National Prosecuting Authority (NPA) is still deciding whether to prosecute the Tongaat Hulett executives — including its former chief executive — allegedly responsible for the R11-billion fraud which has gutted the sugar and property giant.
The 10 former top managers from the company’s South African, Mozambican and Zimbabwean operations were implicated in accounting irregularities, which will ultimately cost some 8000 workers their jobs as the company battles to turn its fortunes around.
They allegedly overstated the company’s assets by more than R11-billion by inflating revenue from sugar and land sales and by including land sales before they had been finalised.
The managers were named in a forensic audit report conducted by PwC, who were appointed by Tongaat Hulett’s new chief executive, Gavin Hudson, a year ago.
The company had suspended trading its shares on the JSE, only releasing its results in December, when it posted a loss of R314-million. It resumed trading on the JSE on February 3.
Apart from the chief executive, other managers in the company’s South African and Zimbabwean operations implicated in the fraud are the former Tongaat Hulett SA Sugar finance executive, the former chief financial officer, a former finance official, Tongaat Hulett Developments’s former managing director, the finance director of Hippo Valley Estates, the Zimbabwe sugar sales general manager, the Triangle Finance director, the former Zimbabwean managing director and the Zimbabwean sales executive.
NPA spokesperson Kholiswa Mdhluli confirmed that the matter was before the prosecuting authority, to which the PwC report was handed last year. “The matter is still under investigation and no decision has been made in regards to whether or not we will institute a prosecution in the matter.”
Tongaat Hulett spokesperson Virginia Horsley said the new board and management team was committed to ensuring that those responsible for “certain past practices” were held to account and had handed the forensic report to the NPA.
They were also pursuing civil action against the executives, who PwC found had overstated profits and assets to increase the bonuses they received from the company.
According to company records, its former chief executive earned R38.8-million in cash bonuses and R55.8-million in other incentives between 2008 and 2017.
The PwC report said a number of senior executives who had left the company had refused to co-operate with their investigation or had imposed conditions that “made it difficult to get their input”.
“The board intends to pursue claims against certain individuals who appear to have been responsible for, or party to, the undesirable activities outlined in the PwC report. It appears that personal financial enrichment of key senior employees was largely limited to the financial incentives paid to them during the years in which they achieved their employment targets,” the company said.
The company would go to court to recover the bonuses and benefits and would also make applications to have them declared delinquent directors.
Criminal charges were being pursued in South Africa, Zimbabwe and Mozambique, the company said.
Horsley confirmed that a total of 8000 employees would be laid off across the Southern African Development Community by the end of March 2021 as part of the company’s commitment to reduce its debt in South Africa by R8.1-billion.
An initial section 189 retrenchment notice was issued to 5000 workers last June, which means a further 3000 will be laid off during the next year.
She confirmed that the company would continue to sell its estates and other core and non-core assets as a means of reducing its debt. The workers would be either retrenched or offered early retirement or voluntary severance packages.
Horsely said 693 workers had been re-employed by Uzinzo, a project through which Tongaat Hulett is leasing sugar farms to black growers to keep them under sugar until they are eventually sold.
She said the company hoped to expand the Uzinzo project, which will focus on farms that will “transition” and eventually be sold off for property development.