Tongaat Hulett warned shareholders in March 2019 that “certain practices” had been discovered that may lead to a restatement of earlier financial information. This was the beginning of a scandal that has been likened to that of the Steinhoff debacle. A forensic investigation into the group’s financials and corporate governance failures was launched by PricewaterhouseCoopers Advisory Services Proprietary Limited (PwC) that same month. The investigation, initiated following reports of accounting irregularities, came as Tongaat had been trying to rebuild itself in the face of a crashing share price, fraud allegations, and a host of business issues. – Nadya Swart
After the sugar producing giant restated its 2017 and 2018 results, South Africa’s financial accountability watchdog – the Financial Sector Conduct Authority (FSCA) – found that the company had breached the Financial Markets Act by misrepresenting its financial performance in prior years.
The FSCA initially imposed an administrative penalty of R118m on Tongaat, with a view that the company’s conduct (that resulted in the contraventions) influenced the financial system and caused significant financial losses to the investors. The initial sanction of R118m on the company has been reduced to an administrative penalty of R20m.
This significant reduction has been reported by the FSCA to have been agreed upon after consideration of the company’s current management providing full cooperation during the investigation and enforcement process and in the interests of avoiding further penalisation of innocent shareholders. The FSCA’s agreement to the reduction of the penalty was also contingent upon Tongaat Hulett undertaking to continue cooperating with the FSCA to ensure that those responsible for contravening the FMA are brought to book.
