Tongaat Hulett’s R11-billion fraud scandal has left the National Prosecuting Authority (NPA) in the process of deciding whether to prosecute the sugar company’s executives who were allegedly involved in the matter, reports Mail & Guardian.
The former senior executives were allegedly involved in the accounting irregularities around Hulett’s franchises which operated in South Africa, Mozambique and Zimbabwe, which will lead to approximately 8,000 employees losing their jobs.
It was reported that the company’s assets were overstated with more than R11 billion by inflating revenue from sugar and land sales and by including land sales before it was finalised.
The PricewaterhouseCoopers (PwC) conducted a forensic audit report which revealed the names of the 10 senior executives including a former chief executive involved.
On 3 February, the company started to trade again on the Johannesburg Stock Exchange (JSE) after it suffered a loss of R314 million which resulted in the suspension of trading its shares on the JSE.
Apart from the chief executive, other managers in the company’s South African and Zimbabwean operations involved in the fraud are the former Tongaat Hulett SA Sugar finance executive, the former chief financial officer, a former finance official, Tongaat Hulett Development’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.
Kholiswa Mdhluli, NPA’s spokesperson confirmed that the matter was before the prosecuting authority, to which the PwC report was handed last year.
“No decision has been made in regards to whether or not the company’s former executives will be prosecuted because the NPA is still investigating the case,” said Mdhluli.
Virginia Horsley, Tongaat Hulett’s spokesperson, said the company’s new board members and management team have committed themselves to ensure that the people involved in the fraud will be held accountable.
“We are also pursuing civil action against the executives, who PwC found had overstated profits and assets to increase the bonuses they received from the company,” said Horsley.
Between 2008 and 2017. Hulett’s former chief executive earned R38.8 million in cash bonuses plus R55.8 million in other incentives according to the company’s records.
According to the PwC report, 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,” said Horsley.
Horsley said the company was planning to go to court in a quest to retrieve the bonuses and benefits and would also make applications to have them declared delinquent executives.
“Criminal charges are being pursued in all of our companies in South Africa, Zimbabwe and Mozambique,” said Horsley.
Horsley confirmed that approximately 8,000 employees would be retrenched by the end of March 2021 as the company looks to reduce its debt in South Africa by R8.1 billion.
“Last June, the company issued a section 189 retrenchment notice to 5,000 employees, which means a further 3,000 will be laid off during the next year,” said Horsley.
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, also adding that workers would be either retrenched, 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.