Deloitte will pay Tongaat Hulett R261 million for its role in okaying the sugar and property group’s financial statements between 2012 and 2018, when in fact the figures were misrepresented by former management.
Tongaat Hulett, which is now in business rescue after the fraud was uncovered, said yesterday in a JSE regulatory notice that it had reached an agreement for Deloitte to pay it the money in settlement of a claim for its role as auditor from 2012 to 2018.
Some of Tongaat’s minority shareholders have long agitated that the group make a legal claim against Deloitte. Tongaat’s financial statements between those years were found to have been overstated by almost R12 billion over seven years. The shares were suspended in July last year.
“Deloitte will pay … R260m to the company without admission of liability. The business rescue practitioners (BRPs), having taken advice in this regard, are of the considered opinion that a settlement on these terms is in the best interests of the company,” a statement said yesterday.
A forensic investigation by PwC, the key findings of which were published in November 2019, found the misstatements in the financial results. The full report was never made public.
The PWC report found that certain senior executives initiated or participated in undesirable accounting practices that resulted in, among others, revenue being recognised in earlier reporting periods than it should have been, and in expenses being inappropriately capitalised to assets.
Among other governance failures that were identified, these actions resulted in profits in the respective years being overstated, and in the overstatement of certain assets in Tongaat’s financial statements..
According to reports, Tongaat has also instituted civil claims totalling some R450m against past directors and executives allegedly implicated in the undesirable accounting practices.
It initiated civil proceedings in the Pietermaritzburg High Court in September 2020 against former CEO Peter Staude, former chief financial officer Murray Munro and former finance executive Sean Slabbert, who was also a director of Tongaat Hulett Sugar South Africa. The cases continued in court this year.