CAPE TOWN – Tongaat Hulett fell more than 5 percent on the JSE yesterday after the Financial Sector Conduct Authority (FSCA) fined the sugar-maker nearly R120 million for the misrepresentation of its financials, but reduced the penalty to R20m after the group co-operated with the investigations.
The FSCA said yesterday that it imposed an initial headline fine of R118.34m, but reduced it because of what it called the company’s difficult financial position.
The authority said it remitted the larger portion of the fine, because of the difficult financial position of the group, the need to avoid penalising innocent shareholders further, and to maintain Tongaat’s commitment to continue to co-operate with the FSCA in all future actions taken against any persons allegedly responsible for the wrongdoing.
This followed the FSCA’s investigation into alleged contraventions of the Financial Markets Act by Tongaat after the group had to make multiple, significant restatements of its March 31, 2017, and March 31, 2018, financial results.
The prior-period errors extend over the past six years, and the cumulative correction has been reflected in the March 31, 2017, financial statements.
“The FSCA has found that Tongaat made false, misleading or deceptive statements, promises or forecasts in its public statements to the markets in the prior period,” the FSCA said.
Earlier this month, Tongaat said it would hear from the National Prosecuting Authority within six months on whether the group’s former executives, implicated in alleged accounting fraud and the subsequent wiping of billions of rand off the group’s market capitalisation last year, would be prosecuted. The group is also pursuing civil action.
In July, the JSE fined Tongaat Hulett R7.5m for publishing false information between 2011 and 2018, but suspended R2.5m of the penalty for five years on condition that the group did not breach the listing rules during that time.
Several previous directors, including former chief executive Peter Staude and chief financial officer Murray Monroe and former executives in its Zimbabwean operations, were implicated.
The independent accounting firm that signed off Tongaat’s financial statements in the 2017 and 2018 financial years was Deloitte & Touche.
Tongaat reported a R285m headline loss in the year to March 31, 2020, which was an improvement on the R1.4 billion headline loss reported the previous year after the group this year began a restructuring and turnaround strategy to turn Tongaat into a low-cost sugar producer and a leading agri-business in Africa.
Tongaat Hulett shares closed 3.47 percent lower at R5 – nearly the same level at which it started trading in January after a suspension last year.