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Tongaat Hulett fraud, corruption scandal – the sweet tooth of double standards

Adri Senekal de Wet.

Adri Senekal de Wet.

Published Apr 14, 2022

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Adri Senekal de Wet

SEVEN former Tongaat Hulett (THL) senior executives were charged over their role in a R3.5 billion fraud perpetrated at the company, this week appearing in the Durban Commercial Crimes Court.

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The accused were: Peter Staude, Murray Munro, Michael Deighton, Rory Wilkinson, Kamasagrie Singh, and Samantha Shukla, as well as Deloitte auditor Gavin Kruger.

IOL has previously reported that: “It is alleged that between March 2015 and September 2018, the accused acted in common purpose to misrepresent to THL, its employees, creditors, shareholders and more, that the revenue that was derived from land sales was the correct value, and correctly reflected in the financial reports when, in fact, they had backdated sale agreements.”

This allegedly resulted in the accounts being misstated, incorrect profits being declared, and huge bonuses being awarded.

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In addition to the fraud charges, the seven also face charges of contravening the Financial Markets Act, the Companies Act and Prevention of Organised Crime Act (Poca), while Kruger has the dubious honour of being the first auditor ever to be charged under the Auditing Profession Act.

Tongaat Hulett has a primary listing on the JSE with a secondary one on the London Stock Exchange.

Interestingly, and worryingly, Tongaat is still to post a SENS update announcement (of any kind) related to the corruption and fraud that occurred at the company.

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As this is a material breach of conduct, which affects the share price, just assuredly as its current dealing with the Takeover Committee concerning a rights offer with Magister, it is, therefore, curious as to why Tongaat did not take the appropriate steps to officially inform the market.

It would seem, on the face of things, there are double standards at play here, because as readers will well know by now, the Sekunjalo Group, not found guilty of any untoward dealings in its listed interests, has been put through the wringer by various regulators.

Add to that, South Africa’s banks have closed ranks to terminate banking facilities of group companies and certain individuals, on the flimsy pretext of reputational risk. Yet, their sweet tooth appears to have no objection to retaining those of Tongaat.

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Tongaat Hulett banks with First National Bank, Nedcor Bank Limited, Standard Bank and Absa.

The Public Investment Corporation is also substantially invested in Tongaat as it is in some of the Sekunjalo-related companies.

My question: Why is Tongaat not a “reputational risk” to banks?

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