Durban - Fraud amounting to about R3.5 billion, racketeering and contravention of the Financial Markets Act and Companies Act are among the charges that seven former Tongaat Hulett executives are facing.
This is according to the State’s final indictment which was served on them yesterday.
The seven accused – Peter Staude, Murray Hector Munro, Michael Edward Deighton, Rory Edward Wilkinson, Kamlasagrie Singh, Samantha Shukla and Gavin Dykes Kruger – made a brief court appearance in the Durban Specialised Commercial Crimes Court.
According to the summary of substantial facts in the indictment, the matter relates to how revenue from the sale of land was allegedly misrepresented in Tongaat Hulett Limited’s (THL) Consolidated Annual Financial Statements.
THL’s subsidiary Tongaat Hulett Developments (Proprietary) (THD) was a property development company with a major part of its business being sale of THL land holdings to prospective buyers for development.
The State said sales of land undertaken by THD would ultimately be reflected as revenue in the annual financial statements of THL.
The indictment states that the financial fortunes of THL and its subsidiaries were in a poor state as a result of a number of circumstances, including a significant drop on the international market of the price of sugar.
Therefore, the State alleges, the accused resorted to a scheme to falsely produce results to show that the company was still performing.
It alleged that during the period September 2014 to May 2018, the accused formed a common purpose to manipulate the financial results of THL.
“To that end, transactions for the sales of land through THD were deliberately manipulated to boost the income stream to make it appear that income was derived from sales of land.
“The respective accused were either directly party to the backdating of the transactions or condoned the recognition of the transactions in question as having produced revenue for THL when they were under an obligation by law to report the transactions as being fraudulent.”
It said the backdating of the sale agreements had a significant impact on the financial results of THD and the consolidated financial results of THL.
“The effect of recognising revenue in the incorrect year resulted in the presentation of inflated profits when issuing annual financial statements.”
Regarding the racketeering charges, the State said the seven accused were a group of individuals associated in fact with one another and this association constituted an enterprise or alternatively that THD, a legal entity, provided the continuity of structure for the accused to conduct their unlawful activities and therefore constituted an “enterprise” which was used as a “central operational point for the illegal activities of the accused”.
“The offences in respect of which the accused are charged were committed with the intention to benefit the enterprise, its managers, employees and persons directly and indirectly involved therein,” alleges the indictment.
The State said the main purpose of the enterprise was to manipulate the results as published to the outside world of the financial health of THL and THD through acts of fraud which formed a pattern of racketeering activity.
“The aforementioned acts were committed to ensure that the true state of the financial health of THL and its subsidiaries was concealed from persons who had an interest in the financial health of THL.”
Natasha Ramkisson-Kara, spokesperson for the National Prosecuting Authority in KwaZulu-Natal, said the case was adjourned to September 15 for the accused’s first appearance in the Durban High Court.
| Additional Reporting Mercury Reporter