Tongaat Hulett to pursue claims against executives after PwC report suggests shortfalls
Tongaat had appointed PwC to investigate allegations that came through the whistleblowing line.
On 19 November, sugar producer Tongaat Hulett (THL) released the PwC probe results into alleged irregularities.
In a statement released to the public, THL said that they had appointed PwC on 13 March 2019 to investigate allegations that came through their whistleblowing line.
These allegations revealed that certain business, accounting and other practices which were of concern required further examination. “It soon became clear that, over and above the operational difficulties facing THL, there was insufficient internal accountability, governance and financial oversight,” the statement read.
The probe found that:
- Certain senior executives initiated or participated in undesirable accounting practices that resulted, amongst others, in revenue being recognised in earlier reporting periods than it should have been, and in expenses being inappropriately capitalised to assets. This resulted in profits in the respective years being overstated, and in the overstatement of certain assets in THL‘s financial statements
- there was a culture of deference and lack of challenge at THL that resulted in employees following instructions on accounting practices, without questioning the basis for those accounting practices; and
- there were a number of governance failures pursuant to which internal policies, guidelines and frameworks were not followed, creating an environment in which senior executives could initiate or participate in the financial reporting misstatements
PwC stated that the investigation identified “major historical shortfalls in a number of important areas, including governance practices, delegation of authority, decision-making, oversight, financial discipline, record keeping, systems usage and financial reporting, among other things.
The THL board intends to pursue claims against “certain individuals who appear to have been responsible for, or party to, the undesirable activities outline in the PwC Report”.