- Tongaat Hulett chair Louis van Zeuner says a legal team has been assembled to engage Deloitte following a reporting scandal.
- Deloitte signed off on irregularities in the company's financial statements, which inflated its financial position by R12 billion.
- On Tuesday, shareholders also voted in favour of a massive rights issue, which will give a Zimbabwean company control of the company.
Sugar giant Tongaat Hulett confirmed on Tuesday that it has asked a legal team to pursue recourse from auditing firm Deloitte.
Deloitte, which has been the company’s auditor for many decades, signed off on irregularities in its financial statements from 2011 to 2018. The misstatements inflated Tongaat's financial position by almost R12 billion.
Trading in the company’s shares was suspended in 2018 after news of the irregularities sent its shares into free fall.
Last week, Tongaat Hulett confirmed that it is filing a R450 million civil claim against some of its former executives – including former CEO Peter Staude and former CFO Murray Munro – for the inflating of profits.
At a general meeting on Tuesday, Tongaat Hulett chair Louis van Zeuner said that the company was also planning action against Deloitte.
At the general meeting, a majority of shareholders approved a massive rights issue.
The rights issue which will see the company issue new shares worth up to R4 billion.
The company's total market capitalisation currently is only R703 million.
Some R2 billion of the rights issue is underwritten by a Mauritius-based firm called Magister Investments.
The group is controlled by the Rudland family, who owns a range of Zimbabwean businesses, including the cigarette group Gold Leaf Tobacco Corporation.
The family already owns around 10% of Tongaat, according to an amaBhungane report. The rights issue will most likely give it control of the company.
Tongaat's share price fell 3.5% to 529c.
Tongaat Hulett spokesperson Virginia Horsley told Fin24 that a legal team has been assembled to engage with Deloitte on this matter.
Horsley said the timelines of the legal team's work will be determined by the legal process and Tongaat Hulett was not able to provide specific timelines at this point.
"It is, however, worth noting that recent examples of similar litigation matters in the SA context suggests that it can be a slow process, often dragging on for a number of years," Horsley said.
She said Tongaat Hulett could only proceed in engaging with Deloitte over its role in the historic mismanagement of the company, after Deloitte completed its audit for the group's 2021 financial year, in order to preserve the independence of the audit.
"This work was only completed late in 2021, after which engagements commenced. Engagements with Deloitte continue and we will release a statement regarding the process as soon as we are in a position to do so," she said.
After Deloitte audited Tongaat for 82 years, EY was appointed as its new auditors.
Last year, Deloitte paid back R150 million of its consulting fees to Eskom after an "irregular procurement process". Deloitte did consulting work for Eskom from April 2016 to September 2017.
Eskom launched legal action against Deloitte Consulting, accused the firm of securing two tenders and other work "improperly".
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