Sugar producer Tongaat Hulett has filed a R450 million civil claim against some of its former executives and is also seeking a order declaring them as delinquent directors.
The claim is part of Tongaat’s strategy to hold those implicated in the company’s near collapse following an almost R12 billion overstatement of the company’s financials over a period of more than seven years. The saga resulted in a crash of the company's share price.
In its forensic investigation on the irregularities PwC found that some senior executives at Tongaat had allegedly been part of inflating the group’s profits.
In a statement on Tuesday, Tongaat said it instituted civil proceedings against its former CEO Peter Staude, former CFO Murray Munro, and former finance executive Sean Slabbert, at the Pietermaritzburg High Court in 2020.
"The civil action is based on the findings of the PwC forensic investigation, namely unjustified enrichment, damages consequent upon the breach of their fiduciary duties and misrepresentation,” Tongaat said.
The sugar producer explained that in addition to seeking an order declaring the former directors as delinquent, it has also launched separate proceedings though its Tongaat Hulett Developments business, against former managing director Michael Deighton.
The action against Deighton was instituted in February 2020, also at the Pietermaritzburg High Court, bringing Tongaat’s total claim to R450 million. The case against the former directors’ trials is likely to begin in early 2023.
"As previously disclosed, criminal cases against former executives and senior managers have been opened, both in South Africa and in Zimbabwe and we continue to work with the relevant authorities. In South Africa, the matter is still with the NPA [National Prosecuting Authority] and we understand that a decision on the next steps is imminent," Tongaat said.
Company secretary Johann van Rooyen said the group will do everything within its power to get a fair outcome for its shareholders.
The group has been working on strengthening its governance and financial recovery, since the appointment of CEO Gavin Hudson in 2019. The company is now embarking on a R4 billion rights issue, as part of that strategy.