BUSINESS MAVERICK ANALYSIS: Tongaat Hulett scandal raises more red flags about governance in corporate South Africa By Ed Stoddard
When sugar producer Tongaat Hulett produced its financial statement for the year ended March 2018, the company had the usual spiel about the quality of the reported results:The summarised consolidated financial statements for the year ended 31 March 2018 have been prepared in accordance with the JSE Limited Listings Requirements for provisional reports, the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards , the SAICA Financial...
For one, the statements, we are told, comply with JSE requirements for “provisional” results. And there is a lot more impressive-sounding gobbledygook thrown in here. International Financial Reporting Standards are invoked as are domestic reporting guidelines. The Companies Act South Africa also gets an honourable mention. So investors have an assurance that the numbers have been crunched properly and everything is in order.
Jenitha John, the audit and compliance chair of the Tongaat board, stepped down last week “owing to other work commitments, and Tongaat’s increased demands on her time, given the current business challenges”.quoted Chris Logan of Opportune Investment as saying that past executive bonuses should be repaid if it transpires they were the product of inflated — in other words, fraudulent — profits. A reckoning of some sort seems to be looming.
Public sector corruption is widely seen as a major drain on Africa’s most advanced economy, which is why the country ranks 73 out of 180 on Transparency International’s Corruption Perceptions Index. But for a long time, investors who sank money into publicly listed companies on the JSE generally had confidence that the performance of their investments was reflected accurately in financial statements and results.
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