Sugar producer Tongaat Hulett has been ordered by the Financial Sector Conduct Authority (FSCA) to pay a R20-million administrative penalty.
The FSCA has concluded its investigation and determined that Tongaat had breached the provisions of Section 81 of the Financial Markets Act. The breach relates to the misrepresentation by Tongaat of its financial performance in prior years, which resulted in the restatement of the results for its 2017 and 2018 financial years.
The FSCA noted that Tongaat’s current management had given their full cooperation during the investigation and enforcement process, accepted that the company had contravened the provisions of the Act and undertook to put measures in place to ensure the company mitigates the risk of similar contraventions occurring in the future.
The FSCA initially imposed a proposed administrative penalty of R118.34-million, but Tongaat applied for the remission of the penalty.
After considering the application for remission, the FSCA agreed to reduce a portion of the penalty, ordering the sugar producer to pay R20-million.
Last month, the JSE imposed a R7.5-million fine on Tongaat for breaching its listing requirements by publishing incorrect and misleading financial statements.
Advisory firm PwC in November 2019 released its findings into an investigation of financial activities by certain former executives. The firm found that certain senior executives had initiated or participated in “undesirable accounting practices”.
This had resulted in revenue being recognised in earlier reporting periods than it should have been, and in expenses being inappropriately capitalised to assets. This, in turn, resulted in profits in the respective years being overstated.
Tongaat in November said it would pursue claims against those executives identified in the PwC investigation.