Former Tongaat CFO fined R6m, barred for 10 years from boards

Former Tongaat Hullet CFO Murray Munro cannot escape taking responsibility for the accounting fraud that took place under his watch which brought the company to its knees, an investigation by the JSE has found.

The bourse found that Munro’s “actions and failure to comply with important provisions of the listings requirements” contributed to the publication and “dissemination of material misstatements to Tongaat’s consolidated financial statements for the periods 2011 to 2018”.

The JSE then proceeded to slap Munro with a R6m fine and banned him from being a director of a listed company for 10 years.

In one of SA’s biggest scandals since Steinhoff disclosed accounting fraud in December 2017, Tongaat in June 2019 asked the JSE to suspend trade in its shares after an investigation flagged accounting practices that meant its financial statements could not be relied on.

The JSE said the accuracy and reliability of financial information published by companies are the cornerstone of a fair and transparent market.

“The material prior-period errors took place under the supervision of Mr Munro and, as the CFO at the time, Mr Munro was obliged to take the necessary actions to ensure that Tongaat’s financial information was, in all aspects, correct and that it represents a fair and accurate exposition of the company’s financial information,” the JSE said in a statement.

“Tongaat’s previously published financial information failed to comply with IFRS and was incorrect, false, and misleading in material respects. Mr Munro’s actions directly resulted and/or contributed to Tongaat breaching the listings requirements. As Tongaat’s CFO at the time, he was responsible for this, and in terms of the listings requirements cannot delegate this responsibility.”

Tongaat, which is in business rescue, has launched a civil claim in an attempt to recoup millions of rand. The company, which traces its roots to the 1850s, in 2020 initiated proceedings against former CEO Peter Staude, Munro and former finance executive Sean Slabbert, demanding R450m from them based on a damning PwC forensic investigation released a year earlier.

In 2022 the men were charged with fraud amounting to R3.5bn. According to the provisional indictment, they acted with a common purpose to commit the crimes between 2015 and 2018 related to about 69 property deals involving Tongaat Hulett Development.

The JSE said when it informed Munro of its findings, he indicated he does not agree with them and would be challenging them. It said Munro has since applied to the Financial Services Tribunal for an order suspending the decisions of the JSE.

“On 18 April 2023, the deputy chairperson of the Financial Services Tribunal, retired judge Harms, dismissed the suspension application, other than agreeing to suspend the payment of the fine that the JSE has imposed on Mr Munro. In the circumstances, the JSE is entitled to publish this censure and to disqualify Mr Munro from holding the office of a director or officer of a listed company for a period of 10 years.”

The bourse added that it will await the decision on the reconsideration application as it relates to the fine.

“The JSE will continue to oppose the reconsideration application. The investigation into the conduct of other individuals that presided at the company during the periods in question and who are bound by the listings requirements is ongoing.”