JOHANNESBURG Stock Exchange-listed sugar producer, Tongaat Hulett, has implicated Zimbabwean executives at its subsidiaries Hippo Valley and Triangle Limited in a financial scandal that involved the massaging of company profits as well as assets, it has emerged.
The executive that are facing civil claims include Zimbabwe-based executives John Chibwe (Hippo Valley Estates Finance Director), Mr Sydney Mtsambiwa (former managing director of THL’s Zimbabwean operations), Mr Raphael Pfunye (Zimbabwe Sugar Sales Finance Executive) and Mr Steve Frampton (former Zimbabwe Sugar Sales General Manager).
The financial scam was unearthed after the JSE-listed company received the results of a six-month forensic probe into its finances carried out by PwC which found that profits and assets had been overstated in earnings reports.
“Certain senior executives initiated or participated in undesirable accounting practices that resulted, among others, in revenue being recognised in earlier reporting periods than it should have been, and in expenses being inappropriately capitalised to assets,” it said.
“This resulted in profits in the respective years being overstated, and in the overstatement of certain assets in THL’s financial statements.”
The PwC Investigation identified that certain agreements in Zimbabwe which, in substance, were financing arrangements, were structured as sales of significant sugar stocks, and accounted for as sales every six months, at financial half year and year-end.
Furthermore, even though at least part of the sugar stocks comprised raw sugar, these ‘sales’ were accounted for as sales of refined sugar, and priced accordingly. As a result, revenue pertaining to sugar sales was overstated.
Zimbabwean executives were mentioned as some of the individuals “involved in some or all of the above practices, to a greater or lesser extent.”