Tongaat to take legal action against Deloitte after massive financial scandal

Tongaat to take legal action against Deloitte after massive financial scandal

South Africa sugar giant Tongaat Hulett on Tuesday confirmed that it is going for legal redress against auditing firm Deloitte.

The auditing firm which has been the company’s auditor for many decades signed off on irregularities in its financial statements from 2011 to 2018 which inflated Tongaat’s financial position by almost R12 billion.

In 2018 after news of the irregularities broke out, trading in the company’s shares was suspended and this sent its shares into free fall.

Last week Tongaat Hulett confirmed that it is filing a R450 million civil claim for profit inflation against some of its former executives including former CEO Peter Staude and former CFO Murray Munro.

Louis van Zeuner, Tongaat Hulett chairman, Tuesday said at a general meeting that the company was also planning action against Deloitte.

A spokesperson for Tongaat Hulett, Virginia Horsley told an online media Fin24 that a legal team has been assembled to engage with Deloitte on this matter.

She said the timelines of the legal team’s work will be determined by the legal process and Tongaat Hulett was not able to provide specific timelines at this point.

“It is, however, worth noting that recent examples of similar litigation matters in the SA context suggests that it can be a slow process, often dragging on for a number of years,” Horsley said.

Horsley said Tongaat Hulett could only proceed in engaging with Deloitte over its role in the historic mismanagement of the company, after Deloitte completed its audit for the group’s 2021 financial year, in order to preserve the independence of the audit.

“This work was only completed late in 2021, after which engagements commenced. Engagements with Deloitte continue and we will release a statement regarding the process as soon as we are in a position to do so,” she said.

After Deloitte audited Tongaat for 82 years, EY was appointed as its new auditors.

 

Author: Greg