Property Flash


April 20, 2023

Murray Munro is the first former Tongaat Hulett executive, embroiled in billions of Rand worth of fraud allegations, to face severe punishment from the JSE.

The former chief financial officer of the sugar products producer was fined R6m on Tuesday. He was also banned from being a director of a listed company for a decade.

The JSE said that Munro could not escape taking responsibility for the accounting fraud that took place under his watch which brought the company into a position where its future as a going concern was in doubt.

The accounting scandal is one of SA’s biggest since furniture producer and investment group, 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 expects all companies listed on its bourses, including the AltX (Alternate Exchange) to provide accurate and reliable financial information.

The JSE 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’s punishment comes months after accounting and advisory firm, PwC conducted an investigation which flagged accounting practices that meant previous financial results could not be relied on.

PwC identified 10 executives, including former CEO, Peter Staude, who were allegedly involved in fraud at the company.

Munro was also accused, as well as former managing director of Tongaat Developments, Michael Deighton, former Tongaat Hulett Developments planning director Rory Wilkinson, and directors Samantha Shukla and Kamlasagrie Singh. Gavin Kruger, once a lead partner at Deloitte, was charged with contravening the Auditing Professions Act.

The alleged fraudulent acts at Tongaat Hulett by the former executives ruined a company which had appeared to have years of history and integrity. Tongaat was founded 148 years ago and developed into one of South Africa’s largest farming companies. The company amassed huge land parcels over time and formed a development arm. The group was set to develop a variety of property types across its land parcels. Now it sits with billions of Rand worth of debt.

According to the charge sheet, the accused acted with the common purpose to commit fraud, relating to a scam worth about R3.5bn which involved 69 property deals, between 2015 and 2018.

The JSE said Munro had to take responsibility.

“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. Tongaat’s previously published financial information failed to comply with International Financial Reporting Standards (IFRS) 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,” said in a statement.

Tongaat is in business rescue. Dan Marokane is the group’s acting CEO.

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