Tongaat scandal: Thursday court appearance for former directors
Related to criminal charges - but the 'hundreds of millions' civil damages claim is still dawdling along.
Former directors of Tongaat Hulett appeared in a Durban court on Thursday (10 September) for a pre-trial conference in connection with criminal charges. The charges stem from alleged fraudulent activity between March 2015 and September 2018, related to the fraudulent backdating of land sale agreements. These actions had a significant impact on the company's financial results and resulted in a substantial loss in shareholder value.
The criminal proceedings are being driven by the National Prosecuting Authority (NPA) in KwaZulu-Natal, but progress has been slow, with the trial expected to take place late in 2024.
Tongaat also initiated civil proceedings against former executives in September 2020. These civil claims allege unjustified enrichment, breaches of fiduciary duties, and misrepresentation. The civil proceedings, which are currently ongoing, include an application for the former directors to be declared delinquent. The company's business rescue practitioners have sought to recover R250 million from the former directors, although there are indications that the total amount sought could be as high as R450 million.
Analyst David Woollam expressed skepticism about the likelihood of a successful civil claim, questioning whether the alleged enrichment was truly "unfair." Woollam pointed out that while the company's executives received significant salaries and bonuses, they also invested substantial sums in company shares. He suggested that the potential financial gains from the civil proceedings may not be as substantial as initially thought, as many of the alleged ill-gotten gains have since been lost due to the decline in share prices.
Written by urgent.news from The Citizen's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
