HARARE – (FinX) – Former Hippo Valley Estates chief executive Sydney Mtsambiwa has demanded a retraction of the statements contained in Tongaat Hulett’s accounting probe and is seeking US$500 000 in damages for defamation in the findings which implicated him alongside mostly Zimbabwean executives.
Two weeks ago Tongaat Hulett (THL) released key findings of a PwC investigation, which stated that certain senior executives initiated or participated in undesirable accounting practices that resulted, among other things, in revenue being recognised in earlier reporting periods than it should have been, and in expenses being inappropriately capitalised to assets. This resulted in profits in the respective years being overstated, and in the overstatement of certain assets in THL‘s financial statements. It also highlighted a culture of deference and corporate governance failures.
The executives are John Chibwe (Hippo Valley Estates Finance Director), Steve Frampton (former Zimbabwe Sugar Sales General Manager), Shelton Nhari (Triangle Finance Director), Mtsambiwa (former managing director of THL’s Zimbabwean operations), Raphael Pfunye (Zimbabwe Sugar Sales Finance Executive), Michael Deighton (former managing director of THD), Les Munro (former Finance Executive of Tongaat Hulett SA Sugar), Murray Munro (former Chief Financial Officer of THL), Sean Slabbert (former Finance Executive of THL) and Peter Staude (former Chief Executive Officer of THL).
The South African Company, which is currently suspended from trading on the Johannesburg Stock Exchange, also announced its intention to institute civil claims against former and current top executives at Hippo Valley Estates Limited and Triangle Limited, over misstatements in its financial reports.
THL finally released its financial results for the year to end-March as well as its restated results for 2018 on Tuesday. The figures show an almost R11.9 billion reduction in the group’s equity, mainly due to a R7 billion hit from its Zimbabwean business. THL says it was dealt a further blow of R3 billion related to deferred tax assets that had not been recognised in Zimbabwe.
However, in a statement, Mutsambiwa, who mutually parted ways with the group in July, said THL failed, prior to the issuance of the notice, to afford him an opportunity to comment on the findings and address issues that the board had with the report.
“I view the failure by Tongaat and its board to adhere to the basic tenets of justice and fairness as regrettable and evidence of clear prejudice and malicious intent on the part of Tongaat and its board.
“I take great exception to the defamatory statements that are made in SENS statement insofar as they relate to an alleged breach of my fiduciary duty to the company and shareholders and my complicit or participation in improper accounting practices in connection with the operations of Tongaat or any of its subsidiaries,” he said.
Mutsambiwa further said the statements and conclusions by the THL board had a negative and damaging impact on his name and reputation.
In a letter sent to THL by Mtsambiwa’s legal representatives Kantor and Immerman and seen by FinX, Mtsambiwa said the statement imputes dishonesty and unethical financial and accounting practices, management including bad and reckless business and financial practices on his part.
“The allegations are wholly untrue and unsubstantiated and have tarnished our client’s name and reputation locally and internationally, as he is a well-respected business executive and director of a number of public entities,” they said.
The lawyers also claimed that the defamation was made worse by the fact that no attempt was made to contact Mtsambiwa prior to the publication of the notice neither had a fair hearing been observed. According to recent reports, only Chibwe (the Hippo Valley FD) had been subjected to a hearing.
Mtsambiwa said he was not given the opportunity to peruse the draft PwC report and believes that it was inappropriate for the board to issue the statement. The lawyers are demanding a public retraction of the statement including a press statement to the same effect within a fortnight before instituting legal proceedings on THL and its entire board.
Mtsambiwa is also demanding full PwC report in unreducted form within seven days.