Fri. Dec 6th, 2019

AMBAZONIA ECHOES

Scrutiny of News!

Zimbabwe: Hippo Valley in the Eye of a Storm

3 min read

South African and Johannesburg Stock Exchange-listed sugar producer Tongaat Hulett (THL) yesterday said it intends to institute civil claims against former and current top executives at Hippo Valley Estates Limited and Triangle Limited, over misstatements in its financial reports.

Zimbabwe-based executives facing civil claims include 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).

From a criminal law perspective, Tongaat is engaging South African Police Services and the National Prosecuting Authority of South Africa to “assist them in pursuing those parties who the NPA determines should be prosecuted”.

“Equivalent authorities will be engaged in Zimbabwe and Mozambique where applicable,” said Tongaat.

The decision to prosecute and recover assets comes after the JSE-listed company received the results of a six-month forensic probe into its finances carried out by auditors.

Auditors, PricewaterhouseCoopers (PwC), found that profits and assets had been overstated in earnings reports.

The PwC report was released on Friday last week.

“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,” PWC 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.

The PwC investigation also revealed that there were a number of governance failures pursuant to which internal policies, guidelines and frameworks were not followed, creating an environment in which “senior executives could initiate or participate in the financial reporting misstatements”.

From the PwC investigation, it appears that personal financial enrichment of key senior employees was largely limited to the financial incentives paid to them during the years in which they achieved their employment targets.

Zimbabwean executives were mentioned as some of the individuals “involved in some or all of the above practices, to a greater or lesser extent.”

“Disciplinary action has been or is being taken in relation to certain of the senior executives referred to above and other individuals.

“The Board is considering the institution of civil actions against the senior executives referred to above and other individuals, including, among others: actions to recover bonuses and benefits paid to specific executives and other individuals for the

relevant periods; and applications to court for orders declaring relevant people to be delinquent directors or otherwise incapable of occupying fiduciary positions.”

The Board is considering the institution of civil actions against the senior executives referred to above and other individuals, including, among others “actions to recover bonuses and benefits paid to specific executives and other individuals for the relevant periods; and applications to court for orders declaring relevant people to be delinquent directors or otherwise incapable of occupying fiduciary positions”.

Hippo Valley shares on the ZSE are currently suspended from trading after the firm had missed three deadlines to publish its financial results.

Allegations of financial misappropriation against South African-headquartered parent company Tongaat Hulett Limited (THL) had forced Zimbabwean subsidiary, Hippo Valley Estates Limited to postpone publication of its FY2019 results.

Source

[uam_ad id="49333"]

Leave a Reply

Your email address will not be published. Required fields are marked *

Copyright © All rights reserved. | Newsphere by AF themes.