Former CFO of Tongaat Hulett fined and barred by JSE for misrepresenting financials

The Johannesburg Stock Exchange (JSE) fined and censured Murray Munro, the former CFO of Tongaat Hulett, for his role in misrepresenting the company’s financials between 2011 and 2018. Munro has also been barred from serving as a director of a publicly traded company for the next ten years, according to the JSE. Munro has challenged the JSE’s decision and findings and has applied to the Financial Services Tribunal under the provisions of the Financial Sector Regulation Act (FSRA) for an order suspending the JSE’s decisions. The JSE opposed Munro’s suspension and reconsideration applications and retired Judge Louis Harms, the deputy chair of the Financial Services Tribunal, dismissed the suspension application, except for the payment of the fine imposed by the JSE.

As a result, the JSE has the authority to publish this censure and bar Munro from serving as a director or officer of a publicly traded company for ten years. However, in terms of fine enforcement, the JSE will await the outcome of the reconsideration application. Munro, who retired early after the accounting scandal was revealed five years ago, is one of several former executives, including former CEO Peter Staude, who are facing fraud charges related to Tongaat accounting irregularities.

The JSE highlighted its July 2020 public censure and financial penalties totalling R7.5 million against Tongaat in its Sens announcement, which was related to the group’s “previously published financial information for the periods 2011 to 2018” that “did not comply with IFRS and was incorrect, false, and misleading in material aspects.” The JSE has completed its investigation into Munro, who was the CFO of Tongaat at the time.

The JSE determined that Munro’s actions and failure to comply with important provisions of the Listing Requirements were one of the causes of Tongaat’s consolidated financial statements being published and disseminated with material misstatements from 2011 to 2018. Munro was Tongaat’s CFO during the relevant periods, and he was the guardian and overseer of Tongaat’s financial health and infrastructure, with a key role and direct function being the analysis and preparation of Tongaat’s financial statements. Munro was also the senior executive in charge of managing Tongaat’s financial actions and held the highest financial position in the company. Munro was in charge of the material prior to the errors. Munro’s actions directly caused and/or contributed to Tongaat’s violation of the listing requirements.

Meanwhile, the JSE is continuing its investigation into the conduct of other individuals who presided at Tongaat Hulett “during the periods in question and who are bound by the Listings Requirements.” The accuracy and dependability of financial information published by companies are critical to ensuring a fair, efficient, and transparent market, and the investing public relies on published financial information by companies to make important investment decisions. Munro’s censure and monetary penalty demonstrate the importance of companies adhering to the listing requirements, as well as the need for directors and officers to exercise their fiduciary duties with diligence and integrity.