As the fate of Tongaat Hulett, SA’s sugar producing giant founded over a century ago in KwaZulu-Natal, hangs in the balance, the ripple effects are unimaginable.
This month, the group’s business rescue practitioners (BRPs) approached the KwaZulu-Natal High Court in Pietermaritzburg seeking an order to place the embattled company into provisional liquidation.
In court papers, the BRPs state they have “exhausted all reasonable prospects” of implementing the approved rescue plan, marking a dramatic turn for a company once regarded as an agri-industrial powerhouse.
But the collapse did not begin in the courtroom. It began in the boardroom.
Forensic probe exposes financial manipulation
Public records, including findings from a forensic investigation commissioned by the company and conducted by PricewaterhouseCoopers (PwC), detail how senior executives manipulated financial statements over years, overstating profits and asset values.
Among those implicated were former CEO Peter Staude and former chief financial officer Murray Munro.
PwC’s 2019 report found revenue had been prematurely recognised, land sale profits improperly booked and costs deferred in ways that artificially inflated earnings.
The inflated figures were allegedly used to justify executive bonuses and bolster market confidence.
ALSO READ: Sour end to SA sugar icon
Value wiped out after restatement
When the misstatements were uncovered, Tongaat was forced to restate its financial results, wiping approximately R12 billion off its value and exposing a debt burden exceeding R6.6 billion.
The fallout was swift, with shareholders launching civil claims. Criminal complaints were laid with the SA Police Service’s elite unit Directorate for Priority Crime Investigation, known as the Hawks.
In 2020 and 2021, the National Prosecuting Authority confirmed it was pursuing fraud-related charges linked to the accounting scandal.
Staude and Munro have previously indicated their intention to contest the allegations.
Deal lapses
Credit ratings collapsed, lenders tightened terms and confidence evaporated. By 2022, Tongaat had entered business rescue under the Companies Act to stave off insolvency.
This week, Tongaat Hulett said BRPs had taken the step towards provisional liquidation after concluding there was no reasonable prospect of saving the business.
The rescue plan depended on two key elements: the successful sale of the business to the Vision Sugar consortium and the refinancing of post-commencement funding provided by the Industrial Development Corporation (IDC).
However, Vision Sugar and the IDC were unable to finalise funding and refinancing arrangements within the agreed timelines, causing the deal to lapse.
ALSO READ: FSCA fines Tongaat Hulett R20m for contravening Financial Markets Act
A rescue plan approved by creditors in 2024 envisaged restructuring debt and selling key SA sugar assets to the Vision consortium. But that transaction ultimately collapsed.
Central to the plan was the refinancing of a R2.3 billion IDC facility, alongside a R517 million escrow arrangement tied to industry obligations.
According to the BRPs, the funding conditions were not met before the long-stop date. Sale agreements lapsed on 7 February, liquidity deteriorated and liabilities overtook assets; leaving provisional liquidation, they argue, as the only viable option.
Jobs and communities on the line
The human and economic stakes are staggering. Tongaat employs about 2 500 people and supports between 25 000 and 30 000 indirect jobs across cane farming, haulage and downstream industries.
Entire communities in KwaZulu-Natal’s north coast and Midlands depend on its mills.
Government efforts, including engagement by the IDC and oversight by the department of trade, industry and competition, have sought to stabilise the sector under the Sugar Value Chain Master Plan 2030.
Yet the structural damage caused by years of financial misrepresentation continues to haunt the company.
As the high court weighs provisional liquidation, the company’s future hangs in the balance; a stark reminder of how executive misconduct, once exposed in public records and court filings, can unravel even a century-old industrial titan.
NOW READ: Tongaat Hulett suffers legal blow in dispute over R900m debt
About the Author
