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A reconsideration application by Murray Munro, the former chief financial officer accounting-scandal-hit sugar and property group Tongaat Hulett, of the public censure and R6 million fine imposed on him by the JSE has been dismissed by the Financial Services Tribunal (FST).
An analyst who did not want to be named said on Wednesday the confirmation of the JSE public censure and penalties could be highly significant to how Munro and other former Tongaat directors conduct their defence against the criminal charges and civil claims by Tongaat.
The analyst believes that until there was a guilty finding against any of the former directors, Tongaat kept paying their legal fees through the directors indemnity insurance.
He said the dismissal of the reconsideration application could mean the “taps are turned off from this directors indemnity insurance” and then Munro has to fund all his defences in the criminal and civil matters himself.
Deal time?
The analyst said this would also leave Munro isolated and questioned whether he then tries to strike a deal or continues with this Stalingrad defence that he would now have to pay for himself.
He said the modus operandi in cases like this is that a couple of the implicated people do a plea deal, leaving the others to face the music.
“If the funds are turned off, I think it puts a different complexion on things.
“It’s ridiculous – Munro resigned in 2018 and six years later we are where we are.
“This fraud at Tongaat I think started in 2011. We are now in 2024 and there have been no criminal convictions,” he said.
Murray Munro, Tongaat Hulett, JSE
“There is this censure and fine now but other than that there’s been no civil damages judgment or anything like that. A lot of it is because they have put up this elaborate Stalingrad-type defence.
“Remember former president Jacob Zuma did the same thing and the state used to pay his legal fees and eventually that got stopped. This is a similar thing,” he said.
‘Valid and enforceable’
The JSE said on Wednesday the reconsideration application was heard by the FST on 3 July 2024.
It said the tribunal on 31 July 2024 dismissed the reconsideration application, affirming the validity and enforceability of the censure and penalties imposed on Munro by the JSE.
“In the circumstances, the JSE’s decisions to impose a public censure and penalties against Mr Munro for contraventions of the JSE Listings Requirements remain binding and fully enforceable,” it said.
The JSE said Munro is: immediately liable for the payment of the financial penalty imposed; and disqualified from holding the office of a director or officer of a listed company for a period of 10 years.
The JSE imposed the public censure and fined Munro in April 2023 for his actions between 2011 and 2018, which directly resulted and/or contributed to the restatement of Tongaat’s previously published financial information that did not comply with IFRS (International Financial Reporting Standards) and was incorrect, false and misleading in material aspects.
In terms of the penalties imposed on him by the JSE, Munro was also immediately disqualified from holding the office of a director or officer of a listed company for a period of 10 years for failing to fulfil his duties and responsibilities as the chief financial officer with the necessary due care and skill.
The former chief financial officer disagreed with the JSE’s decision and lodged an application for reconsideration of the decision with the FST and also applied for an order suspending the decision of the JSE in terms of Section 231 of the Financial Sector Regulation Act.
The FST dismissed the suspension application in April 2023 but agreed to suspend the payment of the fine the JSE had imposed on Munro pending the outcome of the reconsideration application.
Costly fallout
Tongaat has been in business rescue since October 2022 and trading in its shares was suspended by the JSE on 19 July 2022 because of its failure to publish its financial results within the stipulated time period. – Moneyweb
Online Reporter