Fraud blamed for Tongaat Hulett collapse

The collapse of Tongaat Hulett cannot be blamed on broad-based black economic empowerment (B-BBEE), says billionaire director of Vision Investments Robert Gumede, arguing that the crisis stems from a massive fraud scandal that shook the 140-year-old company. The sugar producer, once partly owned by Anglo American, was historically one of South Africa’s largest agricultural firms and at one stage produced about 70% of the country’s white sugar. According to Gumede, the company, once valued at more than R22 billion, plunged into turmoil in 2018 when alleged large-scale financial fraud by senior management was uncovered.

The former leadership, including then chief executive Peter Staude, who had presided over what appeared to be a high-performing company before the accounting irregularities emerged. Gumede said the case has yet to reach trial, raising concerns about delays in the justice system and the limited scrutiny of alleged white-collar crime. “The irony of it all is that no hearing has started and no one is asking the National Prosecuting Authority why this matter is not being dealt with,” he said.

Gumede said the exposure of the fraud triggered a chain reaction across the business. As the group’s financial position deteriorated, he said banks that had previously provided funding began withdrawing support, while investors dumped their shares, sending the share price tumbling. Suppliers increasingly demanded upfront payments, while clients started looking for alternative sugar producers, placing further pressure on the business.

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He said at the time, the company owed lenders about R6 billion, a debt burden that prompted banks to push for repayment. The lenders initially sought to liquidate the company, but the state-owned Industrial Development Corporation (IDC) stepped in to support a business rescue process instead.

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