eBusiness Weekly
Business Writer
Hippo Valley Estates Limited majority shareholder Tongaat Hulett, has announced that its former finance director John Chibwe and one Shelton George Nhari, are no longer on the company’s board with effect from February 12, 2020.
While Tongaat’s announcement did not state the reason behind Nhari and Chibwe’s exit from the board, there are strong links that its related to the financial misstatements case and shenanigans they were implicated in.
Chibwe and Nhari — who is also Triangle Estates finance director — were last year implicated in acts of misstatements of financial reports that had serious bearing on the operations of the company.
Results of a six-month forensic probe into Tongaat’s finances carried out by auditors PricewaterhouseCoopers (PwC), found that profits and assets had been overstated in earnings reports including those of Hippo Valley.
“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 in its report.
“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”.
Zimbabwe-based executives, among them, Chibwe and Nhari, were mentioned as some of the individuals “involved in some or all of the above practices, to a greater or lesser extent”.
However, Chibwe could not take the charges lightly.
He alleged the charges were an attempt to smear his name to influence outcome of a disciplinary hearing, after the firm published results of an audit into the alleged misconduct.
He also expressed displeasure over certain contents of the publication, which he said had already convicted him long before a determination had been made following the hearing on his alleged transgressions.
Chibwe said the publication of certain findings of the audit into the suspected irregular dealings by him and other senior executives of Tongaat and its subsidiaries smacked of a smear campaign aimed at influencing the results of the disciplinary hearing into the charges levelled against him by the sugar company.
Hippo is a Zimbabwean firm involved in growing and milling of sugar cane in Chiredzi and Triangle and Tongaat is its biggest shareholder with a 50,3 percent stake. THL also has a 50 percent stake in Zimbabwe Sugar Sales, which acts as a broker to the sugar millers who produce the Lowveld of Chiredzi and Triangle.
Following the appointment of Mr Gavin Hudson as chief executive of THL in February 2019, the board gave him the mandate to immediately conduct a comprehensive strategic and financial review with the objective of stabilising the business.
