EDITORIAL: JSE needs more teeth to sanction errant companies

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Dishing out token fines could undermine the faith of investors in SA’s financial system

If anything needs to change in how the JSE fights dodgy bookkeeping practices, it is the stock market operator’s powers to punish misbehaviour.

Shares in Tongaat, an icon past of SA industry, have dropped more than 97% from a R174 per share peak in 2014, when the group was worth more than R23bn. Since 2018, the year the company revealed questionable accounting practices that overstated sales and assets, about R17bn has been wiped off. For scrutiny in the review of financial disclosures to be upgraded, it would help if a company’s board members were aware that the JSE could slap a crippling penalty on the company, or on themselves as individuals. It would be even better if the SA Police Service, the Hawks and the National Prosecuting Authority were quick off the mark in apprehending and prosecuting individual directors responsible for such financial scandals.

The NPA still has to charge anyone in relation to the huge fraud at Steinhoff, even after an internal investigation found that a group of executives used complex transactions to hide financial losses at underperforming subsidiaries.

 

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