Zimbabwean businessman Hamish Rudland believes he knows why his putative bid to wrest control of Tongaat Hulett failed. And it’s a conspiracy that will appeal to Julius Malema’s EFF.
It was the hidden hand of “Stellenbosch”, Rudland tells the FM — and here, the finger is pointing at Johann Rupert.
In September, Rudland’s Mauritius-based company Magister said it would pay up to R2bn to underwrite a rights issue to recapitalise Tongaat, making it the sugar giant’s largest shareholder. But minority investors lobbied the Takeover Regulation Panel (TRP) to veto the deal — which it did.
“There are bigger people behind this, who don’t want us in Tongaat. It’s obvious. The minority shareholders are just a small player in the bigger picture,” he tells the FM.
“It’s those people from Stellenbosch. They’re involved in Rainbow Foods (part of RCL Foods) and they know what Simon [Hamish’s brother] has done to them in the tobacco business — he cleaned them up, and they don’t want that. And I hope they’re hearing this — because if we get into that sugar business, we’re going to clean them up.”
This suggests he’s talking about Rupert and Remgro, which owns 44% of RCL Foods, which sells sugar under the Selati brand.
Rupert was also instrumental in creating the modern British American Tobacco (BAT), of which his family investment company, Reinet, still holds 2.1%.
“Yes — it’s those people,” Rudland says. “These minority shareholders, what are they going to gain by doing what they did? It just doesn’t make sense — the company is on its knees, and we were bringing money to the table.”
Instead, he says, “people from Stellenbosch” smeared Magister by creating the impression that Hamish’s brother Simon, who runs Gold Leaf Tobacco, is involved in the Tongaat bid.
This spooked investors, since Simon had been accused of all manner of shifty dealings. In 2018, for example, market researcher Ipsos said Gold Leaf’s cigarettes “account for 75% of the illegal trade” in SA — which Rudland denied.
But as much as Tongaat initially denied it, it turned out Simon was involved indirectly, as his daughters were beneficiaries of a trust which owns 41.3% of Magister.
This belated admission didn’t impress the TRP. Zano Nduli, an investigator for the TRP, invoked a Zulu idiom — ukucasha ngesithupha — which means hiding behind one’s thumb, to describe the Rudlands’ behaviour. He said they “jumped from pillar to post” to avoid answering questions.
So given that, was it unfair for the minorities to speculate about Simon’s involvement?
“Of course it was,” says Rudland. “It cost us a fortune to put these structures in place, and to raise this type of money. This is not play-play, hey — we lost an absolute fortune in structuring something that was good for shareholders. What are they going to end up with now? A one-legged dog, that’s what.”
Contacted by the FM, Rupert was clear he has no involvement with any Tongaat shareholders, let alone being the “hidden hand” behind their opposition to Rudland.
“I don’t even know him, but I can tell you it’s complete nonsense — he’s really clutching at straws,” he says.
Rupert added that Tongaat’s predicament is sad, given that, decades ago, it was one of SA’s great industrial successes. But he says the revelations of auditing fraud — land deals were backdated, sugar roots were incorrectly valued, and profits were padded by more than R1bn — were shocking.
“I couldn’t believe that in the modern-day SA, with all its transparency requirements, that this kind of thing can go on. It doesn’t say very much for Tongaat’s audit committee at the time, nor its auditors,” he says.
This fraud, actually, is the reason Tongaat is facing an existential crisis. And while the previous management — including former CEO Peter Staude and auditor Gavin Kruger — are facing criminal charges, that doesn’t ease the immediate cash crunch.
But without Magister’s cash, Tongaat CEO Gavin Hudson is scrambling to put together a new “recapitalisation plan” to appease the banks, which are unwilling to lend more to a company already R6.8bn in debt.
Hudson told the FM this week that there is “momentum in the restructuring process”, and a plan will be finalised by the end of September. But, he said, it has been a slog.
“We inherited the near-collapse of one of SA’s largest companies, and second only to Steinhoff in scale, that resulted in the loss of significant value,” he said.
And that’s before you throw in Covid, the riots a year ago in KwaZulu-Natal, floods this year, and the fact that 500,000 people rely on the company — through staff, suppliers, their families and surrounding communities.
“What other management team has had to face this? We are still in business and still delivering,” he said.
At this point, however, it seems that Rudland won’t be part of Tongaat’s new plan.
He tells the FM he’s not keen to “simply be bludgeoned by the press and the minority shareholders” any more.
“If there’s a deal that’s sweet, and we see light at the end of the tunnel, and we’re assured there’ll be no hurdles in the way, we can do it. But if we’re going to be bludgeoned again, we’re not interested. Then we’ll wait and pick up the pieces at the end, and we’ll get them for nothing,” he says.
Those much-maligned minority shareholders will be hoping Hudson can sort out a rescue plan before that happens.
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