South African tycoon Robert Gumede's Tongaat sugar deal reported to police

South African tycoon Robert Gumede's takeover of Tongaat Hulett Ltd., the 134-year-old sugar producer bought out of business rescue by his Vision consortium, has been reported to the police by the Zulu Royal House, which has raised allegations about how the deal was represented and concluded.

KwaZulu-Natal Police Commissioner Lt. Gen. Nhlanhla Mkhwanazi called a closed-door meeting in Durban on Oct. 23 after the complaints were lodged with the South African Police Service. He asked the state-owned Industrial Development Corporation to pause any further payments still due under the Vision transaction while the matter is looked into.

Details of the meeting are contained in a letter to cane growers from Higgins Mdluli, chairman of the South African Canegrowers Association, which represents about 18,000 growers. Mdluli wrote that the Hawks, the police's priority crimes unit, would set up a dedicated team to investigate, with Mkhwanazi overseeing the work.

"These are allegations at this stage," Mdluli wrote, adding that they "do have serious and immediate consequences for the South African industry."

Vision left out of the meeting

Representatives of the Vision consortium, the approved buyer of Tongaat Hulett's South African businesses and assets, were not invited. Police spokesman Col. Robert Netshiunda confirmed Vision was not represented. He declined to disclose the full allegations or to say whether the inquiry targets the consortium or any individual.

The meeting was attended by the IDC, Tongaat Hulett, the South African Sugar Association, the Zulu Royal House, organized labor, grower and business groups and the provincial Department of Community Safety. The IDC's board met on Oct. 24 and Oct. 25 to consider further funding. It has not made the outcome public.

Gumede has not responded publicly to the police complaint. The police have not named any suspect, and no charges have been filed.

The deal

Vision is buying Tongaat Hulett's South African operations through Vision Investments 155 and its subsidiary Vision Sugar South Africa. The IDC agreed in June to convert its post-commencement funding into equity, and its proposed stake is 25% of Vision's southern African sugar operations. The state lender has also guaranteed R1.3 billion ($78 million) of a Standard Bank Group Ltd. loan to Vision.

Tongaat Hulett's R2.5 billion ($151 million) post-commencement funding facility has been extended to Nov. 30. Avinash Gobind, acting managing director of its South African sugar business, told growers on Oct. 27 that management was "awaiting confirmation from Vision and IDC that the Vision transaction will proceed."

The company was removed from the Johannesburg Stock Exchange on Nov. 3, ending a 74-year listing. Shareholders, whose stock had been suspended since July 2022, will receive nothing.

Earlier challenges

This is not the first time Vision's role has been questioned. The investigative unit amaBhungane reported in February that Vision bought R11.73 billion ($707 million) of lender claims and security for about R3.2 billion ($193 million), mostly with borrowed money. RGS Group Holdings, a Mozambican rival bidder, told the IDC that a Standard Bank proof-of-funds letter Vision relied on in December 2023 was false or misleading.

Vision rejected that claim. It said "neither the representations nor the letter from Standard Bank were false or misleading," and that it never said the full price would come from its own cash. The business rescue practitioners said they accepted the Standard Bank confirmation in good faith, and Standard Bank denied "any allegations against the Bank of any kind." Vision has called RGS a failed bidder whose own funding proof is under criminal investigation.

The Zulu Royal Household had already pressed Trade, Industry and Competition Minister Parks Tau in September, when Royal Chancellor Inkosi Malusi Zondi complained that traditional leaders, growers and workers were not consulted on the IDC arrangement. The Ingonyama Trust, chaired by King Misuzulu kaZwelithini, holds about 2.8 million hectares of land in the province, and small-scale growers on that land supply Tongaat Hulett's mills.

Gumede, an information technology entrepreneur who founded Guma Group, leads the Vision consortium alongside Zimbabwean businessman Rute Moyo. Tongaat Hulett has supported more than 25,000 jobs and accounts for about 77% of sugar industry revenue in KwaZulu-Natal.

Figures were converted at R16.6 to the dollar.