'Lies' cost Pather R1.5m

Marci Pather's unhappy tenure as the head of a JSE-listed company reached a new low yesterday when he and AH-Vest were fined R1.5-million for lying to shareholders.

This follows a hearing in July at which the Financial Services Board's enforcement committee slated Pather and AH-Vest (formerly sauce-maker All Joy) for cooking the company's books.

Though Pather "wasn't available" to comment yesterday, a company official said "we have instructed our lawyers to lodge an appeal".

But given the damning findings of the FSB enforcement committee ruling, critics will justifiably ask whether a R1.5-million fine is adequate punishment.

After all, not often does a regulator conclude that, on a balance of probabilities, the current chief executive of a JSE-listed company "authorised the manipulations [of the financial accounts] and participated with [ex-financial director Cedric Carroll] in cooking the books of the company".

The story began in 2005 when All Joy's auditors discovered that journal entries to the value of R830000 "could not be verified or explained".

It turned out that these journal entries were forged, which allowed the company to initially report profits for the year, which were overstated by R295747.

All Joy subsequently announced the problem, but attributed this to "human error".

But the FSB wasn't convinced there was such a benign explanation, and conducted an inquiry into whether Pather, Carroll and AH-Vest were responsible for making "false statements" under the Securities Services Act.

During the inquiry, Pather blamed Caroll (who has disappeared) for the fictitious journal entries "to cover his backside".

But the FSB said "this is so much nonsense".

"It is unlikely that Carroll would, on his own, even without a nod from Pather, 'cook the books' in an effort to show the company in a good light," it said.

It said the clear inference was that "Pather must have given the instructions to practise the deceit."